As filed with the Securities and Exchange Commission on July 14, 2026.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ATTOVIA THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 2836 | 92-1510574 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
1091 Industrial Road, Suite 310
San Carlos, California 94070
(510) 399-5001
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Tao Fu
Chief Executive Officer
1091 Industrial Road, Suite 310
San Carlos, California 94070
(510) 399-5001
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Matthew Rossiter, Esq. Robert A. Freedman, Esq. Amanda Rose, Esq. Chelsea Anderson, Esq. Fenwick & West LLP One Front Street 33rd Floor San Francisco, California 94111 (415) 875-2300 |
Charles S. Kim, Esq. Kristin VanderPas, Esq. Denny Won, Esq. Dave Peinsipp Cooley LLP 10265 Science Center Drive San Diego, California 92121 (858) 550-6000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☒ |
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY 14, 2026
Shares
Common Stock
This is the initial public offering of shares of common stock of Attovia Therapeutics, Inc.
We are offering shares of our common stock.
Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price will be between $ and $ per share. We have applied to list our common stock on the Nasdaq Global Market under the symbol “ATTO,” and this offering is contingent upon obtaining such approval.
We are an “emerging growth company” and a “smaller reporting company” as defined under the federal securities laws and, as such, have elected to comply with certain reduced reporting requirements in this prospectus and may elect to do so in future filings.
Investing in our common stock involves a high degree of risk. See the section titled “Risk Factors” beginning on page 14 to read about factors you should consider before deciding to invest in shares of our common stock.
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Total | |||||||
| Initial public offering price |
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| Underwriting discounts and commissions(1) |
$ | $ | ||||||
| Proceeds, before expenses, to Attovia Therapeutics, Inc. |
$ | $ | ||||||
| (1) | See the section titled “Underwriters” for additional disclosure regarding the underwriting discounts and commissions and estimated offering expenses. |
We have granted the underwriters an option for a period of 30 days to purchase up to an additional shares of our common stock solely to cover over-allotments, if any.
The underwriters expect to deliver the shares of common stock to purchasers on , 2026.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
| Morgan Stanley | Leerink Partners | Citigroup | RBC Capital Markets |
LifeSci Capital
, 2026
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Through and including , 2026 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We and the underwriters do not take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares of our common stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or the time of any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside of the United States.
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This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our audited consolidated financial statements and the related notes, our unaudited interim condensed consolidated financial statements and the related notes and the other information set forth under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included in this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See the section titled “Special Note Regarding Forward-Looking Statements” for additional information. Unless the context otherwise requires, we use the terms “Attovia Therapeutics, Inc.,” “Attovia,” the “Company,” “we,” “us” and “our” in this prospectus to refer to Attovia Therapeutics, Inc.
Overview
We are a clinical-stage biopharmaceutical company developing next-generation biotherapeutics for immune-mediated diseases with high unmet need. Our lead pipeline candidates target commercially validated pathways and are designed through our ATTOBODY biologics platform to deliver improved treatments relative to the current standards of care. Leveraging our ATTOBODY platform, we have nominated three product candidates within our first two years, including one currently in the clinic, ATTO-1310. ATTO-1310 is an ATTOBODY-based therapeutic targeting interleukin-31 (IL-31) that completed dosing in a Phase 1 clinical trial in healthy volunteers (HVs) and patients in the first quarter of 2026. ATTO-2306 is an ATTOBODY-based bispecific targeting interleukin-13 (IL-13) and IL-31 that is in investigational new drug (IND)-enabling studies, and we expect to commence a Phase 1 clinical trial in the first half of 2027. Lastly, ATTO-1091 is our trispecific ATTOBODY-based Fc fusion protein that is designed to block TL1A, IL-23 and integrin a4ß7 simultaneously, and is currently in IND-enabling studies.
All of our product candidates have been internally discovered using our ATTOBODY biparatopic biologics platform, which we have in-licensed from Alamar Biosciences, Inc. (Alamar). Our ATTOBODY platform uses an evolution-driven, high-throughput process which allows for rapid discovery and creation of a high diversity of potential product candidates. Our initial focus for ATTOBODIES has been to develop novel biotherapeutics targeting highly synergistic, clinically and commercially validated pathways where early data indicates the potential of our candidates to deliver next-generation treatments relative to the current standards of care. Our early-stage discovery efforts have further expanded our pipeline to additional complex biologics, including conditional “AND” gate bispecifics directed against novel targets, which are historically difficult to develop with conventional antibody technology.
ATTO-1310 is a novel ATTOBODY-based Fc-fusion protein therapeutic that inhibits IL-31 and is currently in a Phase 1 clinical trial in HVs and patients suffering from chronic pruritus and high-itch atopic dermatitis (AD). IL-31 is commonly known as the “itch cytokine” and is upregulated in a host of pruritic diseases. We plan to evaluate ATTO-1310 for the treatment of chronic pruritic diseases such as chronic pruritus of unknown origin (CPUO), high-itch AD, cholestatic pruritus in primary biliary cholangitis (PBC) and primary sclerosing cholangitis (PSC) and chronic kidney disease-associated pruritus (CKD-aP), also known as uremic pruritus, in subsequent clinical trials. Beyond individual diseases, we also intend to pursue a potential pan-pruritic disease regulatory development path for patients with elevated levels of IL-31. Our initial clinical data demonstrated that ATTO-1310 has been well tolerated with low immunogenicity and pharmacokinetic (PK) and target engagement data supporting the possibility of an extended dosing regimen in human patients. Initial data from our Phase 1b clinical trial of ATTO-1310 in patients with chronic pruritus and high-itch AD showed rapid, deep itch relief in both patient populations and consistent lesion control for patients with high-itch AD. We believe ATTO-1310 has the potential to offer patients fast and deep itch relief, a favorable tolerability profile and convenient subcutaneous (SC) dosing once every three months.
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ATTO-2306 is an ATTOBODY-based, half-life extended, immunoglobulin-G (IgG)-fusion protein therapeutic that inhibits IL-13 and IL-31. IL-13 and IL-31 reside in the only two clinically and commercially validated pathways in AD, and we believe that blocking them in a bispecific format offers a novel approach and a high likelihood of achieving differentiated treatment effect and extended dosing by avoiding the reverse dose-efficacy effect seen for IL-31Ra and the target-mediated drug disposition (TMDD) observed in treatments targeting IL-4Rα. We believe ATTO-2306 has the potential to provide a new standard of care for the treatment of AD and other immune-mediated skin diseases, such as chronic spontaneous urticaria (CSU) and prurigo nodularis (PN), by offering favorable lesion and itch control, as well as significantly improved convenience compared to currently available treatments. Independent third-party market research studies1 commissioned by us estimated that by 2035 AD will affect 21 million adults and 10 million pediatric patients in the United States, with approximately one-third of AD patients having moderate-to-severe disease. We expect to commence a Phase 1 clinical trial for ATTO-2306 in the first half of 2027.
ATTO-1091 is a trispecific ATTOBODY-based Fc-fusion protein therapeutic that inhibits TL1A, IL-23 and integrin α4ß7, and is currently undergoing IND-enabling studies. TL1A, IL-23 and integrin α4ß7 all play distinct roles in inflammatory bowel disease (IBD) pathophysiology, contributing to inflammation and fibrosis in the gut and intestinal tissue. We believe that ATTO-1091 has the potential to improve upon existing induction and maintenance therapies for IBD by inhibiting three clinically validated pathways with preserved binding affinity and potency of each individual arm in the trispecific format. We plan to initiate a Phase 1 clinical trial for ATTO-1091 in the first half of 2027, subject to IND clearance.
Our Pipeline
We are developing a pipeline of novel biotherapeutics for the treatment of immune-mediated diseases. Our first two product candidates for our immune-dermatology franchise, ATTO-1310 and ATTO-2306, have broad potential to treat patients suffering from pruritic and lesional diseases. Our third program, ATTO-1091, broadens our reach to other inflammatory diseases such as IBD, a therapeutic area with substantial unmet need.
Beyond the initial monospecific and multispecific applications of our ATTOBODY platform, we are exploring the development of therapeutics aimed at novel and exploratory targets and pursuing conditional “AND” gate and tetraspecific formats. A conditional “AND” gate bispecific is a molecule in which one of the arms engages its target and imparts its action only when the second arm binds to its target.
| 1 | Based on reports we commissioned by LifeSci Consulting, an affiliate of LifeSci Capital LLC, in 2025 and 2026 (the LifeSci Reports). |
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Our ATTOBODY Platform and Discovery Capabilities
Our ATTOBODY platform is designed to create highly potent monospecifics, complex biologics, including multispecifics and conditional “AND” gated bispecifics, as well as other formats. ATTOBODY-based biologics are characterized by tunable affinity with the ability to achieve high potency, a high degree of modularity, precision design, infrequent dosing and robustness on par with IgG-based antibody biologics.
Each ATTOBODY consists of two heavy-chain antibody variable region domains (also known as VHHs or nanobodies) connected with a proprietary peptide-based linker, with the VHHs targeting two different epitopes on a target molecule in what is known as biparatopic binding. VHHs are a form of antibody naturally produced by camelids and other species, which can provide an attractive alternative to IgG-based biotherapeutics. The ATTOBODY platform uses an evolution-driven, high-throughput process to screen millions of combinations of VHHs simultaneously and allows us to select ATTOBODIES that are highly developable and conform to a desired set of precision design biologic properties.
ATTOBODIES against individual targets can be connected into complex biologics using a variety of scaffolds and formats without loss of activity or developability. To enable extended dosing intervals, we typically fuse ATTOBODIES to an Fc fragment-based scaffold using proprietary or standard linkers.
We believe that ATTOBODIES offer several key properties that make them well-positioned for the creation of differentiated multispecific medicines:
| • | Tunable affinity with the option to achieve high potency, driven by the biparatopic mode of target binding, results in high achievable affinity directly from discovery screening, without the need for affinity maturation. |
| • | Precision design enables the discovery of ATTOBODIES that, for example, bind to specific epitopes on target molecules for target selectivity, spare desired biologic pathways such as decoy clearance mechanisms, or avoid known target-specific challenges such as aggregation. |
| • | Significant engineering potential with the ability to simultaneously connect multiple ATTOBODIES into multispecifics that retain the biological properties of each individual ATTOBODY with excellent developability. |
| • | Tunable half-life through ease of fusion to a variety of half-life extending fragments such as albumin-binding VHHs and Fc fragments or IgGs, with potential for infrequent dosing in patients. |
| • | Simple manufacturing using standard equipment and processes for making biologics. |
We have completed over 15 successful ATTOBODY campaigns against a variety of target types including cytokines, cell surface molecules and multi-transmembrane proteins with a 100% success rate in discovering individual ATTOBODIES and complex biologics conforming to desirable characteristics in preclinical studies. Our preclinical discovery timelines are short, reflective of the robust nature of the platform; we have been able to nominate a development candidate within 12 months of commencing a preclinical discovery process and to submit an IND application within two years from commencing such preclinical discovery. We believe that the initial clinical data from the ATTO-1310 Phase 1 trial has preliminarily demonstrated that ATTO-1310 has the potential for favorable tolerability, low immunogenicity, fast and deep pruritic relief and convenient quarterly SC dosing.
ATTO-1310 for Chronic Pruritic Diseases
ATTO-1310 is a novel half-life extended anti-IL-31 ATTOBODY-based therapeutic currently in a Phase 1 clinical trial. We intend to develop ATTO-1310 for the treatment of chronic pruritic diseases such as CPUO, high-itch AD, cholestatic pruritus, and CKD-aP, with a long-term precision immunology-based clinical strategy. We believe that the initial clinical data from the ATTO-1310 Phase 1 trial has preliminarily demonstrated that ATTO-1310 has the potential for favorable tolerability, low immunogenicity, fast and deep pruritic relief and convenient quarterly SC dosing. We expect to initiate a Phase 2 clinical trial by the first half of 2027.
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We believe that ATTO-1310 has the potential to be a favorable treatment option for CPUO, high-itch AD, cholestatic pruritus, CKD-aP and other pruritic indications. The molecule is designed for:
| 1. | Deep anti-pruritic responses; |
| 2. | Fast pruritic relief; |
| 3. | Favorable tolerability profile; and |
| 4. | Up to quarterly maintenance subcutaneous dosing for patient convenience. |
ATTO-1310 is currently being evaluated in a four-part, randomized, double-blinded, placebo-controlled Phase 1 clinical trial. Parts 1 and 2 of the trial, evaluating the tolerability, PK and immunogenicity of ATTO-1310 in HVs, have now been completed. Parts 3 and 4 of the trial, evaluating the tolerability, PK, immunogenicity, pharmacodynamic (PD), and efficacy of ATTO-1310 in patients suffering from high-itch AD or chronic pruritus are currently ongoing.
To date, ATTO-1310 has demonstrated a favorable tolerability profile across HVs and patients with chronic pruritus and high-itch AD, with predominantly Grade 1 or Grade 2 TEAEs and no treatment-related serious or severe adverse events (SAEs) observed. PK data demonstrated an approximately dose-proportional profile with good SC bioavailability, while immunogenicity remained low with no detected neutralizing anti-drug antibodies (ADAs).
We plan to focus the ongoing and future trials of ATTO-1310 on exploring the PD link between IL-31 levels, pruritus and efficacy of ATTO-1310 treatment. The body of evidence generated through these studies will potentially support a precision immunology, IL-31 biomarker-based clinical development strategy for ATTO-1310.
ATTO-2306 for AD and Other Inflammatory Diseases
ATTO-2306 is a novel half-life extended ATTOBODY-based biotherapeutic that inhibits both IL-13 and IL-31. We believe ATTO-2306 has the potential to establish a new standard of care for the treatment of AD and other immune-mediated skin diseases, such as CSU and PN, by offering favorable lesion and itch control, as well as significantly improved convenience compared to currently available biologic treatments. ATTO-2306 is a next-generation bispecific designed to improve upon one of our past product candidates, ATTO-3712. The key improvement of ATTO-2306 is its potential to deliver a significantly longer projected human half-life compared to ATTO-3712.
ATTO-2306 consists of two highly potent IL-31-targeted ATTOBODIES, which are connected to an anti-IL-13 IgG containing the M252Y/S254T/T256E (YTE) mutation for half-life extension, and the anti-IL-13 IgG was derived from lebrikizumab. The IL-31 targeting ATTOBODIES incorporated in ATTO-2306 use the same VHHs as those in ATTO-1310. We believe these shared elements will enable the findings from ATTO-1310 clinical trials, together with the existing ample body of evidence for anti-IL-13 antibodies, including evidence supporting half-life extension, to inform and accelerate the development of ATTO-2306.
ATTO-2306 has exhibited strong initial developability properties, and ability to develop a high-concentration SC formulation. We have conducted a preclinical program to better understand the potential of ATTO-2306. Through these studies, ATTO-2306 has demonstrated:
| • | High potency compared to analogous molecules regardless of whether each arm was tested as a monospecific or bispecific; |
| • | Low projected risk of immunogenicity in humans; and |
| • | Long half-life, consistent with avoidance of TMDD compared to an IL-4Ra targeted therapeutic and the utilization of half-life extension technology. |
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IND-enabling studies for ATTO-2306 are currently ongoing. We anticipate commencing a Phase 1 clinical trial for ATTO-2306 in the first half of 2027.
ATTO-1091 for IBD
ATTO-1091 is a trispecific ATTOBODY-Fc fusion construct that binds to TL1A, IL-23 and integrin α4ß7 with binding properties optimized for all three targets. Similar to ATTO-1310, the Fc portion of ATTO-1091 has been engineered to harbor a YTE mutation.
IBD is a chronic immune-mediated condition characterized by persistent inflammation of the gastrointestinal tract. Two of the most common forms of IBD include ulcerative colitis (UC) and Crohn’s disease (CD), affecting more than 7 million people worldwide. In the United States, UC prevalence is estimated to be approximately 1.1 million individuals, and CD prevalence is estimated to be approximately 1.0 million individuals.
ATTO-1091 inhibits three distinct immune pathways, each of which has demonstrated a favorable tolerability profile in third-party clinical trials. As part of our design process, we carried out a dose range finding study in non-human primates (NHPs). There were no clinical safety observations and no histopathology findings in any of the animals in the study.
GMP manufacturing process development and GLP toxicology studies for ATTO-1091 are ongoing. We expect to commence a randomized, placebo-controlled Phase 1 clinical trial for ATTO-1091 in the first half of 2027.
Our Management Team and Investors
We were founded in 2023 to build a therapeutics company based on the potential of our ATTOBODY platform to discover and develop novel biologics targeting immune-mediated diseases. Our company was founded by a group of investors, including Alamar, with the goal of giving the ATTOBODY platform the dedicated attention and resources necessary to fully realize its potential for therapeutics. We are led by a proven management team with a strong track record of excellence, bringing decades of experience in drug discovery, development and company leadership through multiple therapeutic approvals and strategic transactions. Our management team brings and deploys a deep understanding of disease biology to deliver potential complex biologic treatment options discovered through our ATTOBODY platform.
As of March 31, 2026, we have raised $255.8 million since our inception from leading life science investors with significant industry experience and expertise including certain of our current 5% or greater holders: Deep Track Capital, Frazier Life Sciences, Goldman Sachs Alternatives and venBio. Prospective investors should not rely on the past investment decisions of our investors, as our investors may have different risk tolerances and have received their shares in prior offerings at prices lower than the price offered to the public in this offering. In addition, some of these investors may not be subject to reporting requirements under Section 16 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, thus, prospective investors may not necessarily know the total amount of investment by each of our existing investors and if and when our existing investors may decide to sell any of their shares. See the sections titled “Certain Relationships and Related Party Transactions” and “Principal Stockholders” for more information on prior purchases by and current holdings of these stockholders.
Our Strategy
We believe the future treatment of immune-mediated diseases will be defined by precisely engineered biologics capable of delivering both enhanced efficacy as well as improved durability and patient convenience.
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Our strategy is to leverage our ATTOBODY platform to develop next-generation, precision-designed biologics with the potential to improve clinical outcomes while enabling infrequent SC dosing. We are pursuing this strategy through the following priorities:
| • | Establish leadership in chronic pruritic diseases with ATTO-1310. |
| • | Advance ATTO-2306 as a differentiated therapy for inflammatory skin diseases. |
| • | Expand our pipeline of next-generation complex biologics. |
| • | Utilize strategic collaborations to extend platform reach and maximize value. |
Recent Developments
Preliminary Financial Results
Based on our current estimates, we had approximately $ million in cash, cash equivalents and marketable securities as of June 30, 2026. However, this estimate is preliminary, unaudited and may change, was prepared by management based on the most current information available to management, and is subject to the completion of our quarter-end financial closing process for the three months ended June 30, 2026. This estimate should not be viewed as a substitute for financial statements prepared in accordance with accounting principles generally accepted in the United States and is not necessarily indicative of the results to be achieved in any future period. Accordingly, you should not draw any conclusions based on the foregoing estimate and should not place undue reliance on this preliminary estimate. We assume no duty to update this preliminary estimate except as required by law.
The preliminary financial data included in this registration statement on Form S-1 has been prepared by, and is the responsibility of, Attovia Therapeutics, Inc.’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled, nor applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.
Summary of Risks Associated with Our Business
Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, among others, the following:
| • | We have a limited operating history, have not completed any clinical trials and have no products approved for commercial sale, which may make it difficult for investors to evaluate our business, likelihood of success and viability. |
| • | We have incurred significant operating losses since our inception and have not generated any product revenue. We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. |
| • | Even if this offering is successful, we will require substantial additional capital to finance our operations and achieve our goals. If we are unable to raise capital when needed or on terms acceptable to us, we may be forced to delay, reduce or eliminate our research or development programs, any future commercialization efforts or other operations. |
| • | We are substantially dependent on the success of our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091. If we are unable to advance the development of, receive regulatory approval for, and ultimately successfully commercialize ATTO-1310, ATTO-2306 or ATTO-1091, or experience significant delays in doing so, our business will be materially harmed. |
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| • | Drug development is a lengthy and expensive process, the outcome of clinical testing is inherently uncertain, and results of earlier preclinical studies and clinical trials may not be predictive of future clinical trial results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates for many reasons, including a failure to replicate positive results from earlier preclinical studies or clinical trials in ongoing or future preclinical studies or clinical trials. |
| • | Our future performance is dependent on our ability to retain key employees and to attract, retain and motivate qualified personnel and manage our human capital. |
| • | We expect to expand our development, clinical and regulatory capabilities and operations as we grow, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations. |
| • | We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. |
| • | Our quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline. |
| • | If we are unable to obtain and maintain patent protection or other necessary rights for any of our current or future product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or our rights under our patents are not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products and technology may be adversely affected. |
| • | We rely, and intend to continue to rely, on third parties to conduct our clinical trials and perform some of our research and potential preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or do not meet expected deadlines, our development programs may be delayed or subject to increased costs or we may be unable to obtain marketing authorization, each of which may have an adverse effect on our business, financial condition, results of operations and prospects. |
| • | We rely on third parties to manufacture our product candidates and clinical product supplies and we may not be able to obtain adequate supplies at a reasonable cost or in a timely way. |
| • | The regulatory approval process is highly uncertain, and we may be unable to obtain, or may be delayed in obtaining, U.S. or foreign regulatory approval and, as a result, unable to commercialize ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates. Even if we believe our current, or planned clinical trials are successful, regulatory authorities may not agree that they provide adequate data on safety or efficacy. |
The summary risk factors described above should be read together with the text of the full risk factors in the section titled “Risk Factors” and the other information set forth in this prospectus, including our consolidated financial statements and the related notes. The risks summarized above or described in full elsewhere in this prospectus are not the only risks that we face. Additional risks and uncertainties not presently known to us, or that we currently deem to be immaterial, may also materially adversely affect our business, financial condition, results of operations and future growth prospects.
Corporate and Other Information
We were incorporated under the laws of the State of Delaware on December 16, 2022, under the name Attovia Therapeutics, Inc.
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Our principal executive offices are located at 1091 Industrial Road, Suite 310, San Carlos, California 94070, and our telephone number is (510) 399-5001. Our website address is https://www.attovia.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated by reference into, this prospectus. We have included our website in this prospectus solely as a textual reference. Investors should not rely on any such information in deciding whether to purchase our common stock.
The marks “Attovia” and “ATTOBODY” and our other registered or common law trade names, trademarks or service marks appearing in this prospectus are valuable company assets and are the exclusive property of Attovia. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus appear without the ® and ™ symbols, but this should not be interpreted as a waiver of any rights, and we fully reserve the right to assert and protect our intellectual property rights concerning our marks in accordance with applicable laws.
All other service marks, trademarks and trade names appearing in this prospectus are the property of their respective owners. Our use of third-party trade names, trademarks or service marks in this prospectus does not imply any affiliation with, endorsement by, or sponsorship by us of those companies.
Implications of Being an Emerging Growth Company and a Smaller Reporting Company
As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). An emerging growth company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies. These provisions include, but are not limited to:
| • | being permitted to present only two years of financial statements and only two years of reduced related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this prospectus; |
| • | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley Act), on the effectiveness of our internal controls over financial reporting; |
| • | reduced disclosure obligations regarding executive compensation arrangements; and |
| • | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
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 more than $1.235 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of the completion of this offering.
We have elected to take advantage of certain of the reduced disclosure obligations for emerging growth companies in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.
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, until 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
8
(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 such new or revised accounting standards. Until the date that we are no longer an emerging growth company or affirmatively and irrevocably opt out of the exemption provided by Section 7(a)(2)(B) of the Securities Act of 1933, as amended (Securities Act), upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.
We are also a “smaller reporting company,” meaning that (i) the aggregate number of shares of our common equity held by non-affiliates before the effectiveness of the registration statement of which this prospectus is a part, plus the number of such shares offered hereby to non-affiliates, multiplied by the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, is less than $700.0 million, and (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our capital stock 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 capital stock 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, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
9
The Offering
| Common stock offered by us |
shares. | |
| Underwriters’ over-allotment option |
shares. | |
| Common stock to be outstanding immediately after this offering |
shares (or shares, if the underwriters exercise their over-allotment option in full). | |
| Use of proceeds |
We estimate that the net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise their over-allotment option in full), based upon the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. | |
| We currently intend to use the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, to advance the clinical development of ATTO-1310, ATTO-2306, and our research pipeline, including ATTO-1091, for other research and development activities, as well as for working capital and for other general corporate purposes. | ||
| See the section titled “Use of Proceeds” for additional information. | ||
| Risk factors |
Investing in our common stock involves a high degree of risk. You should read the section titled “Risk Factors” in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. | |
| Proposed Nasdaq trading symbol |
We have applied to list our common stock on Nasdaq under the symbol “ATTO.” The closing of this offering is contingent upon such listing. | |
The number of shares of our common stock to be outstanding after this offering is based on (i) shares of our common stock outstanding as of March 31, 2026, including shares of unvested restricted stock subject to repurchase and (ii) the automatic conversion of all shares of our outstanding redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock in connection with the completion of this offering, and excludes:
| • | shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2026 under our 2023 Equity Incentive Plan (2023 Plan), with a weighted-average exercise price of $ per share; |
| • | shares of our common stock issuable upon the exercise of stock options granted after March 31, 2026 under our 2023 Plan, with a weighted-average exercise price of $ per share; |
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| • | shares of our common stock reserved for future issuance under our 2026 Equity Incentive Plan (2026 Plan), which will become effective in connection with this offering (including shares reserved for issuance under our 2023 Plan, which shares will be added to the 2026 Plan upon its effectiveness); and |
| • | shares of our common stock to be reserved for future issuance under our 2026 Employee Stock Purchase Plan (ESPP), which will become effective in connection with this offering. |
Our 2026 Plan and our ESPP provide for automatic annual increases in the number of shares of our common stock reserved thereunder. For additional information regarding our 2023 Plan, 2026 Plan and ESPP, see the section titled “Executive Compensation—Equity Compensation Plans and Other Benefit Plans.”
Except as otherwise indicated, all information in this prospectus assumes or gives effect to the following:
| • | the automatic conversion of all shares of our redeemable convertible preferred stock outstanding as of March 31, 2026 into an aggregate of shares of our common stock in connection with the completion of this offering; |
| • | a -for- reverse stock split of our outstanding common stock, which was effected on , 2026; |
| • | our outstanding shares include shares of unvested stock subject to repurchase as of March 31, 2026; |
| • | the adoption, filing, and effectiveness of our restated certificate of incorporation and restated bylaws, each of which will occur immediately prior to the completion of this offering; |
| • | no exercise of outstanding options described above; and |
| • | no exercise by the underwriters of their over-allotment option. |
11
Summary Consolidated Financial Data
The following tables set forth our summary consolidated statements of operations and comprehensive loss and condensed balance sheet data as of the dates indicated. The summary consolidated statements of operations and comprehensive loss data for the years ended December 31, 2024 and 2025 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary interim condensed consolidated statements of operations and comprehensive loss data for the three months ended March 31, 2025 and 2026, and the summary interim condensed consolidated balance sheet data as of March 31, 2026, have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our audited consolidated financial statements and unaudited interim condensed consolidated financial statements included elsewhere in this prospectus have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Our unaudited interim condensed consolidated financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in our opinion, all adjustments of a normal and recurring nature that are necessary for the fair statement of the financial information set forth in those statements included elsewhere in this prospectus. The following summary financial data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in any future period and results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026. The summary consolidated financial data in this section are not intended to replace our consolidated financial statements and are qualified in their entirety by the consolidated financial statements and related notes included elsewhere in this prospectus.
| Year Ended December 31, |
Three Months Ended March 31, |
|||||||||||||||
| 2024 | 2025 | 2025 | 2026 | |||||||||||||
| (in thousands, except share and per share amounts) | ||||||||||||||||
| Consolidated Statements of Operations Data: |
||||||||||||||||
| Revenue: |
||||||||||||||||
| Collaboration revenue |
$ | — | $ | 1,350 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
— | 1,350 | — | — | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
33,864 | 54,153 | 11,856 | 16,746 | ||||||||||||
| General and administrative |
7,689 | 14,356 | 4,248 | 3,209 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
41,553 | 68,509 | 16,104 | 19,955 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(41,553 | ) | (67,159 | ) | (16,104 | ) | (19,955 | ) | ||||||||
| Other income (expense) |
||||||||||||||||
| Interest income |
3,437 | 6,627 | 1,126 | 1,326 | ||||||||||||
| Change in fair value of preferred stock tranche liability |
(1,674 | ) | (170 | ) | (170 | ) | — | |||||||||
| Other income (expense), net |
(11 | ) | 75 | (3 | ) | (27 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income (expense), net |
1,752 | 6,532 | 953 | 1,299 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
$ | (39,801 | ) | $ | (60,627 | ) | $ | (15,151 | ) | $ | (18,656 | ) | ||||
| Less: accretion of redeemable convertible preferred stock to its redemption value |
(5,245 | ) | (271 | ) | (271 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss attributable to common stockholders |
$ | (45,046 | ) | $ | (60,898 | ) | $ | (15,422 | ) | $ | (18,656 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
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| Year Ended December 31, |
Three Months Ended March 31, |
|||||||||||||||
| 2024 | 2025 | 2025 | 2026 | |||||||||||||
| (in thousands, except share and per share amounts) | ||||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted(1) |
$ | (1.37 | ) | $ | (1.66 | ) | $ | (0.44 | ) | $ | (0.48 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares of common stock outstanding, basic and diluted(1) |
32,806,601 | 36,690,341 | 35,364,476 | 38,583,067 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)(2) |
$ | $ | ||||||||||||||
|
|
|
|
|
|||||||||||||
| Weighted-average shares used in computing pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)(2) |
||||||||||||||||
|
|
|
|
|
|||||||||||||
| (1) | See Note 2 and Note 13 to our audited consolidated financial statements and Note 12 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic and diluted net loss per share attributable to common stockholders, and basic and diluted weighted-average number of shares used in the computation of the per share amounts. |
| (2) | The calculations for the pro forma net loss per share attributable to common stockholders, basic and diluted, give effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock as if it occurred on January 1, 2025 and the reversal of the change in fair value of preferred stock tranche liability related to the subsequent tranche closing of Series B redeemable convertible preferred stock recorded in our consolidated statement of operations and comprehensive loss for the year ended December 31, 2025. |
| As of March 31, 2026 | ||||||||||||
| Actual | Pro Forma(1) | Pro Forma As Adjusted(2)(3) |
||||||||||
| (in thousands) | ||||||||||||
| Consolidated Balance Sheet Data |
||||||||||||
| Cash, cash equivalents and marketable securities |
$ | 132,622 | ||||||||||
| Working capital(4) |
126,843 | |||||||||||
| Total assets |
146,086 | |||||||||||
| Total liabilities |
13,375 | |||||||||||
| Redeemable convertible preferred stock |
258,226 | |||||||||||
| Accumulated deficit |
(129,666 | ) | ||||||||||
| Total stockholders’ deficit |
(125,515 | ) | ||||||||||
| (1) | Pro forma amounts give effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock and the related reclassification of the carrying value of the redeemable convertible preferred stock to permanent equity in connection with the completion of this offering. |
| (2) | The pro forma as adjusted consolidated balance sheet data gives effect to (i) the pro forma adjustments described in footnote (1) above and (ii) the sale of shares of common stock in this offering, at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
| (3) | Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, each of our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets and total stockholders’ deficit by approximately $ million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same. Similarly, each increase or decrease of 1.0 million shares in the number of shares of our common stock offered in this offering would increase or decrease, as applicable, each of our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets and total stockholders’ deficit by approximately $ million, assuming the assumed initial public offering price remains the same. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering. |
| (4) | We define working capital as current assets less current liabilities. See our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities. |
13
Investing in our common stock involves a high degree of risk. Before making your decision to invest in shares of our common stock, you should carefully consider the risks described below, together with the other information contained in this prospectus, including in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our consolidated financial statements and the related notes included elsewhere in this prospectus. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. We cannot assure you that any of the events discussed below will not occur. These events could have a material and adverse impact on our business, financial condition, results of operations and prospects. If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.
Risks Related to Our Financial Position, Limited Operating History and Need for Additional Capital
We have a limited operating history, have not completed any clinical trials and have no products approved for commercial sale, which may make it difficult for investors to evaluate our business, likelihood of success and viability.
We are an early clinical-stage biopharmaceutical company with a limited operating history. We commenced operations in 2023, have no products approved for commercial sale and have never generated any revenue. Drug development is a highly speculative undertaking and involves a substantial degree of risk. It entails substantial upfront capital expenditures and significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval or become commercially viable. To date, we have devoted substantially all of our resources to identifying, acquiring and developing our product candidates and licensed technologies, building our pipeline, conducting preclinical studies and early-stage clinical trials, organizing and staffing our Company, business planning, establishing and maintaining our intellectual property portfolio, establishing arrangements with third parties for the manufacture of our product candidates, raising capital and providing general and administrative support for these operations.
To date, we have primarily funded our operations with proceeds from sales of our redeemable convertible preferred stock. As of March 31, 2026, we had received an aggregate of $255.8 million in gross proceeds from sales of our redeemable convertible preferred stock and an aggregate of $0.5 million in gross proceeds from sales of our common stock and stock option exercises.
We have not yet demonstrated an ability to successfully complete any clinical trials, including for our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091, obtain regulatory approvals, manufacture a commercial-scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. As a result, it may be more difficult for you to accurately predict our likelihood of success and viability than it could be if we had a longer operating history.
In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical-stage biopharmaceutical companies developing targeted therapeutic candidates for immune-mediated diseases. We also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities. We have not yet demonstrated an ability to successfully overcome such risks and difficulties, or to make such a transition. If we do not adequately address these risks and difficulties or successfully make such a transition, our business will suffer.
14
We have incurred significant operating losses since our inception and have not generated any product revenue. We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.
We have incurred significant operating losses in each reporting period since our inception, have not generated any product revenue to date and have financed our operations principally through private placements of our redeemable convertible preferred stock. For the years ended December 31, 2024 and 2025, we reported a net loss of $39.8 million and $60.6 million, respectively, and for the three months ended March 31, 2025 and 2026, we reported a net loss of $15.2 million and $18.7 million, respectively. We had an accumulated deficit of $129.7 million as of March 31, 2026. There is no assurance that we will obtain financing from other sources, or that we will be able to obtain such financing on favorable terms, if at all. Substantially all of our losses have resulted from expenses incurred in connection with the development and in-licensing of intellectual property related to our pipeline of biotherapeutics, the research and development of ATTO-1310, ATTO-2306, and ATTO-1091, and from general and administrative costs associated with our operations. We expect to incur increasing levels of operating losses for the foreseeable future, particularly as we advance ATTO-1310, ATTO-2306, and ATTO-1091 through clinical development. Our prior losses have had, and combined with expected future losses will continue to have, an adverse effect on our stockholders’ equity and working capital. We expect our research and development expenses to significantly increase in connection with our ongoing and planned clinical trials for ATTO-1310 and our planned clinical trial for ATTO-2306, and in connection with preclinical development and potential future clinical development of and other product candidates, including ATTO-1091. In addition, if we obtain regulatory approval for ATTO-1310, ATTO-2306, and ATTO-1091 or any future product candidates, we will incur significant sales, marketing, manufacturing and distribution expenses in connection with the commercialization of ATTO-1310, ATTO-2306, ATTO-1091 or any other future product candidates. We may never succeed in these activities and, even if we do, we may never generate any revenue or revenue that is significant enough to achieve profitability.
As a result, we expect to continue to incur significant and increasing net losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developing therapeutic products, we are unable to predict the extent of any future losses or when we will become profitable, if at all. To become and remain profitable, we must succeed in discovering, developing, obtaining regulatory approvals for, and eventually commercializing products that generate significant revenue. We are only in the preliminary stages of these activities.
Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. In addition, we expect our financial condition and operating results to fluctuate significantly from quarter-to-quarter and year-to-year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely on the results of any quarterly or annual periods as indications of future operating performance. If we fail to become and remain profitable, there may be an adverse effect on the value of our company which could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product candidate pipeline, achieve our strategic objectives or even continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
Even if this offering is successful, we will require substantial additional capital to finance our operations and achieve our goals. If we are unable to raise capital when needed or on terms acceptable to us, we may be forced to delay, reduce or eliminate our research or development programs, any future commercialization efforts or other operations.
Developing therapeutic products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091, and any future product candidates through clinical development. We expect increased expenses as we continue our research and development, continue our ongoing clinical trials, initiate additional clinical trials,
15
seek to expand our product pipeline and clinical applications, seek regulatory approval for our current and future product candidates, and invest in our organization. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company that we did not incur as a private company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
We had $132.6 million in cash, cash equivalents and marketable securities as of March 31, 2026. Based on our current operating plan, we believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities will be sufficient for us to fund our operations . We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Changes beyond our control may occur that would cause us to use our available capital before that time, including changes in and progress of our drug development activities and changes in regulation. Our future capital requirements will be dependent on many factors, including:
| • | the progress, timing and results of preclinical studies and clinical trials for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates; |
| • | further development of our ATTOBODY platform; |
| • | the extent to which we develop, in-license, out-license or acquire any future product candidates or technologies; |
| • | the number and development requirements of any future product candidates that we may pursue, and other indications for our current product candidates that we may pursue; |
| • | the costs, timing and outcome of obtaining regulatory approvals of our current or future product candidates; |
| • | the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current or future product candidates; |
| • | the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or future product candidates; |
| • | the costs associated with commercializing any approved product candidates, including establishing sales, marketing, market access and distribution capabilities; |
| • | to the extent we pursue strategic collaborations, including collaborations to commercialize ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations or our current licenses; |
| • | the costs associated with completing any post-marketing studies or trials required by the U.S. Food and Drug Administration (FDA), or other comparable foreign regulatory authorities; |
| • | the revenue, if any, received from commercial sales of ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, if any are approved; |
| • | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims that we may become subject to, including any litigation costs and the outcome of such litigation; and |
| • | the costs associated with potential product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims. |
Even if this offering is successful, we will require additional capital to complete our planned preclinical studies and clinical trials for our current product candidates to obtain regulatory approval, and we anticipate
16
needing to raise additional capital to complete the development of, and eventually commercialize, our product candidates, if approved. Adequate additional financing may not be available to us on favorable terms, or at all. Our ability to raise additional funds will be dependent on financial, economic and market conditions, geopolitical issues and other factors, over which we may have limited or no control. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If adequate funds are not available on commercially acceptable terms when needed, we may be forced to delay, reduce or terminate the development or commercialization, if approved, of all or part of our research programs or product candidates or we may be unable to take advantage of future business opportunities, including pursuing new in-licenses and acquisitions. Furthermore, any additional capital-raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our current and any future product candidates, if approved. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
We will be required to obtain further funding through public or private equity financings, debt financings, collaboration agreements, licensing arrangements or other sources of financing, which may dilute our stockholders or restrict our operating activities. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, each investor’s ownership interests will be diluted, and the terms may include liquidation or other preferences that adversely affect each investor’s rights as a stockholder. Debt financing or 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, making capital expenditures or declaring dividends. Such restrictions could adversely impact our ability to conduct our operations and execute our business plan. If we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us.
Our failure to raise capital as and when needed or on acceptable terms could significantly harm our business, financial condition, results of operations and prospects and cause the price of our common stock to decline, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our research or drug development programs, preclinical studies, clinical trials or future commercialization efforts.
Risks Related to Research, Discovery, Development, Regulatory Approval and Commercialization of Our Product Candidates
We are substantially dependent on the success of our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091. If we are unable to advance the development of, receive regulatory approval for, and ultimately successfully commercialize ATTO-1310, ATTO-2306 or ATTO-1091, or experience significant delays in doing so, our business will be materially harmed.
Our future success is highly dependent on our ability to timely complete successful clinical trials, obtain regulatory approval for, and then successfully commercialize, our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091, which may never occur. We are early in our Phase 1 clinical development efforts with respect to ATTO-1310, and ATTO-2306 and ATTO-1091 are still in preclinical development. Our other potential product candidates are also in earlier stages of development. We currently have no products that are approved for sale in any jurisdiction. We have invested substantially all of our efforts and financial resources in ATTO-1310, ATTO-2306 and ATTO-1091 and conducting preclinical studies and clinical trials. There can be no assurance that ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates we develop will achieve success in their clinical trials or obtain regulatory approval. In the future, we may also become dependent on other product candidates that we may develop or acquire; however, given our early stage of development, it may be several years, if at all, before we have demonstrated the safety and efficacy of a treatment sufficient to warrant approval for commercialization.
17
Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will be heavily dependent on the successful development and eventual commercialization of our product candidates, ATTO-1310, ATTO-2306 and ATTO-1091, and the development of additional product candidates on our ATTOBODY platform. The success of ATTO-1310, ATTO-2306 and ATTO-1091 and any additional product candidates will be dependent on several factors, including the following:
| • | timely completion of successful current and future preclinical studies and clinical trials resulting in attractive, competitive target product profiles; |
| • | acceptance of INDs by the FDA or other similar clinical trial applications from comparable foreign regulatory authorities for our future clinical trials for our pipeline product candidates; |
| • | timely and successful enrollment of patients in, and timely and successful completion of, clinical trials with favorable results; |
| • | our ability to enroll adequate subjects to allow the results to be generalizable to the U.S. population; |
| • | the frequency and severity of adverse events in clinical trials; |
| • | approval of BLAs by the FDA or other similar regulatory authorities, including the completion of any required post-marketing studies or trials and available funding to perform any post-marketing commitments; |
| • | raising additional funds necessary to complete clinical development of and commercialize our current or future product candidates; |
| • | obtaining, maintaining, expanding and protecting our patent, trade secret and other intellectual property and regulatory exclusivity for our current and future product candidates; |
| • | making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current and future product candidates and ensuring a resilient, effective supply chain that produces supply that outpaces demand; |
| • | developing and implementing marketing and reimbursement strategies, and creating adequate demand forecasts for supply and sales planning; |
| • | establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others in a market where promotional sales approaches are rapidly moving to digital platforms; |
| • | demonstration of safety, purity and potency, and acceptable risk-benefit profiles of our product candidates to the satisfaction of the FDA and comparable foreign regulatory authorities and attractive to physicians, patients, advocates, payors and caregivers; |
| • | acceptance of our products, if and when approved, by patients, the medical community and third-party payors underpinned by adequate health economic data and a meaningful value proposition; |
| • | effectively competing with existing and future therapies; |
| • | obtaining and maintaining third-party payor coverage and adequate reimbursement in both public and private payor spaces; |
| • | obtaining appropriate support from patient advocacy organizations; |
| • | addressing any delays in our clinical trials resulting from any major natural disasters, health pandemics or significant political events; and |
| • | maintaining a continued acceptable safety profile of the products following approval. |
Many of these factors are beyond our control, and it is possible that none of our product candidates will ever obtain regulatory approval even if we expend substantial time and resources seeking such approval. If we do not
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achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business. For example, our business could be harmed if the results of our ongoing clinical trial of ATTO-1310 show unexpected adverse events or a lack of efficacy in the indications we intend to treat, do not meet the clinical endpoints or if we experience other regulatory or developmental issues.
Drug development is a lengthy and expensive process, the outcome of clinical testing is inherently uncertain, and results of earlier preclinical studies and clinical trials may not be predictive of future clinical trial results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates for many reasons, including a failure to replicate positive results from earlier preclinical studies or clinical trials in ongoing or future preclinical studies or clinical trials.
ATTO-1310 is in Phase 1 clinical development, and ATTO-2306 and ATTO-1091 are in preclinical development. The risk of failure is high for preclinical and early clinical-stage product candidates. We will need to file INDs for ATTO-2306 and ATTO-1091 before they can be tested in clinical trials. It is impossible to predict when or if ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates will receive regulatory approval. To obtain the requisite regulatory approvals to commercialize any product candidate, we must demonstrate through extensive preclinical studies and lengthy, complex and expensive clinical trials that our product candidates are safe, pure and potent, which includes clinical effectiveness, in humans. Clinical testing can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, or a competitor’s product candidate in the same class, may not be predictive of the results of later-stage clinical trials. For example, as is common for early trials, in our Phase 1b clinical trial of ATTO-1310, we looked at a number of exploratory efficacy measures, including by pooling results from different dose groups and without accounting for multiplicity. Accordingly, it is possible that positive results, including statistically significant results observed in our Phase 1b clinical trial, will not be replicated in our future clinical trials with different designs and greater number of patients. We may be unable to establish benefit on clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a clinical trial can fail at any stage of testing. Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval of their products. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or to unfavorable safety profiles, notwithstanding promising results in earlier trials. There is typically a high rate of failure of product candidates proceeding through clinical trials, particularly in the earlier stages of development. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our future clinical trials will ultimately be successful or support clinical development of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates.
Additionally, some of our planned clinical trials utilize, or may utilize, an “open-label” trial design. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this
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knowledge. The results from an open-label trial may not be predictive of future clinical trial results with any of our product candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control.
We may experience delays in initiating or completing clinical trials. We also may experience numerous unforeseen events during, or as a result of, any future clinical trials that we could conduct that could delay or prevent our ability to receive regulatory approval or commercialize ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, including:
| • | regulatory authorities, institutional review boards (IRBs) or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may halt or suspend an ongoing clinical trial; |
| • | we may experience delays in reaching or fail to reach agreement on acceptable terms with prospective trial sites and prospective contract research organizations (CROs) the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; |
| • | clinical trial sites deviating from the trial protocol or dropping out of a trial; |
| • | clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may decide, or regulatory authorities may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product development programs; |
| • | the number of subjects required for clinical trials of any product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; |
| • | our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators; |
| • | we may elect, or regulatory authorities, IRBs, or ethics committees may require, that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks; |
| • | the cost of clinical trials of any of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates may be greater than we anticipate, and we may not have sufficient funds to complete such trials; |
| • | the quality of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates or other materials necessary to conduct clinical trials of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates may be inadequate to initiate or complete a given clinical trial; |
| • | our inability to manufacture sufficient quantities of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates for use in clinical trials; |
| • | our inability to meet drug specifications suitable for use in clinical trials and commercial applications, including the development and validation of a potency assay to ensure that the characteristics of the product released are as expected; |
| • | reports from clinical testing of other therapies may raise safety or efficacy concerns about ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates; |
| • | the receipt of feedback from regulatory authorities that requires us to modify the design of our clinical trials; |
| • | our failure to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidate as well as data emerging from other therapies in the same class as ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates; and |
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| • | the FDA or other comparable foreign regulatory authorities may require us to submit additional data such as long-term toxicology studies or impose other requirements before permitting us to initiate a clinical trial. |
We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs overseeing the institutions in which such trials are being conducted, or the FDA or other comparable regulatory authorities, or if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board (DSMB) for such trial. A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA’s Good Clinical Practice (GCP) regulations, or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Clinical studies may also be delayed or terminated as a result of ambiguous or negative interim results. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. Further, the FDA or other comparable foreign regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.
We cannot predict with any certainty the schedule for commencement and completion of future clinical trials. Further, conducting clinical trials in foreign countries, as we have done and may do in the future for our product candidates, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.
If we are required to conduct additional clinical trials or other testing of our current or future product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our current or future product candidates or other testing in a timely manner, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may incur unplanned costs, be delayed in seeking and obtaining regulatory approval, if we receive such approval at all, receive more limited or restrictive regulatory approval, be subject to additional post-marketing testing requirements or have the product removed from the market after obtaining regulatory approval.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may:
| • | be delayed in obtaining regulatory approval, if at all; |
| • | obtain approval for indications or patient populations that are not as broad as intended or desired or may have restricted duration expectations or guidance; |
| • | obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; |
| • | be subject to additional post-marketing testing requirements; |
| • | be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; |
| • | have regulatory authorities withdraw or suspend their approval of the product or impose restrictions on its distribution in the form of a Risk Evaluation and Mitigation Strategy (REMS); |
| • | be subject to the addition of labeling statements, such as warnings or contraindications; |
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| • | be sued; or |
| • | experience damage to our reputation. |
Our drug development costs will also increase if we experience delays in testing or obtaining regulatory approvals. Also, delays in obtaining regulatory approval may increase commercialization costs if the competitive environment becomes more intense prior to market entry. We do not know whether any of our preclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all.
Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authority 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 or comparable foreign regulatory authority 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 or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of regulatory approval of one or more of our product candidates.
We may make formulation or manufacturing changes to our product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our current or any future product candidates could be negatively impacted, and our ability to generate revenues from our current or future product candidates may be delayed or eliminated entirely.
If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain patient consents, the risk that enrolled participants will drop out before completion, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or therapeutic biologics, including those being developed by our competitors, that may be approved for the indications being investigated by us, and patients’ inability to complete treatment due to illness or other events. In addition, some of our competitors currently have ongoing clinical trials for product candidates that would treat the same patients as ATTO-1310, ATTO-2306, and ATTO-1091, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Furthermore, we expect to rely on our collaborators, CROs and clinical trial sites to ensure the proper and timely conduct of our future clinical trials, including the patient enrollment process, and we have limited influence over their performance. Additionally, we could encounter delays if treating physicians face unresolved ethical issues associated with enrolling patients in future clinical trials of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.
We may not be able to initiate or continue our ongoing or planned clinical trials for our current or future product candidates if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or comparable foreign regulatory authorities. We cannot be certain (i) how many patients will meet our criteria for inclusion in our clinical trials, (ii) that the number of patients enrolled in each program will suffice for marketing authorization or (iii) whether the indication targeted will be included in
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the approved product labeling. If our strategies for patient identification and enrollment prove unsuccessful, we may have difficulty enrolling or maintaining patients appropriate for our product candidates. Patient enrollment is also affected by other factors, including:
| • | severity of the disease under investigation; |
| • | our ability to recruit clinical trial investigators of appropriate competencies and experience; |
| • | the incidence and prevalence of our target indications; |
| • | clinicians’ and patients’ awareness of, and perceptions as to, the potential advantages and risks of our product candidates in relation to other available therapies, including any new products that may be approved for the indications we are investigating; |
| • | the availability, expertise, dedication and selection of CROs, to manage operations related to clinical trial enrollment; |
| • | competing studies or trials with similar eligibility criteria; |
| • | invasive procedures required to enroll patients and to obtain evidence of the product candidate’s performance during the clinical trial; |
| • | availability and efficacy of approved medications for the disease under investigation; |
| • | eligibility criteria defined in the protocol for the trial in question; |
| • | the size and nature of the patient population required for analysis of the trial’s primary endpoints; |
| • | efforts to facilitate timely enrollment in clinical trials; |
| • | whether we are subject to a partial or full clinical hold on any of our clinical trials; |
| • | reluctance of physicians or patient advocacy organizations to encourage patient participation in clinical trials; |
| • | the ability to monitor patients adequately during and after treatment; |
| • | our ability to obtain and maintain patient consents; and |
| • | proximity and availability of clinical trial sites for prospective patients. |
If we are unable to enroll a sufficient number of patients for our clinical trials, it would result in significant delays or might require us to abandon one or more clinical trials altogether. Even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining patients in our clinical trials. Many of the patients who end up receiving placebo may perceive that they are not receiving the product candidate being tested, and they may decide to withdraw from our clinical trials to pursue other alternative therapies rather than continue the trial with the perception that they are receiving placebo. Enrollment delays in our clinical trials may result in increased development costs for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, slow down or halt our product candidate development and approval process and jeopardize our ability to seek and obtain the regulatory approval required to commence product sales and to generate revenue, which would cause our stock price to decline and limit our ability to obtain additional financing, if needed.
Adverse side effects or other safety risks associated with ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates we may develop could delay or preclude approval, cause us to suspend or discontinue clinical trials or abandon further development, limit the commercial profile of an approved product, or result in significant negative consequences following regulatory approval, if any.
There may be treatment-related serious adverse events or unexpected serious adverse reactions suspected to be associated with the use of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. Our clinical trials may reveal significant adverse events not seen in our preclinical studies or prior clinical trials and
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may result in a safety or tolerability profile that could delay or prevent regulatory approval or market acceptance of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. Undesirable or clinically unmanageable side effects observed in our clinical trials for our product candidates could occur and cause us or regulatory authorities to interrupt, delay or halt our clinical trials and could result in more restrictive labeling than anticipated or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. If additional adverse events, serious adverse events (SAEs) or other side effects are observed in any of our clinical trials that are atypical of, or more severe than, the known side effects of the respective class of agents that each of our product candidates are a part of, we may have difficulty recruiting participants to our clinical trials, participants may drop out of our trials, or we may be required to abandon those trials or our development efforts of one or more product candidates altogether. Furthermore, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of subjects and limited duration of exposure, rare and severe side effects of our product candidates or those of our competitors may only be uncovered with a significantly larger number of patients exposed to the drug. Undesirable or clinically unmanageable side effects observed in our clinical trials for our product candidates could also occur following discontinuation of ATTO-1310, ATTO-2306, ATTO-1091, or any future product candidates with sufficient recovery periods, and we will need to monitor the severity and duration of side effects in our clinical trials. If such effects are more severe, less reversible than we expect or not reversible at all, we may decide or be required to perform additional studies or to halt or delay further clinical or preclinical development of ATTO-1310, ATTO-2306, or ATTO-1091, as applicable, or any future product candidates, which could result in the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Adverse events and SAEs that emerge during clinical investigation of or treatment with ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates may be deemed to be related to our product candidates. Moreover, if our product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for our product candidates, if approved. This may require longer and more extensive clinical development, or regulatory authorities may increase the amount of data and information required to approve, market or maintain approval for ATTO-1310, ATTO-2306, ATTO-1091 or future product candidates and could result in warnings and precautions in our product labeling or a restrictive REMS. This may also result in an inability to obtain approval of ATTO-1310, ATTO-2306, ATTO-1091 or future product candidates. We, the FDA or other comparable foreign regulatory authorities or an IRB or ethics committee may suspend clinical trials of a product candidate at any time for various reasons, including a belief that participants in such trials are being exposed to unacceptable health risks or adverse side effects. Even if the side effects do not preclude a product candidate from obtaining or maintaining regulatory approval, undesirable side effects may inhibit market acceptance of such approved product due to its tolerability versus other therapies. Further, it is possible that, as we test our product candidates in larger, longer and more extensive clinical trials, including with different dosing regimens, or as the use of our drug candidates becomes more widespread following any regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients. Any of these developments could materially harm our business, financial condition, results of operations and prospects.
Preliminary, topline or interim data from our clinical trials that we announce or publish from time to time may change as more patient data become available and/or are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose preliminary, topline or interim data from our clinical trials, such as preliminary, topline or interim data analysis from our ongoing Phase 1 clinical trial for ATTO-1310. These data and related findings and conclusions may only reflect certain endpoints rather than all endpoints and are subject to change. 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 preliminary or 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.
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Preliminary or topline data also remain subject to review and verification procedures that may result in the final data being materially different from the preliminary or topline data we previously published. As a result, preliminary and topline data should be viewed with caution until the final data are available. In addition, we may report preliminary data or interim analyses of the clinical trials we may conduct and complete, which 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 preliminary or interim data and final data could significantly harm our business and prospects. Further, additional disclosure of preliminary or interim data by us, including, for example, preliminary or interim data that become available to us from our ongoing Phase 1 clinical trial for ATTO-1310 or by our competitors in the future could result in volatility in the price of our common stock.
Further, the information we choose to publicly disclose regarding a particular study or clinical trial is typically selected from a more extensive amount of available information. You or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business. If the preliminary, topline or interim data that we report differ from later, final or actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
The incidence and prevalence for target patient populations of one or more of our current product candidates have not been established with precision. If the market opportunities for our current or future product candidates are smaller than we estimate or if any approval that we may obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
Our projections of the number of people who have atopic dermatitis (AD), chronic pruritus of unknown origin (CPUO), as well as other immune-mediated diseases we are targeting, and who have the potential to benefit from treatment with ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of the indications that we are targeting. The potentially addressable patient population for ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates may be more limited than we currently estimate or may not be amenable to treatment with such product candidates.
Although we intend to explore other therapeutic opportunities in addition to the product candidates that we are currently developing, we may fail to identify viable new product candidates for clinical development for a number of reasons. If we fail to identify additional potential product candidates, our business could be materially harmed.
We may expend our limited resources to pursue a particular product candidate in specific indications and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. Because we have limited financial and managerial resources, we focus our development efforts on certain selected product candidates in certain selected indications. For example, we are initially focused on ATTO-1310 and ATTO-2306 for the treatment of immune-mediated diseases and ATTO-1091 for the treatment of IBD. As a result, we may forgo or delay pursuit of opportunities with other product candidates, or other indications for our current or any future product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not
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accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
We are conducting, and may in the future conduct, clinical trials for current or future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials.
We are conducting, and may in the future conduct, clinical trials for current or future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. We are currently conducting clinical trials in Canada, and we expect to continue to conduct trials internationally in the future. The acceptance of data from clinical trials conducted outside the United States by the FDA or other comparable foreign regulatory authorities may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for regulatory approval in the United States, the FDA will generally not approve the application unless (i) the data are applicable to the U.S. population and U.S. medical practice and (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations, and the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCPs and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign trials are subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. Conducting clinical trials outside the United States also exposes us to additional risks, including risks associated with foreign exchange fluctuations, compliance with foreign manufacturing, customs, shipment and storage requirements, and cultural differences in medical practice and clinical research, and diminished protection of intellectual property in some countries.
There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. For example, for FDA acceptance, we will have to demonstrate that the foreign data are applicable to the U.S. population and U.S. medical practice. If the FDA or other comparable foreign regulatory authorities do not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in current or future product candidates that we may develop being delayed or not receiving approval for commercialization in the applicable jurisdiction.
If, in the future, we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product we may develop, we may not be successful in commercializing those products if they are approved.
We do not have a sales or marketing infrastructure and have no experience in the sales, marketing or distribution of any current or future product candidates. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource these functions to third parties. In the future and if any of our product candidates are approved, we may choose to build a focused sales, marketing and commercial support infrastructure to sell, or participate in sales activities with collaborators for some of our current or future product candidates.
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There are risks involved with both establishing our own commercial capabilities and entering into arrangements with third parties to perform these services. For example, factors that may inhibit our efforts to commercialize any approved product candidates include:
| • | the inability to recruit and retain adequate numbers of effective sales, marketing, coverage or reimbursement, customer service, medical affairs and other support personnel; the inability of sales personnel to obtain access to or persuade adequate numbers of decision makers of the utility of future approved product candidates; |
| • | the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement and other acceptance by payors; |
| • | the inability to price any of our current or future product candidates at a sufficient price point to ensure an adequate and attractive level of profitability; |
| • | restricted or closed distribution channels that make it difficult to distribute our current or future product candidates to segments of the patient population; |
| • | the lack of complementary product candidates to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product candidate lines; and |
| • | unforeseen costs and expenses associated with creating an independent commercialization organization. |
If the commercial launch of a product candidate, if approved, for which we recruit a sales force and establish marketing and other commercialization capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our commercialization personnel.
If we enter into arrangements with third parties to perform sales, marketing, commercial support and distribution services, our sales revenue or the profitability of sales revenue may be lower than if we were to do so ourselves. In addition, we may not be successful in entering into arrangements with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us. We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our product candidates effectively. If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates, if approved.
Our current or future product candidates may not achieve adequate market acceptance among physicians, patients or their families, healthcare payors and others in the medical community necessary for commercial success.
Even if our current or future product candidates receive regulatory approval, they may not gain adequate market acceptance among physicians, patients or their families, third-party payors and others in the medical community. The degree of market acceptance of any of our approved product candidates will be dependent on a number of factors, including:
| • | the efficacy, durability and safety profile as demonstrated in clinical trials compared to alternative treatments; |
| • | the timing of market introduction of the product candidate as well as competitive products; |
| • | the clinical indications for which a product candidate is approved; |
| • | restrictions on the use of product candidates in the labeling approved by regulatory authorities, such as boxed warnings or contraindications in labeling, or a REMS, if any, which may not be required of alternative treatments and competitor products; |
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| • | the terms of any approvals and the countries in which approvals are obtained; |
| • | the potential and perceived advantages of our current or future product candidates over alternative treatments; |
| • | the cost of treatment in relation to alternative treatments and the cost/benefit ratios of each; |
| • | the availability of coverage and adequate reimbursement by third-party payors, including government authorities, and timing of relevant formulary decision-making resulting in this coverage and reimbursement; |
| • | the availability of an approved product candidate for use as a combination therapy; |
| • | relative convenience and ease of administration in relation to competition; |
| • | the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; |
| • | the effectiveness of sales, marketing efforts and market access; |
| • | publicity relating to our product candidates or those of our competitors; |
| • | potential product liability claims; and |
| • | the approval of new therapies for the same indications. |
If any of our current or future product candidates are approved but do not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we may not generate or derive sufficient revenue from that product candidate and our financial results could be negatively impacted. Our efforts to educate the medical community and third-party payors regarding the benefits of our products may require significant resources and may never be successful.
If our product candidates do not achieve projected development milestones or commercialization in the announced or expected timeframes, the further development or commercialization of such product candidates may be delayed, and our business will be harmed.
We have estimated, and may in the future estimate, the timing of the accomplishment of various scientific, clinical, manufacturing, regulatory and other product development objectives. These milestones have and may include our expectations regarding the commencement or completion of preclinical studies and clinical trials, data readouts, the submission of regulatory filings, the receipt of marketing approval or the realization of other commercialization objectives. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, including assumptions regarding capital resources, constraints and priorities, progress of and results from development activities and the receipt of key regulatory approvals or actions, any of which may cause the timing of achievement of the milestones to vary considerably from our estimates. If we or our collaborators fail to achieve announced milestones in the expected timeframes, the commercialization of the product candidates may be delayed, our credibility may be undermined, our business and results of operations may be harmed and the trading price of our common stock may decline.
Risks Related to Our Business and Operations
Our future performance is dependent on our ability to retain key employees and to attract, retain and motivate qualified personnel and manage our human capital.
Our ability to compete in the highly competitive biotechnology and biopharmaceutical industries is largely dependent on our ability to attract, motivate and retain highly qualified managerial, clinical, quality control, scientific and medical personnel. We are highly dependent on the development and management expertise of our executive officer team. We currently do not maintain “key person” life insurance on these individuals or any of
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our employees. This lack of insurance means that we may not have adequate compensation for the loss of the services of these individuals. The loss of one or more members of our management team or other key employees or advisors could delay our research and development programs and have a material and adverse effect on our business, financial condition, results of operations and prospects. We are dependent on the continued service of our technical personnel, because of the highly technical nature of ATTO-1310, ATTO-2306 and ATTO-1091 or any future product candidates and technologies, and the specialized nature of the regulatory approval process. Because our management team and key employees are not obligated to provide us with continued service, they could terminate their employment with us at any time without penalty.
In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived benefits of our stock awards decline, either because we are a public company or for other reasons, it may harm our ability to recruit and retain highly skilled employees. Our employees may be more likely to leave us if the shares they own have significantly appreciated in value relative to the original purchase prices of the shares, or if the exercise prices of the options that they hold are significantly below the market price of our common stock, particularly after the expiration of the lock-up agreements described herein.
We primarily conduct our in-person operations at our corporate headquarters and research and development facility in San Carlos, California. This region is headquarters to many other biopharmaceutical companies and academic and research institutions. Competition for skilled personnel in our market, and nationally, is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. We also face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. Our industry has experienced a high rate of turnover of management personnel in recent years. Our future performance will be dependent in large part on our continued ability to attract and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, manufacturing, governmental regulation and commercialization. If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover and develop product candidates will be limited, which could have a material and adverse effect on our business, financial condition, results of operations and prospects.
Our future growth may be dependent, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
Our future growth may be dependent, in part, on our ability to develop and commercialize ATTO-1310, ATTO-2306 and ATTO-1091, if approved, and any future product candidates in foreign markets for which we may rely on collaboration with third parties. We are not permitted to market or promote ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates before we receive regulatory approval from the applicable regulatory authority in that foreign market and may never receive such regulatory approval for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. To obtain separate regulatory approval in many other countries, we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, and we cannot predict success in these jurisdictions. If we fail to comply with the regulatory requirements in international markets and receive applicable regulatory approvals, our target market will be reduced and our ability to realize the full market potential of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates will be harmed and our business will be adversely affected. We may not obtain foreign regulatory approvals on a timely basis, if at all. Our failure to obtain approval of any of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates by regulatory authorities in another country may significantly diminish the commercial prospects of that product candidate and our business, financial condition, results of operations and prospects could be materially and adversely affected. Moreover, even if we obtain approval of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates and ultimately commercialize ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates in foreign markets, we would be subject to the risks and
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uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and reduced protection of intellectual property rights in some foreign countries.
We expect to expand our development, clinical and regulatory capabilities and operations as we grow, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
As of June 30, 2026, we had 44 full-time employees. We expect to increase the number of our employees and the scope of our operations, particularly in the areas of clinical development, clinical operations, manufacturing, late-stage regulatory affairs, finance, accounting, management information systems, business operations, public company compliance, communications and other corporate development functions, and, if ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates receive regulatory approval, sales, marketing and distribution capabilities. If we acquire additional product candidates or enter into future collaborations, we may have to further expand our employee base beyond our current projections, which may include further preclinical research and development or later-stage regulatory operations. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth and with developing sales, marketing and distribution infrastructure, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. As our operations expand, we also expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. The expansion of our operations may lead to significant costs and may divert our management and business development resources.
If we are not able to effectively manage growth and expand our operations, we may not be able to successfully implement the tasks necessary to further develop and commercialize, if approved, ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates and, accordingly, we may not achieve our research, development and commercialization goals.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition from entities that have made substantial investments into the rapid development of novel treatments for disorders associated with immune-mediated diseases, including large and specialty biopharmaceutical and biotechnology companies, some of which already have approved therapies in our current indications. The development and commercialization of therapeutic candidates for disorders associated with immune-mediated diseases is highly competitive. Our current and any future product candidates, if approved, will face significant competition, including from well-established, currently marketed therapies or recommended standards of care, and our failure to demonstrate a meaningful improvement to the existing standards of care may prevent us from achieving significant market penetration. Many of our competitors have significantly greater resources and experience than we do and we may not be able to successfully compete. We face substantial competition from multiple sources, including large and specialty biopharmaceutical and biotechnology companies, academic research institutions and governmental agencies and public and private research institutions.
Our current product candidates, initially under development for treatment of various immune-mediated diseases, if approved, would face competition from approved treatments, some of which have achieved commercial success. To compete successfully, we need to differentiate our product candidates from these currently marketed drugs, meaning that we will have to demonstrate that the relative cost, method of administration, safety, tolerability or efficacy of our product candidates provides a better alternative to existing and new therapies. Our commercial opportunity and likelihood of success will be reduced or eliminated if our product candidates are not ultimately demonstrated to be safer, more effective, more conveniently administered or less expensive than the current standards of care. Furthermore, even if our product candidates are able to
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achieve these attributes, acceptance of our products may be inhibited by the reluctance of physicians to switch from existing therapies to our products, or if physicians choose to reserve our products for use in limited circumstances.
Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than us. If we obtain regulatory approval for any product candidate, we will face competition based on many different factors, including the safety and effectiveness of our current or any future product candidates, the ease with which our current or any future product candidates can be administered and the extent to which participants accept relatively new routes of administration, the timing and scope of regulatory approvals for these product candidates, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing products could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our current or any future product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan. In addition, any collaborators may decide to market and sell products that compete with the product candidates that we have agreed to license to them, and any competition by our collaborators could also have a material adverse effect on our future business, financial condition, and results of operations. Mergers and acquisitions in the biopharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified management and other personnel and establishing clinical trial sites and patient/participant registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
We depend on the efficient and uninterrupted availability and use of our data, the uninterrupted operation of our information technology systems, and the information technology systems of the third-party vendors, contractors, consultants and other partners (collectively, third parties) with whom we work, which may fail or suffer security incidents, cyberattacks, loss of data and other disruptions. If such systems or our data are or were compromised, we may experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other impacts to our business.
We are increasingly dependent on information technology systems, infrastructure and data to operate our business. In the ordinary course of business, we, and the third parties with whom we work, collect, process, store, generate, transfer, and transmit (collectively, process) a significant amount of personal information and other sensitive information, including our proprietary and confidential business data, trade secrets, employee data, intellectual property, data we collect about trial participants in connection with clinical trials, and other sensitive third-party data (collectively, sensitive data). It is important that we do so in a manner designed to maintain the availability, confidentiality, and integrity of such data.
We and the third parties with whom we work may experience security incidents caused by our personnel, vendors, or other external actors, including cyber-attacks, malicious internet-based activity, online and offline fraud, and other activities that could threaten the confidentiality, integrity, and availability of our sensitive data and information technology systems and those of the third parties with whom we work. Such threats are prevalent, continue to rise, are increasingly difficult to detect, and come from a variety of sources, including criminals, “hacktivists,” insiders, and sophisticated nation state or state-supported actors. We and the third parties with whom we work are subject to evolving threats such as social-engineering attacks (including deep fakes and phishing), malicious code (such as viruses and worms), malware (including advanced persistent threat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error,
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ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data, adware, telecommunications failures, earthquakes, fires, floods, attacks enhanced or facilitated by artificial intelligence, and other similar threats.
It may be difficult or costly to detect, investigate, mitigate, contain, and remediate a security incident. Our efforts to do so may not be successful. Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to the same or other networks and systems after a compromise of our networks and systems or those of the third parties with whom we work.
Remote work has increased risks to our information technology systems and data, as our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
Future business transactions (such as acquisitions) could expose us to additional cybersecurity risks and vulnerabilities as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues not found during due diligence of such acquired or integrated entities or it may be difficult to integrate companies into our information technology environment and security program.
We also outsource certain elements of our information technology systems and operations to various third parties. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place despite any applicable contractual representations and warranties to do so. If the third parties with whom we work experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if such third parties fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover any such award. In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or that of the third parties with whom we work have not been or will not be compromised.
We, and the third parties with whom we work, take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems; however, we may not detect and remediate all such vulnerabilities on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities. Vulnerabilities could be exploited and result in a security incident.
Despite the implementation of these security measures, any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive data, or our information technology systems, or those of the third parties with whom we work. A security incident or other interruption could disrupt our or the third parties with whom we work’s ability to provide our services.
To try to protect our information technology systems and sensitive data, we have expended and may expend significant resources to implement and maintain specific security measures, industry standards, and reasonable security measures. Applicable data privacy and security obligations may require us, or we may voluntarily choose, to notify relevant stakeholders, including affected individuals, customers, regulatory authorities, and investors, of security incidents, or to take other actions, such as providing credit monitoring and identity theft protection services. Such disclosures and related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences.
The risk of a security incident or other disruption has generally increased as the number, intensity, and the sophistication of attempted and successful attacks and intrusions from around the world have increased. We may not be able to anticipate all types of security threats, nor implement effective preventive measures against all
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such security threats. If we (or a third party with whom we work) experience or are perceived to have experienced a security incident involving sensitive data or information technology systems, we may experience material adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, or inspections); additional reporting requirements or oversight; restrictions on processing sensitive data; litigation (including possible class-action claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant material consequences may cause existing customers to stop enrolling patients in our sponsored clinical trials or prescribing our products, deter new customers from doing so, and negatively impact our ability to grow and operate our business. Furthermore, if the information technology systems of a third party with whom we work become subject to a security incident or other disruption, we may have insufficient recourse against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.
Significant disruptions of our information technology systems or those of the third parties with whom we work, or security breaches could result in the loss, misappropriation or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property or proprietary business information) and claims by our counterparties that we have failed to comply with legal or contractual obligations, which could result in financial, legal, business, and reputational harm to us.
There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate to protect us from liabilities and damage, and we may not have adequate insurance coverage to cover all types of costs, expenses and losses we could incur with respect to security breaches or disruptions. The successful assertion of one or more large claims against us that exceed any available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
We and the third parties with whom we work, are, or may in the future become, subject to stringent and changing obligations related to data privacy and security. Our (or their) actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation (including class-action claims) or mass arbitration demands; fines or penalties; disruptions to our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
The global data protection landscape is rapidly evolving and our data processing activities subject us to numerous data privacy and security obligations, such as various state, federal and foreign laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other obligations that govern the processing of sensitive data by us and on our behalf, and we may be subject to new or additional obligations related to data privacy and security and face increased scrutiny from regulatory authorities as our business grows. The legislative and regulatory landscape for data privacy and security continues to evolve worldwide, and there has been an increasing focus on these issues with the potential to adversely affect our business. Various global legislative and regulatory bodies, or self-regulatory organizations, may expand current laws, rules or regulations, enact new ones or issue guidance regarding data privacy and security that could impact our business. As implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, we cannot yet determine the impact that future privacy and security obligations may have on our business. This evolution creates uncertainty in our business and may affect our ability to operate in certain jurisdictions or to process sensitive data, necessitate the acceptance of more onerous obligations in our contracts, result in liability, or impose additional costs on us. The cost of compliance with these obligations is high and is likely to increase in the future. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, our internal policies and procedures or our contracts governing our processing of sensitive data could result in negative publicity, government investigations or enforcement
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actions, claims by third parties or damage to our reputation, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), comprehensive consumer privacy laws, sector-specific privacy laws, data breach notification laws, laws regarding marketing, and other similar laws governing the processing of sensitive data that we are or may in the future be required to comply with. In addition, we obtain health information from third parties (including research institutions from which we obtain clinical trial data) that is subject to privacy and security requirements under the Health Insurance Portability and Accountability Act (HIPAA), which imposes among other things, certain requirements relating to the privacy, security, transmission, and breach of individually identifiable health information. If we violate HIPAA, depending on the specific facts and circumstances, we could be subject to significant fines, penalties or regulatory inquiries or actions.
Over a third of U.S. states have enacted comprehensive consumer privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information. Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future. While these states exempt some data processed in the context of clinical trials, these developments may further complicate compliance efforts and increase legal risk and compliance costs for us and the third parties with whom we work. Certain states have also adopted specific privacy and security laws and regulations which govern the privacy, processing and protection of health-related personal information. Such laws and regulations will likely be subject to interpretation by various courts and other governmental authorities, creating potentially complex compliance issues for us and our future customers and strategic partners. In addition to government activity, privacy advocacy groups and technology and other industries continue to consider new or revised self-regulatory standards related to privacy and security that may place additional burdens on us.
Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security. For example, in Canada, the Personal Information Protection and Electronic Documents Act (PIPEDA) and various related provincial laws apply to our operations.
Additionally, the U.S. Department of Justice issued a final rule, effective April 8, 2025, entitled “Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons,” which places additional restrictions on certain data transactions involving “countries of concern” (currently, China (including Hong Kong and Macau), Russia, Iran, North Korea, Cuba and Venezuela) and “covered persons” (entities owned by, organized under the laws of, or operating in such countries, as well as certain individuals affiliated with those countries). The rule restricts or prohibits a range of business activities, such as vendor engagements, data brokerage transactions, employment of certain individuals, and certain investor agreements, if they involve the transfer or access to “sensitive personal data” (such as precise geolocation data, biometric identifiers, personal health data, and personal financial data) above specific thresholds. Certain transactions may be permitted if specific security requirements are met or exemptions apply, but others may be outright prohibited. Violations of the rule could result in significant civil and criminal fines and penalties. Aside from certain narrow exemptions, the rule applies regardless of whether data is anonymized, key-coded, pseudonymized, de-identified or encrypted, which may present challenges for companies like ours and may impact our ability to transfer data in connection with certain transactions or agreements.
In addition to data privacy and security laws, we are also bound by other contractual obligations related to data privacy and security. For example, we may be contractually required to indemnify and hold harmless third parties with whom we work from the costs or consequences of non-compliance with applicable laws, rules and regulations or other legal obligations relating to privacy or security or any inadvertent or unauthorized processing of sensitive data that we store or handle as part of operating our business. Any of these events could adversely affect our reputation, business, or financial condition, including but not limited to: loss of customers;
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interruptions or stoppages in our business operations (including clinical trials); inability to process personal information or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations. We also publish privacy policies, marketing materials, and other statements concerning data privacy and security. Regulatory authorities in the United States and other jurisdictions are increasingly scrutinizing these statements, and if these policies, materials or statements are found to be deficient, deceptive, unfair, or misleading, we would be subject to investigation or enforcement actions by regulatory authorities.
We cannot assure you that our CROs, contract manufacturing organizations (CMOs) or other third parties with whom we work will not breach contractual obligations imposed by us, or that they will not experience data security incidents or other interruptions, which could have a corresponding effect on our business, including under privacy laws and regulations or which could in turn adversely affect our business, financial condition, results of operations and prospects. Our contractual measures and our own privacy and security-related safeguards may not be sufficient to completely protect us from the risks associated with the third-party processing of such information. Any of the foregoing could adversely affect our business, financial condition, results of operations and prospects.
Complying with these complex and often evolving privacy and security related obligations can be expensive, difficult, time consuming, and subject to inconsistent application and interpretation. Any actual or perceived failure to comply with any such obligations, whether by us, or by our CROs, CMOs, partners or other third parties with whom we work, could result in significant adverse consequences, including: investigation costs; material fines and penalties; compensatory, special, punitive, or statutory damages; litigation (including class-action claims) and mass arbitration demands; government enforcement actions; requirements to provide notices, credit monitoring or other services to impacted individuals; adverse actions against our licenses; bans or restrictions on processing personal information; required changes to our services, technologies, systems, or practices (or those of our partners); reputational damage; imprisonment of company officials; and injunctive relief.
In addition, any actual, perceived or suspected failure to comply with applicable privacy and security obligations —regardless of whether it results in unauthorized or lawful processing of sensitive data--may lead to enforcement actions, private litigation, significant fines and penalties, regulatory investigations, adverse publicity, loss of customer trust, and other consequences that could adversely affect our business, financial condition, results of operations and prospects.
If we, or any contract manufacturers or suppliers we engage, fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We and our third-party contractors are subject to numerous federal, state, local and foreign environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources, including any available insurance. We could also be held liable for unexpected safety events that could happen in our business offices.
In addition, our leasing and operation of real property may subject us to liability pursuant to certain of these laws or regulations. Under existing United States environmental laws and regulations, current or previous owners or operators of real property and entities that disposed or arranged for the disposal of hazardous substances may
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be held strictly, jointly and severally liable for the cost of investigating or remediating contamination caused by hazardous substance releases, even if they did not know of and were not responsible for the releases.
We could incur significant costs and liabilities which may adversely affect our financial condition and operating results for failure to comply with such laws and regulations, including, among other things, civil or criminal fines and penalties, property damage and personal injury claims, costs associated with upgrades to our facilities or changes to our operating procedures, or injunctions limiting or altering our operations.
Although we maintain liability insurance to cover us for costs and expenses that we may incur due to injuries to our employees, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations, which are becoming increasingly more stringent, may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could have a material and adverse effect on our business, financial condition, results of operations and prospects. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit, delay or cease commercialization of our products.
When we conduct clinical trials of our current and any future product candidates, we may be exposed to significant product liability risks inherent in the development, testing, manufacturing and marketing of therapeutic treatments. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, if approved, such claims could result in an FDA investigation of the safety and effectiveness of our products, our manufacturing processes and facilities or our marketing programs and potentially a recall of our products or more serious enforcement action by U.S. or foreign regulatory authorities, limitations on the approved indications for which they may be used or suspension or withdrawal of approvals. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit, delay or cease the commercialization of our products. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products, termination of clinical trial sites or entire trial programs, withdrawal of clinical trial participants, injury to our reputation and significant negative media attention, significant costs to defend the related litigation, a diversion of management’s time and our resources from our business operations, substantial monetary awards to trial participants or patients, loss of revenue, the inability to commercialize any products that we may develop, and a decline in our stock price.
We currently maintain approximately $10.0 million in general liability insurance and $10.0 million in product liability insurance. We may, however, need to obtain higher levels of insurance coverage for later stages of clinical development or marketing any of our product candidates. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material and adverse effect on our business, financial condition, results of operations and prospects. Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of our product candidates. Although we will maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies will also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
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Our employees, independent contractors, consultants and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
We are exposed to the risk of employee fraud or other illegal activity by our employees, independent contractors, consultants and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to comply with FDA regulations, provide true, complete and accurate information to the FDA or other comparable foreign regulatory authorities, comply with manufacturing standards we may establish, comply with healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. If we obtain FDA approval of any of our current or future product candidates and begin commercializing those products in the United States, our potential exposure under these laws will increase significantly, and our costs associated with compliance with these laws will likely increase. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, 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. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. 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 such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a material and adverse effect on our business, financial condition, results of operations and prospects, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA or other comparable foreign regulatory authorities exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, integrity oversight and reporting obligations, or reputational harm.
Changes in tax laws or regulations that are applied adversely to us may have a material adverse effect on our business, cash flows, financial condition or results of operations.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (TCJA), enacted many significant changes to the U.S. tax laws. For our 2022 through 2024 tax years, the TCJA eliminated the option to immediately deduct research and development expenditures and required taxpayers to amortize domestic expenditures over five years and foreign expenditures over fifteen years. Beginning with our 2024 tax year, and with permitted retrospective application to amend the 2023 tax return, the One Big Beautiful Bill Act, or OBBBA, restored immediate deductibility of domestic expenditures, while foreign expenditures will continue to be capitalized and amortized over fifteen years. Future changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future tax expense. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
Further, we are subject to U.S. federal, state, and local income taxes and other taxes in the United States and will be subject to income taxes, withholding taxes, transaction taxes, and other taxes in any foreign jurisdictions in which we currently do business or may do business in the future. Due to the expanding scale of our international business activities, we may become subject to taxation in additional foreign jurisdictions. Moreover, changes to our corporate structure, including increased headcount and expanded functions outside of the United States, as well as changes to the tax laws in the jurisdictions in which we do business, could impact our worldwide effective tax rate and adversely affect our operating results and financial condition.
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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability. Under current law, unused U.S. federal net operating losses generated in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely, but the deductibility of such federal net operating losses for any year is limited to no more than 80% of the excess, if any, of current year taxable income (without regard to certain deductions). In addition, both our current and our future unused losses and other tax attributes may be subject to limitation under Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (the Code), if we undergo, or have undergone, an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders or groups of stockholders over a three-year period. It is possible that we have undergone one or more “ownership changes” in the past. We may also undergo an ownership change as a result of the offering or other shifts in the ownership of our capital stock in the future, which may further limit our ability to use our pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset our post-change income or taxes. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of net operating losses is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, even if we attain profitability, we may be unable to use all or a material portion of our net operating losses and other tax attributes, which could adversely affect our future cash flows.
Our quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including:
| • | timing and variations in the level of expense related to the ongoing development of ATTO-1310, ATTO-2306, ATTO-1091 or any future development programs; |
| • | timing and results of preclinical studies, existing and future clinical trials, or the addition or termination of future preclinical studies and clinical trials or funding support by us, or existing or future collaborators or licensing partners; |
| • | our ability to enroll patients in clinical trials and the timing and status of enrollment for our clinical trials; |
| • | the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated; |
| • | competition from products that compete with our product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners; |
| • | our execution of any additional collaboration or licensing agreements with third parties or other strategic transactions, and the timing of payments we may make or receive under existing or future arrangements or the termination or modification of any such existing or future arrangements; |
| • | any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become involved; |
| • | additions and departures of key personnel; |
| • | strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; |
| • | future accounting pronouncements or changes in our accounting policies; |
| • | regulatory developments affecting ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates or those of our competitors; |
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| • | the timing and cost to establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with current or future collaborators; |
| • | our ability to adequately support future growth; |
| • | potential unforeseen business disruptions that increase our costs or expenses; |
| • | effects of macro events, such as inflation, geopolitical conflicts, pandemics, natural disasters and supply chain issues, on our business and operations; and |
| • | changes in general global market, political and economic conditions. |
If our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide. Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially. We believe that quarterly or annual comparisons of our financial results are not necessarily meaningful and should not be relied on as an indication of our future performance.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all.
Our estimates and forecasts relating to size and expected growth of our target market may prove to be inaccurate. Even if the markets in which we compete meet our size estimates and growth forecasts, our business may not grow at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
Our revenue will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to obtain coverage and reimbursement and whether we own the commercial rights for that territory. If the number of our addressable patients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect or the treatment population is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products, even if approved.
Risks Related to Intellectual Property
If we are unable to obtain and maintain patent protection or other necessary rights for any of our current or future product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or our rights under our patents are not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products and technology may be adversely affected.
Our success is dependent in part on our ability to obtain and maintain proprietary or intellectual property protection in the United States and other countries for our current product candidates or any future product candidates, as well as our core technologies, including our manufacturing know-how. We strive to protect and enhance the proprietary technology, inventions and improvements that are commercially important to the development of our business by seeking, maintaining and defending our intellectual property, whether developed internally or licensed from third parties. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of immune-mediated diseases drug development.
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The patent position of biotechnology and biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has in recent years been the subject of much litigation. The degree of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage. We cannot provide any assurances that any of our own or licensed patent applications will mature into issued patents, and cannot provide any assurances that any such patents, if issued, will include claims with a scope sufficient to protect our current and future product candidates or otherwise provide any competitive advantage. Additionally, patents can be enforced only in those jurisdictions in which the patent has issued. Furthermore, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after its first nonprovisional U.S. filing. The natural expiration of a patent outside of the United States varies in accordance with provisions of applicable local law, but is generally 20 years from the earliest local filing date. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Moreover, our platform license may be subject to field restrictions and retained rights, which may adversely impact our competitive position. See “Business—Alamar Platform License Agreement.” Our licensed patent portfolio may not provide us with adequate and continuing patent protection sufficient to exclude others from commercializing products similar to our product candidates, including biosimilar and interchangeable versions of such products. In addition, the patent portfolio licensed to us is, or may be, licensed to third parties outside our licensed field, and such third parties may have certain enforcement rights. Thus, patents licensed to us could be put at risk of being invalidated or interpreted narrowly in litigation filed by or against another licensee or in administrative proceedings brought by or against another licensee in response to such litigation or for other reasons.
Other parties have developed technologies that may be related or competitive to our own and such parties may have filed or may file patent applications, or may have received or may receive patents, claiming inventions that may overlap or conflict with those claimed in our own patent applications or issued patents. Publication of discoveries in the scientific literature lags behind the actual discoveries, and patent applications in the United States and in other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether the inventors of our patents and applications were the first to make the inventions claimed in those patents or pending patent applications, or that they were the first to file for patent protection of such inventions. Further, we cannot assure that all of the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application. As a result, the issuance, scope, validity and commercial value of our patent rights cannot be predicted with any certainty. Further, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.
In addition, the patent prosecution process is expensive and time-consuming, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, the scope of the claims initially submitted for examination may be significantly narrowed by the time they issue, if at all. It is also possible that we or our licensors will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We cannot provide any assurances that we will be able to pursue or obtain additional patent protection based on our research and development efforts, or that any such patents or other intellectual property we generate will provide any competitive advantage. Moreover, we do not have the right to control the preparation, filing and prosecution of patent applications, or to control the maintenance of the patents, covering technology that we license from third parties. Therefore, these patents and applications may not be filed, prosecuted or maintained in a manner consistent with the best interests of our business.
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Even if we acquire patent protection that we expect should enable us to maintain competitive advantage, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability. Third parties, including former employees, consultants, collaborators and competitors, may challenge the inventorship, scope, validity, or enforceability thereof, which may result in such patents being narrowed, invalidated or held unenforceable. If issued, our patents may be challenged in patent offices in the United States and abroad, or in court. For example, we may be subject to Post Grant Review or Inter Partes Review proceedings to the U.S. Patent Trial and Appeal Board (PTAB) challenging the validity of one or more claims of our patents, once issued. Such submissions may also be made prior to a patent’s issuance, precluding the granting of a patent based on one of our patent applications. We may become involved in opposition, reexamination, inter partes review, post-grant review, derivation, or similar proceedings in the United States or abroad challenging the claims of our patents, once issued. Furthermore, patents may be challenged in court, once issued. Competitors may have filed patent applications before the inventors of our patents did. A competitor may also claim that we are infringing its patents and that we therefore cannot practice our technology as claimed under our patent applications and patents, if issued. As a result, one or more claims of our patents may be narrowed or invalidated. In litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons. If a court agrees, we would lose our rights to those challenged patents.
Even if they are unchallenged, our patents and pending patent applications, if issued, may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our patents by developing similar or alternative technologies or therapeutics in a non-infringing manner. For example, even if we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention if the other party can show that they used the invention in commerce before our filing date or the other party benefits from an ex-U.S. compulsory license. If the patent protection provided by the patents and patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
Certain regulatory exclusivities may be available. However, the scope of such regulatory exclusivities is subject to change, and may not provide us with adequate and continuing protection sufficient to exclude others from commercializing products similar to our product candidates.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.
In addition to patent protection, we rely on the protection of our trade secrets, unpatented know-how, technology and other proprietary information to maintain our competitive position. Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, we cannot provide any assurances that any party thereto will not breach the agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us. If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced, and our competitive position could be harmed. If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.
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If we breach our license agreement with Alamar or any other third-parties, or if there are disputes over the intellectual property that we license, it could have a material adverse effect on our commercialization efforts for ATTO-1310, ATTO-2306, and ATTO-1091 and any current or future product candidates.
We are party to a platform license agreement with Alamar (Alamar Platform License Agreement) that enables us to utilize third-party intellectual property in the development of ATTO-1310, ATTO-2306 and ATTO-1091, and we may in the future enter into more such license agreements with third parties under which we license the use, development and commercialization rights to current or future product candidates or technology from third parties.
These intellectual property license agreements may require us to comply with various obligations, including diligence obligations such as development and commercialization obligations, as well as potential royalty and milestone payments and other obligations. If we fail to comply with our obligations under any of these license agreements, use the licensed intellectual property in an unauthorized manner, we are subject to bankruptcy-related proceedings or otherwise materially breach any of these license agreements, the terms of the license granted may be materially modified, such as by rendering currently exclusive licenses non-exclusive, or it may give our licensors the right to terminate the applicable license agreement, in whole or in part. Generally, the loss of or termination of our rights under the Alamar Platform License Agreement, or any other licenses we may acquire in the future, could harm our business, financial condition, results of operations and prospects.
We may also, in the future, enter into license agreements with third parties under which we are a sublicensee. If our sublicensor fails to comply with its obligations under its upstream license agreement with its licensor, the licensor may have the right to terminate the upstream license, which may result in termination of our sublicense. If this were to occur, we would no longer have rights to the applicable intellectual property unless we are able to secure our own direct license with the owner of the relevant rights, which we may not be able to do on reasonable terms, or at all, which may impact our ability to continue to develop and commercialize product candidates incorporating the relevant intellectual property.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:
| • | the scope of rights granted under the license agreement and other interpretation-related issues; |
| • | whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; |
| • | our right to sublicense patent and other intellectual property rights to third parties under collaborative development relationships; |
| • | our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization product candidates, and what activities satisfy those diligence obligations; |
| • | our right to transfer or assign the license; |
| • | the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and |
| • | whether and the extent to which inventors are able to contest the assignment of their rights to our licensors. |
If disputes over intellectual property that we have licensed or license in the future prevent or impair our ability to maintain our current licensing arrangements on acceptable terms or at all, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse
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effect on our business. In addition, if disputes arise as to ownership of licensed intellectual property, our ability to pursue or enforce the licensed patent rights may be jeopardized. If we or our licensors fail to adequately protect this intellectual property, our ability to commercialize our products could suffer. Further, certain of our future license agreements with third parties may limit or delay our ability to consummate certain transactions, may impact the value of those transactions or may limit our ability to pursue certain activities (e.g., we may in the future enter into license agreements that are not assignable or transferable, or that require the licensor’s express consent in order for an assignment or transfer to take place).
As the field of immune-mediated diseases continues to mature, patent applications are being processed by national patent offices around the world. There is uncertainty about which patents will issue and, if they do, as to when, to whom, and with what claims. In addition, third parties may attempt to invalidate our intellectual property rights. Even if our rights are not directly challenged, disputes could lead to the weakening of our intellectual property rights. Our defense against any attempt by third parties to circumvent or invalidate our intellectual property rights could be costly to us, could require significant time and attention of our management and could have a material and adverse effect on our business, financial condition, results of operations and prospects or our ability to successfully compete. If we are found to infringe a third-party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product.
We may not be able to protect our intellectual property rights throughout the world.
Although we have pending patent applications in the United States and other countries, filing, prosecuting, maintaining, enforcing and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates, and our patents, the patents of our licensors, or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or our licensors’ patents or marketing of competing products in violation of our proprietary rights. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents or the patents of our licensors at risk of being invalidated or interpreted narrowly and our patent applications or the patent applications of our licensors at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
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We, our licensors, or any future collaborators and strategic partners may need to resort to litigation to protect or enforce our patents, if and when granted, or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates, or put our patents, if and when granted, and other proprietary rights at risk.
Competitors may infringe our patents, if and when granted, or other intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products or our technology, the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, lack of adequate written description, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that an individual connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity or unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our products or certain aspects of our platform technology. Such a loss of patent protection could have a material and adverse effect on our business, financial condition, results of operations and prospects. Derivation proceedings provoked by third parties or brought by us may be necessary to determine the inventorship of inventions with respect to our patents or patent applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates to market. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. Patents and other intellectual property rights will not protect our technology if competitors design around our protected technology without legally infringing our patents or other intellectual property rights.
Intellectual property rights of third parties could adversely affect our ability to commercialize ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates, and we, our licensors or collaborators, or any future strategic partners may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights. We might be required to litigate or obtain licenses from third parties in order to develop or market ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.
We, our licensors or collaborators, or any future strategic partners, may be subject to third-party claims for infringement or misappropriation of patent or other proprietary rights. There are a substantial number of forums available for challenging intellectual property rights, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries, including patent infringement lawsuits, interferences, derivations, post-grant reviews, oppositions and inter partes review proceedings before the USPTO, and corresponding foreign patent offices. There may be issued patents and pending patent applications that claim aspects of our targets or ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates and modifications that we may need to apply to ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. There may be issued patents that claim methods which may be
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relevant to the products we wish to develop. Thus, it is possible that one or more entities will hold patent rights to which we will need a license. If those entities refuse to grant us a license to such patent rights on reasonable terms, we may not be able to market products or perform research and development or other activities covered by these patents, which could have a material and adverse effect on our business, financial condition, results of operations and prospects. If we, our licensors or collaborators, or any future strategic partners are found to infringe a third-party patent or other intellectual property rights, we could be required to pay damages, potentially including treble damages and attorneys’ fees if we or they are found to have infringed willfully. In addition, we, our licensors or collaborators, or any future strategic partners may choose to seek, or be required to seek, a license from a third party, which may not be available on acceptable terms, if at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property rights licensed to us. If we fail to obtain a required license, we or our existing or future collaborators, or any future strategic partners, may be unable to effectively market product candidates based on our technology, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. In addition, we may find it necessary to pursue claims or initiate lawsuits to protect or enforce our patent or other intellectual property rights. The cost to us in defending or initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor, could be substantial, and litigation could divert our management’s attention. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations.
Our competitive position may suffer if patents issued to third parties or other third-party intellectual property rights cover our products or product candidates or elements thereof, or our manufacture or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or product candidates until such patents expire or unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may be issued patents of which we are not aware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. There also may be pending patent applications of which we are not aware that may result in issued patents, which could be alleged to be infringed by ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. There may be issued patents, held by third parties, which we do not believe we infringe, that, if found to be valid and enforceable, could be found to be infringed by ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, including potentially treble damages and attorneys’ fees for willful infringement, and we may be forced to abandon ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.
It is also possible that we have failed to identify relevant third-party patents or applications. Patent applications covering our products could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our products or the use of our products. Third-party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our products. Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from
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the initiation and continuation of any litigation could have a material adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, financial condition, results of operations and prospects. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing any of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business and could have a material and adverse effect on our business, financial condition, results of operations and prospects.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Litigation and other legal proceedings relating to intellectual property claims, with or without merit, are unpredictable and generally expensive and time consuming and are likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Moreover, such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.
We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating or from successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.
Many of our employees, including our management, were previously employed at biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Some of these employees executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to develop and ultimately commercialize, or prevent us from developing and commercializing, ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, which could severely harm our business, financial condition, results of operations and prospects. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
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Patent terms may be insufficient to protect our competitive position on ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various patent term adjustments or extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products, including biosimilars or interchangeables. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
If we do not obtain patent term extension for any product candidates we may develop, our business may be harmed.
Depending upon the timing, duration and specifics of any FDA regulatory approval of any product candidates we may develop and our technology, our U.S. patent or one or more U.S. patents that may issue in the future based on a patent application that we license or own may be eligible for limited patent term extension under the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved product, a method for using it or a method for manufacturing it may be extended. The application for the extension must be submitted prior to the expiration of the patent for which extension is sought and within 60 days of FDA approval. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. In addition, to the extent we wish to pursue patent term extension based on a patent that we in-license from a third party, we would need the cooperation of that third party. If we are unable to obtain patent term extension or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
Obtaining and maintaining our patent protection is dependent on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm and/or rely on our outside counsel to pay these fees due to the USPTO and non-U.S. governmental patent agencies. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
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Changes in U.S. patent and ex-U.S. patent laws could diminish the value of patents in general, thereby impairing our ability to protect our current or future product candidates.
Changes in either the patent laws or interpretation of the patent laws in the United States or in other jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In the United States, numerous recent changes to the patent laws and proposed changes to the rules of the USPTO may have a significant impact on our ability to protect our technology and enforce our intellectual property rights.
For example, the Leahy-Smith Act includes a number of significant changes to United States patent law. These changes include provisions that affect the way patent applications are prosecuted, redefine prior art, provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, and enable third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent at USPTO-administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.
Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, the United States transitioned to a first-to-file system in which, assuming that the other statutory 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. As such, Leahy-Smith America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
In addition, the patent positions of companies in the development and commercialization of pharmaceuticals and biologics are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our patent rights and our ability to protect, defend and enforce our patent rights in the future. For example, in the case, Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held that claims to certain DNA molecules are not eligible for patenting. In Amgen Inc. v. Sanofi, 598 U.S. 594 (2023), the Supreme Court held that claims with functional language may face high hurdles in fulfilling the enablement requirement. Recent Federal Circuit decisions such as Cellect v. Vidal, raise questions regarding the award of patent term adjustment (PTA) for patents where related patents have been issued without a PTA. Thus, it cannot be said with certainty how PTA will or will not be viewed in the future and whether patent expiration dates may be impacted. We cannot predict how this and future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents. Any similar adverse changes in the patent laws of other jurisdictions could also have a material adverse effect on our business, financial condition, results of operations and prospects.
Furthermore, in Europe, a new unitary patent system took effect June 1, 2023, which will significantly impact European patents, including those granted before the introduction of such a system. Under the unitary patent system, European applications have the option, upon grant of a patent, of becoming a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court (UPC). As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation. Patents granted before the
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implementation of the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries. Patents that remain under the jurisdiction of the UPC will be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC. We cannot predict with certainty the long-term effects of any potential changes.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our current or future trademarks or trade names may be challenged, infringed, circumvented or declared generic or descriptive or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest.
During trademark registration proceedings, we may receive rejections of our applications by the USPTO or in other foreign jurisdictions. Although we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Although these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and trade names by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names. Moreover, any name we have proposed to use with our therapeutic candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. Similar requirements exist in Europe. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA (or an equivalent administrative body in a foreign jurisdiction) objects to any of our proposed proprietary product names, it may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. Furthermore, in many countries, owning and maintaining a trademark registration may not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. If we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks. In addition, geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors.
Intellectual property rights do not necessarily address all potential threats to our business.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. For example:
| • | others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own or license; |
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| • | we or our licensors or collaborators might not have been the first to make the inventions covered by the issued patents or patent application that we own or license; |
| • | we or our licensors or collaborators might not have been the first to file patent applications covering certain of our inventions; |
| • | others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; |
| • | it is possible that the pending patent applications we own or license will not lead to issued patents; |
| • | issued patents that we own or license may be held invalid or unenforceable, as a result of legal challenges by our competitors; |
| • | our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; |
| • | we may not develop additional proprietary technologies that are patentable; |
| • | the patents of others may have an adverse effect on our business; |
| • | we may fail to adequately protect and police our trademarks and trade secrets; and |
| • | we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property. |
Should any of these events occur, it could significantly harm our business, financial condition, results of operations and prospects.
Risks Related to Our Reliance on Third Parties
We are dependent on sole source and limited source suppliers for certain drug products, raw materials, samples, components, and other materials used in our product candidates. If we are unable to source these supplies on a timely basis, or establish longer-term contracts with our CMOs, we will not be able to complete our clinical trials on time and the development of our product candidates may be delayed.
We are dependent on sole source and limited source suppliers for certain drug products, raw materials, samples, components, and other materials used in our product candidates. For example, we rely on WuXi AppTec, WuXi Biologics and their affiliates (WuXi) to perform preclinical studies and supply drug substance and products for our pipeline assets. If we are unable to source these supplies on a timely basis, or establish longer-term contracts with our CMOs, we will not be able to complete our clinical trials on time and the development of our product candidates may be delayed. We do not currently have long-term supply contracts with any of our CMOs and they are not obligated to supply drug products to us for any period, in any specified quantity or at any certain price beyond the delivery contemplated by the relevant purchase orders. As a result, our suppliers could stop selling to us at commercially reasonable prices, or at all. While we intend to enter into long-term master supply agreements with certain of our CMOs in the future as we advance our clinical trials or commercialization plans, we may not be successful in negotiating such agreements on favorable terms or at all. If we do enter into such long-term master supply agreements, or enter into such agreements on less favorable terms than we currently have with such manufacturers, we could be subject to binding long-term purchase obligations that may be harmful to our business, including in the event that we do not conduct our trials on planned timelines or utilize the drug products that we are required to purchase. Any change in our relationships with our CMOs or changes to contractual terms of our agreements with them could adversely affect our business, financial condition, results of operations and prospects. Furthermore, any of the sole source and limited source suppliers upon whom we rely could stop producing our supplies, cease operations or be acquired by, or enter into exclusive arrangements with, one or more of our competitors.
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Additionally, our manufacturing process for ATTO-1310, ATTO-2306 and ATTO-1091 requires special equipment, and identifying additional suppliers able to fabricate such equipment at their facility at acceptable costs may be difficult. Establishing additional or replacement suppliers for these supplies, and obtaining regulatory clearance or approvals that may result from adding or replacing suppliers, could take a substantial amount of time, result in increased costs and impair our ability to produce our products, which would adversely impact our business, financial condition, results of operations and prospects. Any such interruption or delay may force us to seek similar supplies from alternative sources, which may not be available at reasonable prices, or at all. Any interruption in the supply of sole source or limited source components for our product candidates would adversely affect our ability to meet scheduled timelines and budget for the development and commercialization of our product candidates, could result in higher expenses and would harm our business. Although we have not experienced any significant disruption as a result of our reliance on limited or sole source suppliers, we have a limited operating history and cannot assure you that we will not experience disruptions in our supply chain in the future as a result of such reliance or otherwise.
Our rights to develop and commercialize our ATTOBODY Platform and product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.
We have licensed and are dependent on certain patent rights and proprietary technology from third parties that are important or necessary to the development of our ATTOBODY Platform and product candidates. For example, we are a party to the Alamar Platform License Agreement with Alamar, a beneficial owner of more than 5% of our capital stock, pursuant to which we license patents and patent applications that relate to our ATTOBODY Platform. The Alamar Platform License Agreement imposes various milestone payment, royalty, insurance, indemnification and other obligations on us. If we breach any material obligation, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and Alamar may have the right to terminate the license. If the license is terminated, we may be unable to develop, manufacture, sell, or use our ATTOBODY Platform and products that are covered by the patents licensed under the Alamar Platform License Agreement, and Alamar may allow a competitor to license the covered technology instead. For more information regarding this agreement, please see “Business—Material Agreements.”
Our licenses may not provide us with exclusive rights to use the licensed intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our ATTOBODY technologies and product candidates in the future. Some licenses granted to us are subject to certain preexisting rights. Further, our out-licensing agreements generally include exclusivity terms limiting our ability to develop product candidates that may compete with the relevant licensed target or product.
We do not have complete control in the preparation, filing, prosecution, maintenance, enforcement and defense of patents and patent applications covering the technology that we license from third parties. It is possible that our licensors’ enforcement of patents against infringers or defense of such patents against challenges of validity or claims of enforceability may be less vigorous than if we had conducted them ourselves, or may not be conducted in accordance with our best interests. We cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained, enforced and defended in a manner consistent with the best interests of our business. If our licensors fail to prosecute, maintain, enforce and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, our right to develop and commercialize any of our product candidates we may develop that are the subject of such licensed rights could be adversely affected and we may not be able to prevent competitors from making, using and selling competing products.
Sharing trade secrets with employees, consultants or other third parties may expose us to potential litigation.
We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose
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valuable intellectual property rights or personnel. Many of our employees, including our management, were previously employed at biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Some of these employees executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to develop and ultimately commercialize, or prevent us from developing and commercializing, ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, which could severely harm our business, financial condition, results of operations and prospects. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
We may, in the future, seek to enter into collaborations with third parties for the discovery, development and commercialization of product candidates, if approved, and we may not be successful in doing so. If those collaborations are not successful, we may not be able to capitalize on the market potential of ATTO-1310, ATTO-2306, ATTO-1091 or future product candidates.
We may seek third-party collaborators for the development and commercialization of our current or any future product candidates, if approved, on a select basis, including potentially in specific foreign jurisdictions. We have not entered into any such collaborations to date. Our likely collaborators for any future collaboration arrangements include large and mid-size biopharmaceutical companies, regional and national biopharmaceutical companies and biotechnology companies. We will face significant competition in seeking appropriate collaborators. Whether we decide to enter into any collaboration arrangement will depend, among other things, on our assessment of the future collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of our business. As such, there can be no assurance that we will reach a definitive agreement for a future collaboration with any third-party collaborators.
If we do enter into any such arrangements with any third parties, we will likely have limited control over the amount and timing of resources that our future collaborators dedicate to the development or commercialization of our current or any future product candidates. Our ability to generate revenues from these arrangements will be dependent on our future collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Collaborations with future collaborators involving our current or any future product candidates would pose numerous risks to us, including the following:
| • | collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; |
| • | collaborators may de-emphasize or not pursue development and commercialization of our current or any future product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; |
| • | collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; |
| • | collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our current or any future product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
| • | a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product, if approved, relative to other products; |
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| • | collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; |
| • | disputes may arise between the collaborators and us, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed during our collaboration, any of which could result in the delay or termination of the research, development or, if approved, commercialization of our current or any future product candidates or that result in costly litigation or arbitration that diverts management attention and resources and in turn could prevent us from generating revenue and limit or prevent us from entering into additional collaborations; |
| • | collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or, if approved, commercialization of the applicable product candidates; |
| • | collaboration agreements may not lead to development or, if approved, commercialization of product candidates in the most efficient manner or at all; and |
| • | if a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or, if approved, commercialization program could be delayed, diminished or terminated. |
If we establish one or more collaborations, all of the risks relating to product development, regulatory approval and, if approved, commercialization described above would also apply to the activities of any such future collaborators.
We rely, and intend to continue to rely, on third parties to conduct our clinical trials and perform some of our research and potential preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or do not meet expected deadlines, our development programs may be delayed or subject to increased costs or we may be unable to obtain marketing authorization, each of which may have an adverse effect on our business, financial condition, results of operations and prospects.
We do not have the ability to independently conduct all aspects of our clinical trials ourselves. As a result, we are dependent on third parties to conduct our ongoing and planned clinical trials of ATTO-1310, ATTO-2306 and ATTO-1091, any preclinical studies and all clinical trials of any future product candidates. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to our development programs. Specifically, we expect CROs, independent clinical investigators and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, these investigators, CROs and other third parties are not our employees, and we will not be able to control all aspects of their activities. Nevertheless, we are responsible for ensuring that each clinical trial is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the investigators, CROs and other third parties does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA for product candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical trial investigators and clinical trial sites. If we or any of our CROs or clinical trial sites fail to comply with applicable GCP requirements, the data generated in our clinical trials may be deemed unreliable, and the FDA may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that our clinical trials comply with GCPs. In addition, our clinical trials must be conducted with product produced under current good manufacturing practice (cGMP) regulations. Our failure or the failure of third parties on whom we rely to comply with these regulations may require us to stop and/or repeat clinical trials, which would delay the marketing authorization process.
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There is no guarantee that any such CROs, clinical trial investigators or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required. In addition, these third parties may be subject to supply chain or inflationary pressures that limit their ability to achieve anticipated timelines or result in a greater cost to us. For example, we are aware of recurrent shortages of non-human primates available for preclinical studies and although that is not expected to impact our current business, if we begin new product development programs we could be subject to longer development times or difficulty completing necessary research. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise perform in a substandard manner, or terminate their engagements with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated. If our clinical trial site terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trial unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.
In addition, with respect to investigator-sponsored trials that may be conducted, we would not control the design or conduct of these trials, and it is possible that the FDA will not view these investigator-sponsored trials as providing adequate support for future clinical trials or market approval, whether controlled by us or third parties, for any one or more reasons, including elements of the design or execution of the trials or safety concerns or other trial results. We expect that such arrangements will provide us certain information rights with respect to the investigator-sponsored trials, including access to and the ability to use and reference the data, including for our own regulatory submissions, resulting from the investigator-sponsored trials. However, we would not have control over the timing and reporting of the data from investigator-sponsored trials, nor would we own the data from the investigator-sponsored trials. If we are unable to confirm or replicate the results from the investigator- sponsored trials or if negative results are obtained, we would likely be further delayed or prevented from advancing further clinical development. Further, if investigators or institutions breach their obligations with respect to the clinical development of our product candidates, or if the data proves to be inadequate compared to the firsthand knowledge we might have gained had the investigator-sponsored trials been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be adversely affected. The investigators may design clinical trials with clinical endpoints that are more difficult to achieve, or in other ways that increase the risk of negative clinical trial results compared to clinical trials that we may design on our own. Negative results in investigator-sponsored clinical trials could have a material adverse effect on our efforts to obtain marketing authorization for our product candidates and the public perception of our product candidates. Additionally, the FDA may disagree with the sufficiency of our right of reference to the preclinical, manufacturing or clinical data generated by these investigator-sponsored trials, or our interpretation of preclinical, manufacturing or clinical data from these investigator-sponsored trials. If so, the FDA may require us to obtain and submit additional preclinical, manufacturing, or clinical data.
Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors for whom they may also be conducting clinical trials or other therapeutic candidate development activities that could harm our competitive position. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approval for ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our products.
We rely on third parties to manufacture our product candidates and clinical product supplies and we may not be able to obtain adequate supplies at a reasonable cost or in a timely way.
The process of manufacturing therapeutic candidates is complex and highly regulated. We do not have any manufacturing facilities or plans to establish manufacturing capabilities in the near future. We rely, and expect to continue to rely, on third parties, including foreign manufacturers, for the manufacture of our product candidates for preclinical and clinical testing, development purposes, to support regulatory application submissions, as well as for commercial manufacture if any of our product candidates obtain marketing approval. This reliance on third
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parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. In addition, global health crises or geopolitical conflict may result in disruptions to the operations or an extended shutdown of certain businesses, which could include certain of our contract manufacturers. Further, as our product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, we are likely to alter various aspects of the development program, such as manufacturing and testing methods, to optimize processes and results, which may result in additional cost or delay.
We have only limited supply arrangements in place with respect to our product candidates, and these arrangements do not extend to Phase 3 clinical or commercial supply. We acquire many key materials on a purchase order basis. As a result, we may not have long-term committed arrangements with respect to aspects of our product candidates and other materials. We will need to establish one or more agreements with third parties to develop and scale up the drug manufacturing process, conduct testing, and generate data to support regulatory submissions, and may be unable to do so on favorable terms. If we obtain marketing approval for any of our product candidates, we will need to establish an agreement for commercial manufacture with a third party. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including, but not limited to:
| • | reliance on the third party for regulatory, compliance and quality assurance; |
| • | reliance on the third party for product development, analytical testing, and data generation to support regulatory applications; |
| • | operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier, the issuance of an FDA Form 483 notice or warning letter, or other enforcement action by FDA or other comparable foreign regulatory authority; |
| • | the possible breach of the manufacturing agreement by the third party; |
| • | the possible infringement, misappropriation, violation or unauthorized disclosure of our intellectual property and proprietary rights, including our trade secrets, know-how and other confidential information; |
| • | the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; |
| • | competition with other companies for access to manufacturing capacity; |
| • | carrier disruptions or increased costs that are beyond our control; and |
| • | failure to deliver our products under specified storage conditions and in a timely manner. |
Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. If the FDA determines that our CMOs are not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may not approve a BLA until the deficiencies are corrected or we replace the manufacturer in our application with a manufacturer that is in compliance. Moreover, our failure, or the failure of our third-party manufacturers and suppliers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. In addition, approved products and the facilities at which they are manufactured are required to maintain ongoing compliance with extensive FDA requirements and the requirements of other similar agencies, including ensuring that quality control and manufacturing procedures conform to cGMP requirements. As such, our CMOs are subject to continual review and periodic inspections to assess compliance with cGMPs. Furthermore, although we do not have day-to-day control over the operations of our CMOs, we are responsible for ensuring compliance with applicable laws and regulations, including cGMPs.
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Further, we rely on third parties located in China for some of our contract manufacturing, and we expect to continue to use such third-party manufacturers for such purposes. For any activities conducted in China, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the United States or Chinese governments, political unrest or unstable economic conditions in China. In addition, certain Chinese biotechnology companies may become subject to trade restrictions, sanctions, other regulatory requirements, or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of material to us. For example, the BIOSECURE Act, which was signed into law in December 2025 as part of the National Defense Authorization Act for FY 2026, prohibits U.S. federal agencies from entering into or renewing any contract, loan, or grant with any entity that uses biotechnology equipment or services produced or provided by a “biotechnology company of concern” to perform that contract as well as authorizes the U.S. government to name additional Chinese “biotechnology companies of concern.” The Office of Management and Budget (OMB) of the U.S. government will issue a list of “biotechnology companies of concern,” which will include certain companies that are identified on the U.S. Department of Defense’s annual List of Chinese Military Companies, also known as the 1260H List, other entities which the U.S. government has deemed as such pursuant to a separate designation process, and certain subsidiary, parent and successor entities of the foregoing. We are currently party to agreements with WuXi AppTec, WuXi Biologics and their affiliates for certain development and manufacturing services. WuXi AppTec was designated on the 1260H List on June 8, 2026. WuXi Biologics is not currently designated on the 1260H List; however, WuXi Biologics was previously explicitly named as a “biotechnology company of concern” in prior versions of the BIOSECURE Act. There is a safe harbor provision providing that the restrictions do not apply to equipment or services that were formerly but are no longer provided by a “biotechnology company of concern,” as well as a grandfathering provision providing that the prohibitions shall not apply for a five-year period to biotechnology equipment or services produced or provided under a contract or agreement entered into before the applicable effective date. It is unclear whether the grandfathering provision would apply to entities designated as “biotechnology companies of concern” due to their inclusion on the 1260H List. The guidance to be issued by the Office of Management and Budget regarding implementation of the BIOSECURE Act may provide further clarity on this point. If WuXi AppTec, WuXi Biologics and/or other WuXi affiliates that are or may become contractors of ours are designated as “biotechnology companies of concern” by OMB, we may be restricted in our ability to work with such companies to the extent we would contract with, or otherwise receive funding from, the U.S. government. As a result, we may need to seek alternative CMO relationships. While we believe we will be able to identify and contract with such alternative CMOs, we cannot predict the terms of any such alternative arrangement nor what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, what products and services may be subject to such actions or what actions may be taken by China or the other countries in retaliation. In addition, any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, new legislation or regulations, renegotiation of existing trade agreements, or any retaliatory trade actions due to recent or future trade tension, may impede, delay, limit, or increase the cost of manufacturing our product candidates. Such events could result in our clinical or commercial supply of drug, packaging and other services being interrupted or limited, which could harm our business.
In addition, our third-party manufacturers and suppliers are subject to numerous environmental, health and safety laws and regulations, including those governing the handling, use, storage, treatment and disposal of waste products, and failure to comply with such laws and regulations could result in significant costs associated with civil or criminal fines and penalties for such third parties. Based on the severity of regulatory actions that may be brought against these third parties in the future, our clinical or commercial supply of drug and packaging and other services could be interrupted or limited, which could harm our business.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance. If our current CMOs for preclinical and clinical testing cannot perform as agreed, we may be required to replace such CMOs. Although we believe that there are several potential alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays
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in identifying and qualifying any such replacement manufacturer or be able to reach agreement with any alternative manufacturer. Further, our third-party manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or global health crises. If our current third-party manufacturers cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to commercialize any products that obtain marketing approval on a timely and competitive basis.
Risks Related to Government Regulation
The regulatory approval process is highly uncertain, and we may be unable to obtain, or may be delayed in obtaining, U.S. or foreign regulatory approval and, as a result, unable to commercialize ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates. Even if we believe our current, or planned clinical trials are successful, regulatory authorities may not agree that they provide adequate data on safety or efficacy.
ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, post-approval monitoring, marketing and distribution of products. Rigorous preclinical testing and clinical trials and an extensive regulatory approval process are required to be completed successfully in the United States and in many foreign jurisdictions before a new biopharmaceutical product can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. It is possible that none of the product candidates we may develop will obtain the regulatory approvals necessary for us to begin selling them.
We have no prior experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to obtain FDA and other approvals is unpredictable but typically takes many years following the commencement of clinical trials, depending on the type, complexity and novelty of the product candidate. The standards that the FDA and its foreign counterparts use when regulating us require judgment and can change, which makes it difficult to predict with certainty their application. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. It is not possible to predict whether additional legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or the impact of such changes, if any. Any elongation or de-prioritization of preclinical studies or clinical trials or delay in regulatory review resulting from such disruptions could adversely affect the development and study of ATTO-1310, ATTO-2306, ATTO-1091 or other future product candidates.
Further, the FDA and other comparable foreign regulatory authorities may respond to any Investigational New Drug Application (IND) or Biologics License Application (BLA) (and their foreign equivalents) that we may submit by defining requirements that we do not anticipate. Such responses could delay clinical development of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates.
Various regulatory programs in the United States, such as Breakthrough Therapy Designation, Fast Track Designation or Priority Review Designation, are designed to expedite the development and review of therapies to treat certain diseases. We may seek such designations, and comparable designations by foreign regulatory authorities, for one or more of our product candidates for the treatment of certain indications. However, regulatory
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authorities have broad discretion whether or not to grant such designations, and the receipt of such designations may not result in faster development, review or approval and does not guarantee regulatory approval.
In addition, the approval policies or regulations of the FDA and other comparable regulatory authorities in other jurisdictions may change in a manner rendering our clinical data insufficient for approval. Any delay or failure in obtaining required approvals could have a material and adverse effect on our ability to generate revenues from the particular product candidate for which we are seeking approval. Furthermore, any regulatory approval to market a product may be subject to limitations on the approved uses for which we may market the product or on the labeling or other restrictions.
We are also subject to or may in the future become subject to numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process varies among countries and may include all of the risks associated with the FDA approval process described above, as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. FDA approval does not ensure approval by regulatory authorities outside the United States and vice versa. Any delay or failure to obtain United States or foreign regulatory approval for a product candidate could have a material and adverse effect on our business, financial condition, results of operations and prospects.
If there are delays in obtaining, or we are not able to obtain, required regulatory approvals in the United States or in foreign jurisdictions, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.
It is possible that none of the product candidates that we develop will obtain the regulatory approvals necessary for us to begin commercializing them. The time required to obtain FDA and other approvals is unpredictable but in general takes years following the commencement of clinical trials, depending on the nature of the product candidate. Any analysis we perform of data from clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Any delay or failure in obtaining required approvals could have a material adverse effect on our ability to generate revenues from the particular product candidate including, but not limited to, loss of patent term during the approval period. Furthermore, if we, or our partners, do not reach the market with our products before our competitors offer products for the same or similar uses, or if we, or our partners, are not effective in marketing our products, our revenues from product sales, if any, will be reduced. We face intense competition in our development activities. We face competition from many companies in the United States and abroad, including a number of large biopharmaceutical companies, firms specialized in the development and production of antibody fusion proteins and major universities and research institutions. Most of our competitors have substantially greater resources, more extensive experience in conducting nonclinical studies and clinical testing and obtaining regulatory approvals for their products, greater operating experience, greater research and development and marketing capabilities and greater production capabilities than those of ours. These companies might succeed in obtaining regulatory approval for competitive products more rapidly than we can for our products, especially if we experience any delay in obtaining required regulatory approvals.
A Breakthrough Therapy Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive regulatory approval.
We may seek breakthrough designation for some or all of our product candidates. A Breakthrough Therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug, or biologic in our case, may demonstrate substantial improvement over existing therapies with respect to one or more clinically significant endpoints, such as substantial treatment effects observed early in
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clinical development. For product candidates that have been designated as Breakthrough Therapies, interaction and communication between the FDA and the sponsor can help to identify the most efficient path for development.
Designation as a Breakthrough Therapy is within the discretion of the FDA. Accordingly, even if we believe, after completing early clinical trials, that one of our product 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 for other product candidates or indications in the future, we may not experience a faster development process, review or approval compared to drugs or biologics considered for approval under conventional FDA procedures and such a designation does not assure ultimate approval by the FDA. Even if one or more of our product candidates qualify as a Breakthrough Therapy, the FDA may later decide that such product candidates no longer meet the conditions for qualification.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction. For example, even if the FDA or European Medicines Agency (EMA) grants regulatory approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. However, a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we or any partner we work with fail to comply with the regulatory requirements in international markets or fail to receive applicable regulatory approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.
Even if we receive regulatory approval for ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal. We may also be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.
Any regulatory approvals that we obtain for ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates may also be subject to limitations on the approved indicated uses for which a product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA or other comparable foreign regulatory authorities approve any of our future product candidates, the manufacturing processes, labeling, packaging, distribution, post-approval monitoring and adverse event reporting, storage, import, export, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. The FDA has significant post-market authority, including the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate safety risks related to the use of a product or to require withdrawal of the product from the market. The FDA also has the authority to require a REMS after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug. The manufacturing facilities we use to make future
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product candidates, if any, will also be subject to periodic review and inspection by the FDA or other comparable foreign regulatory authorities, including for continued compliance with cGMP requirements. The discovery of any new or previously unknown problems with our CMOs, manufacturing processes or facilities may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market. If we rely on CMOs, we will not have control over compliance with applicable rules and regulations by such manufacturers.
Moreover, any product promotion and advertising will also be subject to regulatory requirements and continuing regulatory review. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products. If we promote ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates in a manner inconsistent with FDA-approved labeling or otherwise not in compliance with FDA regulations, we may be subject to enforcement action. Moreover, while we believe that ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates may provide better safety or effectiveness as compared to approved products, if we do not study ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates in head-to-head trials with those products, we will not be able to make comparative claims for our products, if approved.
If we or our manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the United States or foreign jurisdictions in which we seek to market our products, we or they may be subject to, among other things:
| • | Form 483s, restrictions on the manufacturing of the product, product recalls or withdrawal of the product from the market; |
| • | warning or untitled letters or holds on clinical trials; |
| • | refusal of the FDA or comparable foreign regulatory authorities to accept new marketing applications or approve pending applications or supplements to approved applications, or suspension or revocation of product approvals; |
| • | product seizure or detention, or refusal to permit the import or export of products; |
| • | consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; |
| • | mandated modification of promotional materials and labeling and the issuance of corrective information; |
| • | the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or |
| • | injunctions or the imposition of fines or civil or criminal penalties. |
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate adverse publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products, if approved. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.
Subsequent discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our CMOs or manufacturing processes, or failure to comply with regulatory requirements, may result in, these same consequences.
Our programs for which we intend to seek approval as biologics may face competition sooner than anticipated.
The Patient Protection and Affordable Care Act (ACA), as amended by the Health Care and Education Reconciliation Act, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009
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(BPCIA), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Biosimilars are biological products approved under section 351(k) of the Public Health Service Act (PHS Act) relying on the FDA’s findings of safety, purity, and potency for a licensed biologic (Reference Product) submitted pursuant to section 351(k) of the PHS Act. A biosimilar is highly similar to its Reference Product, excluding minor differences in clinically inactive components for which there are no clinically meaningful differences between the proposed biological product and the Reference Product in safety, purity, or potency. Certain biosimilars may be substituted for the Reference Product in accordance with state law. Under the BPCIA, an application for a biosimilar product relying on the Reference Product may not be submitted to the FDA until four years following the date that the Reference Product was first approved by the FDA. In addition, the approval of a biosimilar product relying on the Reference Product may not be made effective by the FDA until 12 years from the date on which the Reference Product was first approved. During this 12-year period of exclusivity, another company may still market a competing version of the Reference Product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.
We believe that any of our programs approved as biologics under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our programs to be Reference Products for competing products, potentially creating the opportunity for competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any Reference Product in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
The policies of the FDA or other regulatory authorities may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any of ATTO-1310, ATTO-2306, ATTO-1091 or our future product candidates.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business. We also 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.
In addition, three decisions from the U.S. Supreme Court in July 2024 may lead to an increase in litigation against regulatory agencies that could create uncertainty and thus negatively impact our business. The first decision overturned established precedent that required courts to defer to regulatory agencies’ interpretations of ambiguous statutory language. The second decision overturned regulatory agencies’ ability to impose civil penalties in administrative proceedings. The third decision extended the statute of limitations within which entities may challenge agency actions. These cases may result in increased litigation by industry against regulatory agencies and impact how such agencies choose to pursue enforcement and compliance actions. However, the specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, are unknown. We also cannot predict the extent to which regulations, policies, and decisions of the FDA or other regulatory authorities, such as the SEC, may become subject to increasing legal challenges, delays, and changes.
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Disruptions at the FDA and other government agencies caused by, among other factors, funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, slow the time necessary for new products to be reviewed and/or approved, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which would adversely affect our business. In addition, there is substantial uncertainty regarding new initiatives and how these might impact the FDA, its implementation of laws, regulations, policies and guidance and its personnel. Similar initiatives may also be directed toward other government agencies. These initiatives could prevent, limit or delay development and regulatory approval of our product candidates, which would adversely affect our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, government shutdowns, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. In addition, government funding of other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA may slow the time necessary for new products to be reviewed and/or approved, which would adversely affect our business. For example, starting in January 2025, the U.S. government has reduced the number of federal employees, including at FDA, by establishing voluntary termination programs, by position eliminations or by involuntary terminations. Changes in FDA staffing could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all.
Similar consequences would also result in the event of a significant shutdown of the federal government. For example, over the last several years, and most recently in late 2025, the U.S. government has shut down several times, and certain regulatory agencies, such as the FDA, had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, or if geopolitical or global health concerns prevent the FDA from conducting their regular inspections, reviews, or other regulatory activities, or if the volume of applications to the FDA for new product candidates increases materially, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns or delays could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations. If any legislation, executive orders, or lapses in agency funding impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.
FDA-regulated industries, such as ours, face uncertainty with regard to the regulatory environment we will face as we proceed with research and development, and possibly in the future commercialization. Some of these efforts have manifested to date in the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays or limitations on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory approvals in the future. Moreover, the U.S. government paused payments by, reduced the budget of, and terminated grants provided by the National Institutes of Health (NIH) related to its funding for medical research, which has decreased, and may continue to decrease, the ability of facilities that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials. Some of these actions have been challenged in court and there remains general uncertainty regarding future activities. New executive orders, regulations, policies or guidance could be issued or promulgated that adversely affects us or creates a more challenging or costly environment to pursue the development of new therapeutic products. Alternatively, state governments may attempt to address or react to changes at the federal level with changes to their own regulatory frameworks in a manner that is adverse to our operations. If we become negatively impacted by future governmental orders, regulations, policies or guidance, there could be a material adverse effect on us and our business.
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If we are found to have improperly promoted off-label use of our products, we may become subject to significant liability.
The FDA, the EMA and comparable regulatory authorities in other jurisdictions strictly regulate the promotional claims that may be made about prescription drug products, such as our products. While physicians, in the practice of medicine, may prescribe approved drugs for unapproved indications, a product may not be promoted for uses that are not approved by the applicable regulatory authority as reflected in the product’s approved labeling or for uses inconsistent with the product’s approved labeling. If our promotional materials and related activities are not consistent with the approved labeling or if physicians, in their professional medical judgment, nevertheless prescribe the drug product to their patients in a manner that is inconsistent with the approved labeling, we may be subject to claims that we promoted off-label use or otherwise violated applicable regulations. In addition, although we may believe ATTO-1310, ATTO-2306, ATTO-1091 or our future product candidates may provide for superior efficacy as compared to marketed products, without head-to-head data, we will be unable to make comparative claims for our products. If we are found to have promoted such off-label use or made such unsubstantiated comparative claims, we may become subject to significant liability under the Federal Food, Drug, and Cosmetic Act and other statutory authorities, such as laws prohibiting false claims for reimbursement.
Our operations and relationships with healthcare providers, healthcare organizations, customers and third-party payors will be subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to, among other things, enforcement actions, criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
Our current and future arrangements with healthcare providers, healthcare organizations, third-party payors and customers expose us to broadly applicable anti-bribery, fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute any of our product candidates, if approved. Restrictions under applicable federal and state anti-bribery and healthcare laws and regulations, include the following:
| • | the federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, receiving, offering, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual, or the purchase, order or recommendation of, any good or service for which payment may be made under a federal and state healthcare program such as Medicare and Medicaid. The term remuneration has been broadly interpreted to include anything of value. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
| • | the federal criminal and civil false claims and civil monetary penalties laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions against individuals or entities, and the Federal Civil Monetary Penalties Law, which prohibit, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; |
| • | HIPAA and its implementing regulations, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for |
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| healthcare benefits, items or services; similar to the federal Anti- Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
| • | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and their respective implementing regulations, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates and covered subcontractors that perform certain services involving the storage, use or disclosure of individually identifiable health information for or on behalf of a covered entity and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; |
| • | the federal Physician Payments Sunshine Act, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to the Centers for Medicare & Medicaid Services (CMS) information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals (such as physician assistants and certain advanced practice nurses), and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; |
| • | the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. businesses and their representatives from directly or indirectly offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business; |
| • | analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; |
| • | certain state laws that require biopharmaceutical companies to obtain regulatory licenses to manufacture or distribute products commercially, comply with the biopharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing information, and state and local laws that require the registration of biopharmaceutical sales representatives; and |
| • | state and non-U.S. laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
Efforts to ensure that our current and future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any such requirements, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, integrity oversight and reporting obligations, or reputational harm, any of which could adversely affect our financial results. These risks cannot be entirely eliminated. Any action against us for an alleged or suspected
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violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.
We may face difficulties from healthcare legislative and regulatory reform measures.
Existing laws and regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained, or may face penalties for any approved products, and we may not achieve or sustain profitability.
In the United States and some foreign jurisdictions, there have been and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain marketing approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of care.
For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA) made significant changes to the healthcare system, including an increase to manufacturers’ rebate liability under the Medicaid Drug Rebate Program, imposition of a significant annual fee on companies that manufacture or import branded prescription drug products and a requirement for manufacturers to provide a discount off the negotiated price of prescriptions filled by Medicare Part D enrollees. In addition, on July 4, 2025, the OBBBA was signed into law that narrowed access to ACA marketplace exchange enrollment and declined to extend the ACA enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance. The OBBBA also is expected to reduce Medicaid spending and enrollment by, among other things, implementing work requirements for most beneficiaries, capping state-directed payments, reducing federal funding and limiting provider taxes used to fund the program. Congress is also considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies.
There has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, Congressional inquiries, proposed regulations, and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, reduce the costs of drugs under Medicare, and reform government program reimbursement methodologies for drug products. For example, the current administration has announced agreements with several pharmaceutical companies that require the drug manufacturers to offer, through a direct to consumer platform (TrumpRx) U.S. patients and Medicaid programs prescription drug Most-Favored Nation (MFN) pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues. Other examples include: (1) proposed regulations to reduce Medicare payments of single-source drugs and biologics to prices paid in other developed countries; (2) imposing tariffs on certain imported pharmaceutical products; and (3) as part of the Make America Healthy Again (MAHA) Commission’s Strategy Report released in September 2025, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising. Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand MFN pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager (PBM) payment methodologies, among others. These actions and policies may significantly reduce U.S. drug
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prices, potentially impacting manufacturers’ global pricing strategies and profitability, while increasing their operational costs and compliance risks. Further, on December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA.
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 pharmaceuticals and other healthcare products and services, which could result in reduced demand for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates or additional pricing pressures.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products, if approved.
Even if we are able to commercialize ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates, if approved, such product candidate may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business.
The availability of coverage and the adequacy of reimbursement by governmental healthcare programs, such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as our product candidates, if approved. Sales of any of our product candidates that receive regulatory approval will be dependent substantially, both in the United States and internationally, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize an adequate return on our investment. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain regulatory approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain regulatory approval.
There is significant uncertainty related to insurance coverage and reimbursement of newly approved products. In the United States, principal decisions about reimbursement for new products are typically made by CMS. CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare, and private payors often follow CMS’s decisions regarding coverage and reimbursement to a substantial degree. However, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. As a result, the coverage determination process is often time-consuming and costly. This process will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Increasingly, third-party payors are requiring that drug companies provide them
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with predetermined discounts from list prices and are challenging the prices charged for medical products. Further, such payors are increasingly challenging the price, examining the medical necessity and reviewing the cost effectiveness of medical products. There may be especially significant delays in obtaining coverage and reimbursement for newly approved products. Third-party payors may limit coverage to specific products on an approved list, known as a formulary, which might not include all FDA-approved products for a particular indication. We may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of our products. Nonetheless, our product candidates may not be considered medically necessary or cost effective. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be.
Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates, if approved. For example, the Inflation Reduction Act of 2022 directed the U.S. Department of Health and Human Services (HHS) to impose rebates on most Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis. In addition, the Inflation Reduction Act authorized the Medicare Drug Price Negotiation Program, which empowers HHS to negotiate the price of certain single-source biologics that have been on the market for at least 11 years covered under Medicare. Each year, up to 20 drugs or biologics covered under Medicare Part B and Part D will be selected by HHS for negotiation of a price that must be lower than a statutory mandated cap. Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis. We expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.
We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic and international markets. We can face criminal liability and other serious consequences for violations, which can harm our business.
U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions and other trade laws and regulations prohibit, among other things, companies and their employees, agents, CROs, CMOs, legal counsel, accountants, consultants, contractors and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of these laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We also expect our non-U.S. activities to increase over time. We expect to rely on third parties for research, preclinical studies and clinical trials and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals. We can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.
We are also subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of certain products and services to countries, governments and persons targeted by U.S. sanctions.
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Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.
Governments outside the United States tend to impose strict price controls, which may adversely affect our revenue, if any.
In some countries, particularly member states of the EU, the pricing of therapeutic products is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. To obtain coverage and reimbursement or pricing approvals in some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of any product candidate approved for marketing is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business, financial condition, results of operations or prospects could be materially and adversely affected.
Risks Related to Our Common Stock and This Offering
Anti-takeover provisions in our charter documents and under Delaware law could prevent or delay an acquisition of us, which may be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.
Our restated certificate of incorporation and our restated bylaws that will be in effect upon completion of this offering contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions:
| • | establish a classified board of directors so that not all members of our board of directors are elected at one time; |
| • | permit only the board of directors to establish the number of directors and fill vacancies on the board of directors; |
| • | provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders; |
| • | require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws; |
| • | authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; |
| • | eliminate the ability of our stockholders to call special meetings of stockholders; |
| • | prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; |
| • | prohibit cumulative voting; and |
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| • | establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. |
In addition, Section 203 of the Delaware General Corporation Law (DGCL), may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock.
The exclusive forum provisions in our organizational documents may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or employees, or the underwriters of any offering giving rise to such claim, which may discourage lawsuits with respect to such claims.
Our restated bylaws that will be in effect upon completion of this offering, to the fullest extent permitted by law, will provide that the Court of Chancery of the State of Delaware is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our restated bylaws; or any action asserting a claim that is governed by the internal affairs doctrine. This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, or the underwriters of any offering giving rise to such claims, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions contained in our restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, results of operations and prospects.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our restated bylaws will provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (Federal Forum Provision). Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While federal or other state courts may not follow the holding of the Delaware Supreme Court or may determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court, and our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court, and our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholder’s ability to bring a claim, and may result in increased costs for a stockholder to bring such a claim, in a judicial forum of their choosing for disputes with us or our directors, officers, other employees or agents, which may discourage lawsuits against us and our directors, officers, other employees or agents.
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The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment.
The trading price of our common stock following this offering is likely to be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. As a result of this volatility, investors may not be able to sell their common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, including the other risks described in this “Risk Factors” section and the following:
| • | results of preclinical studies and clinical trials of any product candidates, or those of our competitors or our existing or future collaborators or licensing partners; |
| • | the timing and enrollment status of our clinical trials; |
| • | regulatory or legal developments in the United States or other countries, especially changes in federal or global health policies, laws or regulations applicable to any product candidates, including the review and oversight functions of federal health regulatory bodies; |
| • | the success or failure of competitive products or technologies; |
| • | introductions and announcements of new product candidates by us, any future commercialization partners, or our competitors, and the timing of these introductions or announcements; |
| • | actions taken by regulatory agencies with respect to any product candidates, clinical studies, and, if approved, manufacturing process or sales and marketing terms; |
| • | actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; |
| • | the success of our efforts to identify, acquire or in-license new technologies or product candidates; |
| • | developments concerning any future collaborations, including but not limited to those with development and commercialization partners if any product candidates are approved; |
| • | market conditions in the pharmaceutical and biotechnology sectors; |
| • | announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; |
| • | developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for any product candidates; |
| • | our ability or inability to raise additional capital and the terms on which we are able to raise it, if at all; |
| • | our ability to effectively manage our growth; |
| • | the recruitment or departure of key personnel; |
| • | changes in the structure of healthcare payment systems; |
| • | actual or anticipated changes in earnings estimates, development timelines or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; |
| • | our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; |
| • | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
| • | announcement and expectation of additional financing efforts; |
| • | speculation in the press or investment community; |
| • | fluctuations of share price and trading volume of our common stock; |
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| • | sales or perceived potential sales of shares of our common stock by us, insiders or our stockholders; |
| • | the concentrated ownership of our common stock; |
| • | expiration of market standoff or lock-up agreements; |
| • | changes in accounting principles; |
| • | actions instituted by activist shareholders or others; |
| • | terrorist acts, acts of war or periods of widespread civil unrest; |
| • | natural disasters and other calamities, including global pandemics such as the COVID-19 pandemic; |
| • | general economic, industry and market conditions, including changes in tariffs and trade restrictions, fluctuating interest rates and inflation; and |
| • | other events or factors, many of which are beyond our control. |
In addition, the stock market in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme price and volume fluctuations that have been often unrelated or disproportionate to the operating performance of the issuer. Furthermore, the trading price of our common stock may be adversely affected by third parties trying to drive down the market price. Short sellers and others, some of whom post anonymously on social media, may be positioned to profit if our stock declines and their activities can negatively affect our stock price. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our common stock.
We do not currently intend to pay dividends on our common stock and, consequently, our stockholders’ ability to achieve a return on their investment will be dependent on appreciation of the value of our common stock.
We have never declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to support operations and to finance the growth and development of our business. As a result, any investment return on our common stock will be dependent on increases in the value of our common stock, which is not certain. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over the industry or securities analysts, or the content and opinions included in their reports. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our common stock could be impacted negatively. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our preclinical studies and clinical trials and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of such analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause a decline in our stock price or trading volume.
Sales of substantial amounts of shares of our common stock may cause the price of our common stock to decline.
Based on shares of our capital stock outstanding as of March 31, 2026, upon completion of this offering, we will have a total of shares of common stock outstanding. Of these shares, only the
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shares of common stock sold in this offering, or shares if the underwriters exercise their option to purchase additional shares in full, will be freely tradable, without restriction, in the public market immediately after this offering. Each of our officers, directors and substantially all of our stockholders have entered into lock-up agreements with the underwriters that, among other things and subject to certain exceptions, restrict their ability to sell or transfer their shares. The lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus. However, Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC may, in their sole discretion, permit our officers, directors and other stockholders who are subject to the lock-up agreements to sell shares prior to the expiration of the lock-up agreements. After the lock-up agreements expire, based on shares outstanding as of March 31, 2026, approximately up to an additional shares of common stock will be eligible for sale in the public market approximately of which shares are held by our officers, directors and their affiliated entities, and will be subject to volume limitations under Rule 144 under the Securities Act.
After this offering, the holders of an aggregate of shares of our outstanding common stock as of March 31, 2026 will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders. We also intend to register shares of common stock that we may issue under our equity incentive plans. Once we register these shares, they will be able to be sold freely in the public market upon issuance, subject to the 180-day lock-up period under the lock-up agreements described above and in the sections titled “Shares Eligible for Future Sale” and “Underwriters.” See the section titled “Description of Capital Stock—Registration Rights” for additional information.
We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of our outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.
We also expect that significant additional capital may be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. To the extent that additional capital is raised through the sale and issuance of shares of our common stock or other securities convertible into shares of our common stock, our stockholders will be diluted. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares of our common stock, could reduce the market price of our common stock.
We will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled “Use of Proceeds,” and you will be relying on the judgment of our management regarding the application of these proceeds. You will not have the opportunity, as part of your investment decision, to assess whether we are using the proceeds appropriately. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.
No public market for our common stock currently exists, and an active and liquid trading market for our common stock may never develop. As a result, you may not be able to resell your shares of common stock at or above the initial public offering price.
Prior to this offering, no market for our common stock existed and an active trading market for our common stock may never develop or be sustained following this offering. The initial public offering price for our common
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stock was determined through negotiations with the underwriters and the negotiated price may not be indicative of the market price of our common stock after this offering. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares following this offering, and the market value of our common stock may decrease from the initial public offering price. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the initial public offering price. The lack of an active market may impair your ability to sell your shares of common stock at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares of common stock. To the extent certain of our existing stockholders and their affiliated entities participate in this offering, such purchases would reduce the nonaffiliated public float of our shares, meaning the number of shares of our common stock that are not held by officers, directors and controlling stockholders. As a result, the number of freely tradeable shares of our common stock following this offering will be reduced to what it would have been had these shares been sold to investors that were not existing stockholders, affiliates or purchasers. A reduction in the public float could reduce the number of shares that are available to be traded at any given time, thereby adversely impacting the liquidity of our common stock and depressing the price at which you may be able to sell shares of common stock purchased in this offering. Furthermore, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies or products by using our shares of common stock as consideration.
You will experience immediate and substantial dilution as a result of this offering and raising additional capital in the future may cause dilution to our stockholders, including purchasers of common stock in this offering, restrict our operations or require us to relinquish rights to our technologies or product candidates.
The assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, is substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock immediately following the completion of this offering. If you purchase common stock in this offering at the assumed initial public offering price of $ per share, and assuming that the underwriters do not exercise their option to purchase additional common stock in this offering, you will incur immediate and substantial dilution of $ per share, representing the difference between the assumed initial public offering price of $ per share and our pro forma as adjusted net tangible book value per share as of March 31, 2026 after giving effect to this offering and the conversion of all outstanding redeemable convertible preferred stock upon the completion of this offering. Following the completion of this offering, investors purchasing common stock in this offering will have contributed % of the total amount invested by stockholders since inception, but will only own % of the shares of common stock outstanding. For a further description of the dilution you will experience immediately after this offering, see the section titled “Dilution.”
General Risk Factors
Our current in-person operations are located in San Carlos, California, and we or the third parties on whom we depend may be adversely affected by natural disasters, terrorist activity, pandemics, geo-political actions in the United States and in foreign countries, and other events beyond our control, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster. Geo-political actions could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors.
Our in-person operations are located in our corporate headquarters and research and development facility in San Carlos, California. Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, pandemic, medical epidemic, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our CMOs may have a material and adverse effect on our ability to operate our business and have significant negative consequences on our financial and operating conditions. If our facilities, or the manufacturing facilities
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of our CMOs, are unable to operate because of an accident or incident or for any other reason, including an inability to use all or a significant portion of our headquarters, damages to critical infrastructure, such as our research facilities or the manufacturing facilities of our CMOs, or other disruptions to operations, even for a short period of time, any or all of our research and development programs may be harmed. Any business interruption could have a material and adverse effect on our business, financial condition, results of operations and prospects.
Our employees often conduct business outside of any facilities leased by us. These locations may be subject to additional security and other risk factors due to the limited control of our employees. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business. As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and losses.
Unstable market and economic conditions and adverse developments affecting the financial services industry, such as actual events or concerns involving inflation, liquidity, defaults or nonperformance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations, and our financial condition and results of operations.
From time to time, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Russia’s ongoing incursion into Ukraine has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets; it is possible that the ongoing Israel-Hamas conflict may have similar effects. In addition, adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to market-wide liquidity problems. For example, in March 2023, Silicon Valley Bank (SVB), one of our banking partners, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The closure of any additional national or regional commercial banks could lead to further economic instability. Although the Department of the Treasury, the Federal Reserve and the FDIC have taken steps to mitigate these risks, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediate liquidity may still occur in the future. We may maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit and there is no guarantee that the federal government would provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
Although we have not experienced any adverse impact to our liquidity or to our current and projected business operations, financial condition or results of operations, uncertainty remains over liquidity concerns in the broader financial services industry, and our business, our business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time. Inflation and fluctuating interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.
We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a public company, and particularly after we are no longer an emerging growth company or smaller reporting company, we will incur significant legal, accounting and other expenses that we did not incur as a
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private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. The increased costs will decrease our net income or increase our net loss, and the increased costs may require us to reduce costs in other areas of our business.
Moreover, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
We may be subject to securities litigation, which is expensive and could divert management attention.
The market price of our common stock is likely to be volatile. The stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs, divert our management’s attention and resources from other business concerns and damage our reputation, which could seriously harm our business, financial condition, results of operations and prospects.
We are an “emerging growth company” and a “smaller reporting company” and the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies could make our common stock less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and (iii) exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not approved previously. In addition, as an emerging growth company, we are only required to provide two years of audited financial statements and two years of selected financial data in this prospectus.
We could be an emerging growth company for up to five years following the completion of this offering, although circumstances could cause us to lose that status earlier, including if we are deemed to be a “large accelerated filer,” which occurs when the market value of our common stock that is held by non-affiliates equals or exceeds $700.0 million as of the prior June 30, or if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31, or if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, in which case we would no longer be an emerging growth company immediately.
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Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an “emerging growth company” or affirmatively and irrevocably opt out of the exemption provided by Section 7(a)(2)(B) of the Securities Act, upon issuance of a new or revised accounting standard that applies to our consolidated financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.
We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company after this offering if either (i) the market value of our common stock held by non-affiliates is less than $250.0 million, measured as of the last business day of our most recently completed second quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our common stock held by non-affiliates is less than $700.0 million. We may continue to be a smaller reporting company even after we cease to be an emerging growth company, so 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, we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
If we fail to establish and maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely consolidated financial statements could be impaired, which could harm our operating results, investors’ views of us and, as a result, the value of our common stock.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to furnish a report by our management on our internal control over financial reporting within our Annual Report on Form 10-K. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate consolidated financial statements on a timely basis is a costly and time-consuming effort that will need to be frequently evaluated. Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have a material adverse effect on our business. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
As we grow, we expect to hire additional personnel and may utilize external temporary resources to implement, document and modify policies and procedures to maintain effective internal controls. However, it is possible that we may identify deficiencies and weaknesses in our internal controls. If material weaknesses or deficiencies in our internal controls exist and go undetected or unremediated, our consolidated financial statements could contain material misstatements that, when discovered in the future, could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Upon the completion of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and
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procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make any related party transaction disclosures. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. In addition, we do not have a formal risk management program for identifying and addressing risks to our business in other areas.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
The forward-looking statements in this prospectus include, among other things, statements about:
| • | the initiation, timing, progress, results and costs of our clinical trials for ATTO-1310, ATTO-2306 and ATTO-1091, as well as any future preclinical studies and clinical trials and our research and development programs; |
| • | the timing of and our ability to obtain and maintain regulatory approvals for ATTO-1310, ATTO-2306, ATTO-1091 and any future product candidates; |
| • | our ability to obtain funding for our operations, including funding necessary to complete further clinical development and commercialization of ATTO-1310, ATTO-2306, ATTO-1091 and further discovery, development and commercialization of earlier stage and future product candidates, if approved; |
| • | estimates of the addressable market for our current and any future product candidates, and market growth; |
| • | our plans to develop and, if approved, commercialize ATTO-1310 for the treatment of chronic pruritic diseases, including chronic pruritus of unknown origin (CPUO), high-itch atopic dermatitis (AD), cholestatic pruritus in primary biliary cholangitis (PBC) and primary sclerosing cholangitis (PSC) and chronic kidney disease-associated pruritus (CKD-aP), ATTO-2306 for the treatment of AD and other inflammatory skin diseases, such as chronic spontaneous urticaria (CSU) and prurigo nodularis (PN), and ATTO-1091 for the treatment of IBD; |
| • | our expectations regarding demand for, and market acceptance of, our current and any future product candidates, if approved; |
| • | our ability to market or commercialize any product candidates we may develop and to compete effectively with existing competitors and new market entrants; |
| • | our ability to obtain, maintain, protect and enforce intellectual property and proprietary rights; |
| • | our ability to expand our pipeline of product candidates; |
| • | the potential effects of extensive government regulations relating to our industry; |
| • | our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights and proprietary technology of third parties; |
| • | our ability to retain the continued service of our key professionals and consultants and to identify, hire and retain key management and technical personnel; |
| • | our expectations regarding any future collaboration and current or future licensing arrangements with third parties, including our ability to reach development milestones under such agreements; |
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| • | the impact of natural disasters, terrorist activity, pandemics and other events beyond our control on any of the above or any other aspect of our business operations; |
| • | general global macroeconomic, industry and market conditions in either domestic or international markets, as well as economic conditions specifically affecting industries in which we operate, including but not limited to, actual or perceived instability in the global banking industry, potential uncertainty with respect to the U.S. federal debt ceiling and budget and potential government shutdowns related thereto, labor shortages, supply chain disruptions, potential recession, inflation and changing interest rates; |
| • | the impact of natural and man-made global events on our business, including political instability and military hostilities in multiple geographies, including global responses thereto; |
| • | our expectations regarding expenses, future revenue, capital requirements and our needs for additional financing; |
| • | sales of our stock by us, our insiders or our stockholders, as well as the anticipation of lock-up releases or expiration of market standoff or lock-up agreements; |
| • | our expectations regarding the period during which we will qualify as an emerging growth company under the JOBS Act or a smaller reporting company; |
| • | our ability to maintain adequate internal controls over financial reporting and to manage our business in accordance with applicable laws and the highly regulated industry in which we participate; and |
| • | our expected use of the net proceeds from this offering and our existing cash, cash equivalents and marketable securities. |
We caution you that the foregoing list may not contain all of the forward-looking statements made in this prospectus.
The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations, except as required by law.
You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
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This prospectus contains estimates and other statistical data made by independent parties and by us relating to our industry and the markets in which we operate, including our general expectations and market position, market opportunity, the incidence of certain medical conditions and other industry data. In some cases, we do not expressly refer to the sources from which these data are derived.
These data, to the extent they contain estimates or projections, involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates or projections. Industry publications and other reports we have obtained from independent parties may state that the data contained in these publications or other reports have been obtained in good faith or from sources considered to be reliable, but they do not guarantee the accuracy or completeness of such data. The industry in which we operate is subject to risks and uncertainties due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications and reports.
Estimates of certain market opportunities and the prevalence of certain medical conditions included in this prospectus are derived from data from third-party research studies we commissioned from LifeSci Consulting, an affiliate of LifeSci Capital LLC, in 2025 and 2026.
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We estimate that the net proceeds from this offering will be approximately $ million, or approximately $ million if the underwriters exercise their over-allotment option in full, based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the net proceeds to us from this offering by $ million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares of our common stock offered would increase or decrease, as applicable, the net proceeds that we receive from this offering by $ million, assuming that the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.
The principal purposes of this offering are to increase our financial flexibility, to obtain additional capital to support our operations, to create a public market for our common stock and to facilitate our access to the public equity markets. We currently intend to use the net proceeds we receive from this offering, together with our existing cash, cash equivalents and marketable securities as follows:
| • | approximately $ million to $ million to advance the clinical development of ATTO-1310 through ; |
| • | approximately $ million to $ million to advance the clinical development of ATTO-2306 through ; and |
| • | the remainder to advance our research pipeline, including ATTO-1091 through , for other research and development activities, as well as for working capital and other general corporate purposes. |
Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities, together with the net proceeds from this offering, will be sufficient for us to fund our operations . We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drugs, we are unable to estimate the exact amount of our working capital requirements.
The expected use of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts we actually expend in these areas, and the timing thereof, may vary significantly from our current intentions and will depend on a number of factors, including the progress of our current and planned clinical trials, regulatory feedback, the success of research and development efforts, the results and timing of any future preclinical studies and clinical trials any new collaborations or licenses we may enter into, cash generated from future operations and actual expenses to operate our business, and other factors described in the section titled “Risk Factors.” We may also use a portion of the net proceeds of this offering to in-license, acquire or invest in complementary businesses, products, or technologies, or to obtain the right to use such complementary technologies. We have no commitments with respect to any acquisition or investment, and we are not currently involved in any negotiations with respect to any such transaction.
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As a result, we cannot predict with any certainty all of the particular uses for the net proceeds or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering.
The expected net proceeds of this offering, together with our existing cash, cash equivalents and marketable securities, will not be sufficient for us to fund ATTO-1310, ATTO-2306, ATTO-1091, our earlier stage product candidates or any other future product candidates, if any, through regulatory approval, and we will need to raise substantial additional capital to complete the development and potential commercialization of our product candidates, if approved.
Pending the uses described above, we intend to invest the net proceeds from this offering in short-term, investment-grade interest-bearing securities such as money market accounts, certificates of deposit, commercial paper and guaranteed obligations of the U.S. government.
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We have never declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. Our ability to pay cash dividends on our capital stock in the future may also be limited by any restrictions contained in any future financing instruments or by the terms of any preferred securities we may issue or agreements governing any indebtedness we may incur.
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The following table sets forth our cash, cash equivalents and marketable securities and capitalization as of March 31, 2026:
| • | on an actual basis; |
| • | on a pro forma basis, giving effect to (i) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock and the related reclassification of the carrying value of the redeemable convertible preferred stock to permanent equity in connection with the completion of this offering, and (ii) the filing and effectiveness of our restated certificate of incorporation upon the completion of this offering; and |
| • | on a pro forma as adjusted basis giving effect to (i) the pro forma adjustments described above, and (ii) the issuance and sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
The pro forma and pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.
You should read this table together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes, each included elsewhere in this prospectus.
| As of March 31, 2026 | ||||||||||||
| Actual | Pro Forma | Pro Forma As Adjusted(1) |
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| (in thousands, except share and per share |
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| Cash, cash equivalents and marketable securities |
$ | 132,622 | $ | $ | ||||||||
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| Redeemable convertible preferred stock, par value $0.0001 per share; 199,902,270 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted |
$ | 258,226 | $ | - | $ | - | ||||||
| Stockholders’ deficit: |
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| Preferred stock, par value $0.0001 per share; no shares authorized, issued and outstanding, actual; shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted |
- | - | - | |||||||||
| Common stock, par value $0.0001 per share; 284,023,000 shares authorized, 41,907,870 shares issued and outstanding, actual; shares authorized, shares issued and outstanding, pro forma; shares authorized, shares issued and outstanding, pro forma as adjusted |
4 | |||||||||||
| Additional paid-in capital |
4,174 | |||||||||||
| Accumulated other comprehensive loss |
(27 | ) | ||||||||||
| Accumulated deficit |
(129,666 | ) | ||||||||||
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| Total stockholders’ deficit |
(125,515 | ) | - | - | ||||||||
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| Total capitalization |
$ | 132,711 | $ | - | $ | - | ||||||
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| (1) | Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, each of our pro forma as adjusted cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $ million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares of our common stock offered in this offering would increase or decrease, as applicable, each of our pro forma as adjusted cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $ million, assuming the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
If the underwriters exercise their over-allotment option in full, our pro forma as adjusted cash, cash equivalents, and marketable securities, additional paid-in capital, total stockholders’ equity, total capitalization, and shares of common stock outstanding as of March 31, 2026 would be $ million, $ million, $ million, $ million, and shares, respectively.
The number of shares of our common stock to be outstanding after this offering on a pro forma and pro forma as adjusted basis set forth in the table above is based on (i) shares of our common stock outstanding as of March 31, 2026, including shares of unvested restricted stock subject to repurchase and (ii) the automatic conversion of all shares of our outstanding convertible redeemable preferred stock as of March 31, 2026 into an aggregate of shares of our common stock in connection with the completion of this offering, and excludes:
| • | shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2026 under our 2023 Plan, with a weighted-average exercise price of $ per share; |
| • | shares of our common stock issuable upon the exercise of stock options granted after March 31, 2026 under our 2023 Plan, with a weighted-average exercise price of $ per share; |
| • | shares of our common stock reserved for future issuance under our 2026 Plan, which will become effective in connection with this offering (including shares reserved for issuance under our 2023 Plan, which shares will be added to the 2026 Plan upon its effectiveness); and |
| • | shares of our common stock to be reserved for future issuance under our ESPP, which will become effective in connection with this offering. |
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If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.
Net tangible book value (deficit) per share is determined by dividing our total tangible assets (which excludes deferred offering costs) less our total liabilities and redeemable convertible preferred stock by the number of shares of our common stock outstanding. Our historical net tangible book value (deficit) as of March 31, 2026 was $ million, or $ per share, based on shares of our common stock outstanding as of that date.
After giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock and the related reclassification of the carrying value of the redeemable convertible preferred stock to permanent equity in connection with the completion of this offering, our pro forma net tangible book value as of March 31, 2026 would have been $ million, or $ per share of our common stock.
After giving further effect to the sale and issuance of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2026 would have been $ million, or approximately $ per share. This amount represents an immediate increase in pro forma net tangible book value of $ per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of approximately $ per share to new investors participating in this offering.
Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the initial public offering price per share paid by new investors. The following table illustrates this dilution (without giving effect to any exercise by the underwriters of their over-allotment option):
| Assumed initial public offering price per share |
$ | |||||||
| Historical net tangible book value (deficit) per share as of March 31, 2026 |
$ | |||||||
| Pro forma increase in historical net tangible book value per share as of March 31, 2026 attributable to the pro forma adjustments described above |
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| Pro forma net tangible book value per share as of March 31, 2026 |
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| Increase in pro forma net tangible book value per share attributable to new investors participating in this offering |
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| Pro forma as adjusted net tangible book value per share after this offering |
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| Dilution per share to new investors participating in this offering |
$ | |||||||
|
|
|
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted net tangible book value per share after this offering by $ per share, and dilution per share to new investors in this offering by $ per share, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us. Similarly, each increase of 1.0 million shares in the number of shares of our common stock offered in this offering would increase our pro forma net tangible book value by approximately $ million or approximately
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$ per share and pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and would decrease dilution per share to new investors in this offering by approximately $ per share. Each decrease of 1.0 million shares in the number of shares of our common stock offered in this offering would decrease our pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and would increase dilution per share to new investors in this offering by approximately $ per share, assuming the assumed initial public offering price per share remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.
If the underwriters exercise their over-allotment option in full, the dilution to new investors in this offering would be $ per share, assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus.
The following table shows, as of March 31, 2026, on a pro forma as adjusted basis described above, the differences between the existing stockholders and the new investors purchasing shares in this offering at the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, with respect to the number of shares purchased from us, the total consideration paid, which includes net proceeds received from the issuance of common and redeemable convertible preferred stock and cash received from the exercise of stock options, and the weighted-average price paid per share:
| Shares Purchased | Total Consideration | Weighted- Average Price Per Share |
||||||||||||||||||
| Number | Percent | Amount | Percent | |||||||||||||||||
| Existing stockholders before this offering |
% | $ | % | $ | ||||||||||||||||
| New investors participating in this offering |
$ | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
|
100.0 | % | $ | 100.0% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, total consideration paid by new investors and total consideration paid by all stockholders by approximately $ million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same. Similarly, each increase or decrease of 1.0 million shares in the number of shares of our common stock offered in this offering would increase or decrease, as applicable, total consideration paid by new investors and total consideration paid by all stockholders by approximately $ million, assuming the assumed initial public offering price remains the same.
In addition, to the extent that any outstanding options are exercised, investors in this offering will experience further dilution.
Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, our existing stockholders would own % and our new investors would own % of the total number of shares of our common stock outstanding upon the completion of this offering.
The foregoing tables and calculations (other than historical net tangible book value) are based on (i) shares of our common stock outstanding as of March 31, 2026, including shares of unvested restricted stock subject to repurchase and (ii) the automatic conversion of all shares of our outstanding
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redeemable convertible preferred stock as of March 31, 2026 into an aggregate of shares of our common stock in connection with the completion of this offering, and excludes:
| • | shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2026 under our 2023 Plan, with a weighted-average exercise price of $ per share; |
| • | shares of our common stock issuable upon the exercise of stock options granted after March 31, 2026 under our 2023 Plan, with a weighted-average exercise price of $ per share; |
| • | shares of our common stock reserved for future issuance under our 2026 Plan, which will become effective in connection with this offering (including shares reserved for issuance under our 2023 Plan, which shares will be added to the 2026 Plan upon its effectiveness); and |
| • | shares of our common stock to be reserved for future issuance under our ESPP, which will become effective in connection with this offering. |
To the extent that these outstanding stock options are exercised, new stock options are issued or we issue additional shares of our common stock in the future, there will be further dilution to new investors. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes, our unaudited interim condensed consolidated financial statements and the related notes, and other financial information included elsewhere in this prospectus. This discussion and analysis and other parts of this prospectus contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” and elsewhere in this prospectus. You should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”
Overview
We are a clinical-stage biopharmaceutical company developing next-generation biotherapeutics for immune-mediated diseases with high unmet need. Our lead pipeline candidates target commercially validated pathways and are designed through our ATTOBODY biologics platform to deliver improved treatments relative to the current standards of care. Leveraging our ATTOBODY platform, we have nominated three product candidates within our first two years, including one currently in the clinic, ATTO-1310. ATTO-1310 is an ATTOBODY-based therapeutic targeting interleukin-31 (IL-31) that completed dosing in a Phase 1 clinical trial in healthy volunteers and patients in the first quarter of 2026. ATTO-2306 is an ATTOBODY-based bispecific targeting interleukin-13 (IL-13) and IL-31 that is in IND-enabling studies, and we expect to commence a Phase 1 clinical trial in the first half of 2027. Lastly, ATTO-1091 is our trispecific ATTOBODY-based Fc fusion protein that is designed to block TL1A, IL-23 and integrin α4ß7 simultaneously, and is currently in IND-enabling studies.
All of our product candidates have been internally discovered using our ATTOBODY biparatopic biologics platform, which we have in-licensed from Alamar Biosciences, Inc. (Alamar). Our ATTOBODY platform uses an evolution-driven, high-throughput process which allows for rapid discovery and the creation of a high diversity of potential product candidates. Our initial focus for ATTOBODIES has been to develop novel biotherapeutics targeting highly synergistic, clinically and commercially validated pathways where early data indicates the potential of our candidates to deliver next-generation treatments relative to the current standards of care. Our early-stage discovery efforts have further expanded our pipeline to additional complex biologics, including conditional “AND” gate bispecifics directed against novel targets, which are historically difficult to develop with conventional antibody technology.
We were incorporated in December 2022 under the laws of the State of Delaware. We have incurred significant net operating losses and negative cash flows since our inception. Since our inception, we have devoted substantially all of our resources to organizing our company, hiring personnel, business planning, acquiring and developing our product candidates, performing research and development, conducting research, preclinical studies and clinical trials, enabling manufacturing activities in support of our product development efforts, building our platform technologies, establishing, expanding and protecting our intellectual property portfolio, establishing licensing, raising capital, and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. We expect to continue to incur significant and increasing expenses and substantial losses for the foreseeable future as we continue our development of and seek regulatory approvals for our product candidates and commercialize any approved products, seek to expand our product pipeline and invest in our organization. Our ability to achieve and sustain profitability will depend on our ability to successfully develop, obtain regulatory approval for and commercialize our product candidates. There can be no assurance that we will ever generate product revenue or achieve profitability, or if achieved, that the product revenue or profitability will be sustained on a continuing basis.
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To date, we have primarily funded our operations with proceeds from sales of shares of our redeemable convertible preferred stock in private placements. As of March 31, 2026, we have received aggregate gross proceeds of $255.8 million from sales of shares of our redeemable convertible preferred stock, which includes aggregate gross proceeds of $52.5 million from the sale of the second tranche of our Series B redeemable convertible preferred stock in January of 2025 and aggregate gross proceeds of $90.0 million from the sale of our Series C redeemable convertible preferred stock in March of 2025.
We have incurred significant losses and negative cash flows from operations since our inception. Our net loss for the years ended December 31, 2024 and 2025 was $39.8 million and $60.6 million, respectively. Our net loss for the three months ended March 31, 2025 and 2026 was $15.2 million and $18.7 million, respectively. As of March 31, 2026, we had an accumulated deficit of $129.7 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and, to a lesser extent, from general and administrative costs associated with our operations. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our preclinical studies and clinical trials, our other research and development expenses, and the timing and amount of any milestone or royalty payments due under our existing or future license agreements.
As of March 31, 2026, we had $132.6 million in cash, cash equivalents and marketable securities. Based on our current operating plan, we estimate that our existing cash, cash equivalents and marketable securities, together with the estimated net proceeds from this offering, will be sufficient to fund our projected operating expenses and capital expenditure requirements into . We have based this estimate on our current assumptions, which may prove to be wrong, and we may exhaust our available capital resources sooner than we expect. 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.
Given our stage of development, we currently have no sales, marketing or commercialization capabilities. However, we intend to build the necessary sales, marketing and commercialization capabilities and infrastructure over time as our product candidates advance through clinical development. We expect to spend a significant amount on development and marketing costs prior to obtaining regulatory and marketing approval of one or more of our product candidates. We expect that our expenses and capital requirements will increase substantially in the near- to mid-term as we continue our development efforts for ATTO-1310 and ATTO-2306, and for our other developmental programs; and add clinical, scientific, sales and marketing, operational and financial personnel, including personnel to support our product development and potential future commercialization activity, and the timing and amount of any milestone or royalty payments due under our existing or future license or collaboration agreements.
License Agreements
Alamar Platform License Agreement
We are party to a Second Amended and Restated Platform License Agreement (the Alamar Platform License Agreement) with Alamar, which is effective as of June 1, 2023. Under the Alamar Platform License Agreement, Alamar granted us a worldwide, non-transferable, sublicensable license to use the antibody engineering platform developed by or on behalf of Alamar (the ATTOBODY Platform) within the therapeutic field (the Alamar License). The Alamar License allows us to identify new molecules or gene codes, research, develop, manufacture, and commercialize new or existing molecules or gene codes identified using the ATTOBODY Platform (Products), and to develop improvements to the ATTOBODY Platform. This license is exclusive in the therapeutic field with respect to Alamar patents and patent applications, and non-exclusive with respect to Alamar know-how.
In connection with the execution of the Alamar Platform License Agreement, on June 1, 2023, we issued 22,562,123 shares of our common stock to Alamar as consideration for the Alamar License. The Alamar
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Platform License Agreement requires us to pay Alamar up to $4.3 million per Product in aggregate milestone payments upon the completion of certain clinical and regulatory milestones. The Alamar Platform License Agreement also requires that we pay Alamar tiered royalties in low single digit percentages on net sales of Products on a Product-by-Product basis, subject to certain deductions, provided that if no valid claim covers a Product in a country, then the royalty percentage applicable to net sales in such country shall be reduced to percentages also in the low single digits.
Milestone payments are contingent consideration and are accrued when it becomes probable that the underlying milestone will be achieved. We recorded $0.3 million as research and development expenses in the statement of operations and comprehensive loss during the year ended December 31, 2024, related to the achievement of a development milestone for ATTO-1310. We recorded $0.3 million as research and development expenses in the consolidated statement of operations during the year ended December 31, 2025, related to achievement of a development milestone for ATTO-3712. The remaining milestones were considered not probable to be achieved as of March 31, 2026. Royalties will be recognized as cost of sales when products are sold and royalties are payable.
EndPath License Agreement
In July 2025, we entered into a license agreement with EndPath RadioTherapeutics, Inc. (formerly Isotovia Biosciences, Inc.) (EndPath), under which we granted EndPath an exclusive, worldwide license to certain of our ATTOBODY platform technology for radioligand products (the EndPath Agreement) and agreed to perform initial research and development services for two targets. We account for the EndPath Agreement as a customer contract under ASC Topic 606, Revenue from Contracts with Customers (ASC 606) and recognized $1.4 million of collaboration revenue during the year ended December 31, 2025. We may recognize additional revenue in future periods from remaining performance obligations and, if achieved, milestone payments and royalties under the EndPath Agreement. See Note 5 to our audited consolidated financial statements for further information.
Components of Our Results of Operations
Revenue
We recognize collaboration revenue from the EndPath Agreement for research and development services related to radioligand products. To date, we have not generated any revenue from the sale of products. We do not expect to generate any such revenue unless and until such time as our product candidates have advanced through clinical development and regulatory approval, if ever. If we fail to complete preclinical and clinical development of any product candidates or obtain regulatory approval for them, our ability to generate future product revenues, and our results of operations and financial position would be adversely affected.
Operating Expenses
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Research and Development
Research and development expenses consist of external and internal costs primarily related to acquiring our product candidate pipeline and technologies, and preclinical and clinical development of our product candidates.
External costs include:
| • | costs incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with CROs, CMOs and other third parties that conduct clinical trials and manufacture clinical supplies, product candidates, and components on our behalf; |
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| • | costs related to compliance with regulatory requirements; |
| • | costs associated with acquiring technology and intellectual property licenses that have no alternative future uses and costs incurred under in-license agreements, including milestone payments; and |
| • | costs for third-party professional research and development consulting services. |
Internal costs include:
| • | research and development personnel-related costs, including salaries, benefits, travel and meals expenses and stock-based compensation expense; and |
| • | allocated facilities and other overhead costs, including software, computer supplies and accessories and other miscellaneous expenses. |
We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed. Since our inception and through March 31, 2026, substantially all of our third-party expenses were related to the development of ATTO-1310, ATTO-3712 and ATTO-1091. We do not allocate employee costs, laboratory supplies and facilities, including other internal costs, to specific product candidates because these costs are associated with multiple programs and, as such, are not separately classified. We use internal resources primarily for managing our process development, manufacturing, and clinical development activities. We deploy our personnel across all of our research and development activities and, as our employees work across multiple programs, we do not currently track our costs by product candidate indication.
We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through clinical trials, pursue regulatory approval of our product candidates, build our operational and commercial capabilities for supplying and marketing our products, if approved, and expand our pipeline of product candidates. We expect to incur significant manufacturing costs as our CMOs develop scaled commercial manufacturing processes. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion of costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved by the FDA and other applicable regulatory authorities.
Our future research and development costs may vary significantly based on factors such as:
| • | the progress, timing and results of our preclinical studies and clinical development activities for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates; |
| • | the number and scope of preclinical and clinical programs we decide to pursue; |
| • | the amount and timing of any milestone payment due under an existing, or any future, license or collaboration agreement; |
| • | the costs and fees associated with discovery, acquisition or in-license of our products or technologies, including to maintain and expand our ATTOBODY platform; |
| • | the number of patients that participate in our clinical trials, and per participant clinical trial costs; |
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| • | the number and duration of clinical trials required for approval of our product candidates; |
| • | the number of sites included in our clinical trials, and the locations of those sites; |
| • | delays or difficulties in adding trial sites, and enrolling participants in our clinical trials, or higher than expected patient drop-out or discontinuation rates; |
| • | potential additional safety monitoring requested by regulatory authorities; |
| • | the phase of development of our product candidates; |
| • | the efficacy and safety profile of our product candidates; |
| • | the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and foreign regulators; |
| • | maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates; |
| • | changes in the competitive outlook; and |
| • | the extent we pursue strategic collaborations, including collaborations to commercialize ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations or our current licenses to which we establish additional strategic collaborations or other arrangements. |
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.
General and Administrative
Our general and administrative expenses consist primarily of personnel-related costs, legal and consulting services, including those relating to intellectual property and corporate matters, and allocated overhead, including software, computer supplies and accessories, insurance and other miscellaneous expenses. Personnel-related costs include salaries, annual bonuses, benefits, recruiting fees, travel and meal expenses and stock-based compensation for our general and administrative personnel.
We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and facility occupancy costs, as well as various incremental costs associated with operating as a public company. We expect that our costs will increase related to legal, audit, accounting fees, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company. We also expect to increase the size of our administrative function to support the growth of our business.
Interest Income
Interest income primarily consists of interest income earned on our invested cash, cash equivalents and marketable securities.
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Change in Fair Value of Preferred Stock Tranche Liability
The Series A Purchase Agreement and Series B Purchase Agreement include contingent obligations for us to issue shares of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock, respectively, at future dates (the preferred stock tranche liabilities). The preferred stock tranche liabilities were determined to be freestanding instruments within the scope of ASC 480, Distinguishing Liabilities from Equity that should be accounted for at fair value and remeasured at fair value each reporting period with changes recognized in the consolidated statement of operations and comprehensive loss.
Results of Operations
Comparison of the Years Ended December 31, 2024 and 2025
The following table summarizes our results of operations for the years ended December 31, 2024 and 2025 (in thousands):
| Year Ended December 31, | ||||||||||||||||
| 2024 | 2025 | Change | % Change | |||||||||||||
| Revenue |
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| Collaboration revenue |
$ | — | $ | 1,350 | $ | 1,350 | 100 | % | ||||||||
|
|
|
|
|
|
|
|||||||||||
| Total revenue |
— | 1,350 | 1,350 | |||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
33,864 | 54,153 | 20,289 | 60 | % | |||||||||||
| General and administrative |
7,689 | 14,356 | 6,667 | 87 | % | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
41,553 | 68,509 | 26,956 | 65 | % | |||||||||||
|
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|
|
|
|
|
|||||||||||
| Loss from operations |
(41,553 | ) | (67,159 | ) | (25,606 | ) | 62 | % | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
3,437 | 6,627 | 3,190 | 93 | % | |||||||||||
| Change in fair value of preferred stock tranche liability |
(1,674 | ) | (170 | ) | 1,504 | (90 | )% | |||||||||
| Other income (expense), net |
(11 | ) | 75 | 86 | * | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total other income (expense), net |
1,752 | 6,532 | 4,780 | * | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Net loss |
$ | (39,801) | $ | (60,627 | ) | $ | (20,826 | ) | 52 | % | ||||||
|
|
|
|
|
|
|
|||||||||||
| * | Not meaningful |
Collaboration Revenue
For the year ended December 31, 2025, we recognized collaboration revenue of $1.4 million, related to the EndPath Agreement. See Note 5 to our audited consolidated financial statements and Note 5 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus.
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Research and Development Expenses
The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2025 (in thousands):
| Year Ended December 31, | ||||||||||||||||
| 2024 | 2025 | Change | % Change | |||||||||||||
| External costs: |
||||||||||||||||
| Clinical, manufacturing, and preclinical services |
$ | 21,375 | $ | 37,106 | $ | 15,731 | 74 | % | ||||||||
| Professional consulting services |
1,834 | 2,417 | 583 | 32 | % | |||||||||||
| Consumables and other research and development costs |
3,132 | 3,122 | (10 | ) | * | |||||||||||
| Internal costs: |
||||||||||||||||
| Personnel-related costs |
6,993 | 10,686 | 3,693 | 53 | % | |||||||||||
| Facilities and overhead costs |
530 | 822 | 292 | 55 | % | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total research and development expenses |
$ | 33,864 | $ | 54,153 | $ | 20,289 | 60 | % | ||||||||
|
|
|
|
|
|
|
|||||||||||
| * | Not meaningful |
Research and development expenses increased by $20.3 million, from $33.9 million for the year ended December 31, 2024 to $54.2 million for the year ended December 31, 2025. The increase was primarily attributable to the following: Clinical, manufacturing, and preclinical services increased by $15.7 million from $21.4 million for the year ended December 31, 2024 to $37.1 million for the year ended December 31, 2025, primarily due to increased CRO and CMO activities related to ATTO-1310, ATTO-3712 and ATTO-1091 development. Professional research and development consulting services expense increased by $0.6 million to support advancement and expansion of our pipeline programs.
Personnel-related costs increased by $3.7 million primarily as a result of increased research and development headcount, including the increase in stock-based compensation expense of $0.3 million. Facilities and overhead costs increased as a result of higher laboratory equipment depreciation expense.
General and Administrative Expenses
General and administrative expenses increased by $6.7 million, from $7.7 million for the year ended December 31, 2024 to $14.4 million for the year ended December 31, 2025. The increase was primarily driven by an increase in facilities and overhead costs of $2.5 million due to the lease of a new headquarters facility and other office expenses, an increase in professional services and consulting expenses of $2.4 million due to higher legal, accounting, IT, and business development consulting to support our growth, and the increase in personnel-related costs of $1.8 million as a result of higher headcount, including an increase in stock-based compensation expense of $0.7 million.
Interest Income
Interest income increased by $3.2 million, from $3.4 million for the year ended December 31, 2024 to $6.6 million for the year ended December 31, 2025 as a result of higher investment balances during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Change in Fair Value of Preferred Stock Tranche Liability
The Series B preferred stock tranche liability was initially recorded as a liability at $5.0 million in May 2024. We remeasured the Series B preferred stock tranche liability as of December 31, 2024 and determined that the fair value of the liability was $6.6 million, and therefore recorded an approximately $1.7 million loss in our statement of operations and comprehensive loss during the year ended December 31, 2024. The Series B preferred stock
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tranche was settled in January 2025 when the Series B milestone was achieved. We remeasured the Series B preferred stock tranche liability in January 2025 immediately prior to its settlement and determined that the fair value of the liability was $6.8 million, and therefore recorded an approximately $0.2 million loss in our consolidated statement of operations and comprehensive loss during the year ended December 31, 2025.
Comparison of the Three Months Ended March 31, 2025 and 2026
The following table summarizes our results of operations for the three months ended March 31, 2025 and 2026 (in thousands):
| Three Months Ended March 31 |
||||||||||||||||
| 2025 | 2026 | Change | % Change | |||||||||||||
| (unaudited) | ||||||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
$ | 11,856 | $ | 16,746 | $ | 4,890 | 41 | % | ||||||||
| General and administrative |
4,248 | 3,209 | (1,039 | ) | (24 | )% | ||||||||||
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|
|
|
|
|
|
|||||||||||
| Total operating expenses |
16,104 | 19,955 | 3,851 | 24 | % | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Loss from operations |
(16,104 | ) | (19,955 | ) | (3,851 | ) | 24 | % | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
1,126 | 1,326 | 200 | 18 | % | |||||||||||
| Change in fair value of preferred stock tranche liability |
(170 | ) | — | 170 | (100 | )% | ||||||||||
| Other income (expense), net |
(3 | ) | (27 | ) | (24 | ) | * | |||||||||
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|
|
|
|
|
|
|||||||||||
| Total other income (expense), net |
953 | 1,299 | 346 | * | ||||||||||||
|
|
|
|
|
|
|
|||||||||||
| Net loss |
$ | (15,151 | ) | $ | (18,656 | ) | $ | (3,505 | ) | 23 | % | |||||
|
|
|
|
|
|
|
|||||||||||
| * | Not meaningful |
Research and Development Expenses
The following table summarizes our research and development expenses for the three months ended March 31, 2025 and 2026 (in thousands):
| Three Months Ended March 31 |
||||||||||||||||
| 2025 | 2026 | Change | % Change |
|||||||||||||
| (unaudited) | ||||||||||||||||
| External costs: |
||||||||||||||||
| Clinical, manufacturing, and preclinical services |
$ | 8,010 | $ | 11,895 | $ | 3,885 | 49 | % | ||||||||
| Professional consulting services |
528 | 618 | 90 | 17 | % | |||||||||||
| Consumables and other research and development costs |
553 | 752 | 199 | 36 | % | |||||||||||
| Internal costs: |
||||||||||||||||
| Personnel-related costs |
2,512 | 3,017 | 505 | 20 | % | |||||||||||
| Facilities and overhead costs |
253 | 464 | 211 | 83 | % | |||||||||||
|
|
|
|
|
|
|
|||||||||||
| Total research and development expenses |
$ | 11,856 | $ | 16,746 | $ | 4,890 | 41 | % | ||||||||
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|
|
|
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Research and development expenses increased by $4.9 million, from $11.9 million for the three months ended March 31, 2025 to $16.7 million for the three months ended March 31, 2026. The increase was primarily attributable to the following: Clinical, manufacturing, and preclinical services increased by $3.9 million from $8.0 million for the three months ended March 31, 2025 to $11.9 million for the three months ended March 31, 2026, primarily due to increased CRO and CMO activities related to ATTO-1310, ATTO-3712 and ATTO-1091 development.
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Personnel-related costs increased by $0.5 million, from $2.5 million for the three months ended March 31, 2025 to $3.0 million for the three months ended March 31, 2026, primarily due to an increase in headcount to support our programs and higher stock-based compensation expense.
General and Administrative Expenses
General and administrative expenses decreased by $1.0 million, from $4.2 million for the three months ended March 31, 2025 to $3.2 million for the three months ended March 31, 2026. The decrease was driven primarily by lower legal, accounting and other professional services compared to the prior period, when we incurred a higher amount of public company readiness activities.
Interest Income
Interest income increased by $0.2 million, from $1.1 million for the three months ended March 31, 2025 to $1.3 million for the three months ended March 31, 2026 as a result of higher investment balances during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Change in Fair Value of Preferred Stock Tranche Liability
Our Series B preferred stock tranche was settled in January 2025 when the Series B milestone was achieved. The remeasurement of the related liability resulted in an approximately $0.2 million loss 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 our operations. From inception, we have primarily funded our operations from sales of shares of our redeemable convertible preferred stock in private placements.
As of March 31, 2026, we had $132.6 million in cash, cash equivalents and marketable securities, which we believe will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12 months from the issuance of the unaudited interim condensed financial statements. Based on our current operating plan, we estimate that our existing cash, cash equivalents and marketable securities as of the date of this prospectus, together with the estimated net proceeds from this offering, will be sufficient to fund our projected operating expenses and capital expenditure requirements .
Future Funding Requirements
Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we continue to advance our product candidates, further our research and development initiatives for our product candidates, expand our corporate infrastructure, including the costs associated with being a public company, and incur costs associated with potential commercialization. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses.
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Our future funding requirements will depend on many factors, including the following:
| • | the progress, timing and results of preclinical studies and clinical trials for ATTO-1310, ATTO-2306, ATTO-1091 or any future product candidates, including the costs of any third-party products used as combination agents in our combination clinical trials; |
| • | further development of our ATTOBODY platform; |
| • | the extent to which we develop, in-license or acquire any future product candidates or technologies; |
| • | the number and development requirements of any future product candidates that we may pursue, and other indications for our current product candidates that we may pursue; |
| • | the costs, timing and outcome of obtaining regulatory approvals of our current or future product candidates; |
| • | the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current or future product candidates; |
| • | the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or future product candidates; |
| • | the costs associated with commercializing any approved product candidates, including establishing sales, marketing, market access and distribution capabilities; |
| • | to the extent we pursue strategic collaborations, including collaborations to commercialize ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations or our current licenses; |
| • | the costs associated with completing any post-marketing studies or trials required by FDA, or other comparable foreign regulatory authorities; |
| • | the revenue, if any, received from commercial sales of ATTO-1310, ATTO-2306, ATTO-1091 or any of our future product candidates, if any are approved; |
| • | our ability to achieve sufficient market acceptance, coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; |
| • | patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payors; |
| • | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims that we may become subject to, including any litigation costs and the outcome of such litigation; |
| • | our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting; |
| • | the costs associated with hiring additional personnel and consultants as our clinical and preclinical activities increase; |
| • | the costs associated with potential product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims; and |
| • | the effects of competing technological and market developments as well as disruptions to and volatility in the credit and financial markets. |
Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.
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Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financing, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders 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 stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, 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 capital as and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.
Cash Flows
The following summarizes our cash flows for the periods indicated (in thousands):
| Year Ended December 31, | Three Months Ended March 31, |
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| 2024 | 2025 | 2025 | 2026 | |||||||||||||
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| Net cash (used in) provided by: |
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| Operating activities |
$ | (35,035 | ) | $ | (59,199 | ) | $ | (14,131 | ) | $ | (18,141 | ) | ||||
| Investing activities |
(39,804 | ) | (73,455 | ) | (29,294 | ) | 22,486 | |||||||||
| Financing activities |
82,746 | 142,012 | 141,894 | (1,241 | ) | |||||||||||
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| Net increase in cash, cash equivalents and restricted cash |
$ | 7,907 | $ | 9,358 | $ | 98,469 | $ | 3,104 | ||||||||
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Operating Activities
During the year ended December 31, 2024, net cash used in operating activities was $35.0 million, consisting of a net loss of $39.8 million, partially offset by non-cash charges of $3.2 million and a decrease in net operating assets of $1.5 million. The net loss was primarily due to our operating expenses as we invest in our research and development efforts. Non-cash charges consisted primarily of the loss from change in fair value of preferred stock tranche liability, stock-based compensation, non-cash lease expenses and depreciation expenses, partially offset by net amortization of premiums and accretion of discounts on marketable securities. The decrease in net operating assets was primarily due to an increase in accrued and other current liabilities and accounts payable, partially offset by an increase in prepaid expenses and other current assets and a decrease in operating lease liability.
During the year ended December 31, 2025, net cash used in operating activities was $59.2 million, consisting of a net loss of $60.6 million, partially offset by non-cash charges of $1.2 million and a decrease in net operating assets of $0.3 million. The net loss was primarily due to our operating expenses as we invest in our research and development efforts. Non-cash charges consisted primarily of stock-based compensation, non-cash lease expenses and depreciation expenses, partially offset by net accretion of discounts on marketable securities and non-cash consideration for collaboration revenue. The decrease in net operating assets was primarily due to an increase in accrued and other current liabilities, partially offset by an increase in prepaid expenses and other current assets and a decrease in operating lease liability.
During the three months ended March 31, 2025, net cash used in operating activities was $14.1 million, consisting of a net loss of $15.2 million, partially offset by non-cash charges of $1.0 million. The net loss was
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primarily due to our operating expenses as we invest in our research and development efforts. Non-cash charges consisted primarily of stock-based compensation, non-cash lease expenses and depreciation expenses, and write-off of deferred offering costs, partially offset by net accretion of discounts on marketable securities.
During the three months ended March 31, 2026, net cash used in operating activities was $18.1 million, consisting of a net loss of $18.7 million and an increase in net operating assets of $0.5 million, partially offset by non-cash charges of $1.1 million. The net loss was primarily due to our operating expenses as we invest in our research and development efforts. The increase in net operating assets was primarily due to a decrease in operating lease liability. Non-cash charges consisted primarily of stock-based compensation and non-cash lease expense, partially offset by net accretion of discounts on marketable securities.
Investing Activities
During the year ended December 31, 2024, net cash used in investing activities was $39.8 million, consisting of net purchases of marketable securities of $38.0 million and purchases of property and equipment of $1.8 million.
During the year ended December 31, 2025, net cash used in investing activities was $73.5 million, consisting of net purchases of marketable securities of $71.1 million and purchases of property and equipment of $2.3 million.
During the three months ended March 31, 2025, net cash used in investing activities was $29.3 million, consisting of net purchases of marketable securities of $27.5 million and purchases of property and equipment of $1.8 million.
During the three months ended March 31, 2026, net cash provided by investing activities was $22.5 million, consisting of net proceeds from maturities of marketable securities of $22.8 million, partially offset by purchases of property and equipment of $0.3 million.
Financing Activities
During the year ended December 31, 2024, net cash provided by financing activities was $82.7 million, consisting primarily of $52.2 million in net proceeds from issuance of the first tranche of our Series B redeemable convertible preferred stock net of issuance costs, $30.4 million in net proceeds from issuance of our Series A-2 redeemable convertible preferred stock and $0.3 million in proceeds from the exercise of common stock options, partially offset by principal payments on finance lease liabilities of $0.2 million.
During the year ended December 31, 2025, net cash provided by financing activities was $142.0 million, consisting of $89.7 million in net proceeds from the issuance of our Series C redeemable convertible preferred stock net of issuance costs, $52.5 million in net proceeds from issuance of the second tranche of our Series B redeemable convertible preferred stock net of issuance costs and $0.2 million in proceeds from the exercise of common stock options, partially offset by payments of deferred offering costs of $0.4 million.
During the three months ended March 31, 2025, net cash provided by financing activities was $141.9 million, consisting primarily of $89.7 million in net proceeds from the issuance of our Series C redeemable convertible preferred stock net of issuance costs and $52.5 million in net proceeds from issuance of the second tranche of our Series B redeemable convertible preferred stock net of issuance costs, partially offset by payments of deferred offering costs of $0.3 million.
During the three months ended March 31, 2026, net cash used in financing activities was $1.2 million, consisting primarily of payments of deferred offering costs.
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Contractual Obligations and Other Commitments
We have milestones and royalty payments due to Alamar under the Alamar Platform License Agreement. See Note 5 to our audited consolidated financial statements included elsewhere in this prospectus. We recorded $0.3 million as research and development expenses in the statement of operations and comprehensive loss during the year ended December 31, 2024, related to probability of achieving a development milestone under the Alamar Platform License Agreement. We recorded $0.3 million as research and development expenses in the consolidated statement of operations during the year ended December 31, 2025, related to achievement of a development milestone for ATTO-3712. We could not estimate when other payments will be due but none of these events were probable to occur as of December 31, 2025 and March 31, 2026.
We entered into a new lease for office and lab space commencing on January 31, 2025, and expiring on June 30, 2028. Total future minimum lease commitments under the lease agreement as of March 31, 2026 are $5.2 million.
We enter into contracts in the normal course of business with suppliers, CROs, CMOs, clinical trial sites, and similar service providers. These agreements provide for termination at the request of either party generally with less than one-year notice and, therefore, we believe that our non-cancellable obligations under these agreements are not material. We do not currently expect any of these agreements to be terminated and did not have any non-cancelable obligations under these agreements as of December 31, 2025 and March 31, 2026.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including but not limited to those related to accrued research and development costs, the fair value of common stock and stock-based compensation expense, and preferred stock tranche liabilities. These estimates and assumptions are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates and assumptions could occur in the future. 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. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.
Although our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements included in this prospectus, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Accrued Research and Development Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses, including those related to clinical trials and product candidate manufacturing. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the services when we have not yet been invoiced or otherwise notified of actual costs. Our service providers invoice us in arrears or require prepayments for services performed, as well as on a pre-determined schedule or when contractual milestones are met. We make estimates
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of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:
| • | vendors in connection with preclinical and clinical development activities; |
| • | CROs in connection with clinical trials; and |
| • | CMOs in connection with the process development and scale-up activities and the production of preclinical and clinical trial materials. |
Costs for clinical trials and manufacturing activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as participant enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. We determine accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of studies, or the services completed. Our estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the service period as the services are provided.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. However, due to the nature of estimates, we cannot assure that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trials and other research activities.
Revenue Recognition
We generate revenue from a collaboration agreement that allows collaborators to develop, manufacture and commercialize product candidates. Collaboration revenue is recognized in accordance with ASC 606. Arrangements with collaborators may include intellectual property licenses, research and development services, and options to request us to perform additional research and development services.
We recognize collaboration revenue in an amount that reflects the consideration that we expect to receive in exchange for those goods or services when our collaborator, or customer, obtains control of promised goods or services. We follow a five-step approach: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service.
At contract inception, once the contract is determined to be within the scope of ASC 606, we identify the goods or services promised and determine the performance obligations by assessing whether each promised good or service is distinct. Goods or services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. We assess if such options represent material rights, including if the price for the additional goods/services is at a significant and incremental discount to standalone selling price of such goods/services. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
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The transaction price is generally comprised of a fixed fee due at contract inception and at specified future dates, variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when the customer recognizes net sales of licensed products. We measure the transaction price based on the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods and/or services to the customer. We utilize the “most likely amount” method to estimate the amount of variable consideration related to development and regulatory milestone payments. We evaluate whether the associated milestone event is considered most likely to be achieved and estimate the amount to be included in the transaction price. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The cumulative effect of changes to the estimated transaction price and estimated measure of progress to complete our performance obligation is recorded in the period in which changes are identified.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Stock-Based Compensation Expense
Stock-based compensation expense related to the stock-based awards granted to employees, consultants and Board members is measured at the grant date based on the fair value of the award. Compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period. We use the straight-line method to record the expense of awards with service-based vesting conditions. We account for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense. We have not issued awards for which vesting is subject to market or performance conditions.
We estimate the fair value of each restricted stock award (RSAs) based on the fair value of our common stock on the date of grant. We estimate the fair value of each stock option on the date of grant using the Black-Scholes option-pricing model. This model requires the use of highly subjective assumptions to determine the fair value of each stock-based award, including:
Fair value of common stock. The fair value of our common stock is determined by our board of directors with input from management and third-party valuation specialists. Our approach to estimating the fair value of our common stock is consistent with the methods outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the Practice Aid). Determining the best estimated fair value of our common stock requires significant judgment and we consider several factors, including our stage of development, equity market conditions affecting comparable public companies, significant milestones and progress of research and development efforts. See also the subsection titled “—Determination of Fair Value of Common Stock” below.
Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding and is based on the options’ vesting terms and contractual terms as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.
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Expected volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as we did not have any trading history for our common stock. We will continue to analyze the historical stock price volatility and expected term assumption as more historical data for our common stock becomes available.
Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.
Expected dividend yield. We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
See Note 10 to our audited consolidated financial statements and Note 10 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for information concerning certain of the specific assumptions we used in applying the Black-Scholes Option Pricing Model (OPM) and Probability-Weighted Expected Return Method (PWERM) to determine the estimated fair value of our stock options granted in the periods presented.
As of March 31, 2026, there was $5.3 million of total unrecognized stock-based compensation expense related to unvested stock options, which we expect to recognize over a remaining weighted-average period of 2.6 years. As of March 31, 2026, there was $0.7 million of total unrecognized stock-based compensation expense related to unvested restricted stock awards, which we expect to recognize over a remaining weighted-average period of 1.1 years. We expect to continue to grant equity-based awards in the future, and to the extent that we do, our stock-based compensation expense recognized in future periods will likely increase.
The intrinsic value of all outstanding stock options and RSAs as of March 31, 2026 was approximately $ million, based on the assumed initial public offering price of $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, of which approximately $ million related to vested stock options, and approximately $ million related to unvested stock options and RSAs.
Determination of Fair Value of Common Stock
As there has been no public market for our common stock prior to this offering, the estimated fair value of our common stock underlying our stock-based awards has been determined by our board of directors as of each option grant date with input from management, considering our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the Practice Aid.
The methodology to determine the fair value of our common stock included estimating the fair value of the enterprise using a market approach, specifically the recent transaction method, which uses one or more recent negotiated, arms-length transactions to determine the overall value of a company’s equity. The Practice Aid identifies various available methods for allocating enterprise value across classes and series of capital stock to determine the estimated fair value of common stock at each valuation date.
In accordance with the Practice Aid, we used the Option Pricing Method (OPM). Under the OPM, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The estimated fair values of the redeemable convertible preferred stock and common stock are inferred by analyzing these options. This method is appropriate to use when the range of possible future outcomes is so difficult to predict that estimates would be highly speculative, and dissolution or liquidation is not imminent.
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Based on our early stage of development and other relevant factors, we determined that an OPM, primarily the OPM backsolve methodology, was the most appropriate method for allocating the enterprise value to determine the estimated fair value of our common stock for valuations performed from our inception through the end of 2024. Within the OPM framework, the backsolve method was used to infer the total equity value implied by a recent financing transaction or by an estimated equity value of our pipeline product candidates. The backsolve method involves the construction of an allocation model that takes into account our capital structure and the rights, preferences and privileges of each class of stock, and also assumes reasonable inputs for the other OPM variables, including expected time to liquidity, volatility, and risk-free rate. The total equity value is then iterated in the model until the model output value for the equity class sold in a recent financing round equals the price paid in that round. The OPM is generally utilized when specific future liquidity events are difficult to forecast (i.e., the enterprise has many choices and options available), and the enterprise’s value depends on how well it follows an uncharted path through the various possible opportunities and challenges. In determining the estimated fair value of the common stock, our board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, we applied discounts to reflect the lack of marketability of our common stock based on the weighted-average expected time to liquidity. The estimated fair value of the common stock at each grant date reflected a non-marketability discount partially based on the anticipated likelihood and timing of a future liquidity event.
For valuations beginning in March 2025, we began using a hybrid method that combines the PWERM, an accepted valuation method described in the Practice Aid and the OPM. The PWERM contemplated a scenario in which we remained private with an uncertain future exit and scenario(s) in which we exited via initial public offering (“IPO”). For the scenario in which we remained private, we utilized the OPM as discussed above. For the scenario(s) in which we exited via IPO, we utilized an analysis based on observed step-up multiples achieved at IPO for comparable public issuers in which we applied a step-up multiple believed to be achievable at IPO to the post-money valuation achieved by us in our most recent (or expected future cross-over) financing round. The resulting total equity value for us estimated for a scenario(s) in which we exited via IPO was then allocated to our share classes using a waterfall allocation analysis that treats all preferred securities as immediately converting to common stock at the time of an IPO event. In determining the estimated fair value of the common stock, our board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, we applied discounts to reflect the lack of marketability of our common stock based on the weighted-average expected time to liquidity in each of the contemplated exit scenarios. The estimated fair value of the common stock at each grant date reflected a non-marketability discount partially based on the anticipated likelihood and timing of a future liquidity event.
In addition to considering the results of independent third-party valuations, our board of directors considered various objective and subjective factors to determine the fair value of common stock as of each grant date, including:
| • | the prices at which we sold shares of our preferred stock and the superior rights, preferences and privileges of our preferred stock relative to those of our common stock at the time of each grant; |
| • | the progress of our research and development programs, including the status of preclinical studies and clinical trials for our product candidates; |
| • | our stage of development and our business strategy, and material risks related to our business; |
| • | external market conditions affecting the biotechnology industry and trends within the biotechnology industry; |
| • | the competitive landscape for our product candidates; |
| • | our financial position, including cash on hand, and our historical and forecasted performance and operating results; |
| • | the lack of an active public market for our common stock and our redeemable convertible preferred stock; |
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| • | the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company, given prevailing market conditions; and |
| • | the economy in general. |
The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. As a result, if we had used significantly different assumptions or estimates, the fair value of our common stock and our stock-based compensation expense could be materially different.
Once a public trading market for our common stock has been established in connection with the completion of this offering, it will no longer be necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant, as the fair value of our common stock will be based on the quoted market price of our common stock.
Preferred Stock Tranche Liabilities
We determined that the contingent rights and obligations to issue shares of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock upon the achievement of certain milestones represented freestanding instruments. These instruments, referred to as the Series A redeemable convertible preferred stock tranche liability and Series B redeemable convertible preferred stock tranche liability, respectively, should be accounted for as an asset or liability, initially recorded and subsequently remeasured at fair value until their exercise or expiration.
We valued the preferred stock tranche liabilities as contingent forward contracts. The values were determined using a probability-weighted present valuation calculation. In determining the fair value of the preferred stock tranche liabilities, estimates and assumptions impacting fair value included (i) the estimated future values of the respective redeemable convertible preferred stock, (ii) discount rates, (iii) the estimated time to liquidity and probability of the tranche closing, and (iv) the expected term of the forward. We determined the per share future value of the Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock by back-solving to the initial proceeds of the Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock financings, respectively. We remeasured the Series A redeemable convertible preferred stock tranche liability and Series B redeemable convertible preferred stock tranche liability at each reporting period.
The Series A redeemable convertible preferred stock tranche was exercised in January 2024, upon the occurrence of the Series A milestone closing. In January 2025, upon the achievement of the Series B milestone, the Series B Milestone Closing was completed, and the associated Series B preferred stock tranche liability was settled. The fair value of the Series B redeemable convertible preferred stock was $1.55 per share and represented the only input used in determining the fair value of the Series B preferred stock tranche liability upon the Series B Milestone Closing.
The Series B redeemable convertible preferred stock tranche liability was valued using the following assumptions:
| May 1, 2024 | December 31, 2024 | |||||||
| Discount rate |
5.40 | % | 4.40 | % | ||||
| Term of forward (years) |
0.67 | 0.04 | ||||||
| Probability of tranche closing |
75.0 | % | 97.5 | % | ||||
The Series B redeemable convertible preferred stock tranche liability was initially recorded as a liability at $5.0 million in May 2024. We recognized changes in fair value of approximately $1.7 million as loss from the remeasurement of the Series B redeemable convertible preferred stock tranche liability in our consolidated
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statement of operations and comprehensive loss during the year ended December 31, 2024. As of December 31, 2024, the fair value of the Series B redeemable convertible preferred stock tranche liability was $6.6 million in our consolidated balance sheet. The Series B redeemable convertible preferred stock tranche was exercised in January 2025, upon the occurrence of the Series B redeemable convertible preferred stock milestone closing. We remeasured the Series B preferred stock tranche liability in January 2025 immediately prior to its settlement and determined that the fair value of the liability was $6.8 million, and therefore recorded an approximately $0.2 million loss in our consolidated statement of operations and comprehensive loss during the year ended December 31, 2025 and in our unaudited interim condensed consolidated financial statement of operations and comprehensive loss during the three months ended March 31, 2025.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.
Quantitative and Qualitative Disclosures About Market Risks
Interest Rate Risk
The primary objectives of our investment activities are to ensure liquidity and to preserve capital. We are exposed to market risks related to changes in interest rates of our cash equivalents and marketable securities. However, due to the nature of these cash equivalents and marketable securities, we do not believe that a hypothetical 10% increase or decrease in interest rates during any of the periods presented would have had a material effect on our consolidated financial statements included elsewhere in this prospectus.
Foreign Currency Risk
Our business is primarily conducted in U.S. dollars. Transactions conducted in foreign currencies have not had, and are not expected to have, a material effect on our results of operations, financial position or cash flows. Our operating expenses in countries outside the United States are payable in foreign currencies and therefore expose us to currency risk. We do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have had a material effect on our consolidated financial statements included elsewhere in this prospectus. We do not currently maintain a program to hedge exposures to non-U.S. dollar currencies.
Effects of Inflation
Inflation generally affects us by increasing our cost of labor and research and development costs. We do not believe that inflation had a material effect on our business, results of operations, or financial condition, or on our consolidated financial statements included elsewhere in this prospectus.
JOBS Act Transition Period and Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company (EGC). The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would 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 EGC or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.
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In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an EGC, we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended; (ii) provide all of the compensation disclosure that may be required of non-EGCs under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
We will remain an EGC under the JOBS Act until the earliest of (i) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (ii) the date we qualify as a “large accelerated filer,” as defined under Rule 12b-2 of the Exchange Act, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years, or (iv) the last day of our first fiscal year following the fifth anniversary of the closing of this offering.
We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company after this offering if either (i) the market value of our capital stock 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 capital stock 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, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
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Overview
We are a clinical-stage biopharmaceutical company developing next-generation biotherapeutics for immune-mediated diseases with high unmet need. Our lead pipeline candidates target commercially validated pathways and are designed through our ATTOBODY biologics platform to deliver improved treatments relative to the current standards of care. Leveraging our ATTOBODY platform, we have nominated three product candidates within our first two years, including one currently in the clinic, ATTO-1310. ATTO-1310 is an ATTOBODY-based therapeutic targeting interleukin-31 (IL-31) that completed dosing in a Phase 1 clinical trial in healthy volunteers (HVs) and patients in the first quarter of 2026. ATTO-2306 is an ATTOBODY-based bispecific targeting interleukin-13 (IL-13) and IL-31 that is in investigational new drug (IND)-enabling studies, and we expect to commence a Phase 1 clinical trial in the first half of 2027. Lastly, ATTO-1091 is our trispecific ATTOBODY-based Fc fusion protein that is designed to block TL1A, IL-23 and integrin a4ß7 simultaneously, and is currently in IND-enabling studies.
All of our product candidates have been internally discovered using our ATTOBODY biparatopic biologics platform, which we have in-licensed from Alamar Biosciences, Inc. (Alamar). Our ATTOBODY platform uses an evolution-driven, high-throughput process which allows for rapid discovery and creation of a high diversity of potential product candidates. Our initial focus for ATTOBODIES has been to develop novel biotherapeutics targeting highly synergistic, clinically and commercially validated pathways where early data indicates the potential of our candidates to deliver next-generation treatments relative to the current standards of care. Our early-stage discovery efforts have further expanded our pipeline to additional complex biologics, including conditional “AND” gate bispecifics directed against novel targets, which are historically difficult to develop with conventional antibody technology.
ATTO-1310 is a novel ATTOBODY-based Fc-fusion protein therapeutic that inhibits IL-31 and is currently in a Phase 1 clinical trial in HVs and patients suffering from chronic pruritus and high-itch atopic dermatitis (AD). IL-31 is commonly known as the “itch cytokine” and is upregulated in a host of pruritic diseases. We plan to evaluate ATTO-1310 for the treatment of chronic pruritic diseases such as chronic pruritus of unknown origin (CPUO), high-itch AD, cholestatic pruritus in primary biliary cholangitis (PBC) and primary sclerosing cholangitis (PSC) and chronic kidney disease-associated pruritus (CKD-aP), also known as uremic pruritus, in subsequent clinical trials. Beyond individual diseases, we also intend to pursue a potential pan-pruritic disease regulatory development path for patients with elevated levels of IL-31. Our initial clinical data demonstrated that ATTO-1310 has been well tolerated with low immunogenicity and pharmacokinetic (PK) and target engagement data supporting the possibility of an extended dosing regimen in human patients. Initial data from our Phase 1b clinical trial of ATTO-1310 in patients with chronic pruritus and high-itch AD showed rapid, deep itch relief in both patient populations and consistent lesion control for patients with high-itch AD. We believe ATTO-1310 has the potential to offer patients fast and deep itch relief, a favorable tolerability profile and convenient subcutaneous (SC) dosing once every three months.
ATTO-2306 is an ATTOBODY-based, half-life extended, immunoglobulin-G (IgG)-fusion protein therapeutic that inhibits IL-13 and IL-31. IL-13 and IL-31 reside in the only two clinically and commercially validated pathways in AD, and we believe that blocking them in a bispecific format offers a novel approach and a high likelihood of achieving differentiated treatment effect and extended dosing by avoiding the reverse dose-efficacy effect seen for IL-31Ra and the target-mediated drug disposition (TMDD) observed in treatments targeting IL-4Ra. We believe ATTO-2306 has the potential to provide a new standard of care for the treatment of AD and other immune-mediated skin diseases, such as chronic spontaneous urticaria (CSU) and prurigo nodularis (PN), by offering favorable lesion and itch control, as well as significantly improved convenience compared to currently available treatments. The LifeSci Reports estimated that by 2035 AD will affect 21 million adults and 10 million pediatric patients in the United States, with approximately one-third of AD patients having moderate-to-severe disease. We expect to commence a Phase 1 clinical trial for ATTO-2306 in the first half of 2027.
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ATTO-1091 is a trispecific ATTOBODY-based Fc-fusion protein therapeutic that inhibits TL1A, IL-23 and integrin a4ß7, and is currently undergoing IND-enabling studies. TL1A, IL-23 and integrin a4b7 all play distinct roles in inflammatory bowel disease (IBD) pathophysiology, contributing to inflammation and fibrosis in the gut and intestinal tissue. We believe that ATTO-1091 has the potential to improve upon existing induction and maintenance therapies for IBD by inhibiting three clinically validated pathways with preserved binding affinity and potency of each individual arm in the trispecific format. We plan to initiate a Phase 1 clinical trial for ATTO-1091 in the first half of 2027, subject to IND clearance.
Our Pipeline
We are developing a pipeline of novel biotherapeutics for the treatment of immune-mediated diseases (Figure 1). Our first two product candidates for our immune-dermatology franchise, ATTO-1310 and ATTO-2306, have broad potential to treat patients suffering from pruritic and lesional diseases. Our third program, ATTO-1091, broadens our reach to other inflammatory diseases such as IBD, a therapeutic area with substantial unmet need.
Figure 1: Our Pipeline
Beyond the initial monospecific and multispecific applications of our ATTOBODY platform, we are exploring the development of therapeutics aimed at novel and exploratory targets and pursuing conditional “AND” gate and tetraspecific formats. A conditional “AND” gate bispecific is a molecule in which one of the arms engages its target and imparts its action only when the second arm binds to its target.
Our Management Team and Investors
We were founded in 2023 to build a therapeutics company based on the potential of our ATTOBODY platform to discover and develop novel biologics targeting immune-mediated diseases. Our company was founded by a group of investors, including Alamar, with the goal of giving the ATTOBODY platform the dedicated attention and resources necessary to fully realize its potential for therapeutics. We are led by a proven management team with a strong track record of excellence, bringing decades of experience in drug discovery, development and company leadership through multiple therapeutic approvals and strategic transactions. Our management team brings and deploys a deep understanding of disease biology to deliver potential complex biologic treatment options discovered through our ATTOBODY platform.
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As of March 31, 2026, we have raised $255.8 million since our inception from leading life science investors with significant industry experience and expertise including certain of our current 5% or greater holders: Deep Track Capital, Frazier Life Sciences, Goldman Sachs Alternatives and venBio. Prospective investors should not rely on the past investment decisions of our investors, as our investors may have different risk tolerances and have received their shares in prior offerings at prices lower than the price offered to the public in this offering. In addition, some of these investors may not be subject to reporting requirements under Section 16 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, thus, prospective investors may not necessarily know the total amount of investment by each of our existing investors and if and when our existing investors may decide to sell any of their shares. See the sections titled “Certain Relationships and Related Party Transactions” and “Principal Stockholders” for more information on prior purchases by and current holdings of these stockholders.
Our Strategy
We believe the future treatment of immune-mediated diseases will be defined by precisely engineered biologics capable of delivering both enhanced efficacy as well as improved durability and patient convenience. Our strategy is to leverage our ATTOBODY platform to develop next-generation, precision-designed biologics with the potential to improve clinical outcomes while enabling infrequent SC dosing. We are pursuing this strategy through the following priorities:
| • | Establish leadership in chronic pruritic diseases with ATTO-1310: ATTO-1310 is an ATTOBODY therapeutic engineered to selectively target IL-31 with high affinity and potency, with the goal of rapidly suppressing itch while providing prolonged durability. We are developing ATTO-1310 as a potential leading therapy for chronic pruritic diseases across both dermatologic and systemic conditions. We believe chronic itch remains significantly underserved due to its substantial impact on patient quality of life and the lack of effective therapies. Our early clinical data demonstrated rapid and deep reductions in itch in patients with chronic pruritus and high-itch AD, together with a favorable tolerability profile. In addition, PK and pharmacodynamic (PD) data generated in HVs and patients support the potential for convenient quarterly SC dosing. We plan to advance ATTO-1310 through multiple Phase 2 clinical trials across a broad range of pruritic conditions, which could include CPUO, high-itch AD, PBC, PSC, CKD-aP and additional pruritic indications. |
| • | Advance ATTO-2306 as a differentiated therapy for inflammatory skin diseases: ATTO-2306 is designed to simultaneously inhibit IL-31 and IL-13 and incorporates a half-life extension domain to support prolonged dosing intervals. We are developing ATTO-2306, our bispecific therapeutic candidate, as a potential treatment for moderate-to-severe AD and other inflammatory skin diseases. We believe dual inhibition of IL-13 and IL-31 has the potential to provide differentiated clinical benefit by targeting two distinct, complementary and clinically validated pathways involved in inflammation and itch. In addition to AD, we believe ATTO-2306 may have therapeutic potential in other inflammatory conditions, including CSU and PN. Preclinical data generated to date demonstrate potent activity against both targets and PK properties that support the potential for quarterly or longer SC dosing. |
| • | Expand our pipeline of next-generation complex biologics: We believe the modular architecture, tunable affinity and engineering flexibility of the ATTOBODY platform well positions us to develop increasingly sophisticated biotherapeutics designed to precisely modulate disease biology. Our platform is intended to support the rapid generation and optimization of multispecifics and conditional “AND” gate bispecifics against validated and novel targets. Our next identified program, ATTO-1091, is being developed as a trispecific therapeutic for IBD. Beyond ATTO-1091, we intend to build a broad pipeline of additional ATTOBODY-based candidates targeting immune-mediated diseases and other serious conditions where we believe precise pathway modulation may improve efficacy, durability and patient outcomes. |
| • | Utilize strategic collaborations to extend platform reach and maximize value: We intend to selectively pursue strategic collaborations that may enhance the development, manufacturing and |
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| commercialization potential of our pipeline and platform. We believe our ATTOBODY technology and discovery capabilities may be applicable across a broad range of therapeutic targets and disease areas. Accordingly, we may enter into collaborations that provide access to complementary expertise, expand the reach of our platform, accelerate development timelines and strengthen our capital resources, while allowing us to retain meaningful participation in the long-term value creation of our programs and technology. |
Our ATTOBODY Platform and Discovery Capabilities
Immune-mediated and other diseases typically involve alterations in multiple pathways, deregulation of specific cell types and other complex mechanisms. These pathologic changes can be difficult to address with traditional approaches such as monoclonal antibodies or small molecules. We believe that complex biologic modalities such as multispecifics that can simultaneously target several pathways, or conditional “AND” gated bispecifics that can selectively target pathologic cell types while sparing broader cell populations, are the next generation of biologic therapies that will advance our ability to treat diseases.
ATTOBODIES Are Well-Positioned for the Creation of Complex Biologics
Our ATTOBODY platform is designed to create highly potent monospecifics, complex biologics, including multispecifics and conditional “AND” gated bispecifics, as well as other formats. ATTOBODY-based biologics are characterized by tunable affinity with the ability to achieve high potency, a high degree of modularity, precision design, infrequent dosing and robustness on par with IgG-based antibody biologics.
Each ATTOBODY consists of two heavy-chain antibody variable region domains (also known as VHHs or nanobodies) connected with a proprietary peptide-based linker, with the VHHs targeting two different epitopes on a target molecule in what is known as biparatopic binding (Figure 2). VHHs are a form of antibody naturally produced by camelids and other species, which can provide an attractive alternative to IgG-based biotherapeutics. Several FDA-approved drugs, such as CABLIVI and CARVYKTI, include VHHs. The ATTOBODY platform uses an evolution-driven, high-throughput process to screen millions of combinations of VHHs simultaneously and allows us to select ATTOBODIES that are highly developable and conform to a desired set of precision design biologic properties.
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Figure 2: The ATTOBODY Format
Each ATTOBODY binds to two distinct epitopes on a given target.
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ATTOBODIES against individual targets can be connected into complex biologics using a variety of scaffolds and formats without loss of activity or developability. To enable extended dosing intervals, we typically fuse ATTOBODIES to an Fc fragment-based scaffold or an IgG using proprietary or standard linkers (Figure 3).
Figure 3: Example Complex Biologic ATTOBODY Therapeutic Formats
The modularity of the ATTOBODY platform enables construction of ATTOBODIES into various formats with multiple potential configurations for a given number of targets, enabling creation of bespoke biotherapeutics.
We believe that ATTOBODIES offer several key properties that make them well-positioned for the creation of differentiated multispecific medicines:
| • | Tunable affinity with the option to achieve high potency, driven by the biparatopic mode of target binding, results in high achievable affinity directly from discovery screening, without the need for affinity maturation. |
| • | Precision design enables the discovery of ATTOBODIES that, for example, bind to specific epitopes on target molecules for target selectivity, spare desired biologic pathways such as decoy clearance mechanisms, or avoid known target-specific challenges such as aggregation. |
| • | Significant engineering potential with the ability to simultaneously connect multiple ATTOBODIES into multispecifics that retain the biological properties of each individual ATTOBODY with excellent developability. |
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| • | Tunable half-life through ease of fusion to a variety of half-life extending fragments such as albumin-binding VHHs, Fc fragments or IgGs, with potential for infrequent dosing in patients. |
| • | Simple manufacturing using standard equipment and processes for making biologics. |
We have completed over 15 successful ATTOBODY campaigns against a variety of target types including cytokines, cell surface molecules, and multi-transmembrane proteins with a 100% success rate in discovering individual ATTOBODIES and complex biologics conforming to desirable characteristics in preclinical studies. Our preclinical discovery timelines are short, reflective of the robust nature of the platform; we have been able to nominate a development candidate within 12 months of commencing a preclinical discovery process and to submit an IND application within two years from commencing such preclinical discovery. We believe that the initial clinical data from the ATTO-1310 Phase 1 trial has preliminarily demonstrated that ATTO-1310 has the potential for favorable tolerability, low immunogenicity, fast and deep pruritic relief and convenient quarterly SC dosing.
ATTO-1310 for Chronic Pruritic Diseases
ATTO-1310 is a novel half-life extended
anti-IL-31 ATTOBODY-based therapeutic currently in a Phase 1 clinical trial. We intend to develop ATTO-1310 for the treatment of chronic pruritic
diseases such as CPUO, high-itch AD, cholestatic pruritus, and CKD-aP, with a long-term precision immunology-based clinical strategy. We believe that the initial clinical data from the ATTO-1310 Phase 1 trial
has preliminarily demonstrated that ATTO-1310 has the potential for favorable tolerability, low immunogenicity, fast and deep pruritic relief and convenient quarterly SC dosing. We expect to initiate a Phase 2
trial by the first half of 2027.
Background on the Chronic Pruritus Market
Chronic pruritus is a debilitating condition affecting patients with skin diseases (e.g., CPUO, AD), chronic liver disease, chronic kidney disease (CKD), hematologic malignancies, neuropathic disorders and other pathologies. Epidemiologic studies estimate that chronic itch affects over 10% of the general population at any given time and a substantially higher proportion of patients with chronic skin disease, cholestatic liver disease or advanced chronic kidney disease. This translates into millions of patients worldwide living with persistent, often severe pruritus that interferes with sleep, work, mental health and social functioning. In the United States alone, based on the LifeSci Reports and other third-party data, we estimate that by 2035, there will be over 15 million patients with chronic pruritus. This includes at least approximately 3.9 million patients with CPUO, approximately 6.2 million patients with high-itch AD, approximately 2.7 million patients with hepatic itch, approximately 0.5 million patients with CKD-aP, approximately 0.2 million patients with prurigo nodularis, approximately 1.5 million patients with CSU and approximately 0.1 million patients with other pruritic diseases. Despite this broad burden, treatment remains largely non-specific, with patients cycling through off-label therapies with limited efficacy or tolerability. We believe there is a significant global need for pruritus-specific medicines that can be deployed across dermatology, hepatology, nephrology and other areas of medicine.
Background on the CPUO Market
CPUO refers to persistent pruritus lasting more than six weeks without inflammatory skin lesions, lacking an identifiable cause. The LifeSci Reports estimated that by 2035 CPUO will have an adult prevalence of approximately 4 million patients in the United States, with approximately two-thirds having moderate-to-severe disease.
Overview of Current CPUO Treatment and Unmet Needs
Current management of CPUO involves providing symptomatic relief and addressing the psychosocial toll of the symptoms; however, effective treatments remain limited. CPUO treatments often start with antihistamines, which are largely ineffective for non-histaminergic pruritus, followed by neuropathic agents like gabapentin and pregabalin, which modulate central sensitization. Second-line options include rifampicin and opioid receptor modulators like naltrexone, though their effectiveness varies.
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Unmet medical needs in chronic pruritus remain significant. Patients frequently report pruritus as their most debilitating symptom, sometimes linked to suicidal ideation. No FDA-approved targeted therapies exist to treat CPUO, highlighting the urgency to develop treatments.
Background on the High-Itch AD Market
AD, the most common form of eczema, is one of the most prevalent immune-mediated diseases, affecting individuals across all ages, ethnicities and geographies. AD is a multifactorial condition driven by genetic predispositions, immune system dysregulation and environmental factors. Independent third-party market research studies commissioned by us estimated that by 2035 AD will affect 21 million adults and 10 million pediatric patients in the United States, with approximately one-third having upper mild-to-moderate disease, defined as having an Eczema Area Severity Index (EASI) score of 5 to 21. Further, approximately 2 million adults and approximately 1 million pediatric patients with EASI of 5 to 21 will experience severe itch, representing the high-itch mild-to-moderate AD population.
AD significantly impacts quality of life with symptoms such as intense itching (pruritus), redness, dry skin, excoriation, and, in chronic cases, thickened and marked skin. These symptoms of pruritus and inflammatory skin lesions, typically occurring on the neck, inner elbows and behind the knees, create an “itch-scratch cycle” that exacerbates inflammation and dysfunction of the skin barrier. Pruritus is the most burdensome symptom of AD. As a result, patients often experience anxiety, depression and social isolation, further compounding the impact of the disease and ultimately resulting in a substantial economic burden.
Overview of Current High-Itch AD Treatment and Unmet Needs
The treatment for AD has advanced over the past decade, driven by a deeper understanding of disease pathology and the emergence of targeted therapies. For mild-to-moderate cases, topical steroidal and non-steroidal (e.g., EUCRISA, ZORYVE, OPZELURA, VTAMA) therapies remain the front-line treatment, effectively managing flares, but are limited by side effects such as skin thinning and the need for frequent reapplication across potentially broad body surface area. While these therapeutics have benefited patients, no therapies have been approved specifically for the treatment of high itch in AD patients, where significant unmet needs persist, including:
| 1. | Inadequate pruritic relief offered by current therapies. For example, OPZELURA, a currently approved topical drug for mild-to-moderate AD, requires twice-daily application, with only approximately 37% of patients (placebo-adjusted) achieving a 4-point or greater reduction in their daily itch score after 8 weeks of treatment. |
| 2. | Current treatment options result in poor adherence for patients. Poor adherence to topical therapies is a well-documented barrier to disease control in AD, where up to twice-daily application (e.g., EUCRISA, OPZELURA) poses significant barriers. For example, one study has shown that adherence to twice-daily topical application declines from approximately 81% on day 1 to approximately 50% by day 27.2 |
| 3. | Lack of FDA-approved itch-specific treatment option. No oral, topical, biologic or other systemic therapy has been indicated specifically for the treatment of severe itch in the mild-to-moderate AD population. |
Background on the Cholestatic Pruritus Market and Overview of Cholestatic Pruritus Treatment and Unmet Needs
Cholestatic pruritus is a highly debilitating, chronic disease affecting a large share of patients with PBC and PSC. The LifeSci Reports estimated that by 2035 there will be approximately 123,000 adults across the United
| 2 | Yentzer BA, et al. J Drugs Dermatol. 2010 Apr;9(4):324-9. |
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States with PBC/PSC, with approximately 60-65% of those having uncontrolled associated pruritus. The pruritus in these patients drives sleep disruption, functional impairment, depression, and, in extreme cases, liver transplantation in the absence of liver failure.
Management of cholestatic pruritus remains fragmented, relying on therapies such as bile acid sequestrants (e.g., cholestyramine), rifampin, opioid antagonists (e.g., naloxone, naltrexone), neuromodulators (e.g., gabapentin) and antidepressants (e.g., sertraline), which are often limited by suboptimal efficacy, complex dosing, unfavorable tolerability and/or gastrointestinal (GI)-tolerability concerns. More recently, peroxisome proliferator-activated receptor (PPAR) alpha and/or delta agonists, elafibranor (IQIRVO) and seladelpar (LIVDELZI), respectively, have been approved by the FDA for PBC liver disease control, and ileal bile acid transporter (IBAT) inhibitors, maralixibat (LIVMARLI) and odevixibat (BYLVAY), for pediatric bile-acid-mediated pruritus. IBAT inhibitors are also now in development for adult cholestatic pruritus secondary to PBC and PSC.
Background on the CKD-aP Market and Overview of CKD-aP Treatment and Unmet Needs
CKD-aP, also known as uremic pruritus, is a frequent condition across the CKD continuum, particularly in patients with advanced disease and end-stage renal disease. The LifeSci Reports estimated that by 2035 there will be approximately 36 million adults across the United States with CKD, with approximately 1 million of those patients having Stage 4 or Stage 5 disease. Of these, approximately 50% will have moderate-to-severe pruritus. CKD-aP is strongly associated with impaired sleep, reduced quality of life and higher hospitalization and mortality.
Today, treatment of CKD-aP is fragmented. Most patients are managed with non-labeled oral agents such as neuromodulators (e.g., gabapentinoids), antidepressants (e.g., sertraline) and opioid antagonists (e.g., naloxone, naltrexone), which provide inconsistent relief and are limited by sedation, and carry other adverse effects in elderly, comorbid populations. Intravenous difelikefalin (KORSUVA), a peripherally restricted kappa opioid agonist, is the sole approved drug specifically labeled for CKD-aP, but has only been trialed in and approved for the dialysis setting. We are not aware of any active biologic programs aimed broadly at the full CKD-aP population, presenting it as a strong opportunity for novel treatments.
Precision Immunology Overview
IL-31 is upregulated across a wide spectrum of pruritic diseases (Figure 4), creating a potentially vast opportunity for targeted treatment. In the long term, we plan to explore a precision immunology strategy centered on IL-31 as a key pruritogenic cytokine across multiple organ systems. Building upon our expertise and external clinical experience in CPUO, high-itch AD, cholestatic pruritus, CKD-aP and other pruritic diseases, there is an opportunity to develop a deep understanding of the pharmacodynamic (PD) relationship between IL-31 levels, ATTO-1310 treatment, and pruritus. Concurrently, we have access to a proprietary, highly sensitive anti-IL-31 assay which could be developed into a biomarker and used to identify patients whose itch is driven by IL-31, independent of the underlying pathophysiology.
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Figure 4: Serum IL-31 Levels in Healthy Patients and Patients Suffering from Pruritic Diseases
Higher levels of serum IL-31 evident across a wide spectrum of immune-mediated conditions when compared to healthy subjects. By targeting IL-31, ATTO-1310 has the potential to treat pruritus across diseases.
Rationale for IL-31 in Pruritic Diseases
IL-31 is a Central Itch Cytokine in a Host of Indications
The IL-31 pathway plays a crucial role in the pathogenesis of pruritic diseases, making it a key target for therapeutic development (Figure 5). IL-31 binds to a heterodimeric receptor, consisting of IL-31 receptor alpha (IL-31Ra) and oncostatin M receptor beta (OSMRß), subsequently signaling through the Janus kinase/signal transducer and activator of transcription (JAK/STAT) pathway, the phosphoinositide-3-kinase/Akt (PI3K/AKT) pathway and the mitogen-activated protein kinase (MAPK) pathway. A wide range of biological functions are attributed to IL-31, such as the regulation of immune responses, the induction of chemokines, signal proteins and proinflammatory cytokines, and the regulation of cell proliferation. IL-31 has been labeled the “itch cytokine” for its ability to induce itch: (1) IL-31 expression is increased in the lesional skin of patients with pruritic skin disorders; (2) its receptors are localized in dorsal root ganglia and cutaneous nerve fibers; (3) scratching behavior is increased in transgenic mice overexpressing IL-31, as well as in mice or dogs injected with IL-31. IL-31 impairs skin barrier integrity by affecting structural proteins like filaggrin, facilitating water loss and exposure to irritants, which perpetuates inflammation and itching.
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Figure 5: Chronic Pruritus and Role of IL-31 in Driving Itch
IL-31 signaling pathway affects a broad range of cells and biological functions, perpetuating an “itch-scratch” cycle through neuroinflammation and fibrosis.
IL-31 in CPUO
In CPUO, itch is driven by skin barrier dysfunction, immune-senescence and neurodegeneration. IL-31 is elevated in patients with CPUO compared to healthy subjects, and our clinical data indicates that inhibiting IL-31 in patients with chronic pruritus provides rapid and deep symptom relief. Based on our data, and our discussions with key opinion leaders in CPUO, we believe blocking IL-31 is the most attractive approach to treating CPUO.
IL-31 in High-Itch AD
AD pathology is closely linked to Th2 cytokines, including IL-13 and IL-31, which contribute to skin barrier dysfunction, worsen inflammation, induce pruritus and sustain a chronic disease cycle. In particular, IL-31 is a key cytokine that directly activates pruriceptive sensory neurons and is elevated in patients with AD compared to healthy subjects. The role of the IL-31 pathway in driving itch and lesions has been validated clinically through the FDA approval of nemolizumab, an anti-IL-31 receptor alpha (IL-31Ra) antibody, for AD and PN. We believe that inhibiting IL-31 in patients suffering from mild-to-moderate, high-itch AD is the most attractive approach to providing relief for the patients suffering from this subtype of AD.
IL-31 in Other Chronic Pruritus Disease (e.g., Cholestatic Pruritus, CKD-aP)
In various third-party studies conducted by independent investigators, elevated serum IL-31 concentrations have been detected in patients with PBC and PSC and correlate with itch severity, independent of liver biochemistry. In a third-party Phase 3 clinical trial of seladelpar in patients with PBC, the average baseline
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concentration of serum IL-31 was more than 30-fold higher than matched HVs. In that clinical trial, serum IL-31 concentrations were significantly correlated with pruritus severity at baseline, and treatment-related improvement in pruritus was also associated with dose-dependent reductions in serum IL-31 (Figure 6).3 Furthermore, recent third-party studies have provided evidence of a hepatic source of IL-31 in cholestatic liver diseases. Similarly, third-party clinical trials of an IBAT antagonist, linerixibat, in patients with PBC demonstrated that reduction of pruritus was significantly correlated with reduction of IL-31.4 Additionally, FXR agonism elevates serum IL-31, which correlates with higher itch in patients with NASH.5 Collectively, we believe these data provide strong support for a mechanistic role of IL-31 in driving itch in PBC/PSC, enabling the development of ATTO-1310 in this indication and potential utilization of resulting clinical data as a building block in our precision immunology strategy for this asset. Additionally, we believe PBC/PSC could serve as a gateway to developing ATTO-1310 in broader hepatic itch.
Figure 6: IL-31 Levels in Patients with PBC in the ENHANCE Trial
Reduction of IL-31 is associated with reduction of itch in PBC patients treated with seladelpar.
Separately, in patients with CKD-aP, elevated IL-31 serum concentrations have also been detected. Studies of nemolizumab and difelikefalin in CKD-aP have provided further support for targeting IL-31 in this disease. In a third-party Phase 2a (N=69) trial, hemodialysis-dependent CKD patients suffering from chronic pruritus and whose serum IL-31 levels were elevated above 0.86 pg/ml demonstrated a trend for relief of pruritus after administration of nemolizumab. Furthermore, in a third-party Phase 3 clinical trial of difelikefalin in CKD-aP patients, serum IL-31 levels were significantly reduced in responders treated with difelikefalin as compared to non-responders.
Limitations of Current Anti-Pruritic Treatments
Targeting IL-31 offers the potential to provide rapid relief with a favorable tolerability profile. The role of blocking the IL-31 pathway in reducing pruritus has been validated by nemolizumab (NEMLUVIO), an IL-31Ra antagonist, which received FDA approval in 2024. NEMLUVIO is approved in PN and AD and showed relief of pruritus and associated morbidities in these conditions. However, NEMLUVIO has some notable limitations:
| • | Unoptimized potency: Potency is limited by a single unique epitope on both binding regions of the molecule. |
| 3 | Kremer et al. Hepatology. 2023 Dec 20;80(1):27–37. |
| 4 | Xu et al. Hepatology. 2023 Jan 1;77(1):20-32. |
| 5 | Kremer et al. Hepatology. 2023 Dec 20;80(1):27–37. |
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| • | Reverse dose-efficacy profile (higher doses less efficacious than lower doses): Nemolizumab demonstrated a reverse dose-efficacy curve in three separate populations: AD, pediatric AD and CKD-aP, resulting in a limitation of the achievable dose level. By targeting the IL-31 cytokine as opposed to the IL-31 receptor, we believe we will be able to dose ATTO-1310 at higher levels and achieve deeper pruritic relief through stronger pathway blockade. Of note, lokivetmab, an anti-IL-31 antibody used to treat AD in canines, targets the IL-31 cytokine and demonstrates linear dose-efficacy. |
| • | Monthly dosing schedule (with the option for extending to Q2M dosing after 16 weeks if patient is well controlled in AD only): Infrequent dosing intervals, such as quarterly, are preferred by both patients and physicians for better adherence and convenience. |
Within our initial target disease indications for ATTO-1310, nemolizumab and dupilumab (DUPIXENT) are currently being developed in CPUO, and to our knowledge, neither have an active program in high-itch mild-to-moderate AD. In CPUO, there are no currently approved targeted treatments. In high-itch mild-to-moderate AD, existing treatments have suboptimal profiles for patients, including:
| • | Remaining significant efficacy gap in pruritic relief. |
| • | Inconvenient dosing, requiring frequent, once- or twice-daily topical administration or once- or twice-monthly SC injection. |
| • | Burdensome adverse events including headache, nausea and diarrhea (roflumilast), a black box warning (ruxolitinib) and conjunctivitis and facial erythema (dupilumab). |
Our Solution: ATTO-1310
Molecule Design Considerations
ATTO-1310 is a novel, recombinant humanized Fc fusion protein that binds to IL-31 with high affinity and potently blocks IL-31-induced signaling (Figure 7). The Fc portion of ATTO-1310 has been engineered to contain the M252Y/S254T/T256E (YTE) mutation, enhancing FcRn binding and increasing serum half-life. Unlike nemolizumab, which binds to the IL-31Ra, ATTO-1310 directly targets the IL-31 ligand and achieves potent inhibition through simultaneous binding of two unique epitopes on the same molecule, offering the potential for deeper and more rapid pruritic relief. We have evaluated the tolerability, activity and developability of ATTO-1310 in a range of preclinical studies and clinical trials.
Figure 7: ATTO-1310
ATTO-1310 is composed of two anti-IL-31 ATTOBODIES fused to an Fc fragment with a YTE mutation.
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ATTO-1310 Target Product Profile
We believe that ATTO-1310 has the potential to be a favorable treatment option for CPUO, high-itch AD, cholestatic pruritus, CKD-aP and other pruritic indications. The molecule is designed for:
| 1. | Deep anti-pruritic responses due to the high potency of target inhibition offered by the ATTOBODY format and the potential to drive higher therapeutic exposure by avoiding the reverse dose-efficacy effect observed for targeting IL-31Ra. ATTO-1310’s potential to offer rapid, deep itch relief is supported by our initial Phase 1b clinical trial results. |
| 2. | Fast pruritic relief, based on the speed of antipruritic effect observed in canines dosed with lokivetmab (anti-IL-31) and initial clinical trial results of ATTO-1310. |
| 3. | Favorable tolerability profile, based on a robust body of clinical evidence available for nemolizumab (anti-IL-31Ra) and initial clinical trial results of ATTO-1310. |
| 4. | Up to quarterly maintenance SC dosing for patient convenience, supported by our ongoing Phase 1 clinical trial results. |
To assess the peak U.S. sales potential for ATTO-1310 in our target indications, we commissioned a series of primary and secondary market research projects carried out by a third party. Based on the results of these projects, the base case for peak U.S. sales potential for ATTO-1310, if approved, was estimated at over $11 billion across CPUO, high-itch AD, cholestatic pruritus and CKD-aP, with an upside forecast reaching over $22 billion.
Figure 8: ATTO-1310 Peak U.S. Sales Potential
Base case forecast for ATTO-1310 offers over $11 billion peak U.S. sales potential.
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Preclinical Studies of ATTO-1310
Activity of ATTO-1310 in Inhibiting Pruritus in Preclinical Models
We tested the ability of ATTO-1310 to prevent IL-31-induced pruritus in two animal models. In a mouse model, ATTO-1310 reduced IL-31-induced pruritus at concentrations ranging from 1 mg/kg to 3 mg/kg. Additionally, in a NHP model of pruritus, we tested the duration of ATTO-1310-mediated protection from IL-31-induced itch. To establish a baseline, we injected NHPs with 1 mg/kg of IL-31 and saw evidence of pruritic induction, as measured by scratching activity. Ten days later, on day 0 of the experiment, we injected NHPs with 0.5 mg/kg, 1 mg/kg or 5 mg/kg of ATTO-1310. On days 1, 8, 15, and 22 after the ATTO-1310 injection, we repeated the IL-31 challenge and measured the scratching response. We saw a reduction in scratching events through approximately 15 to 20 days post-ATTO-1310 injection at the 1 mg/kg and 5 mg/kg doses, suggesting durable anti-pruritic activity of ATTO-1310.
Tolerability of ATTO-1310 in NHP Studies
To enable human studies of ATTO-1310, we carried out a GLP toxicology study in NHPs. Animals were administered doses of ATTO-1310 between 2 mg/kg and 24 mg/kg for intravenous (IV) delivery and between 2 mg/kg and 8 mg/kg for SC delivery. Following the last dose, a subset of animals underwent an eight-week recovery phase. In a series of standard safety assessments including clinical observations, gross pathology, histopathology and others, we determined that the highest dose tested was tolerated providing for what we believe will be a large safety margin for our planned Phase 1 clinical trial.
Clinical Development of ATTO-1310
Phase 1 Clinical Trial
ATTO-1310 is currently being evaluated in a four-part, randomized, double-blinded, placebo-controlled Phase 1 clinical trial (Figure 9). Parts 1 and 2 of the trial, evaluating the tolerability, PK and immunogenicity of ATTO-1310 in HVs, have now been completed. Parts 3 and 4 of the trial, evaluating the tolerability, PK, immunogenicity, PD, and efficacy of ATTO-1310 in patients suffering from high-itch AD or chronic pruritus are currently ongoing.
Figure 9: ATTO-1310 Phase 1 Clinical Trial Design
ATTO-1310 Phase 1 clinical trial designed in four parts: Part 1 is a HV SAD study, Part 2 is a HV MAD study, Part 3 is being conducted in patients with high-itch AD and Part 4 is being conducted in patients with CP.
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Phase 1 Healthy Volunteer SAD and MAD (Parts 1 and 2) Design
In total, 56 HVs were enrolled in Parts 1 and 2 of the Phase 1 clinical trial. Demographically, subjects were predominantly white (93%), female (59%) and middle-aged (mean age of 38 years).
In Part 1, 40 HVs were randomized to ATTO-1310 or placebo at a 3:1 ratio and received a single dose of ATTO-1310 delivered either IV (N=32) at one of four ascending dosing levels, with the highest dose being 9.0 mg/kg, or SC (N=8) at 1.5 mg/kg. Primary endpoints included the frequency and severity of adverse events (AEs). Secondary endpoints included PK, immunogenicity and bioavailability of ATTO-1310. Exploratory endpoints included changes from baseline in total and free IL-31.
In Part 2, 16 HVs were randomized to ATTO-1310 or placebo at a 3:1 ratio and received two doses of ATTO-1310 delivered SC at 1.5 mg/kg or 4.5 mg/kg on days 1 and 29 of the trial.
Preliminary Tolerability Results
As summarized in Figure 10 below, ATTO-1310 was well tolerated. Treatment emergent adverse events (TEAEs) were reported by 26 subjects across the SAD and MAD cohorts. The majority of TEAEs were either Grade 1 (mild) or Grade 2 (moderate) in severity. There was no increase in the frequency of TEAEs with increasing dose. The only Grade 3 (severe) AE reported was fainting (vasovagal syncope), which occurred in connection with a blood draw in the placebo cohort, and was not considered related to study treatment. Among 24 HVs who have received SC injections (18 ATTO-1310, 6 placebo), no injection site reactions were reported. No clinically relevant trends were observed in laboratory analyses, vital signs or electrocardiogram.
Figure 10: Summary of TEAEs in HV SAD and MAD Portions of ATTO-1310 Phase 1 Clinical Trial
ATTO-1310 has demonstrated a favorable tolerability profile in HVs. Notes: a. Syncope, not treatment related; b. Flushing, nausea, headache, nasal congestion, abdominal discomfort, feeling cold (all Grade 1), possibly related; c. Allergic reaction to excipient (Grade 1), possibly related; d. Pyrexia, Grade 1.
As summarized in Figure 11 below, among TEAEs with frequency 3% or higher among tested subjects, the most common AEs included headache and nausea. Of note, no treatment-related TEAEs were identified at the highest tested dose level, 9.0 mg/kg IV.
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Figure 11: Common and Treatment-Related TEAEs in HV SAD and MAD Portions of ATTO-1310
Phase 1 Clinical Trial
| * | MedDRA preferred terms assigned to infusion-related reaction |
Few TEAEs emerged in Phase 1 SAD and MAD studies of ATTO-1310 Phase 1 clinical trial (left) and no treatment-related TEAEs were identified in the highest (9.0 mg/kg) dose cohort (right).
Preliminary PK Results
ATTO-1310 showed a generally dose-proportional increase in maximum serum concentration (Cmax) and total drug exposure over time (area under the curve, AUC) over the tested dose range, and good bioavailability after SC dosing (Figures 12 and 13).
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Figure 12: Mean Serum ATTO-1310 Following IV Administration in HV
ATTO-1310 showed a generally dose-proportional increase in Cmax and total drug exposure over time following IV administration.
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Figure 13: Mean Serum ATTO-1310 Following SC Administration in HV
ATTO-1310 showed a generally dose-proportional increase in Cmax and total drug exposure over time, and good bioavailability following SC administration.
Immunogenicity Results
Of the 42 subjects treated with active treatment in Parts 1 and 2, only two subjects developed low-titer anti-drug antibodies (ADAs) post-treatment. No neutralizing or PK-altering ADAs were observed.
PD Results
To better understand the potential for a cross-indication clinical development strategy, we carried out several studies to explore the feasibility of using IL-31 as a biomarker, as well as to observe the trends in serum IL-31 levels following administration of ATTO-1310.
IL-31 Levels in Healthy Volunteer and Patient Samples
Using a proprietary, ultra-sensitive assay, we measured the levels of IL-31 in pre-dose serum samples from the HVs participating in the Phase 1 clinical trial of ATTO-1310, as well as in HV, CPUO patient and AD patient samples obtained from two independent academic centers. We observed low levels of IL-31 in all HV samples. In serum from patients suffering from CPUO or AD we found IL-31 levels to be elevated compared to the normal HV samples (Figure 13). These data confirmed that IL-31 is elevated in serum of patients suffering from pruritus, and that our assay offers sufficient sensitivity to measure serum IL-31 levels in HVs and patients, as well as being able to differentiate between these two populations.
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Figure 14: Serum IL-31 Levels
IL-31 serum levels are elevated in CPUO and AD patient samples compared to HV samples.
Impact of ATTO-1310 on IL-31 Target Engagement
We tested free and total serum IL-31 levels in HVs dosed in the SAD and MAD portions of our Phase 1 clinical trial, with samples obtained pre-dose of ATTO-1310, and at various intervals extending up to 112 days post-dose. We then calculated percent free IL-31 as the ratio of free to total as a measure of IL-31 target engagement. Across all dose groups, percent free IL-31 rapidly dropped by greater than 95% and was sustained for 12 weeks at doses of 4.5 mg/kg or higher. A dose-dependent pattern in the extent and duration of free IL-31 reduction was observed, as shown in Figure 15 below.
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Figure 15: Percent Free IL-31 in ATTO-1310 HV
ATTO-1310 has demonstrated >95% coverage of percent free IL-31 for over 12 weeks, suggesting potential for infrequent dosing.
ATTO-1310: Phase 1b Proof-of-Concept Trials in Patients Suffering from Chronic Pruritus and High-Itch AD
In Parts 3 and 4 of the Phase 1 clinical trial of ATTO-1310, a total of 26 patients in each part were randomized at a 2:1 ratio to receive ATTO-1310 at 4.5 mg/kg or 9.0 mg/kg, or placebo, in each case administered SC. In each part, 12 to 14 patients were enrolled at each dose level. Recruitment across clinical sites in the United States and Canada is complete. The study is currently ongoing and remains blinded at an individual level. The study aims to assess the PK, tolerability, immunogenicity and PD of ATTO-1310 in patients suffering from chronic pruritus and high-itch AD. Clinical efficacy endpoints will be evaluated as exploratory assessments to demonstrate initial proof of clinical activity. During the initial four weeks of the study rescue medication use is prohibited. Exploratory efficacy endpoint readouts are carried out at the 4-week and 16-week timepoints. Given that patients only receive a single dose of the drug and are prevented from use of rescue medication for the first 4 weeks, the 4-week timepoint is the most relevant for the assessment of the clinical activity of ATTO-1310. Figure 16 delineates the trial design for each cohort.
Figure 16: ATTO-1310 Phase 1 Clinical Trial Design – Chronic Pruritus and High-Itch AD
ATTO-1310 Phase 1 Parts 3 and 4 consists of 12-14 patients per cohort. Key exploratory efficacy endpoints include PP-NRS, SD-NRS, EASI, SCORAD, and total and free IL-31, among others.
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ATTO-1310 Phase 1b Clinical Trial: Baseline Characteristics
In the chronic pruritus cohorts, 12 and 14 patients were enrolled at the 4.5 mg/kg and 9.0 mg/kg dose levels, respectively. The mean age in both cohorts was approximately 60 to 62 years, consistent with the increased prevalence of CPUO among the elderly population (Figure 17). The mean baseline PP-NRS (peak pruritus numerical rating scale) scores were balanced and above 7, consistent with the inclusion criteria.
Figure 17: Baseline Characteristics of Chronic Pruritus Cohorts
12 and 14 patients were enrolled in the 4.5 mg/kg and 9.0 mg/kg CP cohorts, respectively, of ATTO-1310.
In the high-itch AD cohort, 12 and 14 patients were enrolled at the 4.5 mg/kg and 9.0 mg/kg dose levels, respectively. Patients were balanced across active treatment and placebo cohorts with respect to baseline PP-NRS score, with mean PP-NRS above 7, consistent with inclusion criteria. By chance, patients in the placebo cohorts exhibited higher baseline EASI scores than patients in the active treatment arms (Figure 18).
Figure 18: Baseline Characteristics of High-Itch AD Cohorts
12 and 14 patients were enrolled in the 4.5 mg/kg and 9.0 mg/kg high-itch AD cohorts, respectively, of ATTO-1310.
ATTO-1310 Phase 1b Clinical Trial: Preliminary Tolerability
ATTO-1310 was well tolerated, with the majority of TEAEs at Grade 1 or Grade 2. At present, the trial remains blinded at an individual level.
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ATTO-1310 Phase 1b Clinical Trial: Preliminary PK
The PK profile of ATTO-1310 in chronic pruritus and high-itch AD patients was generally linear and increased in a dose proportional manner (Figure 19). The PK profile was comparable to that observed in HVs.
Figure 19: Mean Serum ATTO-1310 Following SC Administration in Chronic Pruritus and High-Itch AD Patients
Generally dose-dependent PK profile of ATTO-1310 observed in chronic pruritus and high-itch AD cohorts.
In the chronic pruritus cohort, out of 17 patients treated with ATTO-1310, one patient developed post-dosing ADAs for a treatment-induced ADA rate of 5.9%. In the AD cohort, out of 13 patients treated with ATTO-1310 for whom data is available, one patient developed post-dosing ADAs for a treatment-induced ADA rate of 7.7%. In both cohorts, the ADAs had no visible impact on the PK profile of the drug and were not neutralizing.
ATTO-1310 Phase 1b Clinical Trial: Preliminary PD
We tested free and total serum IL-31 levels in chronic pruritus and high-itch AD patients dosed at 4.5 mg/kg or 9.0 mg/kg, with samples obtained pre-dose of ATTO-1310, and at various intervals extending up to 112 days post-dose. We then calculated percent free IL-31 as the ratio of free to total. Across all patient samples, we saw a rapid reduction of percent free IL-31 by at least 95% of baseline and this was maintained for at least 12 weeks post single dose (Figure 20). We believe this data supports the potential for quarterly SC dosing of ATTO-1310 in the maintenance setting.
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Figure 20: Percent Free IL-31 Reduction in Chronic Pruritus and High-Itch AD Patient Cohorts
Rapid reduction by more than 95% of percent free IL-31 that is maintained for at least 12 weeks, supporting quarterly SC dosing.
ATTO-1310 Phase 1b Clinical Trial in Chronic Pruritus: Preliminary Anti-Pruritic Activity
Given small patient numbers in our Phase 1b clinical trial, we elected to analyze results for both the individual dose levels of 4.5 mg/kg and 9.0 mg/kg, as well as a pooled population across both dose cohorts.
We assessed one of our exploratory efficacy endpoints, PP-NRS, by recording changes in the average weekly PP-NRS reported by patients. PP-NRS is a patient reported outcome where once per day, each patient records their highest itch score (peak pruritus) in the past 24 hours using a scale of 0 to 10. Daily scores are then averaged to arrive at a weekly mean (Figure 21).
First, we calculated the share of patients in the active or placebo groups who achieved an at least 4-point reduction in PP-NRS (PP-NRS 4) at various timepoints when compared to their baseline score. In the active treatment group, 50%, 78%, and 65% of patients met this responder definition at week 4 for the 4.5 mg/kg, 9.0 mg/kg and pooled cohorts, respectively. We observed early clinical activity with ATTO-1310, with 38%, 56% and 47% of treated patients reaching PP-NRS 4 by week 2 in each of these cohorts. In contrast, none of the patients treated with placebo showed a 4-point or more reduction in PP-NRS at any of the tested time points. Starting at week 3 for the 9.0 mg/kg cohort and week 2 for the pooled cohort, the difference in response rate between the active and placebo groups became statistically significant (nominal p-value <0.05).
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Figure 21: Chronic Pruritus PP-NRS 4 Responder Interim Analysis
ATTO-1310 rapidly and deeply relieves itch in chronic pruritus patients. Error bars represent confidence intervals. * p < 0.05, ** p < 0.01
Next, we looked for evidence of deeper responses by assessing the share of patients who achieved PP-NRS score of <2 (itch-free or nearly itch-free). Here, 25% and 44% of patients in the active arm dosed at 4.5 mg/kg or 9.0 mg/kg, respectively, met this threshold by week 4, with some patients achieving an itch-free or nearly itch-free status as early as week 1 (Figure 22). None of the patients in the placebo-treated groups showed this level of response.
Figure 22: Chronic Pruritus PP-NRS <2 Interim Analysis
ATTO-1310 enables itch-free or nearly itch-free status in many patients. Error bars represent confidence intervals.
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Limited trials have been carried out in chronic pruritus patients. However, in a recent Phase 3 clinical trial of dupilumab in CPUO (NCT05263206), approximately 18% of dupilumab-treated patients achieved PP-NRS 4 at week 4.
ATTO-1310 Phase 1b Clinical Trial in High-Itch AD: Preliminary Anti-Pruritic Activity
Similar to the chronic pruritus cohorts, we analyzed the results for individual dose levels and a pooled cohort and assessed anti-pruritic activity by measuring PP-NRS.
Here, 63%, 30% and 44% of ATTO-1310-treated patients achieved PP-NRS 4 at week 4 for the 4.5 mg/kg, 9 mg/kg and pooled cohorts, respectively. In comparison, only one placebo patient at each dose level achieved PP-NRS 4, for a placebo rate of 25% (Figure 23).
Figure 23: High-Itch AD PP-NRS 4 Responder Interim Analysis
ATTO-1310 rapidly and deeply relieved itch in high-itch AD patients. Error bars represent confidence intervals.
ATTO-1310 demonstrated fast and deep reduction of pruritus. We believe this supports our hypothesis that direct inhibition of IL-31 is the optimal approach for reducing itch.
In published results of itch reduction achieved by dupilumab, lebrikizumab and nemolizumab (baseline PP-NRS 7+ subgroup analysis), 19%, 32% and 28% of dosed patients reached PP-NRS 4 by week 4.
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ATTO-1310 Phase 1b Clinical Trial in High-Itch AD: Preliminary Lesion Control Activity
Inhibition of IL-31 has been shown to reduce lesions in AD patients, as demonstrated by nemolizumab used on the background of topical corticosteroids (TCS). To determine the extent of lesion reduction offered by ATTO-1310 monotherapy treatment, we measured the EASI and IGA (Investigator Global Assessment) scores of patients in our trial.
We observed a 61% and 51% EASI change from baseline (EASI-CFB) in the active arm at week 4 for the 4.5 mg/kg and 9.0 mg/kg cohorts, compared to 17% EASI-CFB for the pooled placebo group. (Figure 24).
Figure 24: High-Itch AD EASI % Change From Baseline at Week 4
Observed consistent lesion control at both ATTO-1310 doses. * p ≤ 0.01
When looking at responder definition, we assessed the percentage of patients in the active and placebo arms of the study achieving EASI-50 through EASI-100 (at least 50% improvement in EASI score and 100% improvement in EASI score, respectively), and IGA 0/1 (clear or almost clear skin). Comparing activity across the two tested dose levels, we observed similar lesional improvement. Notably, as we increased the stringency of response definition from EASI-50 to EASI-100 and to IGA 0/1, the separation of active arm from placebo becomes apparent, with no placebo patient achieving a response higher than EASI-50 (Figure 25).
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Figure 25: High-Itch AD EASI and IGA 0/1
ATTO-1310 demonstrated clinical activity in lesion relief at both tested doses.
Further, we determined the extent of IGA score improvement from baseline in ATTO-1310- and placebo-treated patients. In placebo-treated patients, we observed little to no improvement in IGA score between weeks 0 and 4. In contrast, ATTO-1310-treated patients demonstrate marked improvement in IGA scores at week 4 at both dose levels (Figure 26).
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Figure 26: High-Itch AD IGA Improvement
ATTO-1310 demonstrated greater IGA improvement at week 4 compared to placebo.
Collectively, we believe these results suggest the potential for good lesional improvement in high-itch AD patients, and combined with the initial pruritic results observed from our Phase 1b clinical trial in patients with chronic pruritus and high-itch AD, demonstrate preliminary clinical activity.
Planned Phase 2 Clinical Trials for ATTO-1310
Encouraged by the strong activity observed in Phase 1b clinical trial of ATTO-1310 in chronic pruritus and high-itch AD patients, we plan to commence Phase 2 clinical trials of ATTO-1310 in both indications.
In chronic pruritus, we are currently preparing for a global Phase 2b clinical trial that would enable Phase 3 clinical trials. In this Phase 2 clinical trial, we plan to test two dose levels of ATTO-1310 at induction, administered SC at weeks 0, 4, and 8, followed by a single dose level administered either every 4 or every 12 weeks. The primary endpoint of the study will be efficacy (improvement of itch), with secondary endpoints including improvement in itch, sleep and Health-Related Quality of Life (HRQoL), as well as safety. Exploratory endpoints will include safety, PK, PD and immunogenicity. The Phase 2 clinical trial is expected to commence in the first half of 2027.
In high-itch AD, we plan to initiate a Phase 2 clinical trial in the first half of 2027.
ATTO-1310: Phase 1b Proof-of-Concept Trials in Non-Inflammatory Pruritic Disease
We are also planning a Phase 1b clinical trial of ATTO-1310 in patients suffering from PBC or PSC (Figure 27). The Phase 1b clinical trial is expected to be a double-blind, placebo-controlled, multiple ascending dose (MAD) study where the primary objective of the trial will be to assess the PK of ATTO-1310 in patients with cholestatic pruritus, with secondary objectives including an assessment of tolerability, PD and immunogenicity associated with the administration of ATTO-1310. Exploratory objectives will measure the change in pruritus scores in response to ATTO-1310 compared to placebo treatment. We expect to dose the first subject in the second half of 2026.
In addition to this PBC/PSC trial, we may consider commencing a second Phase 1b clinical trial for ATTO-1310 in patients suffering from CKD-aP (Figure 27).
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Figure 27: ATTO-1310 Clinical Development Plan
Planned ATTO-1310 clinical trials in CPUO, high-itch AD, and cholestatic pruritus, with potential expansion opportunities in CKD-aP and other pruritic conditions as well as potential to pursue a biomarker-enabled precision strategy.
Summary of ATTO-1310 Clinical Data
To date, ATTO-1310 has demonstrated a favorable tolerability profile across HVs and patients with chronic pruritus and high-itch AD, with predominantly Grade 1 or Grade 2 TEAEs and no treatment-related serious or severe adverse events (SAEs) observed. PK data demonstrated an approximately dose-proportional profile with good SC bioavailability, while immunogenicity remained low with no detected neutralizing ADAs.
PD analyses demonstrated rapid and durable target engagement, with a rapid reduction in percent free IL-31 post-dose and greater than 95% IL-31 suppression maintained for at least 12 weeks at doses of 4.5 mg/kg or greater, supporting the potential for quarterly dosing.
Preliminary Phase 1b data demonstrated rapid and deep anti-pruritic activity following a single dose of ATTO-1310. In pooled analyses, 65% of chronic pruritus patients and 44% of high-itch AD patients achieved a ≥4-point improvement in PP-NRS at week 4, with preliminary evidence of lesion improvement also observed in high-itch AD patients.
We expect to report full results from our Phase 1b clinical trial in the fourth quarter of 2026 or the first quarter of 2027. We are also evaluating ATTO-1310 in another Phase 1b clinical trial in China and expect to report results in the second half of 2027.
Further Development of ATTO-1310: Precision Immunology Strategy
We plan to focus the ongoing and future trials of ATTO-1310 on exploring the PD link between IL-31 levels, pruritus, and efficacy of ATTO-1310 treatment. The body of evidence generated through these studies will potentially support a precision immunology, IL-31 biomarker-based clinical development strategy for ATTO-1310.
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ATTO-2306 for AD and Other Inflammatory Diseases
ATTO-2306 is a novel half-life extended ATTOBODY-based biotherapeutic that inhibits both IL-13 and IL-31. We believe ATTO-2306 has the potential to establish a new standard of care for the treatment of AD and other immune-mediated skin diseases, such as CSU and PN, by offering favorable lesion and itch control, as well as significantly improved convenience compared to currently available biologic treatments. ATTO-2306 is a next-generation bispecific designed to improve upon one of our past product candidates, ATTO-3712. The key improvement of ATTO-2306 is its potential to deliver a significantly longer projected human half-life compared to ATTO-3712.
Background on the AD Market
As described in our discussion of ATTO-1310 earlier, AD is one of the most prevalent immune-mediated diseases globally, affecting an estimated 21 million adults and 10 million pediatric patients in the United States by 2035, with approximately one-third having moderate-to-severe disease (EASI of ≥7). AD pathology is closely linked to Th2 cytokines, including IL-13 and IL-31, which contribute to skin barrier dysfunction, worsen inflammation, induce pruritus and sustain a chronic disease cycle.
The moderate-to-severe AD population represents a large and growing market with substantial commercial opportunity. The combined global revenue for AD drugs was nearly $21 billion in 2025, with the single highest selling therapeutic, DUPIXENT, accounting for $17.8 billion of sales. Despite the significant volume of sales, Sanofi, one of the manufacturers of DUPIXENT, estimated that penetration in moderate-to-severe AD remains at only approximately 18%. The relatively low penetration presents significant room for novel, differentiated therapeutics that address barriers to efficacy, safety, adoption and adherence.
Overview of Current AD Treatment and Unmet Needs
For moderate-to-severe AD, often with larger body surface area involvement, systemic therapies are essential to achieve disease control. Current first-line approved therapies include monoclonal antibodies targeting the IL-4 receptor alpha (DUPIXENT), IL-13 (EBGLYSS, ADBRY), or IL-31Ra (NEMLUVIO). Other approved therapies include oral Janus kinase (JAK) inhibitors (RINVOQ, CIBINQO). While these therapeutics have benefited patients, significant unmet needs persist, including:
| 1. | Significant portion of patients achieve only partial or no response. DUPIXENT and EBGLYSS, both currently approved biologic therapeutics for AD, enable EASI-75 response in approximately 45% and 55% of patients, respectively, with only approximately 33% and 35% of patients achieving EASI-90, respectively. |
| 2. | Inadequate pruritic relief is an especially overlooked aspect of treating the disease. DUPIXENT, takes weeks to months to significantly reduce pruritus, with only approximately 40% of patients achieving a 4-point or greater reduction in their daily itch score after 16 weeks of treatment. |
| 3. | Safety and tolerability remain significant barriers to effective AD management. Options such as RINVOQ and CIBINQO show significant limitations given black box warnings for SAEs such as infections, malignancies and thromboses. |
| 4. | Current treatment options are often inconvenient for patients. Some of the currently approved biologic medications such as DUPIXENT pose significant barriers to patient adherence by requiring biweekly injections, especially in pediatric patients and those with needle phobia. |
Expansion Opportunities in Additional Immune and Inflammatory Diseases
Beyond AD, there are several expansion opportunities in additional immune-mediated diseases, such as CSU, PN and many others. We believe the biologic overlap across various inflammatory conditions will enable us to evaluate ATTO-2306 in other indications where IL-31 and IL-13 dysregulation is implicated, along with our ability to discover ATTOBODIES against a variety of new targets.
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Concurrent Inhibition of IL-13 and IL-31 as a Differentiated Approach to Inflammatory Skin Disease
We believe the combination of targeting IL-13 and IL-31 represents an optimized approach to treating inflammatory dermatological conditions such as AD, as these are distinct, complementary and clinically validated pathways with a wide coverage of disease mechanisms (Figure 28). To date, IL-13 and IL-31 are the only two pathways with approved biologic therapeutics for the treatment of AD, which we believe reflect promising mechanisms to inhibit in a bispecific molecule with the potential for improving efficacy over current treatments. Other potential targets, such as TSLP, IL-7R, IL-18, IL-33 and BTLA, have all failed to show benefit as monotherapy in AD.
Figure 28: IL-31 and IL-13 Pathways
IL-31 and IL-13 drive overlapping and distinct pathologies and have each demonstrated monotherapy activity in AD resulting in FDA approved therapeutics.
IL-13 is a key cytokine in the Type 2 immune response that recruits immune cells to sites of inflammation in the skin, drives keratinocyte differentiation, and induces fibrosis. Therapies targeting IL-13, such as lebrikizumab (EBGLYSS), have already demonstrated significant clinical efficacy and favorable safety in reducing inflammation and improving skin clearance in AD. Blocking IL-13 has been shown to halt the production of pro-inflammatory mediators by keratinocytes, stopping the inflammatory milieu and resolving the self-sustaining cycle of immune dysregulation and skin damage.
In contrast, the “itch” cytokine IL-31 acts on sensory neurons expressing its receptor complex (IL-31Ra and OSMRß), activating pruriceptive pathways and inducing pruritus. Beyond its neuronal effects, IL-31 also contributes to inflammation and skin barrier dysfunction by stimulating keratinocytes, fibroblasts and immune cells to produce pro-inflammatory mediators, as well as playing a potential role in immune-senescence.
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Despite the success of existing therapies individually targeting the IL-13 and IL-31 pathways, there remains significant unmet need across the AD treatment landscape. Patients seek deeper and more rapid lesion and pruritic relief, benign safety and tolerability, as well as improved dosing convenience.
ATTO-2306 Target Product Profile
ATTO-2306 simultaneously blocks both IL-13 and IL-31, aiming to address both the inflammatory and pruritic components of moderate-to-severe AD in a single bispecific molecule, and offering the potential for favorable clinical outcomes compared to monotherapies targeting either cytokine alone. Additionally, we believe that a bispecific targeting the cytokines, rather than the receptors, in each pathway has a high likelihood of creating a differentiated treatment alternative.
| 1. | Target Selection: We specifically chose to target the IL-31 cytokine rather than its receptor, IL-31R to achieve two goals: |
| a. | Enhance efficacy by targeting the IL-31 ligand (now supported by Phase 1b results for ATTO-1310): As noted earlier, the IL-31Ra-targeting molecule, nemolizumab, observed a reverse dose-efficacy effect (higher doses less effective than lower doses) in clinical trials in adult patients with AD, pediatric patients with AD and CKD-aP patients, implying efficacy was not maximized. This is especially important in the context of a bispecific molecule, where dosing limitation of one arm affects the entire molecule. |
| b. | Faster pruritic relief: We believe that by targeting IL-31, rather than its receptor, we may be able to achieve faster pruritic relief based on third-party data from canines treated using lokivetmab, where significant relief of scratching events was seen within three to five hours of dosing, and our Phase 1b data for ATTO-1310. In contrast, clinical data from Phase 3 clinical trials of nemolizumab indicated significant pruritic relief (measured as PP-NRS reduction of 4 points or more) only after multiple weeks of dosing. |
| 2. | Dosing Schedule: A key potential benefit of targeting IL-13 rather than a subunit of its receptor, IL-4Ra, is the avoidance of TMDD, where receptors in the peripheral tissue act as an antigen sink, leading to non-linear PK and the need for frequent dosing to maintain therapeutic drug exposure levels. This choice is also especially important in a bispecific molecule, as a target promoting TMDD in one half of a molecule reduces the available drug to bind the second target. |
Our hypotheses regarding targeting IL-31 rather than IL-31Ra now have initial clinical validation, based on the readout from our Phase 1 clinical trial of ATTO-1310. Collectively, by developing ATTO-2306, we aim to provide patients suffering from AD and other inflammatory skin diseases with a potential treatment option that is differentiated by:
| 1. | Simultaneous inhibition of two disease-causing pathways with distinct mechanisms of action, avoidance of dosing limitations caused by potential receptor-specific biology, and rapid pruritic relief; |
| 2. | A favorable tolerability profile; and |
| 3. | Convenient, quarterly or infrequent dosing. |
Our Solution: ATTO-2306
Molecule Design Considerations
ATTO-2306 consists of two highly potent IL-31-targeted ATTOBODIES (Figure 29), which are connected to an anti-IL-13 IgG containing the YTE mutation for half-life extension and the anti-IL-13 IgG was derived from lebrikizumab. The IL-31 targeting ATTOBODIES incorporated in ATTO-2306 use the same VHHs as those in ATTO-1310. We believe these shared elements will enable the findings from ATTO-1310 clinical trials, together with the existing ample body of evidence for anti-IL-13 antibodies, including evidence supporting half-life extension, to inform and accelerate the development of ATTO-2306.
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Figure 29: ATTO-2306
Our bispecific therapeutic candidate ATTO-2306 contains two anti-IL-31 ATTOBODIES fused to an anti-IL-13 IgG.
Preclinical Characterization of ATTO-2306
We have conducted a preclinical program to better understand the potential of ATTO-2306. Through these studies, ATTO-2306 has demonstrated:
| • | High potency compared to analog molecules regardless of whether each arm was tested as a monospecific or bispecific; |
| • | Low projected risk of immunogenicity in humans; and |
| • | Long NHP half-life, consistent with avoidance of TMDD compared to an IL-4Ra targeted therapeutic and the utilization of half-life extension technology |
High Potency
To demonstrate this property for ATTO-2306, we ran potency measurement assays in vitro. As shown in Figure 30 below, ATTO-2306 demonstrated potent inhibition of the IL-13 and IL-31 pathways, with anti-IL-13 potency on par with a lebrikizumab analog.
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Figure 30: Potency of IL-13 and IL-31 Signaling Inhibition by ATTO-2306
ATTO-2306 potently inhibited its target cytokines.
Immunogenicity
We carried out a dendritic cell-T cell activation assay, exposing immune cells from twenty human donors with a range of HLA-II haplotypes to ATTO-2306. This assessment projected a low risk of immunogenicity in humans.
The ex vivo dendritic cell-T cell assay uses peripheral blood mononuclear cells (PBMCs) from at least 20 human donors with a variety of HLA-II haplotypes. These cells are mixed with ATTOBODIES. Dendritic cells in the PBMCs ingest ATTOBODIES, slice them into peptides and present them in the context of the HLA II antigens. Fluorescently labeled T cells are then added to the mixture. If a particular ATTOBODY-derived peptide is recognized as immunogenic, then the labeled T cells become activated and start proliferating. This process results in the reduction of the intensity of the fluorescent signal emitted by each T cell, which is quantified. The risk of immunogenicity is then assessed based on how many of the 20 PBMC sets from human donors saw the ATTOBODIES as immunogenic, and how strong the response was based on how much the fluorescent T cell signal was diluted. We consider the risk low if it is on par or lower than that calculated using the same assay for a number of commercially available and widely used antibodies (Figure 31).
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Figure 31: Ex Vivo Immunogenicity Assessment
ATTO-2306 showed minimal ex vivo immunogenicity compared to positive controls.
Pharmacokinetic Profile of ATTO-2306
To test our hypothesis that a bispecific molecule targeting IL-13 would offer potential for convenient, quarterly or infrequent dosing, we evaluated the PK profile of ATTO-2306 in NHPs. Here, we observed a preliminary NHP half-life of approximately 22 days (Figure 32), translating to a projected human half-life of 75 days. Thus, we project the ability to enable extended dosing intervals with ATTO-2306.
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Figure 32: NHP PK Profile of ATTO-2306
ATTO-2306 demonstrated extended NHP half-life supporting infrequent dosing. PK Study: Single Dose (5 mg/kg, IV)
Developability of ATTO-2306
ATTO-2306 exhibited favorable developability and manufacturability properties, and ability to develop a high-concentration SC formulation.
Further Development of ATTO-2306
IND-enabling studies for ATTO-2306 are currently ongoing. We anticipate commencing a Phase 1 clinical trial in the first half of 2027 and reporting initial results from healthy volunteers in mid-2027.
ATTO-1091 for IBD
Background on the IBD Market
IBD is a chronic immune-mediated condition characterized by persistent inflammation of the gastrointestinal tract. Two of the most common forms of IBD include ulcerative colitis (UC) and Crohn’s disease
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(CD), affecting more than 7 million people worldwide. In the United States, UC prevalence is estimated to be approximately 1.1 million individuals, and CD prevalence is estimated to be approximately 1.0 million individuals.
UC is an inflammatory condition that develops over time and predominantly affects the lining of the colon and rectum, typically progressing from the rectum upward. Patients with UC often experience periods of remission and flare-ups, which can significantly impact quality of life. It is estimated that half the patients with UC have moderate-to-severe symptoms in a given year. Symptoms typically include diarrhea (often with blood, mucus or pus), blood in the stool, weight loss, fatigue, fever and inability to pass stool despite urgency.
CD causes inflammation that can occur anywhere in the digestive tract from the mouth to the anus, but most often affects the end of the small intestine and the start of the large intestine. Similar to UC, patients with CD often experience periods of remission and flare-ups, which can significantly impact quality of life. Symptoms typically include persistent abdominal pain, diarrhea (sometimes bloody), fatigue, weight loss and reduced appetite. Over time, disease progression may lead to complications such as strictures, fistulas and malabsorption, contributing to nutritional deficiencies. The unpredictable nature of flares, coupled with the need for long-term treatment and potential surgical interventions, often results in physical discomfort and emotional stress for patients, making CD a challenging condition to manage.
The global IBD market was valued at $29.5 billion in 2025 and is projected to grow due to the increasing prevalence of UC and CD along with growing awareness and early diagnosis of IBD symptoms.
Overview of Current IBD Treatment and Unmet Needs
The current front-line treatment paradigm for IBD includes aminosalicylates, corticosteroids, immunosuppressants and immunomodulators, but a substantial number of patients still experience inadequate symptom control and thus require escalation to advanced therapies. Small molecules such as JAK inhibitors, S1P modulators and TYK2 inhibitors as well as biologics such as anti-TNFa, anti-integrin a4ß7, anti-IL-12/23, anti-IL-23, and anti-TL1A assets aim to further improve treatment of IBD. The progressive and relapsing nature of UC and CD has resulted in the development of several blockbuster drugs.
Despite relative success of current IBD treatments, patients with IBD continue to lack an integrated therapeutic option: approximately 30 to 40% of patients do not respond to first-line therapy, and more than 50% of responders lose response within a year. Furthermore, many advanced therapies have black box warnings or associated risks of serious infections, malignancies or death. Given that the majority of IBD patients do not achieve clinical remission with existing treatments, we believe there is ample therapeutic opportunity for novel biotherapeutics in UC and CD.
Rationale for Concurrent Inhibition of TL1A, IL-23 and Integrin a4ß7 in IBD
TL1A has emerged as a promising therapeutic target in IBD because it contributes to both inflammation and fibrosis. Through its receptor, death receptor 3, TL1A amplifies mucosal inflammation by boosting T cell activation and stimulating the release of pro-inflammatory mediators. TL1A also plays a role in driving intestinal fibrosis by activating fibroblasts and promoting collagen deposition.
IL-23 is produced by dendritic cells and macrophages and plays a role in immune response regulation by promoting the expansion and survival of Th17 cells, a subset of T lymphocytes that produce IL-17α and other pro-inflammatory mediators. IL-23 signaling can inhibit the differentiation of regulatory T cells (Tregs), a population essential for controlling and suppressing chronic gut inflammation.
Integrin a4ß7 is a cell-surface adhesion molecule expressed on lymphocytes that enables selective homing to the gastrointestinal tract via binding to MAdCAM-1, which is expressed on the surface of endothelial cells lining blood vessels in the gut. This interaction directs lymphocytes, including naive T cells and effector T cells, from the bloodstream into the intestinal tissue.
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Collectively, TL1A, IL-23 and integrin a4ß7 play distinct roles in the pathophysiology of IBD, and independent inhibition of each of the three pathways typically results in good tolerability, with no significant overlap in tolerability signals. We believe a trispecific ATTOBODY that blocks all three targets simultaneously may offer potential for a differentiated treatment alternative in the treatment of IBD.
Our Solution: ATTO-1091
ATTO-1091 is a trispecific ATTOBODY-based Fc fusion protein construct that binds to TL1A, IL-23 and integrin a4ß7 with binding properties optimized for all three targets. Similar to ATTO-1310, the Fc portion of ATTO-1091 has been engineered to harbor a YTE mutation (Figure 33).
Figure 33: ATTO-1091
ATTO-1091 inhibits three different targets and uses an Fc fragment with a YTE mutation for half-life extension.
ATTOBODY Arm Properties
A known limitation of anti-TL1A mAbs is their propensity to cause formation of high molecular weight aggregates in the presence of TL1A, which can lead to immunogenicity. This is evident in some of the current anti-TL1A molecules in clinical development that induce high levels of ADAs. By taking advantage of the breadth of diversity offered by the ATTOBODY discovery platform, we successfully identified several anti-TL1A binders that block both the monomeric and trimeric versions of TL1A, without causing the formation of high molecular weight aggregates as shown in Figure 34 below. This desirable property is preserved in the trispecific ATTO-1091 format.
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Figure 34: Propensity of Anti-TL1A Containing Constructs to Cause High Molecular Weight Aggregates When Combined with TL1A
ATTO-1091 does not cause high molecular weight aggregates seen for benchmark anti-TL1A analog and associated with immunogenicity.
IL-23 is composed of two protein subunits, p19 and p40. The p40 subunit is shared with IL-12, a different cytokine with a critical role in immune defense that links innate and adaptive immunity. Depending on their recognized epitope, some anti-IL-23 antibodies inhibit both IL-23 and IL-12 (e.g., ustekinumab), whereas others are selective for IL-23 (e.g., risankizumab). Antibodies inhibiting both IL-23 and IL-12 report a higher rate of serious adverse events in clinical trials than antibodies inhibiting only IL-23. Additionally, ustekinumab shows lower efficacy in treating IBD than risankizumab. In our anti-IL-23 research, we prioritized ATTOBODIES that selectively inhibit only IL-23 and have no effect on the activity of IL-12 (Figure 35), a property that is preserved in the trispecific.
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Figure 35: Anti-IL-23 ATTOBODY Selectively Inhibits IL-23
ATTO-1091 and anti-IL-23 monospecific ATTOBODY both selectively inhibit IL-23 without inhibiting IL-12, as well as retain potency between the monospecific and fully-loaded ATTO-1091.
High Potency of Each Arm Preserved in the Trispecific Format
One of the hallmark properties of the ATTOBODY platform is the generation of binders with high potency directly from discovery screening, without the need for affinity maturation. Further, preservation of properties of each arm in a multispecific molecule is critical to achieving the desired target product profile. As demonstrated in head-to-head studies depicted in Figure 35 above and Figure 36 below, each arm of ATTO-1091 shows potency of the target pathway inhibition that is on par or better than the currently available clinical benchmarks. Furthermore, potency is unaffected by the incorporation of the ATTOBODY arm into the trispecific or by the simultaneous binding of all three targets to all arms of ATTO-1091. We believe that the observed lack of interference between the different arms of ATTO-1091, combined with the high potency of each arm and expected significant overdosing of therapeutic versus each individual target are key to the ability to circumvent any target stoichiometry issues in patients.
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Figure 36: Potency of ATTO-1091 in Blocking Target Pathways
Monospecific arms targeting TL1A and integrin a4ß7 demonstrated high in vitro potency that was retained in ATTO-1091 when all three arms were loaded, showing lack of interference between ATTOBODY arms.
Developability of ATTO-1091
We designed ATTO-1091 for ease of developability and manufacturability by testing the molecules in a series of assays that evaluate thermostability, hydrophobicity, polyspecificity, aggregation, concentratability and other properties. ATTO-1091 exhibited good developability properties, including manufacturing yields on par with those of a typical mAb, with concentratability that supports SC administration.
Preclinical PK of ATTO-1091
We aim to achieve infrequent dosing intervals with ATTO-1091, providing an important convenience benefit to patients. We assessed the PK of ATTO-1091 in a humanized Tg32 mouse model. Tg32 mice express human FcRn and have no adaptive immune system, enabling robust evaluation of the PK of Fc-based molecules, including those with mutations enabling longer half-lives. As shown in Figure 37 below, the time-concentration curve of ATTO-1091 administered IV showed much slower elimination kinetics, indicative of potential for extended dosing.
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Figure 37: ATTO-1091 PK
ATTO-1091 demonstrated slow elimination kinetics in a mouse model, suggesting potential for infrequent dosing.
Preclinical Tolerability Profile of ATTO-1091
ATTO-1091 inhibits three distinct immune pathways, each of which has demonstrated a favorable tolerability profile in third-party clinical trials. As part of our design process, we carried out a dose range finding study in NHPs. There were no clinical safety observations and no histopathology findings in any of the animals in the study.
Preclinical Activity Assessment of Triple Inhibition in IBD
We tested the impact of inhibiting TL1A, IL-23 and integrin a4ß7 simultaneously and individually in a mouse model of dextran sulfate sodium (DSS)-induced colitis. While inhibition of each individual target reduced disease activity as measured by body weight loss and disease activity index, simultaneous inhibition of all three targets resulted in much deeper responses (Figure 38). This supports our hypothesis that triple inhibition of TL1A, IL-23 and integrin a4ß7 will result in deeper efficacy in a disease setting, compared to monospecific biologics.
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Figure 38: Triple Blockade Activity in Chronic DSS-Induced Colitis Mouse Model
Triple antigen blockade achieves improved activity vs. monospecific blockade in a mouse model of chronic colitis
Further Development
GMP manufacturing process development and GLP toxicology studies for ATTO-1091 are ongoing. We expect to commence a randomized, placebo-controlled Phase 1 clinical trial for ATTO-1091 in the first half of 2027 and report initial results from healthy volunteers in the second half of 2027.
Our Discovery Programs
The ATTOBODY platform is a robust discovery engine that has generated several additional complex biologic programs. Currently, we are pursuing the next generation of ATTOBODY-based treatments. These include:
| • | ATTO-006, a conditional “AND” gated bispecific tissue resident memory T cell (Trm) survival blocker utilizing a Trm specific anchor arm and a survival blocking arm, where the survival blocking arm becomes engaged and active only when the anchor arm is bound. We believe this program has the potential for broad applicability across immune mediated diseases, including rheumatology, IBD and others. |
| • | ATTO-007, a conditional “AND” gated bispecific immune cell survival blocker targeting a non-T cell population and utilizing a similar concept to ATTO-006 of a cell-specific anchor arm and a broader survival blocking arm. |
| • | ATTO-008, a tri- or tetra-specific multi-alarmin blocker with planned development in respiratory disease, including potentially Th2 low asthma and chronic obstructive pulmonary disease. |
License Agreements
Alamar Platform License Agreement
We are party to a license agreement with Alamar, originally executed on June 1, 2023, subsequently amended and restated on October 9, 2024 and again on April 22, 2025 (as amended, the Alamar Platform License Agreement). Under the License Agreement, Alamar granted us a worldwide, non-transferable, sublicensable
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license to use the antibody engineering platform developed by or on behalf of Alamar (the ATTOBODY Platform) within the therapeutic field (the Alamar License). The Alamar License allows us to identify new molecules or gene codes, research, develop, manufacture, and commercialize new or existing molecules or gene codes identified using the ATTOBODY Platform (Products), and to develop improvements to the ATTOBODY Platform. This license is exclusive in the therapeutic field with respect to Alamar patents and patent applications, and non-exclusive with respect to Alamar know-how.
In connection with the execution of the Alamar Platform License Agreement, on June 1, 2023, we issued 22,562,123 shares of our common stock to Alamar as consideration for the Alamar License. The Alamar Platform License Agreement requires us to pay Alamar up to $4.3 million per Product in aggregate milestone payments upon the completion of certain clinical and regulatory milestones. The Alamar Platform License Agreement also requires that we pay Alamar tiered royalties in low single digit percentages on net sales of Products on a Product-by-Product basis, subject to certain deductions, provided that if no valid claim covers a Product in a country, then the royalty percentage applicable to net sales in such country shall be reduced to percentages also in the low single digits.
We may terminate the Alamar Platform License Agreement for convenience following a notice period and either party may terminate the Alamar Platform License Agreement for bankruptcy or an uncured material breach. Alamar may also terminate the Alamar Platform License Agreement after a notice period if we challenge certain of its patent rights in the ATTOBODY Platform or Products. Upon the termination of the Alamar Platform License Agreement (other than a termination by Alamar for our bankruptcy), the licenses granted to Attovia by Alamar will expire, provided that we may continue to exploit Products, subject to ongoing compliance with the surviving provisions of the Alamar Platform License Agreement, including applicable milestone and royalty payments.
Intellectual Property
Intellectual property is of vital importance in our field and in biotechnology generally. We seek to protect and enhance proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We will also seek to rely on regulatory protection afforded through inclusion in expedited development and review, data exclusivity, market exclusivity and patent term extensions where available.
We have sought patent protection in the United States and internationally related to the proprietary programs and technologies that we believe are important to our business, including compositions of matter of our programs, their methods of use, related technologies, diagnostics, and other inventions and improvements that are central to our research and development efforts. In addition, we intend to seek additional patent protection which may enhance commercial success to the extent warranted by future developments.
As of June 30, 2026, our intellectual property portfolio contained owned and in-licensed cases and contains multiple pending U.S. and foreign national applications, including provisional and national applications pending in the United States, China, Europe and Japan. These patent applications are expected to expire, when granted after examination or filed as PCT and/or U.S. non-provisional applications, between 2041 and 2047, excluding any patent term adjustments or extensions.
ATTO-1310 Program (IL-31)
As of June 30, 2026, we own one patent family covering various aspects of ATTO-1310. U.S. Patent No. 12,509,510, has issued from this family having composition of matter claims specifically covering ATTO-1310. In addition, two U.S. nonprovisional and a Patent Cooperation Treaty (PCT) application are pending having claims directed to IL-31 binder polypeptides, consensus CDRs of the same, nucleic acids encoding the
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polypeptides, methods of making the polypeptides, and methods of using the polypeptides. Any patents issuing from this patent family are expected to expire in 2045, without taking into account any patent term adjustments, extensions or terminal disclaimers, and assuming payment of all appropriate maintenance fees.
ATTO-2306 Program (IL-31 x IL-13)
As of June 30, 2026, we own one patent family covering the IL-31 binder polypeptide of ATTO-2306. U.S. Patent No. 12,509,510, has issued from this family having composition of matter claims covering the IL-31 binder polypeptide of ATTO-2306. In addition, two U.S. nonprovisional and a Patent Cooperation Treaty (PCT) application are pending having claims directed to IL-31 binder polypeptides, nucleic acids encoding the polypeptides, methods of making the polypeptides, and methods of using the polypeptides. Any patents issuing from this patent family are expected to expire in 2045, without taking into account any patent term adjustments, extensions or terminal disclaimers, and assuming payment of all appropriate maintenance fees. We recently filed a second patent family covering various aspects of ATTO-2306. Two U.S. provisional patent applications are pending having claims to the IL-31 x IL-13 binder polypeptide of ATTO-2306, nucleic acids encoding the polypeptide, methods of making the polypeptide and methods of using the polypeptide. Any patents issuing from this second patent family are expected to expire in 2047, without taking into account any patent term adjustments, extensions or terminal disclaimers, and assuming payment of all appropriate maintenance fees.
ATTO-1091 Program (TL1A x IL-23 x α4ß7)
As of June 30, 2026, we own four patent families covering various aspects of ATTO-1091. One family is directed to the TL1A binder polypeptide of ATTO-1091. Four U.S. provisional applications are pending having claims to the TL1A binder polypeptide of ATTO-1091, consensus CDRs of the same, nucleic acids encoding the polypeptides, methods of making the polypeptides, and methods of using the polypeptides. We also own a second patent family directed to the TL1A x a4ß7 binder polypeptides of ATTO-1091. Two U.S. provisional applications are pending having claims to the TL1A x a4ß7 binder polypeptides of ATTO-1091, nucleic acids encoding the polypeptides, methods of making the polypeptides, and methods of using the polypeptides. We also own a third patent family directed to IL-23p19 binder polypeptides, IL-23p19 x TL1A binder polypeptides, and IL-23p19 x a4ß7 binder polypeptides of ATTO-1091. Two U.S. provisional applications are pending having claims to the IL-23p19 binder polypeptides, IL-23p19 x TL1A binder polypeptides, IL-23p19 x a4ß7 binder polypeptides, nucleic acids encoding the polypeptides, methods of making the polypeptides, and methods of using the polypeptides. Finally, we own a fourth patent family directed to ATTO-1091 (TL1A x IL-23 x a4ß7). Two U.S. provisional applications are pending having claims to ATTO-1091, nucleic acids encoding ATTO-1091, methods of making ATTO-1091, and methods of using ATTO-1091. Any patents issuing from the patent families are expected to expire in 2046, without taking into account any patent term adjustments, extensions or terminal disclaimers, and assuming payment of all appropriate maintenance fees.
Platform Technology and Discovery Program
As of June 30, 2026, we have in-licensed one platform patent family to a co-binder comprising two binding moieties, wherein the binding moieties are connected by a linker, nucleic acids encoding the co-binder, methods of making the co-binder, and methods of using the co-binder. The patent family includes a U.S. application, a European application, a Chinese application, and a Japanese application. Any patents issuing from these applications, once granted, are expected to expire in 2041, without taking into account any potential patent term adjustment, terminal disclaimer or future extension.
We expect to file additional patent applications in support of current and future clinical candidates as well as new platform and core technologies.
Our commercial success will depend in part on obtaining and maintaining patent protection on our current and future product candidates and their related methods of use, as well as successfully defending any such
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patents against third-party challenges and operating without infringing on the proprietary rights of others. Our ability to stop third parties from making, using, selling, offering to sell or importing our product candidates will depend, in part, on the extent to which we have rights under valid and enforceable patents that cover these activities. The development of our therapeutic candidates is at a relatively early stage, and as a consequence, our patent portfolio is also at an early stage. We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our product candidates, discovery programs and processes. For this and more comprehensive risks related to intellectual property, please see the section titled “Risk Factors—Risks Related to Intellectual Property.”
The terms of individual patents depend upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, including the United States, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. In the United States, the term of a patent that covers a drug approved by the U.S. Food and Drug Administration (FDA) may also be eligible for extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the subject drug candidate is under regulatory review. Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar provisions to extend the term of a patent that covers an approved drug are available in Europe and certain foreign jurisdictions. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering those products. We plan to seek patent term extensions to any issued patents we may obtain in any jurisdiction where such patent term extensions are available, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment that such extensions should be granted, and if granted, the length of such extensions. For more information regarding the risks related to intellectual property, see the section titled “Risk Factors—Risks Related to Intellectual Property.”
In most instances, we have submitted and expect to submit patent applications directly to the USPTO as provisional patent applications. Corresponding non-provisional patent applications and/or PCT applications must be filed not later than 12 months after the provisional application filing date. While we intend to timely file non-provisional patent applications and/or PCT applications relating to our provisional patent applications, we cannot predict whether any such patent applications will result in the issuance of patents that provide us with any competitive advantage.
We file U.S. non-provisional applications and PCT applications that claim the benefit of the priority date of earlier filed provisional applications, when applicable. The PCT system allows an international patent application to be filed within 12 months of the filing date of each provisional application, and to designate all of the PCT member states in which national patent applications can later be pursued based on the international patent application filed under the PCT. The PCT searching authority performs a patentability search and issues a non-binding patentability opinion which can be used to evaluate the chances of success for the national applications in foreign countries prior to having to incur the filing fees. Although a PCT application does not issue as a patent, it allows the applicant to seek protection in any of the member states through national-phase applications. Before the end of the period of approximately two and a half years from the first priority date of the patent application, separate patent applications can be pursued in any of the PCT member states either by direct national filing or, in some cases, by filing through a regional patent organization, such as the European Patent Office. The PCT system delays expenses, allows a limited evaluation of the chances of success for national/regional patent applications, and enables substantial savings where applications are abandoned within the first two and a half years of filing.
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For all patent applications, we determine claiming strategy on a case-by-case basis. Advice of counsel and our business model and needs are always considered. We seek to file patents containing claims for protection of all useful applications of our proprietary technologies and any products, as well as all new applications and/or uses we discover for existing technologies and products, assuming these are strategically valuable. We continuously reassess the number and type of patent applications, as well as the pending and issued patent claims to pursue maximum coverage and value for our processes, and compositions, given existing patent office rules and regulations. Further, claims may be modified during patent prosecution to meet our intellectual property and business needs.
We recognize that the ability to obtain patent protection and the degree of such protection depends on a number of factors, including the extent of the prior art, the novelty and non-obviousness of the invention, and the ability to satisfy the enablement requirement of the patent laws. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted or further altered even after patent issuance. Consequently, we may not obtain or maintain adequate patent protection for any of our future product candidates or for our technology platform. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors. Any patents that we hold may be challenged, circumvented or invalidated by third parties.
In addition to patent protection, we also rely on trademark registration, trade secrets, know how, other proprietary information and continuing technological innovation to develop and maintain our competitive position. We seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. Our agreements with employees also provide that all inventions conceived by the employee in the course of employment with us or from the employee’s use of our confidential information are our exclusive property. However, such confidentiality agreements and invention assignment agreements can be breached and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting trade secrets, know-how and inventions. For more information regarding the risks related to our intellectual property, see the section titled “Risk Factors—Risks Related to Intellectual Property.”
The patent positions of biotechnology and pharmaceutical companies like ours are generally uncertain and involve complex legal, scientific and factual questions. Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. Third-party patents could require us to alter our development or commercial strategies, or our products or processes, obtain licenses or cease certain activities. Our breach of any license agreements or our failure to obtain a license to proprietary rights required to develop or commercialize our future products may have a material adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference or derivation proceedings in the USPTO to determine priority of invention. For more information, see the section titled “Risk Factors—Risks Related to Intellectual Property.”
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When available to expand market exclusivity, our strategy is to obtain or license additional intellectual property related to current or contemplated development platforms, core elements of technology and/or clinical candidates.
Government Regulation
Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceutical products. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.
FDA Review and Approval Process
In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act (FDC Act), the Public Health Service Act (PHS Act) and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Biological products used for the prevention, treatment, or cure of a disease or condition of a human being are subject to regulation under the FDC Act, except the section of the FDC Act which governs the approval of New Drug Applications (NDAs). Biological products are approved for marketing under provisions of the PHS Act, via a Biologics License Application (BLA). However, the application process and requirements for approval of BLAs are very similar to those for NDAs. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as a clinical hold, FDA refusal to approve a pending BLA, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
Biological product development for a new product or certain changes to an approved product in the United States typically involves laboratory and animal studies (referred to as preclinical studies), the submission to the FDA of an Investigational New Drug Application (IND), which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.
Preclinical Studies
Preclinical studies include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including good laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing, and controls (CMC) and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may impose a partial or full clinical hold. A partial clinical hold is a delay or suspension of fewer than all clinical trials subject to the IND, or certain parts of a clinical trial. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.
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Clinical Trials
Clinical trials involve the administration of the investigational biologic to subjects including healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with good clinical practices (GCPs), which are standards meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; as well as (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. While the IND is active, progress reports summarizing the results, if known, of the clinical trials and preclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators in certain circumstances.
The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be submitted to institutional review boards (IRB) overseeing clinical sites, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for a variety of reasons, including failure to comply with the IRB’s requirements or if there is a finding that patients are exposed to an unacceptable health risk, or may impose other conditions. Some studies also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, which may be known as a data safety monitoring board. This group receives and reviews data from the clinical trial on an ongoing basis and may recommend continuation of the clinical trial as planned, changes in clinical trial conduct, or cessation of the clinical trial at designated check points based on such data.
A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of a BLA. The FDA will accept a well-designed and well-conducted foreign clinical trial not conducted under an IND if the clinical trial was conducted in accordance with GCPs and the FDA is able to validate the data through an onsite inspection if deemed necessary.
Clinical trials to support BLAs for marketing approval are typically conducted in three sequential phases, but the phases may be combined or overlap. In Phase 1, the initial introduction of the biologic into healthy volunteers or patients, the drug is tested to assess safety, dosage tolerance, metabolism, pharmacokinetics, pharmacological actions, side effects associated with drug exposure, and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the biologic for a particular indication, determine optimal dose and regimen, and to identify common adverse effects and safety risks. If a biologic demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the biologic and to provide adequate information for the labeling of the product.
The FDA requires that a sponsor demonstrate that the biologic is safe for its intended use, there is substantial evidence of the biologic’s effectiveness and the biologic’s benefits outweigh its risks. Substantial evidence of effectiveness may be demonstrated by a single adequate and well-controlled trial, typically Phase 3, plus confirmatory evidence or by more than one adequate and well-controlled clinical trial. In the case of a single adequate and well-controlled clinical trial plus confirmatory evidence, the strength of the design, conduct, analysis and results of the single trial will affect the strength of confirmatory evidence needed to establish substantial evidence of effectiveness, with a general expectation for either a highly persuasive trial or a source of strong confirmatory evidence. FDA may exercise flexibility regarding the application of these standards based on clinical considerations such as disease severity, unmet need and disease rarity.
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The manufacturer of an investigational product in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access to such investigational drug.
Concurrent with clinical trials, companies may complete additional preclinical studies and also must develop additional information about the chemistry and physical characteristics of the drug or biologic as well as finalize a process for manufacturing the product in commercial quantities in accordance with current Good Manufacturing Practice (cGMP) requirements. The manufacturing process must be capable of consistently producing quality batches of the product and, among other things, companies must develop methods for testing the identity, strength, quality, potency, and purity of the final product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the investigational medicines do not undergo unacceptable deterioration over their shelf life.
FDA Review Process
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, a BLA is prepared and submitted to the FDA. FDA approval of the BLA is required before marketing and distribution of the product may begin in the United States. The BLA must include the results of all preclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology and CMC. The cost of preparing and submitting a BLA is substantial. The submission of most BLAs is additionally subject to a substantial application user fee. Under an approved BLA, the applicant is also subject to an annual program fee. These fees typically increase annually. A BLA for a biologic that has been designated as an orphan drug is not subject to an application fee, unless the BLA includes an indication for other than a rare disease or condition.
The FDA has 60 days from its receipt of a BLA to conduct a preliminary review and determine whether the application will be filed based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. If the FDA determines the application is incomplete because it does not on its face contain required information, the FDA may refuse to file the application and request additional information rather than file a BLA. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to preliminary review before the FDA files it. Once the submission is filed, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of BLAs. Most applications are classified as Standard Review products that have a goal of being reviewed within ten months of the date the FDA files the BLA; applications classified as Priority Review have a goal of being reviewed within six months of the date the FDA files the BLA. A BLA can be classified for Priority Review when the FDA determines the biologic product candidate has the potential to treat a serious or life-threatening condition and, if approved, would be a significant improvement in safety or effectiveness compared to available therapies. The review process for both standard and priority reviews may be extended by the FDA for three or more additional months to consider information the FDA considers to be a major amendment to the BLA.
The FDA may also refer applications for novel biologic products, as well as biologic products that present difficult questions of safety or efficacy, to an advisory committee—typically a panel that includes clinicians and other experts—for review, evaluation, and a recommendation as to whether the BLA should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.
Before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. Additionally, the FDA will generally inspect the facility or the facilities at which the biologic product is manufactured. The FDA will not approve the product unless compliance with cGMP is satisfactory and adequate to assure consistent production of the product within required specifications, and the BLA contains data that provide substantial evidence that the biologic is safe, pure, potent and effective in the claimed indication.
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After the FDA evaluates the BLA and completes any clinical and manufacturing site inspections, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the BLA and may require substantial additional testing, or information, in order for the FDA to reconsider the BLA for approval. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval.
An approval letter authorizes commercial marketing and distribution of the biologic with specific prescribing information for specific indications. As a condition of BLA approval, the FDA may require a risk evaluation and mitigation strategy (REMS) to help ensure that the benefits of the biologic outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use (ETASU). ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the product. Moreover, the FDA may require substantial post-approval testing, sometimes referred to as Phase 4 testing, and surveillance to monitor the product’s safety or efficacy.
Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, or problems are identified following initial marketing. Changes to some of the conditions established in an approved BLA, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new BLA or BLA supplement before the change can be implemented. A BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing BLA supplements as it does in reviewing BLAs.
Disclosure of Clinical Trial Information
Sponsors of clinical trials of FDA-regulated products, including biologics, are required to register and disclose certain clinical trial information on ClinicalTrials.gov. Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the trial. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.
Additional Controls for Biologics
To help reduce the increased risk of the introduction of adventitious agents, the PHS Act emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined. The PHS Act also provides authority to the FDA to immediately suspend biologics licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases within the United States.
After a BLA is approved, the product may also be subject to official lot release as a condition of approval. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the lot manufacturing history and the results of all of the manufacturer’s tests performed on the lot. The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before allowing the manufacturer to release the lots for distribution. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products. As
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with drugs, after approval of a BLA, biologics manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.
U.S. Patent Term Restoration, Marketing Exclusivity, and Biosimilars
Depending upon the timing, duration, and specifics of FDA approval of our product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Amendments). The Hatch-Waxman Amendments provide for a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process. Patent term extension, however, cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term extension period is generally one half the time between the effective date of an IND and the submission date of a BLA, plus the time between the submission date of a BLA and the approval of that application, up to five years. If the patent selected for extension was issued during the development of or review period, the calculation begins from the date of patent issuance. The review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved drug is eligible for such an extension, only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended, and the application for the extension must be submitted prior to the expiration of the patent. Such application must be submitted within 60 days of approval. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.
The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created an abbreviated approval pathway for biological products shown to be highly similar to or interchangeable with an FDA-licensed reference biological product. Biosimilarity sufficient to reference a prior FDA-approved product requires that there be no differences in conditions of use, route of administration, dosage form, and strength, and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency. Biosimilarity may be shown through analytical studies, an assessment of toxicity, and a clinical trial or trials, unless the Secretary of Health and Human Services waives a required element. A biosimilar product may be deemed interchangeable with a previously approved product if it meets the higher hurdle of demonstrating that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Under most state laws, interchangeable products may be used in place of the reference biological product.
A reference biologic is granted 12 years of exclusivity from the time of first licensure, or BLA approval, of the reference product, and no application for a biosimilar referencing the reference product can be submitted for four years from the date of first licensure of the reference product. “First licensure” typically means the initial date the particular product at issue was licensed in the United States. Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a biological product if the licensure is for a supplement for the biological product or for a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength, or for a modification to the structure of the biological product that does not result in a change in safety, purity or potency. The first biologic product submitted under the biosimilar abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against the approval of other interchangeable biologics for the lesser of (i) one year after first commercial marketing of the first interchangeable biosimilar, (ii) 18 months after the first interchangeable biosimilar is approved if there is no patent challenge, (iii) 18 months after resolution of a lawsuit against the applicant that submitted the application for the first approved interchangeable biosimilar biological product over the patents of the reference biologic, or (iv) 42 months after the first interchangeable biosimilar’s application has been approved if a patent lawsuit is ongoing within the 42-month period.
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Pediatric Information
Under the Pediatric Research Equity Act (PREA), BLAs or supplements to BLAs must contain data to assess the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the biological product is safe and effective. The FDA may grant full or partial waivers or deferrals for submission of data. Unless otherwise required by law or regulation, PREA does not apply to any biological product for an indication for which orphan designation has been granted. However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).
The Best Pharmaceuticals for Children Act (BPCA) provides a six-month extension of non-patent exclusivity for a biologic if certain conditions are met. Conditions for exclusivity include the FDA’s determination that information relating to the use of a new biologic in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory time frame. Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers.
Post-Approval Requirements
Once a BLA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet. Biologics may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.
The FDA strictly regulates marketing, labeling, advertising and promotion of biologics that are placed on the market. Advertising and promotion of biologics must be in compliance with the FDC Act and its implementing regulations and only for the approved indications and in a manner consistent with the approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state authorities.
Adverse event reporting and submission of periodic reports is required following FDA approval of a BLA. The FDA also may require post-marketing testing, or Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control, biological product manufacture, packaging, and labeling procedures must continue to conform to cGMP after approval. Biologic manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects a biologic product’s manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality-control to maintain compliance with cGMP. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
Other potential consequences include, among other things:
| • | Form 483s, restrictions on the manufacturing of the product, product recalls or withdrawal of the product from the market; |
| • | warning or untitled letters or holds on clinical trials; |
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| • | refusal of the FDA or comparable foreign regulatory authorities to accept new marketing applications or approve pending applications or supplements to approved applications, or suspension or revocation of product approvals; |
| • | product seizure or detention, or refusal to permit the import or export of products; |
| • | consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; |
| • | mandated modification of promotional materials and labeling and the issuance of corrective information; |
| • | the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or |
| • | injunctions or the imposition of fines or civil or criminal penalties. |
Regulation Outside of the United States
In addition to regulations in the United States, we are also subject to a variety of regulations in other jurisdictions governing clinical studies, commercial sales, and distribution of our products. Most countries outside of the United States require that clinical trial applications be submitted to and approved by the local regulatory authority for each clinical study.
In Canada, for example, the manufacture and sale of new drugs are controlled by Health Canada. New drugs must pass through a number of testing stages, including preclinical testing and human clinical trials. Preclinical testing involves testing the new drug’s chemistry, pharmacology and toxicology in vitro and in vivo. Successful results (that is, potentially valuable pharmacological activity combined with an acceptable low level of toxicity) enable the developer of the new drug to file a clinical trial application to begin clinical trials involving humans.
To study a drug in Canadian patients, a clinical trial application submission must be filed with Health Canada. The clinical trial application submission must contain specified information, including the results of the preclinical tests completed at the time of the submission and any available information regarding use of the drug in humans. In addition, since the method of manufacture may affect the efficacy and safety of a new drug, information on manufacturing methods and standards and the stability of the drug substance and dosage form must be presented. Production methods and quality control procedures must be in place to ensure an acceptably pure product, essentially free of contamination, and to ensure uniformity with respect to all quality aspects.
In addition, all federally regulated trials must be approved and monitored by an independent committee of doctors, scientists, advocates and others to ensure safety and ethical standards, IRBs or Ethics Review Boards (ERBs). The review boards study and approve all study-related documents before a clinical trial begins and also carefully monitor data to detect benefit or harm, and validity of results.
Provided Health Canada does not reject a clinical trial application submission and IRB or ERB approval has been obtained, clinical trials can begin. Clinical trials for product candidates in Canada, as in the United States, are generally carried out in three phases. Phase 1 involves studies to evaluate toxicity and suitable dose levels in healthy humans. The new drug is administered to human patients who have met the clinical trial entry criteria to determine pharmacokinetics, human tolerance and prevalence of any adverse side effects. Phases 2 and 3 involve therapeutic studies. In Phase 2, efficacy, dosage, side effects and safety are established in a small number of patients who have the disease or disorder that the new drug is intended to treat. In Phase 3, there are controlled clinical trials in which the new drug is administered to a large number of patients who are likely to receive benefit from the new drug. In Phase 3, the effectiveness of the new drug in patients is compared to that of standard accepted methods of treatment in order to provide sufficient data for the statistical proof of safety and efficacy for the new drug.
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If clinical studies establish that a new drug has value, the manufacturer submits a new drug submission application to Health Canada for marketing approval. The new drug submission contains all known information about the new drug, including the results of preclinical testing and clinical trials. Information about a substance contained in new drug submission includes its proper name, its chemical name, and details on its method of manufacturing and purification, and its biological, pharmacological and toxicological properties. The new drug submission also provides information about the dosage form of the new drug, including a quantitative listing of all ingredients used in its formulation, its method of manufacture, manufacturing facility information, packaging and labeling, the results of stability tests, and its diagnostic or therapeutic claims and side effects, as well as details of the clinical trials to support the safety and efficacy of the new drug. Furthermore, for biological products, an on-site evaluation is completed to assess the production process and manufacturing facility. It is required prior to the issuance of a notice of compliance. All aspects of the new drug submission are critically reviewed by Health Canada. If a new drug submission is found satisfactory, a notice of compliance is issued permitting the new drug to be sold for the approved use. In Canada, an establishment license must be obtained prior to marketing the product.
Health Canada has a policy of priority evaluation of new drug submissions for all drugs intended for serious or life-threatening diseases for which no drug product has received regulatory approval in Canada and for which there is reasonable scientific evidence to indicate that the proposed new drug is safe and may provide effective treatment.
An exception to the foregoing requirements relating to the manufacture and sale of a new drug is the limited authorization that may be available in respect of the sale of new drugs for emergency treatment. Under the special access program, Health Canada may authorize the sale of a quantity of a new drug for human use to a specific practitioner for the emergency treatment of a patient under the practitioner’s care. Prior to authorization, the practitioner must supply Health Canada with information concerning the medical emergency for which the new drug is required, such data as is in the possession of the practitioner with respect to the use, safety and efficacy of the new drug, the names of the institutions at which the new drug is to be used and such other information as may be requested by Health Canada. In addition, the practitioner must agree to report to both the drug manufacturer and Health Canada the results of the new drug’s use in the medical emergency, including information concerning adverse reactions, and must account to Health Canada for all quantities of the new drug made available.
The Canadian regulatory approval requirements for new drugs outlined above are similar to those of other major pharmaceutical markets. While the testing carried out in Canada is often acceptable for the purposes of regulatory submissions in other countries, individual regulatory authorities may request supplementary testing during their assessment of any submission. Therefore, the clinical testing conducted under Health Canada authorization or the approval of regulatory authorities of other countries may not be accepted by regulatory authorities outside Canada or other countries.
The monitoring of a new drug does not cease once it is on the market. For example, a manufacturer of a new drug must report any new information received concerning serious side effects, as well as the failure of the new drug to produce desired effects. If Health Canada determines it to be in the interest of public health, a notice of compliance for a new drug may be suspended and the new drug may be removed from the market.
A post surveillance program involves clinical trials conducted after a drug is marketed (referred to as Phase 4 studies in the United States) and is an important source of information on as yet undetected adverse outcomes, especially in populations that may not have been involved in the premarketing trials (e.g., children, the elderly, pregnant women) and the drug’s long-term morbidity and mortality profile. Regulatory authorities may require companies to conduct Phase 4 studies as a condition of market approval. Companies often conduct post-marketing studies in the absence of a regulatory mandate.
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Healthcare Laws and Regulations
Sales of pharmaceutical products and related activities, such as arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers, are subject to fraud and abuse and other healthcare laws and regulation, which are enforced by the federal government and the states and foreign governments in which the business is conducted. Applicable healthcare laws and regulations that may affect a company’s ability to operate if and when marketing approval is granted for a product candidate include the following:
| • | the federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, receiving, offering or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order, or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal or state healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Rather, if “one purpose” of the remuneration is to induce referrals, the federal Anti-Kickback Statute is violated. Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from federal programs; |
| • | the federal criminal and civil false claims and civil monetary penalties laws, including the federal False Claims Act (FCA), which can be enforced through civil whistleblower or “qui tam” actions against individuals or entities, and prohibits, among other things, knowingly presenting, or causing to be presented to the federal government claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery; |
| • | the Health Insurance Portability and Accountability Act (HIPAA), which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of payor (e.g., public or private), or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
| • | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH) and their respective implementing regulations, which impose obligations on certain covered healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates and subcontractors that perform certain services involving the storage, use or disclosure of individually identifiable health information for or on behalf of a covered entity and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually |
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| identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions; |
| • | even when HIPAA/HITECH do not apply, according to the Federal Trade Commission (FTC), failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable information is considered sensitive data that merits stronger safeguards; |
| • | the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions, to report annually to the Centers for Medicare & Medicaid Services (CMS) information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals (such as physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certain nurse midwives) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; |
| • | the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. businesses and their representatives from offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business; |
| • | analogous state laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed under Medicaid and other state programs, or in several states, apply regardless of payor, including private insurers and cash-pay patients; |
| • | state laws that require the registration of manufacturers and wholesale distributors of drug and biological products who ship into a state, including in certain states that require registration even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain; and |
| • | certain state laws that require pharmaceutical and biotechnology companies to obtain regulatory licenses to manufacture or distribute products commercially, establish marketing compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing information, and state and local laws that require the registration of pharmaceutical sales representatives, as well as prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. |
Additionally, we are subject to state and foreign laws governing the collection, use, access to, confidentiality, privacy and security of health-related and other personal information, many of which differ from each other in significant ways and often are not preempted by HIPAA. Violations of any such requirements may result in significant penalties, including civil, criminal and administrative penalties, damages, fines,
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disgorgement, imprisonment, the curtailment or restructuring of operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, integrity oversight and reporting obligations, or reputational harm. Additionally, to the extent that pharmaceutical products are sold in a foreign country, they may be subject to similar foreign laws.
Pharmaceutical Coverage, Pricing and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. In the United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the extent to which third-party payors provide coverage, and establish adequate reimbursement levels for such products. In the United States, third-party payors include federal and state healthcare programs, government authorities, private managed care providers, private health insurers and other organizations, where there is no uniform policy for coverage and reimbursement and can differ significantly from payor to payor.
Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical drug products and medical services, in addition to questioning their safety and efficacy. Such payors may limit coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the FDA-approved drugs for a particular indication. Companies may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of their products, in addition to the costs required to obtain the FDA approvals. Nonetheless, a product candidate may not be considered medically necessary or cost-effective. Moreover, the process for determining whether a third-party payor will provide coverage for a drug product may be separate from the process for setting the price of a drug product or for establishing the reimbursement rate that such a payor will pay for the drug product. A payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. Adequate third-party reimbursement may not be available to enable a company to maintain price levels sufficient to realize an appropriate return on its investment in product development.
The marketability of any product candidates for which regulatory approval is granted for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care in the United States has increased and could increase the pressure on pharmaceutical pricing. Moreover, there have been increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs. For example, the U.S. Department of Health and Human Services (HHS) imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis. In addition, HHS has been empowered to negotiate the price of certain single-source biologics that have been on the market for at least 11 years covered under Medicare as part of the Medicare Drug Price Negotiation Program. Each year, up to 20 products will be selected by HHS for the Medicare Drug Price Negotiation Program. Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which regulatory approval is granted, less favorable coverage policies and reimbursement rates may be implemented in the future.
Healthcare Reform
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system. The United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement, and requirements
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for substitution of generic products for branded prescription drugs and biologics. In recent years, Congress has considered reductions in Medicare reimbursement levels for drugs and biologics administered by physicians. CMS, the agency that administers the Medicare and Medicaid programs, also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs and biologics. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products. While Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payors.
On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was signed into law that narrowed access to marketplace exchanges created under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA) and declined to extend the ACA enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance. The OBBBA also is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding and limiting provider taxes used to fund the program. Congress is also considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies. The current administration has announced agreements with several pharmaceutical companies that require the drug manufacturers to offer, through a direct to consumer platform (TrumpRx) U.S. patients and Medicaid programs prescription drug Most-Favored Nation (MFN) pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues. Other examples include: (1) reducing agency workforces; (2) directing HHS and other agencies to lower prescription drug costs through a variety of initiatives, including by improving upon the Medicare Drug Price Negotiation Program and establishing MFN pricing for pharmaceutical products; (3) imposing tariffs on certain imported pharmaceutical products; and (4) as part of the Make America Healthy Again (MAHA) Commission’s Strategy Report released in September 2025, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising. Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand MFN pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand pharmaceutical drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager, or PBM, payment methodologies, among others. Further on December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and in some cases, designed to encourage importation from other countries and bulk purchasing.
General legislative cost control measures may also affect reimbursement for product candidates. The Budget Control Act, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 that remain in effect through 2032 unless additional Congressional action is taken. Further, in its June 2024 decision in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA. Additional federal, state, and foreign healthcare reform measures may be adopted in the future, particularly given the recent change of administration, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for pharmaceutical products or additional pricing pressures.
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Employees and Human Capital Resources
As of June 30, 2026, we had 44 employees, 44 of whom were full-time and 31 of whom were engaged in research and development activities. Approximately 66% of our employees hold Ph.D. or M.D. or other advanced degrees. None of our employees are represented by a labor union or covered under a collective bargaining agreement. We consider our relationship with our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. It is important that we not only attract and retain the best and brightest diverse talent, but also ensure they remain engaged and can thrive in an environment that is committed to helping them grow, succeed and contribute directly to achieving our purpose. The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase the success of our Company by motivating such individuals to perform to the best of their abilities and achieve our objectives. We also strive to foster career growth and internal mobility by providing a broad range of training, mentoring and other development opportunities.
Manufacturing
We oversee and manage third party contract manufacturing organizations (CMOs) to support development and manufacture of product candidates for our clinical trials. We expect our strategy to use CMOs will enable us to maintain a more efficient infrastructure, avoiding the necessity to acquire our own manufacturing facility and equipment, while simultaneously enabling us to focus our expertise on the clinical development and the potential future commercialization of our products. Currently, we rely on and have agreements with multiple third-party CMOs to manufacture and supply active pharmaceutical ingredient (API) and drug product (DP) for our clinical trials. In the event we advance any of our drug candidates to Phase 3 clinical trials, we anticipate the need to enter into a manufacture and supply agreement with, and transfer API and DP manufacture to, one or more larger third-party CMOs with whom we would also likely enter into commercial supply agreements with prior to any potential regulatory approval if any of our drug candidates are commercialized. The DP for our drug candidates is manufactured via conventional pharmaceutical processing procedures, employing commonly-used and commercially available excipients and packaging materials. The process, equipment and methods employed for manufacture and analysis are consistent with standard biologics synthesis or pharmaceutical production, and are transferable to a range of manufacturing facilities, if needed.
Competition
We face substantial competition from multiple sources, including large and specialty pharmaceutical and biotechnology companies, academic research institutions and governmental agencies and public and private research institutions. Our competitors compete with us on the level of the technologies employed, or on the level of development of product candidates. In addition, many small biotechnology companies have formed collaborations with large, established companies to obtain support for their research, development and commercialization of products or combine several treatment approaches to develop longer lasting or more efficacious treatments that may potentially directly compete with our current or future product candidates. We anticipate that we will continue to face increasing competition as new therapies and combinations thereof, technologies, and data emerge for the treatment of chronic pruritic (itch) and/or inflammatory diseases such as CPUO, CP, UP and AD.
Our current product candidates, initially under development for treatment of chronic pruritic (itch) and/or inflammatory diseases such as CPUO, CP, UP and AD, if approved, would face competition from approved treatments, some of which have achieved commercial success. To compete successfully, we need to differentiate our product candidates from these currently marketed drugs, meaning that we will have to demonstrate that the relative cost, method of administration, safety, tolerability or efficacy of our product candidates provides a better
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alternative to existing and new therapies. Our commercial opportunity and likelihood of success will be reduced or eliminated if our product candidates, if approved, are not ultimately demonstrated to be safer, more effective, more conveniently administered, or less expensive than the current standards of care. Furthermore, even if our product candidates are able to achieve these attributes, acceptance of our products, if approved, may be inhibited by the reluctance of physicians to switch from existing therapies to our products, or if physicians choose to reserve our products for use in limited circumstances.
In addition to the current standard of care treatments for patients with chronic pruritic (itch) diseases such as CPUO, CP, UP and AD, numerous commercial and academic preclinical studies and clinical trials are being undertaken by other parties to assess novel technologies and product candidates in our disease areas of focus.
Many of our competitors, either alone or in combination with their respective strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, the regulatory approval process, and marketing than we do. Mergers and acquisition activity in the pharmaceutical, biopharmaceutical and biotechnology sector is likely to result in greater resource concentration among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through sizeable collaborative arrangements with established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Our commercial opportunity could be reduced or eliminated if one or more of our competitors develop and commercialize products that are safer, more effective, better tolerated, or of greater convenience or economic benefit than our proposed product offering. Our competitors also may be in a position to obtain FDA or other regulatory approval for their products more rapidly, resulting in a stronger or dominant market position before we are able to enter the market. The key competitive factors affecting the success of all of our programs are likely to be product safety, efficacy, convenience and treatment cost.
Facilities
Our headquarters are located in San Carlos, California where we lease and occupy 26,062 square feet of office and laboratory space. The current term of our lease expires on June 30, 2028.
We believe that our existing facilities are sufficient to meet our near-term needs and that suitable additional space will be available as and when needed.
Legal Proceedings
From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
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Executive Officers and Directors
The following table provides information, including ages as of July 1, 2026, regarding our executive officers and directors:
| Name |
Age | Position(s) | ||
| Executive Officers and Employee Directors | ||||
| Tao Fu |
54 |
Chief Executive Officer, President and Director | ||
| Zaneta Odrowaz, Ph.D. |
42 |
Chief Business Officer, Treasurer, Secretary | ||
| Steven Chan |
54 |
Chief Financial Officer | ||
| Petter Veiby |
61 |
Chief Scientific Officer | ||
| Hubert Chen, M.D. |
54 |
Chief Medical Officer | ||
| Non-Employee Directors | ||||
| James Topper, M.D., Ph.D.(2) |
64 |
Chairman and Director | ||
| Mitchell Gold, M.D.(1)(2) |
59 |
Director | ||
| Rebecca Luse.(4) |
41 |
Director | ||
| Aaron Royston, M.D.(1) |
41 |
Director | ||
| John W. Smither(1)(3) |
73 |
Director | ||
| Colin Walsh, Ph.D. |
41 |
Director | ||
| Angie You, Ph.D.(1)(2)(3) |
53 |
Director | ||
| (1) | Member of the Audit Committee effective upon the completion of this offering. |
| (2) | Member of the Compensation Committee effective upon the completion of this offering. |
| (3) | Member of the Nominating and Governance Committee effective upon the completion of this offering. |
| (4) | Ms. Luse has given notice of her intention to resign from our board of directors immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. |
Executive Officers and Employee Directors
Tao Fu is our founder and has served as our Chief Executive Officer, President and a member of our board of directors since April 2023. He also currently serves as a Venture Partner of Frazier Life Sciences, a life sciences investment firm, since May 2022, and as a board member of Tr1X Inc., a pharmaceutical company, since January 2024. Prior to joining us, Mr. Fu served as President and Chief Operating Officer, and Chief Strategy Officer of Zai Lab Ltd. (Zai Lab), a biopharmaceutical company, from September 2018 to March 2022. From June 2015 to September 2018, Mr. Fu served as Executive Vice President, Chief Commercial and Business Officer of Portola Pharmaceuticals, Inc., a biopharmaceutical company. Mr. Fu served as Vice President and led M&A, Corporate Development and Alliance Management functions at Bristol Myers Squibb Co. (BMS), a biopharmaceutical company, from January 2014 to May 2015. Prior to that, Mr. Fu worked at Johnson & Johnson (J&J), a biopharmaceutical company, from February 2003 to January 2014, with his last position being Vice President, Head of M&A, responsible for J&J’s global M&A activities in pharmaceuticals. Mr. Fu also previously held positions with Scios Inc., McKinsey & Company and Becton, Dickinson and Company. Mr. Fu did his undergraduate studies in Biology at Tsinghua University and has a M.S. in Biology from the University of Rochester, and an M.B.A. from Vanderbilt University. We believe Mr. Fu is qualified to serve on our board of directors because of his extensive experience in the biopharmaceutical industry and leadership experience, including his role as our founder, Chief Executive Officer and President.
Zaneta Odrowaz, Ph.D. is one of our co-founders and has served as our Chief Business Officer since April 2023. She has also served as Vice President of Company Creation at Frazier Life Sciences since September 2022. Prior to Frazier Life Sciences, Zaneta served as Senior Director of Corporate Development at Amunix Pharmaceuticals, Inc. (acquired by Sanofi S.A.), a biotechnology company, from April 2020 to June 2022. From October 2018 to March 2020, Dr. Odrowaz was the Chief of Staff to the General Manager at Philips Neuro. Earlier in Dr. Odrowaz’s career, she served biopharma and private equity clients as a management consultant at
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McKinsey & Company. Dr. Odrowaz has a Master’s degree in Biotechnology from the Jagiellonian University in Poland, a Ph.D. in Gene Expression from the University of Manchester, U.K., and completed a postdoctoral fellowship in Neuroepigenomics as a Walter V. and Idun Berry fellow at Stanford University.
Steven Chan has served as our Chief Financial Officer since October 2024. Prior to joining us, Mr. Chan was the Chief Financial Officer at Connect Biopharma Holdings Limited, a biopharmaceutical company, from November 2021 to September 2024. From April 2019 to November 2021, he served as Chief Financial Officer at Delphon Industries, LLC, a semiconductor manufacturing company. Prior to that, he served as Vice President, Finance & Corporate Controller at Arcus Biosciences, Inc., a biopharmaceutical company, from April 2017 to April 2019 and at MyoKardia, Inc. (acquired by BMS), a biopharmaceutical company, from November 2014 to March 2017. Mr. Chan has also held positions at companies in the biopharmaceutical, financial services, and technology sectors, including Solta Medical Inc., Moody’s Analytics, Polycom, Inc. and Logitech, Inc. Mr. Chan received his B.S. in Business Administration from the University of California, Berkeley (UC Berkeley) and is a Certified Public Accountant (inactive).
Petter Veiby is one of our co-founders and has served as our Chief Scientific Officer since June 2023. He also currently serves as a board member of BiVictriX Therapeutics Ltd, a private biotechnology company, since August 2025. Prior to joining us, he was Senior Director at Takeda Oncology, a pharmaceutical company, from November 2022 to June 2023. From April 2022 to November 2022, he was Senior Vice President, Business Development at Immunitas Therapeutics, Inc., a biotechnology company. Prior to that, he was the Head of Alliances and BD Search and Evaluation at Zai Lab from March 2020 to May 2022. From July 1999 to March 2020, he served in various roles with increasing responsibility, including Global Head of Biotherapeutics at Takeda Oncology (originally Millennium Pharmaceuticals). He studied Hematopoietic Stem Cell Biology at the University of Oslo in Norway and completed his postdoctoral studies at the Hipple Cancer Research Center, in Dayton, Ohio, affiliated with Ohio State University.
Hubert Chen, M.D. has served as our Chief Medical Officer since March 2024. Prior to joining us, Dr. Chen served as Senior Vice President of Clinical Development at Krystal Biotech, Inc., a biotechnology company, from October 2021 to March 2024. From August 2011 to September 2021, Dr. Chen served in various roles at Genentech, Inc., a biotechnology company, most recently as Principal Medical Director starting in March 2020 and as Senior Medical Director from March 2016 to March 2020. Dr. Chen has also previously held several positions at the University of California, San Francisco (UCSF) Medical Center. Dr. Chen has a M.P.H. from Harvard University and received his M.D. from Stanford University. He is board-certified in pulmonary medicine, critical care medicine and internal medicine and received his post-graduate training at the University of California, San Francisco.
Non-Employee Directors
James Topper, M.D., Ph.D. has served as Chairman and a member of our board of directors since June 2023. Dr. Topper has served as a Managing Partner of Frazier Life Sciences since 2005 and has been a Partner at Frazier Life Sciences since August 2003. From 2002 to 2003, prior to joining Frazier Life Sciences, Dr. Topper served as head of the Cardiovascular Research and Development Division at Millennium. Dr. Topper currently serves as a member of the board of directors of the following publicly traded companies: Phathom Pharmaceuticals, Inc., a biopharmaceutical company, since September 2022; NewAmsterdam Pharma Company N.V., a biopharmaceutical company, since November 2022. He also served as a member of the board of directors of Alpine Immune Sciences, Inc., a biotechnology company, from June 2016 to May 2024. Dr. Topper received his M.D. and Ph.D. in Biophysics from Stanford University and a B.S. from the University of Michigan. He was board-certified in internal medicine and cardiovascular disease receiving his post-graduate training at the Brigham and Women’s Hospital in Boston. We believe that Dr. Topper is qualified to serve on our board of directors because of his medical background, experience as an investor in biotechnology companies and extensive service as a director of other biopharmaceutical companies.
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Mitchell Gold, M.D. has served as a member of our board of directors since July 2024. Dr. Gold has been a venture partner at Frazier Life Sciences since January 2025 and has also served as a managing partner of Alpine BioVentures, GP, LLC, a healthcare investment firm, since September 2013. From January 2015 to July 2024, Dr. Gold served as Chairman, Chief Executive Officer, and founder of Alpine Immune Sciences, Inc. (acquired by Vertex Pharmaceuticals Incorporated), a biotechnology company. From August 2012 to August 2014, Dr. Gold served as chairman and founder of Alpine Biosciences, Inc. (acquired by Cascadian Therapeutics, Inc.). Previously, Dr. Gold was a board member, President and Chief Executive Officer of Dendreon Corporation (acquired by Valeant Pharmaceuticals International, Inc.), a biotechnology company, from May 2001 to February 2013. Dr. Gold has a B.S. in Biology from the University of Wisconsin and an M.D. from Rush University Medical School in Chicago and did his residency in Urology at the University of Washington. We believe that Dr. Gold is qualified to serve on our board of directors because of his extensive experience in senior executive management roles and as an investor in life sciences companies.
Rebecca Luse has served as a member of our board of directors since March 2025. Ms. Luse has also served as Managing Director of Deep Track Capital, L.P., a life sciences investment firm, since January 2021. From October 2019 to January 2021, Ms. Luse served as Principal of New Leaf Venture Partners, a healthcare technology investment firm, and as Vice President from February 2015 to January 2021. Ms. Luse has also served as a member of the board of directors of LB Pharmaceuticals Inc, a publicly traded biopharmaceutical company, since August 2023. From August 2013 to February 2015, Ms. Luse was a research associate on the biotechnology investment team at Jefferies LLC. Prior to that, Ms. Luse was a research associate on the specialty pharmaceuticals investment team at Piper Jaffray & Co. (now Piper Sandler & Co.), from September 2011 to August 2013. Ms. Luse has a B.S. in Biochemistry and Mathematics from Indiana University Bloomington. We believe that Ms. Luse is qualified to serve on our board of directors because of her financial expertise, investment experience in the life sciences industry, and service as a director of other biopharmaceutical companies. Ms. Luse has given notice of her intention to resign as a member of our board of directors immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.
Aaron Royston, M.D. has served as a member of our board of directors since June 2023. Dr. Royston has been a managing partner at venBio Partners, LLC, a life sciences investment firm, since November 2015. Prior to joining venBio Partners, LLC, Dr. Royston held various positions at Vivo Capital LLC from July 2014 to October 2015, Bain & Company, Inc. from July 2013 to July 2014, and Mount Sinai Medical Center from July 2007 to July 2008. Dr. Royston has served as a member of the board of directors of several publicly traded companies, including RayzeBio, Inc. (acquired by BMS), a biotechnology company, from August 2020 to November 2023, and Ventyx Biosciences, Inc., a biotechnology company, from March 2021 until January 2023. Dr. Royston has a B.S. in Biological Sciences from Duke University, and an M.D. and M.B.A. from the University of Pennsylvania. We believe that Dr. Royston is qualified to serve on our board of directors because of his clinical and biotechnology industry experience and his extensive service as a director of other biopharmaceutical companies.
John W. Smither has served as a member of our board of directors since July 2026. Mr. Smither has served as Chief Financial Officer of MBX Biosciences, Inc., a biopharmaceutical company, since March 2026, and as a senior advisor to Frazier Life Sciences since November 2024. From September 2023 to April 2024, Mr. Smither served as interim Chief Financial Officer of Arcutis Biotherapeutics, Inc., a biopharmaceutical company, where he had previously served as Chief Financial Officer from May 2019 to March 2021. Mr. Smither currently serves as a member of the board of directors of NewAmsterdam Pharma Company N.V., a biopharmaceutical company, since January 2023, where he chairs the audit committee, and of Genelux Corporation, a biopharmaceutical company, since September 2023, where he chairs the compensation committee and is a member of the audit committee. He previously served as a member of the board of directors and chair of the audit committee of eFFECTOR Therapeutics, Inc., a biopharmaceutical company, from March 2018 to September 2023, and of Applied Molecular Transport, Inc., a biopharmaceutical company, from January 2022 to December 2023. Mr. Smither has a B.S. in Business Administration from California State University,
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Los Angeles. We believe that Mr. Smither is qualified to serve on our board of directors because of his financial expertise and his service as a director of other biopharmaceutical companies.
Colin Walsh, Ph.D. has served as a member of our board of directors since May 2024. Dr. Walsh has also served as Managing Director in the Life Sciences Investing group of Goldman Sachs Group, Inc. since September 2023, and as a board member of Vicebio Limited (acquired by Sanofi S.A.), a private biotechnology company, since September 2024. From April 2019 to October 2023, Dr. Walsh served as a partner at Qiming Venture Partners USA, a healthcare investment firm. Prior to that, Dr. Walsh was a Vice President on the life science investment team at ND Capital LLC, an early-stage venture capital firm, from January 2014 to April 2019. From June 2012 to September 2015, Dr. Walsh held a number of roles at Precision NanoSystems, Inc., a biotechnology company, (acquired by Danaher Corporation). Dr. Walsh has served as a member of the board of directors of the following publicly traded companies: Elevation Oncology, Inc., a biotechnology company, from August 2019 to September 2023; and Korro Bio, Inc., a biotechnology company, from August 2020 to September 2023. Dr. Walsh has a dual B.S. in Chemical Engineering and Biochemistry from the University of Massachusetts, Amherst, a Management of Technology Certificate from the Haas School of Business at UC Berkeley, and a Ph.D. from the UC Berkeley – UCSF Graduate Program in Bioengineering. We believe that Dr. Walsh is qualified to serve on our board of directors because of his investment experience, knowledge of our industry and educational background in biochemistry and bioengineering.
Angie You, Ph.D. has served as a member of our board of directors since July 2024. Dr. You has also served as Chief Executive Officer and board member of Architect Therapeutics, LLC, a biotechnology company, since March 2023; as a senior advisor to Frazier Life Sciences, since February 2022; and on the board of directors of Candid Therapeutics, Inc., a private biotechnology company, since October 2024. Dr. You also served as advisor to Casdin Capital, LLC, a life sciences and healthcare investment firm, from April 2022 to May 2023. Prior to that, Dr. You served as Chief Executive Officer of Amunix Pharmaceuticals, Inc. (acquired by Sanofi S.A.), an immuno-oncology company, from December 2018 to January 2022. From September 2014 to December 2018, Dr. You served as Chief Business and Strategy Officer and Head of Commercial at Sierra Oncology, Inc., a biotechnology company. Dr. You has served as a member of the board of directors of the following publicly traded companies: ORIC Pharmaceuticals, Inc., a biopharmaceutical company, since November 2021; and RayzeBio, Inc. (acquired by BMS), a biotechnology company, from April 2022 to July 2024. Dr. You has an A.B. in Chemistry from Harvard College and a Ph.D. in Biochemistry from Harvard University. We believe that Dr. You is qualified to serve on our board of directors because of her extensive drug development expertise, commercial strategy expertise in the biotechnology industry and experience serving as a public company director.
Election of Executive Officers
Our executive officers are appointed by, and serve at the discretion of, our board of directors.
Family Relationships
There are no family relationships among any of our executive officers or directors.
Board Composition
Upon the closing of this offering, our board of directors will consist of seven members, six of which will be independent within the meaning of the independent director guidelines of Nasdaq. Pursuant to our current certificate of incorporation and our amended and restated voting agreement, Mr. Fu, Dr. Gold, Ms. Luse, Dr. Royston, Mr. Smither, Dr. Topper, Dr. Walsh and Dr. You have been designated to serve as members of our board of directors. The amended and restated voting agreement and the provisions of our current certificate of incorporation that govern the election and designation of our directors will terminate immediately prior to the completion of this offering, after which no contractual obligations will concern the election of our directors.
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Classified Board of Directors
In accordance with the terms of our restated certificate of incorporation and restated bylaws that will become effective upon the completion of this offering, our board of directors will be divided into three staggered classes of directors. At each annual meeting of our stockholders, a class of directors will be subject to re-election for a three-year term. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
Our directors will be divided among the three classes as follows:
| • | the Class I directors will be Dr. Royston and Dr. Walsh, and their terms will expire at the first annual meeting of our stockholders held following the completion of this offering; |
| • | the Class II directors will be Mr. Smither and Dr. Topper, and their terms will expire at the second annual meeting of our stockholders held following the completion of this offering; and |
| • | the Class III directors will be Mr. Fu, Dr. Gold and Dr. You, and their terms will expire at the third annual meeting of our stockholders held following the completion of this offering. |
Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Our restated certificate of incorporation and restated bylaws that will be in effect upon the completion of this offering authorize only our board of directors to fill vacancies on our board of directors. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our Company. See the section titled “Description of Capital Stock—Anti-Takeover Provisions—Restated Certificate of Incorporation and Restated Bylaw Provisions” for additional information.
Director Independence
In connection with this offering, we have applied to list our common stock on Nasdaq. Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors within a specified period following the completion of this offering. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (Exchange Act). In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries. We intend to satisfy the audit committee independence requirements of Rule 10A-3 as of the completion of this offering. Additionally, compensation committee members must not have a relationship with us that is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member.
Our board of directors has undertaken a review of the independence of each director and considered whether each director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our board of directors determined that, upon the completion of this offering, all of our directors, except for Mr. Fu, are “independent directors” as defined under the current Nasdaq listing standards and SEC rules and regulations. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with
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regard to each director’s business and personal activities and relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each non-employee director and the transactions involving them as described in the section titled “Certain Relationships and Related Party Transactions.”
Leadership Structure of the Board
Our corporate governance guidelines that will become effective upon the completion of this offering will provide our board of directors with flexibility to combine or separate the positions of Chairman of the board of directors and Chief Executive Officer. Dr. Topper currently serves as the Chairman of our board of directors, and Mr. Fu currently serves as our Chief Executive Officer and President. This structure allows our Chief Executive Officer to focus on our day-to-day business while our Chairman leads our board of directors in its fundamental role of providing advice to, and independent oversight of, management. We believe Dr. Topper is especially qualified for this role based on his medical training and experience working with founders to build therapeutics-focused and innovation-based companies for over twenty-five years. Further, our board of directors believes such separation is appropriate, as it enhances the accountability of the Chief Executive Officer to the board of directors and strengthens the independence of the board of directors from management. Any changes to the leadership structure of our board of directors, if made, will be promptly disclosed on the investor relations section of our website and in our proxy materials. Our board of directors, in its sole discretion, may seek input from our stockholders on the leadership structure of the board of directors.
Our board of directors has concluded that our current leadership structure is appropriate at this time. However, our board of directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.
Role of Board in Risk Oversight Process
Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.
Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. While our board of directors is responsible for monitoring and assessing strategic risk exposure, our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance policies. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Cybersecurity Risk Oversight
Securing the information of participants in our studies, medical professionals, employees, service providers, and other third parties is important to us. We have adopted physical, technological, and administrative controls on data security, and have a defined procedure for data incident detection, containment, response, and remediation. While everyone at our Company plays a part in managing these risks, oversight responsibility is
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shared by our board of directors, our audit committee, and management. Our information technology team provides regular cybersecurity updates in the form of written reports and presentations to our audit committee. Additionally, we leverage industry standard frameworks to drive strategic direction and maturity improvement. We also engage third-party security experts for risk assessments and program enhancements and maintain information security risk insurance coverage.
Committees of the Board of Directors
Our board of directors will have an audit committee, a compensation committee and a nominating and governance committee, each of which will have the composition and responsibilities described below as of the completion of this offering. In addition, from time to time, special committees may be established under the direction of our board of directors when necessary to address specific issues.
Each of the below committees has a written charter approved by our board of directors. Upon completion of this offering, copies of each charter will be posted on the investor relations page of our website. Members that serve on these committees will serve until their resignation or until otherwise determined by our board of directors.
Audit Committee
Effective upon the effectiveness of the registration statement of which this prospectus is a part, our audit committee will be composed of Mr. Smither, Dr. Gold and Dr. Royston, with Mr. Smither as the Chair of our audit committee. Our board of directors has determined that the composition of our audit committee meets the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations, and that each member of our audit committee is financially literate. In addition, our board of directors has determined that Mr. Smither is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act.
Our audit committee is directly responsible for, among other things:
| • | selecting and hiring our independent registered public accounting firm; |
| • | evaluating the qualifications, independence and performance of our independent registered public accounting firm; |
| • | the preparation of the audit committee report to be included in our annual proxy statement; |
| • | oversight of our compliance with legal and regulatory requirements; |
| • | assisting our board of directors with risk assessment and management, including cybersecurity risk management; |
| • | oversight of our accounting and financial reporting processes, including our financial statement audits and the integrity of our consolidated financial statements; and |
| • | reviewing and approving related-person transactions. |
Compensation Committee
Effective upon the effectiveness of the registration statement of which this prospectus is a part, our compensation committee will be composed of Dr. Gold, Dr. Topper and Dr. You, with Dr. Gold as the Chair of our compensation committee. Our board of directors has determined that each member of our compensation committee is a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act, and meets the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations.
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Our compensation committee is responsible for, among other things:
| • | evaluating, recommending, approving and reviewing executive officer compensation arrangements, plans, policies and programs; |
| • | evaluating and recommending non-employee director compensation arrangements for determination by our board of directors; |
| • | administering our cash-based and equity-based compensation plans; and |
| • | overseeing our compliance with regulatory requirements associated with the compensation of directors, executive officers and employees. |
Nominating and Governance Committee
Effective upon the effectiveness of the registration statement of which this prospectus is a part, our nominating and governance committee will be composed of Dr. You and Mr. Smither, with Dr. You as the Chair of our nominating and governance committee. Our board of directors has determined that each member of our nominating and governance committee meets the requirements for independence under the current Nasdaq listing standards.
Our nominating and governance committee is responsible for, among other things:
| • | identifying, considering and recommending candidates for membership on our board of directors; |
| • | overseeing the process of evaluating the performance of our board of directors; and |
| • | advising our board of directors on environmental, social and other corporate governance matters. |
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee has been an officer or employee of our Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more of its executive officers serving on our board of directors or compensation committee.
Prior to establishing the compensation committee, our full board of directors made decisions relating to the compensation of our officers.
Code of Business Conduct and Ethics
Prior to the completion of this offering, our board of directors will adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer and President and other executive and senior officers. The full text of our code of business conduct and ethics will be posted on the investor relations page of our website. The reference to our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus. We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of these provisions, on our website or in public filings to the extent required by the applicable rules.
Non-Employee Director Compensation
Our Chief Executive Officer and President, Mr. Fu, has not received any compensation or reimbursement of any expenses for his services as a director for the year ended December 31, 2025.
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The following table sets forth information concerning the compensation paid to our non-employee directors for the year ended December 31, 2025:
| Name |
Fees Earned or Paid in Cash(1) ($) |
Option Awards(2)(3) ($) |
Total ($) |
|||||||||
| Mitchell Gold |
50,000 | 65,035 | 115,035 | |||||||||
| Rebecca Luse(4) |
— | — | — | |||||||||
| Aaron Royston |
— | — | — | |||||||||
| John W. Smither(5) |
— | — | — | |||||||||
| James Topper |
— | — | — | |||||||||
| Colin Walsh |
— | — | — | |||||||||
| Angie You |
50,000 | 65,035 | 115,035 | |||||||||
| (1) | Dr. Gold and. Dr. You received a cash fee of $50,000 annually for their service on our board of directors for the year ended December 31, 2025. |
| (2) | Represents the grant date fair value of options awarded during the year ended December 31, 2025 as computed in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option award column are set forth in Note 10 to our consolidated financial statements included elsewhere in this prospectus. Note that the amounts reported in this column reflect the aggregate accounting cost for these awards, and do not necessarily correspond to the actual economic value that may be received by each director from the options. |
| (3) | As of December 31, 2025, Dr. Gold held an aggregate of 676,000 options to purchase common stock and Dr. You held an aggregate of 185,000 options to purchase common stock. None of our other non-employee directors held any outstanding equity awards as of December 31, 2025. |
| (4) | Ms. Luse joined our board of directors on March 31, 2025. |
| (5) | Mr. Smither joined our board of directors on July 2, 2026. |
Non-Employee Director Compensation Policy
Prior to this offering, we did not have a formal policy to provide any cash or equity compensation to our non-employee directors for their service as directors.
In July 2026, our board of directors approved a non-employee director compensation policy, which will take effect upon the completion of this offering. Beginning after this offering, pursuant to our non-employee director compensation policy, our non-employee directors will receive annual cash compensation of $40,000 for service on our board of directors and additional compensation for the chairperson and committee members as set forth below. All cash payments will be made quarterly in arrears, and pro-rated for any partial quarters of service, including for the initial quarter in which the non-employee director compensation policy is adopted.
| • | Non-Executive Chair: $30,000 |
| • | Audit Committee Chair: $20,000 |
| • | Audit Committee Member (Non-Chair): $10,000 |
| • | Compensation Committee Chair: $15,000 |
| • | Compensation Committee Member (Non-Chair): $7,500 |
| • | Nominating and Governance Committee Chair: $10,000 |
| • | Nominating and Governance Committee Member (Non-Chair): $5,000 |
In addition, each non-employee director who is elected or appointed to our board of directors after completion of this offering will be granted a stock option under our 2026 Plan to purchase shares of our common stock upon the director’s initial appointment to our board of directors (or, if such date is not a trading day, the first trading day thereafter), referred to as the Initial Award. The Initial Award will vest in equal monthly installments over three years following the date of grant, such that the Initial Award will become fully vested and
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exercisable on the three-year anniversary of the date of grant, subject to the director’s continued service through each applicable vesting date.
Each non-employee director who is serving on our board of directors immediately prior to, and will continue to serve on our board of directors following, our annual meeting of stockholders, will be granted an option under our 2026 Plan to purchase shares of our common stock (provided that the number of shares shall be pro-rated for any non-employee director who joins our board of directors between annual meeting dates) on the date of such annual meeting of stockholders (or, if such date is not a trading day, the first trading day thereafter), referred to as the Annual Award. Each Annual Award will vest on the earlier of (i) the anniversary of the date of grant and (ii) the next annual meeting of our stockholders, in each case, subject to the director’s continued service through the vesting date.
Options granted to our non-employee directors shall accelerate in full upon the consummation of a Corporate Transaction (as defined in our 2026 Plan) if they are then in service to us, pursuant to the terms of our 2026 Plan.
We also will continue to reimburse our non-employee directors for reasonable, customary, and documented travel expenses to meetings of our board of directors or its committees.
In addition, our 2026 Plan includes a maximum annual limit for services rendered after this offering of $750,000 of cash compensation and equity awards that may be paid, issued, or granted to a non-employee director in any calendar year (increased to $1,000,000 for a non-employee director’s initial year of service). Any cash compensation paid or equity awards granted to a person for his or her services as an employee, or for his or her services as a consultant (other than as a non-employee director), will not count for purposes of the limitation.
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The following tables and accompanying narrative disclosure set forth information about the compensation earned by our named executive officers during the year ended December 31, 2025. Our named executive officers, who are our principal executive officer and the two most highly compensated executive officers (other than our principal executive officer) serving as executive officers as of December 31, 2025, were:
| • | Tao Fu, Chief Executive Officer and President; |
| • | Petter Veiby, Chief Scientific Officer; and |
| • | Hubert Chen, Chief Medical Officer. |
Summary Compensation Table
The following table presents summary information regarding the compensation earned by our named executive officers for the year ended December 31, 2025.
| Name and Principal Position |
Fiscal Year |
Salary ($) |
Non-Equity Incentive Plan Compensation(1) ($) |
Option Awards(2) ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||
| Tao Fu Chief Executive Officer and President |
2025 | 547,456 | 287,415 | 1,213,450 | 6,000 | (3) | 2,054,321 | |||||||||||||||||
| Petter Veiby Chief Scientific Officer |
2025 | 389,304 | 143,069 | 292,780 | 107,200 | (4) | 932,353 | |||||||||||||||||
| Hubert Chen Chief Medical Officer |
2025 | 466,049 | 179,837 | 264,560 | 6,000 | (3) | 916,446 | |||||||||||||||||
| (1) | Performance-based bonuses for 2025 were determined by our board of directors and paid during the first quarter of 2026. For additional information regarding the non-equity incentive plan compensation, see the section titled “Annual Performance-Based Bonuses.” |
| (2) | Represents the grant date fair value of options awarded during the year ended December 31, 2025 as computed in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option award column are set forth in Note 10 to our consolidated financial statements included elsewhere in this prospectus. Note that the amounts reported in this column reflect the aggregate accounting cost for these awards, and do not necessarily correspond to the actual economic value that may be received by each named executive officer from the options. |
| (3) | Represents a $6,000 matching contribution under our 401(k) plan. |
| (4) | Represents a $6,000 matching contribution under our 401(k) plan, $100,000 in relocation assistance and a $1,200 cell phone allowance. |
Base Salaries
Base salary is the only fixed component of our named executive officers’ total cash compensation and provides competitive and stable pay to attract and retain our executives. We make annual salary decisions by taking into account competitive data, the skills and experience that each executive brings to us, and the performance contributions of each executive. The base salaries paid to our named executive officers for the year ended December 31, 2025 are included in the Summary Compensation Table above.
Annual Performance-Based Bonuses
A portion of the target compensation for each named executive officer is in the form of an annual cash bonus, which is based on the achievement of corporate and individual performance. For the 2025 annual cash bonuses, the corporate performance objectives included certain research, development, financial and other corporate goals. The target 2025 annual cash bonus amounts, expressed as a percentage of their annual base salary, for Mr. Fu, Mr. Veiby and Dr. Chen were 50%, 35%, and 35%, respectively. The amount of each named executive officer’s 2025 annual cash bonus was approved by our board of directors and paid during the first quarter of fiscal year 2026.
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Equity-Based Incentive Awards
Our equity-based incentive awards are designed to align our named executive officers’ interests with those of our stockholders and to retain and incentivize our named executive officers over the long term. Our board of directors is responsible for approving equity grants. Vesting of equity awards is tied to continuous service with us and serves as an additional retention measure. Our named executive officers generally are awarded an initial new hire grant upon commencement of employment. Additional grants may occur periodically in order to specifically incentivize our named executive officers with respect to achieving certain corporate goals or to reward our named executive officers for exceptional performance.
Prior to this offering, we have granted all option awards pursuant to our 2023 Plan, the terms of which are described below under “—Equity Compensation Plans and Other Benefit Plans.” All options are granted with a per share exercise price equal to no less than the fair market value of a share of our common stock on the date of the grant of such award. Generally, our option awards vest over a four-year period subject to the holder’s continuous service to us, as further described under “—Outstanding Equity Awards at 2025 Fiscal Year-End Table” below.
In April 2023, we issued restricted stock awards (RSAs) with a per share purchase price of $0.0001 to Mr. Fu. Generally, these RSAs vest over a four-year period subject to the holder’s continuous service to us, and until vested, we may repurchase any unvested shares at the original per share purchase price, as further described under “—Outstanding Equity Awards at 2025 Fiscal Year-End Table” below. If there is a Change of Control (as defined in the restricted stock purchase agreement) and if, during the period of time commencing 90 days prior to the execution of a definitive agreement providing for the consummation of such Change of Control and ending on the one-year anniversary of the consummation of such Change of Control, Mr. Fu’s employment is terminated other than for cause (as defined in the restricted stock purchase agreement) or is terminated for good reason (as defined in the restricted stock purchase agreement), then 100% of the RSAs that are unvested as of such termination will become vested at the time of such termination.
Outstanding Equity Awards at 2025 Fiscal Year-End Table
The following table summarizes the outstanding equity awards for each of our named executive officers as of December 31, 2025.
| Option Awards(1) |
|
|||||||||||||||||||||||
| Name |
Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
|
||||||||||||||||||
| Tao Fu |
08/17/2023 | (2) | 59,375 | 356,250 | 0.17 | 08/16/2033 | ||||||||||||||||||
| 05/09/2024 | (3) | 1,473,926 | 2,489,167 | 0.38 | 05/08/2034 | |||||||||||||||||||
| 05/18/2025 | (4) | — | 3,440,000 | 0.53 | 05/17/2035 | |||||||||||||||||||
| Petter Veiby |
08/17/2023 | (5) | 156,250 | 93,750 | 0.17 | 08/16/2033 | ||||||||||||||||||
| 03/06/2024 | (6) | 21,875 | 28,125 | 0.31 | 03/05/2034 | |||||||||||||||||||
| 05/09/2024 | (3) | 395,833 | 604,167 | 0.38 | 05/08/2034 | |||||||||||||||||||
| 05/18/2025 | (4) | — | 830,000 | 0.53 | 05/17/2035 | |||||||||||||||||||
| Hubert Chen |
05/09/2024 | (7) | 453,750 | 618,750 | 0.38 | 05/08/2034 | ||||||||||||||||||
| 05/09/2024 | (3) | 356,250 | 543,750 | 0.38 | 05/08/2034 | |||||||||||||||||||
| 05/18/2025 | (4) | — | 750,000 | 0.53 | 05/17/2035 | |||||||||||||||||||
| (1) | Unless otherwise noted, all outstanding equity awards were granted under the 2023 Plan. |
| (2) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of June 2, 2023 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
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| (3) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of May 9, 2024 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
| (4) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of May 18, 2025 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
| (5) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of June 19, 2023 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
| (6) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of March 6, 2024 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
| (7) | Vests with respect to 1/4th of the shares of our common stock underlying the stock option on the one-year anniversary of March 20, 2024 and an additional 1/48th of the total shares underlying the stock option vest in equal monthly installments over three years, subject to continued service through such date. |
Employment Agreements
In connection with this offering, we intend to enter into a new employment agreement with each of our named executive officers which provides for at-will employment and includes each officer’s base salary, a discretionary annual incentive bonus opportunity and standard employee benefit plan participation.
Potential Payments upon Termination or Change of Control
In connection with this offering, we adopted an executive severance and change in control plan, under which each of our named executive officers will participate. The executive severance and change in control plan will become effective upon the completion of this offering.
The executive severance and change in control plan provides that, upon a termination by us of an executive without “cause” or by the executive due to “good reason” (as such terms are defined in the executive severance and change in control plan), the executive will receive (i) payment of 9 months of such executive’s base salary (12 months, in the case of our CEO), (ii) payment of such executive’s prorated annual target bonus, (iii) continued payment of COBRA premiums for a maximum of 9 months (12 months, in the case of our CEO) and (iv) 6 months of accelerated vesting of all outstanding and unvested equity awards held by the executive, provided that any outstanding and unvested equity awards subject to performance conditions will instead be subject to the terms set forth in the applicable award agreements. An executive shall be entitled to exercise each of the executive’s equity awards that are outstanding as of completion of this offering within the earlier of 6 months (one year, in the case of our CEO) following executive’s termination without “cause” or for “good reason” and the expiration date of the equity award.
The executive severance and change in control plan also provides that, if such termination of employment occurs within three months prior to, or 12 months following, a “change in control” (as defined in the executive severance and change in control plan), the executive will receive (i) payment of 12 months of base salary (18 months, in the case of our CEO), (ii) payment of 100% of such executive’s annual target bonus (payment of 150% of such executive’s annual target bonus, in the case of our CEO) (iii) continued payment of COBRA premiums for a maximum of 12 months (18 months, in the case of our CEO), and (iv) full accelerated vesting of all outstanding and unvested equity awards held by the executive, provided that any outstanding and unvested equity awards subject to performance conditions will instead be subject to the terms set forth in the applicable award agreements. An executive shall be entitled to exercise each of the executive’s equity awards that are outstanding as of completion of this offering within the earlier of 6 months (one year, in the case of our CEO) following executive’s termination without “cause” or for “good reason” and the expiration date of the equity award.
All such severance payments and benefits under the executive severance and change in control plan will be subject to each executive’s execution of a general release of claims against us.
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Equity Compensation Plans and Other Benefit Plans
We believe that our ability to grant equity-based awards is a valuable compensation tool that enables us to attract, retain and motivate our employees, consultants and directors by aligning their financial interests with those of our stockholders. The principal features of our equity plans are summarized below. These summaries are qualified in their entirety by reference to the actual text of the plans, which are filed as exhibits to the registration statement of which this prospectus is a part.
2023 Equity Incentive Plan
The 2023 Plan was initially adopted by our board of directors and approved by our stockholders in June 2023. The 2023 Plan will terminate on the date that the 2026 Plan becomes effective (as described below) and no additional grants will be made pursuant to the 2023 Plan following its termination. However, any outstanding awards will remain outstanding and subject to the terms and conditions of the 2023 Plan until they are exercised, as applicable, or are terminated in accordance with the terms of the 2023 Plan and the applicable award agreements evidencing such awards.
Share Reserve
As of March 31, 2026, we had shares of our common stock reserved for issuance pursuant to grants under our 2023 Plan, of which remained available for grant. As of March 31, 2026, options to purchase shares of common stock had been exercised and options to purchase shares remained outstanding, with a weighted-average exercise price of $ per share. No other types of awards have been granted or are currently outstanding under the 2023 Plan. No additional grants will be made under the 2023 Plan following the date our 2026 Plan becomes effective.
Administration
Our board of directors, or a committee thereof appointed by our board of directors (as applicable, the administrator), administers the 2023 Plan and the awards granted thereunder. Subject to the terms of the 2023 Plan, the administrator has the authority to, among other things, select the persons to whom awards will be granted, construe and interpret the 2023 Plan as well as to amend the terms of any outstanding award under the 2023 Plan, provided that any amendment that would adversely affect a participant’s rights under an outstanding award shall not be made without such participant’s written consent. The 2023 Plan provides that the board of directors may delegate the authority to grant awards under the 2023 Plan to one or more executive officers to the extent permitted by applicable law.
Eligibility
The 2023 Plan provides for the grant of both incentive stock options (ISOs), within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the Code), and nonqualified stock options (NSOs), as well as for the issuance or awards of Restricted Stock Units (RSUs), Stock Appreciation Rights (SARs) and Restricted Stock Awards (each as defined in the 2023 Plan) or other stock-based awards. We may grant ISOs only to our employees. We may grant NSOs, RSUs, SARs, Restricted Stock, and other stock-based awards to our employees, outside directors and consultants. As of March 31, 2026, only stock options have been granted under the 2023 Plan. We refer to employees, outside directors or consultants who receive an award under our 2023 Plan as participants.
Options
The 2023 Plan provides for the grant of both (i) ISOs, intended to qualify for tax treatment under Section 422 of the Code, which may be granted only to employees and (ii) NSOs, which may be granted to our
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employees, outside directors and consultants, each at a stated exercise price and subject to certain vesting and other terms and conditions as set forth in the 2023 Plan. The 2023 Plan provides that the exercise price of options generally must be at least equal to the fair market value of our common stock on the date of grant. In addition, the exercise price of any ISO granted to a participant who owns more than 10% of the total combined voting power of all classes of our capital stock must be at least equal to 110% of the fair market value of our common stock on the date of grant. The maximum permitted term of options granted under our 2023 Plan is ten years from the date of grant, except that the maximum permitted term of ISOs granted to a participant who owns more than 10% of the total combined voting power of all classes of our capital stock is five years from the date of grant. Our 2023 Plan allows for the “early exercise” of stock option grants in the administrator’s discretion, subject to repurchase by the Company as set forth in the 2023 Plan. Options granted under the 2023 Plan vest at the rate and/or subject to performance requirements specified by the administrator and set forth in the award agreement governing the grant. After the participant ceases to provide services to us, he or she is able to exercise his or her vested option for the period of time stated in the governing award agreement. Generally, the vested option will remain exercisable for three months after a participant’s cessation of service, except in the case of termination due to death, disability or termination for cause. An option may not be exercised later than its expiration date.
Restricted Stock Awards and RSUs
The 2023 Plan provides for the grant of Restricted Stock Awards and RSUs, with terms as generally determined by the administrator (in accordance with the 2023 Plan) and to be set forth in an award agreement. A Restricted Stock Award is an offer by us to sell shares of our common stock subject to restrictions, which may lapse based on the satisfaction of service or achievement of performance conditions. The price, if any, of a Restricted Stock Award will be determined by the administrator. Holders of Restricted Stock Awards, unlike holders of options, will have the right to vote and any dividends or stock distributions paid pursuant to Restricted Stock Awards will be accrued and paid when the restrictions on such shares lapse. RSUs represent the right to receive shares of our common stock at a specified date in the future and may be subject to vesting based on service or achievement of performance conditions. No RSU will have a term longer than ten years from the date the RSU is granted. Vested RSUs may be settled in cash, shares of our common stock or a combination of both.
Stock Appreciation Rights
The 2023 Plan provides for the grant of SARs at a stated exercise price, which shall be at least equal to the fair market value of our common stock on the date of grant. A SAR provides for a payment, in cash or shares of our common stock, to the participant based upon the difference between the fair market value of our common stock on the date of exercise and the exercise price, multiplied by the number of shares. The maximum permitted term of SARs granted under the 2023 Plan is ten years from the date of grant. SARs granted under the 2023 Plan vest at the rate and/or subject to performance requirements specified by the administrator and set forth in the SAR agreement governing the grant. After the participant ceases to provide services to us, he or she is able to exercise his or her vested SAR for the period of time stated in the governing SAR agreement. Generally, the vested SARs will remain exercisable for three months after a participant’s cessation of service, except in the case of termination due to death, disability or termination for cause. A SAR may not be exercised later than its expiration date.
Limited Transferability
Except in limited circumstances, awards granted under our 2023 Plan may generally not be transferred in any manner prior to vesting other than by will or by the laws of descent and distribution.
Change in Control
In the event of an Acquisition or Other Combination (as such terms are defined in the 2023 Plan), outstanding awards shall be treated as provided under the agreement evidencing such transaction, which need not
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treat all outstanding awards in an identical manner, in each case without the participant’s consent. Subject to compliance with applicable law, such agreement shall provide for one or more of the following:
| (i) | the continuation of the outstanding awards by us, if we are a surviving corporation; |
| (ii) | the assumption, in whole or in part, of the outstanding awards by the surviving corporation or a successor entity or its parent; |
| (iii) | the substitution, in whole or in part, by the surviving corporation or a successor entity or its parent of its own, substantially similar awards for such outstanding awards; |
| (iv) | the full or partial exercisability or vesting and accelerated expiration of outstanding awards; |
| (v) | settlement of the fair market value of the outstanding awards (whether or not then vested or exercisable) under the terms of the award agreement, with payment made in cash or cash equivalents or securities of the successor entity (subject to vesting and/or deferred delivery consistent with the vesting restrictions applicable to such awards or the underlying shares, as permitted by law)followed by the cancellation of such awards, provided that such awards may be terminated without payment if determined by our board of directors in good faith to have no value at such time; or |
| (vi) | termination without payment of any consideration. |
Modification, Extension and Renewal of Options
The administrator may modify, extend or renew outstanding stock options or may accept the cancellation of outstanding stock options (to the extent not previously exercised) in return for the grant of new stock options. With the consent of the respective participants, new awards may be issued in exchange for the surrender and cancellation of any or all outstanding awards. Without prior stockholder approval, the administrator may reprice options or SARs (and where such repricing is a reduction in the exercise price, the consent of the affected participants is not required provided written notice is provided to them). The administrator may at any time buy from a participant an award previously granted with payment in cash, shares (including restricted stock) or other consideration, based on such terms and conditions as the administrator and the participant may agree.
Adjustments
In the event our common stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or other change in the capital structure of the company affecting shares without consideration, then in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2023 Plan, then (a) the number and class of shares reserved for issuance under the 2023 Plan, (b) the exercise prices of and number and class of shares subject to outstanding options and SARs, and (c) the purchase prices of and/or number and class of shares subject to other outstanding awards will (to the extent appropriate) be proportionately adjusted, subject to any required action by the board of directors or the stockholders of the company and compliance with applicable securities or other laws; provided, however, that fractions of a share will not be issued but will either be paid in cash at the fair market value of such fraction of a share or will be rounded down to the nearest whole share, as determined by our board of directors.
Amendment; Termination
The administrator may amend, suspend or terminate the 2023 Plan at any time. The administrator may terminate any and all outstanding options, SARs or RSUs upon our dissolution or liquidation, followed by the payment of creditors and the distribution of any remaining funds to our stockholders. An amendment of the 2023 Plan shall not be subject to the approval of our stockholders unless it requires such stockholder approval pursuant to Section 25102(o) or pursuant to the Code or the regulations promulgated under the Code as such provisions apply to ISO plans.
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2026 Equity Incentive Plan
We intend to adopt our 2026 Plan that will become effective on the day prior to the date of the effectiveness of the registration statement for which this prospectus will form a part and will serve as the successor to our 2023 Plan. Our 2026 Plan authorizes the award of ISOs, NSOs, RSAs, SARs, RSUs, performance awards, which may include cash-based awards, and stock bonus awards. We have initially reserved shares of our common stock, plus any reserved shares not issued or subject to outstanding grants under the 2023 Plan on the effective date of the 2026 Plan, for issuance pursuant to awards granted under our 2026 Plan.
The number of shares reserved for issuance under our 2026 Plan will increase automatically on January 1 of each of 2027 through 2036 by the number of shares equal to the lesser of 5% of the sum of the total number of shares of all classes of our common stock, plus the total number of shares of our common stock issuable upon conversion of any preferred stock (if any) and the total number of shares of our common stock subject to any pre-funded warrants, as issued and outstanding as of the immediately preceding December 31 (rounded down to the nearest whole share), or a number as may be determined by our board of directors or our Committee (as defined in our 2026 Plan).
In addition, the following shares will again be available for issuance pursuant to awards granted under our 2026 Plan:
| • | shares subject to options or SARs granted under our 2026 Plan that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR; |
| • | shares subject to awards granted under our 2026 Plan that are subsequently forfeited or repurchased by us at the original issue price; |
| • | shares subject to awards granted under our 2026 Plan that otherwise terminate without such shares being issued; |
| • | shares subject to awards granted under our 2026 Plan that are surrendered pursuant to an “exchange program” (as defined in our 2026 Plan); |
| • | shares subject to awards granted under our 2023 Plan that cease to be subject to such awards, by forfeiture or otherwise, after the termination of the 2023 Plan; |
| • | shares subject to awards granted under our 2023 Plan that are repurchased by us at the original price after the termination of the 2023 Plan; and |
| • | shares subject to awards granted under either our 2023 Plan or our 2026 Plan that are used to pay the exercise price of an award, as applicable, or withheld to satisfy the tax withholding obligations related to any award. |
Administration
Our 2026 Plan is expected to be administered by our Committee, all of the members of which are outside directors as defined under applicable law, or by our board of directors acting in place of our Committee. Subject to the terms and conditions of the 2026 Plan, the Committee will have the authority, among other things, to select the persons to whom awards may be granted, construe and interpret our 2026 Plan as well as to determine the terms of such awards and prescribe, amend and rescind the rules and regulations relating to the 2026 Plan or any award granted thereunder. Our 2026 Plan provides that our board of directors or our Committee may delegate its authority, including the authority to grant awards, to one or more executive officers to the extent permitted by applicable law, provided that awards granted to non-employee directors may only be determined by our board of directors.
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Eligibility; Types of Awards
Our 2026 Plan provides for the grant of awards described below to our employees, directors, consultants, independent contractors and advisors. Pursuant to the 2026 Plan, ISOs may be granted only to our employees. We may grant all other types of awards to our employees, directors and consultants.
Options
The 2026 Plan provides for the grant of ISOs and NSOs. ISOs may be granted only to our employees or employees of our parent, subsidiaries and affiliates. NSOs may be granted to eligible employees, consultants and directors or any of the foregoing of our parent, subsidiaries or affiliates. We are able to issue no more than shares pursuant to the grant of ISOs under the 2026 Plan. The Committee determines the terms of each option award, provided that ISOs are subject to statutory limitations. The Committee also determines the exercise price for an option, provided that the exercise price of an option may not be less than the fair market value of our common stock on the date of grant (with certain additional requirements for certain ISOs).
Options granted under the 2026 Plan vest at the rate and/or subject to performance requirements specified by the Committee and set forth in the award agreement governing the grant. The Committee determines the term of options granted under the 2026 Plan, up to a term of 10 years (with certain additional requirements for certain ISOs).
After the participant ceases to provide services to us, he or she is able to exercise his or her vested option for the period of time stated in the governing award agreement. Generally, the vested option will remain exercisable for three months after a participant’s cessation of service, except in the case of termination due to death, disability or termination for cause. An option may not be exercised later than its expiration date.
Restricted Stock Awards
An RSA is an offer by us to sell shares of our common stock subject to restrictions that the Committee may impose. These restrictions may be based on the completion of a specified period of service with us or upon the achievement of performance goals during a performance period. The Committee determines the price of an RSA. Unless otherwise determined by the Committee, vesting will cease on the date the participant no longer provides services to us and unvested RSAs may be forfeited to us or subject to repurchase by us.
Stock Appreciation Rights
A SAR provides for a payment, in cash or shares of our common stock (up to a specified maximum of shares, if determined by our Committee), to the participant based upon the difference between the fair market value of our common stock on the date of exercise and a predetermined exercise price, multiplied by the number of shares. The exercise price of a SAR must be at least the fair market value of a share of our common stock on the date of grant. SARs granted under the 2026 Plan vest at the rate and/or subject to performance requirements specified by the Committee and set forth in the award agreement governing the grant. The Committee determines the term of SARs granted under the 2026 Plan, up to a term of 10 years. After the participant ceases to provide services to us, he or she is able to exercise his or her vested SARs for the period of time stated in the governing award agreement. Generally, the vested SARs will remain exercisable for three months after a participant’s cessation of service, except in the case of termination due to death, disability or termination for cause. A SAR may not be exercised later than its expiration date.
Restricted Stock Units
RSUs represent the right to receive shares of our common stock at a specified date in the future. RSUs granted under the 2026 Plan vest at the rate and/or subject to performance requirements specified by the
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Committee and set forth in the award agreement governing the grant. The Committee determines the term of RSUs granted under the 2026 Plan, up to a term of 10 years. Generally, RSUs cease vesting on the date the participant ceases to provide services to us. Vested RSUs are settled in shares of our common stock, cash or a combination of our common stock and cash as specified in the applicable award agreement.
Performance Awards
A performance award is an award that is based upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee, and may be settled in cash, shares (which may consist of, without limitation, restricted stock), other property, or any combination thereof. Performance awards are subject to forfeiture because of termination of employment or failure to achieve the performance conditions.
Stock Bonus Awards
A stock bonus is an award of shares of our common stock for past or future services to us. No payment from the participant is required. The Committee determines the number of shares to be issued as a stock bonus and any restrictions on those shares. These restrictions may be based on completion of a specified period of service with us or upon the achievement of performance goals during a performance period. Unless otherwise set forth in the award agreement, vesting ceases on the date the participant no longer provides services to us, and at that time unvested shares will be forfeited to us or are subject to repurchase by us. A stock bonus award provides for payment in the form of cash, shares of our common stock or a combination thereof, based on the fair market value of shares subject to such award as determined by our Committee.
Dividend Equivalents Rights
Dividend equivalent rights may be granted at the discretion of our Committee and represent the right to receive the value of dividends, if any, paid by us in respect of the number of shares of our common stock underlying an award. Dividend equivalent rights will be subject to the same vesting or performance conditions as the underlying award and will be paid only at such time as the underlying award has become fully vested. Dividend equivalent rights may be settled in cash, shares or other property, or a combination of thereof as determined by our Committee. No dividend equivalent rights will be paid in respect of options or SARs.
Change of Control
Our 2026 Plan provides that, in the event of a Corporate Transaction (as defined in the 2026 Plan), outstanding awards under the 2026 Plan shall be subject to the agreement evidencing the corporate transaction, which need not treat all outstanding awards in an identical manner. Any or all outstanding awards (a) may be continued by the company, if we are the successor entity; (b) may be assumed or substituted by the successor corporation, or a parent or subsidiary of the successor corporation, for substantially equivalent awards (including, but not limited to, an award to acquire the same consideration paid to our stockholders pursuant to the corporate transaction), in each case after taking into account appropriate adjustments for the number and kind of shares and exercise prices pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable; (c) may be made immediately vested (and exercisable, as applicable) and settled (as applicable), in whole or in part, followed by the cancellation of such awards upon or immediately prior to the effectiveness of such transaction; or (d) may be settled for their intrinsic value (whether or not then vested or exercisable) in cash, cash equivalents, or equity (including cash or equity subject to deferred vesting and delivery consistent with vesting restrictions applicable to such awards or the underlying shares) followed by the cancellation of such awards; provided, however, that such awards may be terminated without payment if, as of the date of the Corporate Transaction, our Committee determines in good faith that no amount would have been attained upon the exercise of such award or realization of the participant’s rights, in each case without the participant’s consent. The successor corporation may also issue, as replacement of our outstanding shares held by a participant, substantially similar
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shares or other property subject to repurchase restrictions no less favorable to the participant. In the event such successor corporation refuses to continue, assume, substitute, settle or replace any award in accordance with the 2026 Plan, then notwithstanding any other provision in the 2026 Plan to the contrary, each such award shall become fully vested and, as applicable, exercisable and any rights of repurchase or forfeiture restrictions thereon will lapse, immediately prior to the consummation of the corporate transaction. Performance awards not continued, assumed, substituted, settled or replaced pursuant to the foregoing shall be deemed earned and vested at 100% of target level, unless otherwise indicated pursuant to the terms and conditions of the applicable award agreement.
If an award vests in lieu of assumption or substitution in connection with a corporate transaction as provided above, the Committee will notify the participant in writing or electronically that such award will be exercisable for a period of time determined by the Committee, in its sole discretion, and such award will terminate upon the expiration of such period without consideration. Any determinations by the Committee need not treat all outstanding awards in an identical manner, and shall be final and binding on each applicable participant.
The vesting of all awards granted to our non-employee directors under our 2026 Plan will accelerate and such awards will become exercisable (as applicable) in full prior to the consummation of the corporate transaction at such times and on such conditions as our Committee determines.
Adjustment
In the event of a change in the number or class of outstanding shares of our common stock, without consideration, by reason of a stock dividend, extraordinary dividend or distribution (whether in cash, shares, or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, conversion, consolidation, reclassification, spin-off or similar change in our capital or corporate structure, appropriate proportional adjustments will be made to the number and class of shares reserved for issuance under our 2026 Plan; the exercise prices, number and class of shares subject to outstanding options or SARs; the number and class of shares subject to other outstanding awards; and the maximum number and class of shares that may be issued as incentive stock options.
Exchange, Repricing and Buyout of Awards
Without prior stockholder approval, our Committee may (a) reprice options or SARs (and where such repricing is a reduction in the exercise price, the consent of the affected Participants is not required, provided written notice is provided to them) and (b) with the consent of the respective participants, pay cash or issue new awards in exchange for the surrender and cancellation of any or all outstanding awards.
Director Compensation Limit
No non-employee director may receive awards under our 2026 Plan in consideration for his or her service as a non-employee director following this offering with a grant date value that, when combined with cash compensation, received for his or her service as a non-employee director, exceeds $750,000 in a calendar year or $1,000,000 in the calendar year of his or her initial service as a non-employee director with us. Awards granted, or cash compensation paid, to an individual in consideration of services as an employee or in consideration of services as a consultant will not count for purposes of this limitation.
Clawback; Transferability
All awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our board of directors or our Committee or required by law, to the extent set forth in such policy.
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Except in limited circumstances, awards granted under our 2026 Plan may generally not be transferred in any manner prior to vesting other than by will or by the laws of descent and distribution.
Foreign Award Recipients
In order to comply with the laws in other countries in which we and our subsidiaries and affiliates operate or have employees or other individuals eligible for awards, the Committee will have the power and authority to modify the terms and conditions of any award granted to individuals outside the United States to comply with applicable foreign laws, establish subplans and modify exercise procedures and other terms and procedures, and take any action that the Committee determines to be necessary or advisable to comply with any local governmental regulatory exemptions or approvals.
Amendment and Termination
Our board of directors may amend our 2026 Plan at any time, subject to stockholder approval as may be required. Our 2026 Plan will terminate ten years from the date our board of directors adopts the 2026 Plan, unless it is terminated earlier as provided by the terms of the 2026 Plan. No termination or amendment of the 2026 Plan may adversely affect any then-outstanding award without the consent of the affected participant, except as is necessary to comply with applicable laws or as otherwise provided by the terms of the 2026 Plan.
2026 Employee Stock Purchase Plan
We intend to adopt our 2026 Employee Stock Purchase Plan (ESPP) that will become effective on the date of the effectiveness of the registration statement of which this prospectus forms a part. Our ESPP will permit eligible employees to purchase shares of our common stock at a discount with accumulated payroll deductions, beginning on a date to be determined by our board of directors or our Committee. Our ESPP is intended to qualify under Section 423 of the Code, provided that the Committee may adopt sub-plans under our ESPP designed to be outside of the scope of Section 423 of the Code for participants who are non-U.S. residents.
Shares Available
We have initially reserved shares of our common stock for sale under our ESPP. The aggregate number of shares reserved for sale under our ESPP will increase automatically on January 1st of each of 2027 through 2036 by the number of shares equal to the lesser of 1% of the sum of the total number of shares of all classes of our common stock, plus the total number of shares of our common stock issuable upon conversion of any preferred stock (if any) and the total number of shares of our common stock subject to any pre-funded warrants, as issued and outstanding as of the immediately preceding December 31 (rounded down to the nearest whole share) or a number of shares as may be determined by our board of directors or our Committee in any particular year. The aggregate number of shares issued over the term of our ESPP, subject to stock-splits, recapitalizations or similar events, may not exceed shares of our common stock.
Administration
Our ESPP is expected to be administered by our Committee, or by our board of directors acting in place of our Committee. Among other things, the Committee will have the authority to determine eligibility for participation in the ESPP, designate separate offerings under the ESPP, and construe, interpret and apply the terms of the ESPP.
Eligibility
Employees eligible to participate in any offering pursuant to the ESPP generally include any employee that is employed by us or certain of our designated subsidiaries at the beginning of the offering period. However, our
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Committee may exclude the following employees from the ESPP (other than where such exclusion is prohibited by applicable law): employees who do not meet eligibility requirements that the Committee may choose to impose (within the limits permitted by the Code); employees who are not employed by the company or a designated subsidiary prior to the beginning of an offering period or prior to such other time period as specified by the Committee, employees who have been employed for less than two years, employees who are customarily employed for 20 hours or less per week, or for five months or less in a calendar year, certain “highly compensated” employees as determined in accordance with applicable tax laws, or employees resident in a foreign jurisdiction whose participation is either prohibited under local law, or where compliance with local law would violate Section 423 of the Code, may not be eligible to participate in the ESPP or individuals who provide services to the company or any of its designated subsidiaries who are reclassified as common law employees for any reason except for federal income and employment tax purposes. In addition, any employee who owns (or is deemed to own as a result of attribution) 5% or more of the total combined voting power or value of all classes of our capital stock, or the capital stock of one of our qualifying subsidiaries, or who will own such amount as a result of participation in the ESPP, will not be eligible to participate in the ESPP.
Offerings
Under our ESPP, eligible employees will be offered the option to purchase shares of our common stock at a discount over a series of offering periods, which may be consecutive or overlapping, through accumulated payroll deductions over the period. Each offering period may itself consist of one or more purchase periods. No offering period may be longer than 27 months.
Participation
Participating employees will be able to purchase the offered shares of our common stock by accumulating funds through payroll deductions. Participants may select a rate of payroll deduction between 1% and 15% of their compensation. A participant may not purchase more than 2,500 (or such higher or lower number of shares as may be determined by the Committee in its discretion) shares of our common stock during any one purchase period, and may not subscribe for more than $25,000 in fair market value of shares of our common stock (determined as of the date the offering period commences) in any calendar year in which the offering is in effect.
The purchase price for shares of our common stock purchased under the ESPP will be 85% of the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of each purchase period in the applicable offering period.
Once an employee becomes a participant in an offering period, the participant will be automatically enrolled in each subsequent offering period at the same contribution level. To the extent applicable, if the fair market value of our common stock on the first day of the current offering period in which a participant is enrolled is higher than the fair market value of our common stock on the first day of any subsequent offering period, then (i) we will automatically withdraw the participant from the current offering period immediately after completion of the purchase on the purchase date of the current purchase period and the participant will be automatically enrolled in the subsequent offering period and (ii) any funds accumulated in a participant’s account prior to the first day of such subsequent offering period will be applied to the purchase of shares on the purchase date preceding the first day of such subsequent offering period. A participant may reduce his or her contribution in accordance with procedures set forth by the Committee and may withdraw from participation in the ESPP at any time prior to the end of an offering period, or such other time as may be specified by the Committee. Upon withdrawal, the accumulated payroll deductions will be returned to the participant without interest.
Adjustments Upon Recapitalization
If the number or class of outstanding shares of our common stock is changed by a stock dividend, extraordinary dividend or distribution (whether in cash, shares or other property, other than a regular cash
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dividend), recapitalization, stock split, reverse stock split, subdivision, combination, conversion, consolidation, reclassification, spin-off or similar change in our capital or corporate structure, without consideration, then our Committee will proportionately adjust the number and class of common stock that may be delivered under the ESPP, the purchase price per share and the number and class of shares of common stock covered by each outstanding option under the ESPP which has not yet been exercised, and the maximum number and class of shares under the ESPP, subject to any required action by our board of directors or our stockholders and in compliance with applicable securities laws; provided that fractions of a share will not be issued.
Change of Control
In the event of a Corporate Transaction (as defined in the ESPP), the offering period for each outstanding option to purchase common stock will be shortened by setting a new purchase date and will end on such new purchase date. The new purchase date will occur on or prior to the consummation of the Corporate Transaction, as determined by our board of directors or our Committee, and our ESPP will terminate on the consummation of the Corporate Transaction.
Transferability
A participant may not assign, transfer, pledge or otherwise dispose of payroll deductions credited to his or her account, or any rights with regard to an election to purchase shares pursuant to the ESPP other than by will or the laws of descent or distribution.
Amendment; Termination
The Committee may amend, suspend or terminate the ESPP at any time without stockholder consent, except to the extent such amendment would increase the number of shares available for issuance under our ESPP, change the class or designation of employees eligible for participation in the plan or otherwise as required by law. If our ESPP is terminated, the Committee may elect to terminate all outstanding offering periods immediately, upon the next purchase date (which may be sooner than originally scheduled) or upon the last day of such offering period. If any offering period is terminated prior to its scheduled completion, all amounts credited to participants which have not been used to purchase shares will be returned to participants as soon as administratively practicable. Our ESPP will continue until the earlier to occur of (a) termination of the ESPP by our board of directors, (b) issuance of all of the shares reserved for issuance under the ESPP, or (c) the tenth anniversary of the effective date of the ESPP.
401(k) Plan
We sponsor a retirement savings plan that is intended to qualify for favorable tax treatment under Section 401(a) of the Code and contains a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. We match portions of employees’ voluntary contributions. Participants may make pre-tax and certain after-tax (Roth) salary deferral contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit under the Code. Participants who are projected to reach 50 years of age or older during a calendar year may contribute additional amounts based on the statutory limits for catch-up contributions. Participant contributions are held in trust as required by law.
Other Benefits
Our named executive officers are eligible to participate in our employee benefit plans on the same basis as our other employees, including our health and welfare plans.
Limitations on Liability and Indemnification Matters
Our restated certificate of incorporation that will become effective upon the completion of this offering contains provisions that limit the liability of our directors and officers for monetary damages to the fullest extent
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permitted by the Delaware General Corporation Law (DGCL). Consequently, our directors and officers will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors or officers, except liability for:
| • | any breach of the director’s or officer’s duty of loyalty to us or our stockholders; |
| • | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
| • | with respect to directors, unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or |
| • | or any transaction from which the director derived an improper personal benefit. |
Our restated certificate of incorporation and our restated bylaws that will become effective upon the completion of this offering require us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject to certain limitations, our restated bylaws will also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted, subject to very limited exceptions.
We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, executive officers and certain of our key employees, in addition to the indemnification provided for in our restated certificate of incorporation and restated bylaws. These agreements, among other things, require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.
We believe that these indemnification provisions and agreements are necessary to attract and retain qualified directors, officers and key employees. We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our restated certificate of incorporation and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Compensation Recovery Policy
In connection with the completion of this offering, our board of directors intends to adopt a compensation recovery policy (Compensation Recovery Policy) which will become effective upon the effectiveness of this registration statement. The Compensation Recovery Policy is in accordance with the final rules regarding
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recovery of erroneously awarded executive officer compensation in connection with an accounting restatement, as adopted by the SEC in October 2022, and consistent with the corresponding listing standards (together, the Clawback Rules). Pursuant to the Compensation Recovery Policy, and subject to certain limited exceptions in the Clawback Rules, in the event we are required to restate our consolidated financial statements, we are required to recoup erroneously awarded incentive-based compensation (as described in the Clawback Rules), including both cash and equity compensation paid to any current or former executive officer (as described in the Clawback Rules) during the three completed fiscal years immediately prior to the date the accounting restatement was required. The amount recoverable is the amount of any incentive-based compensation received by the executive officer based on the consolidated financial statements prior to the restatement that exceeds the amount that such executive officer would have received had the incentive-based compensation been determined based on the financial restatement.
Equity Award Grant Practices
We grant equity awards on a discretionary basis in connection with certain events such as the commencement or anniversary of employment, promotion, high performance, or the closing of an acquisition. We do not grant awards in anticipation of the release of material nonpublic information, and we do not time the release of material nonpublic information for the purpose of affecting the value of any equity awards or executive compensation.
Rule 10b5-1 Plans
Our directors, officers and key employees may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades under parameters established by the director or officer when entering into the plan, without further direction from the director or officer. The director or officer may amend or terminate a Rule 10b5-1 plan, subject to certain requirements. Our directors and executive officers may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information, subject to compliance with the terms of our insider trading policy and any applicable Rule 10b5-1 guidelines. Prior to 180 days after the date of the completion of this offering, subject to early termination, the sale of any shares under such Rule 10b5-1 plan would be subject to the lock-up agreement that our directors and executive officers have entered into with the underwriters in connection with this offering.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the compensation arrangements, including any employment, termination of employment and change in control arrangements, with our directors and executive officers, including those discussed in the sections titled “Management” and “Executive Compensation,” the following is a description of each transaction since January 1, 2023 and each currently proposed transaction in which:
| • | we have been or are to be a participant; |
| • | the amounts involved exceeded or will exceed the lesser of $120,000 and 1% of our total assets at year-end for the last two completed fiscal years; and |
| • | any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member of the foregoing persons, had or will have a direct or indirect material interest. |
Agreements with Alamar
We are party to several agreements with Alamar Biosciences, Inc. (Alamar), which is a beneficial owner of more than 5% of our capital stock.
In December 2022, in connection with our formation, we issued 7,437,877 shares of our common stock to Alamar pursuant to a stock issuance agreement. In June 2023, we entered into the License Agreement with Alamar. In consideration for the rights granted under the License Agreement, we issued an additional 22,562,123 shares of our common stock to Alamar. See “Business—Alamar Platform License Agreement” for additional information.
Additionally, in June 2023, we entered into a services agreement with Alamar, pursuant to which Alamar provides us with certain non-research-based, operational services (the Services Agreement). Under the terms of the Service Agreement, we pay Alamar approximately $25,000 per month in connection with the services Alamar provides under the Services Agreement, and have paid Alamar approximately an aggregate of $0.5 million to date.
In June 2023, we entered into a sublease agreement with Alamar (as amended, the Sublease Agreement), pursuant to which we leased office and laboratory space in Fremont, California until March 2025, for $49,044 in initial rent per month which increased to $63,261 in rent per month pursuant to subsequent amendments. We paid Alamar approximately $1.7 million in aggregate under the Sublease Agreement for rent expense and certain rent-related charges such as common area maintenance charges and utilities.
Furthermore, in February 2024, we entered into a platform service agreement with Alamar, pursuant to which Alamar provides us with certain research-related services (the Platform Service Agreement). Under the terms of the Platform Service Agreement, we have paid Alamar approximately an aggregate of $211,500 to date.
Series A Redeemable Convertible Preferred Stock Financing
In two closings in June 2023 and January 2024, we sold and issued 30,425,000 shares of our Series A-1 redeemable convertible preferred stock (Series A-1 Preferred Stock) at a price per share of $1.00 and 27,659,090 shares of our Series A-2 redeemable convertible preferred stock (Series A-2 Preferred Stock and, together with the Series A-1 Preferred Stock, the Series A Preferred Stock) at a price per share of $1.10 for total gross proceeds of approximately $60.8 million (the Series A Preferred Stock Financing). Each share of our Series A Preferred Stock will automatically convert into one share of our common stock in connection with the completion of this offering. Pursuant to the current investors’ rights agreement, as described below, holders of our Series A Preferred Stock are entitled to certain registration rights. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
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The following table summarizes the Series A Preferred Stock purchased by members of our board of directors or their affiliates and holders of more than 5% of our outstanding capital stock. Please refer to the section titled “Principal Stockholders” for additional information regarding the shares held by these entities.
| Name of Stockholder |
Shares of Series A Preferred Stock |
Total Cash Purchase Price |
||||||
| Frazier Life Sciences XI, L.P.(1) |
31,022,727 | $ | 32,500,000 | |||||
| venBio Global Strategic Fund IV, L.P.(2) |
21,477,273 | $ | 22,500,000 | |||||
| (1) | Consists of shares of our Series A Preferred Stock purchased by Frazier Life Sciences XI, L.P., which beneficially owns more than 5% of our outstanding capital stock. James Topper, a member of our board of directors, is affiliated with Frazier Life Sciences XI, L.P. |
| (2) | Consists of shares of our Series A Preferred Stock purchased by venBio Global Strategic Fund IV, L.P., which beneficially owns more than 5% of our outstanding capital stock. Aaron Royston, a member of our board of directors, is affiliated with venBio Global Strategic Fund IV, L.P. |
Series B Redeemable Convertible Preferred Stock Financing
In two closings in May 2024 and January 2025, we sold and issued an aggregate of 76,363,636 shares of our Series B redeemable convertible preferred stock (Series B Preferred Stock) at a price per share of $1.375 for total gross proceeds of approximately $105.0 million (the Series B Preferred Stock Financing). The Series B Financing is split into two equal tranches of $52.5 million. The first tranche funded on May 1, 2024. The second tranche funded on January 21, 2025. Each share of our Series B Preferred Stock will automatically convert into one share of our common stock in connection with the completion of this offering.
Pursuant to the current investors’ rights agreement, as described below, holders of our Series B Preferred Stock are entitled to certain registration rights. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
| Name of Stockholder |
Shares of Series B Preferred Stock |
Total Cash Purchase Price |
||||||
| Entities affiliated with Goldman Sachs & Co. LLC(1) |
18,181,830 | $ | 25,000,016 | |||||
| Frazier Life Sciences XI, L.P.(2) |
11,054,544 | $ | 15,199,998 | |||||
| venBio Global Strategic Fund IV, L.P.(3) |
7,636,362 | $ | 10,499,998 | |||||
| (1) | Consists of shares of our Series B Preferred Stock purchased by West Street Life Sciences I, LP, WSLS Offshore Investments, SLP, WSLS Emp Onshore Investments, L.P., WSLS Emp Offshore Investments, L.P. and Broad Street Principal Investments LLC, which together with their affiliates, hold more than 5% of our outstanding capital stock. Colin Walsh, a member of our board of directors, is affiliated with Goldman Sachs & Co. LLC. |
| (2) | Consists of shares of our Series B Preferred Stock purchased by Frazier Life Sciences XI, L.P., which beneficially owns more than 5% of our outstanding capital stock. James Topper, a member of our board of directors, is affiliated with Frazier Life Sciences XI, L.P. |
| (3) | Consists of shares of our Series B Preferred Stock purchased by venBio Global Strategic Fund IV, L.P., which beneficially owns more than 5% of our outstanding capital stock. Aaron Royston, a member of our board of directors, is affiliated with venBio Global Strategic Fund IV, L.P. |
Series C Redeemable Convertible Preferred Stock Financing
In March 2025, we sold and issued an aggregate of 65,454,544 shares of our Series C redeemable convertible preferred stock (Series C Preferred Stock) at a price per share of $1.375 for total gross proceeds of approximately $90.0 million (the Series C Preferred Stock Financing). Each share of our Series C Preferred Stock will automatically convert into one share of our common stock in connection with the completion of this offering. Pursuant to the IRA, as described below, holders of our Series C Preferred Stock are entitled to certain registration rights. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
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The following table summarizes the Series C Preferred Stock purchased by members of our board of directors or their affiliates and holders of more than 5% of our outstanding capital stock. Please refer to the section titled “Principal Stockholders” for additional information regarding the shares held by these entities.
| Name of Stockholder |
Shares of Series C Preferred Stock |
Total Cash Purchase Price |
||||||
| Deep Track Biotechnology Master Fund, Ltd(1) |
18,181,818 | $ | 25,000,000 | |||||
| Frazier Life Sciences XI, L.P.(2) |
8,930,685 | $ | 12,279,692 | |||||
| venBio Global Strategic Fund IV, L.P.(3) |
6,179,219 | $ | 8,496,426 | |||||
| Entities affiliated with Goldman Sachs & Co. LLC(4) |
4,445,275 | $ | 6,112,253 | |||||
| (1) | Consists of shares of our Series C Preferred Stock purchased by Deep Track Biotechnology Master Fund, Ltd, which beneficially owns more than 5% of our outstanding capital stock. Rebecca Luse, a member of our board of directors, is affiliated with Deep Track Biotechnology Master Fund, Ltd. |
| (2) | Consists of shares of our Series C Preferred Stock purchased by Frazier Life Sciences XI, L.P., which beneficially owns more than 5% of our outstanding capital stock. James Topper, a member of our board of directors, is affiliated with Frazier Life Sciences XI, L.P. |
| (3) | Consists of shares of our Series C Preferred Stock purchased by venBio Global Strategic Fund IV, L.P., which beneficially owns more than 5% of our outstanding capital stock. Aaron Royston, a member of our board of directors, is affiliated with venBio Global Strategic Fund IV, L.P. |
| (4) | Consists of shares of our Series C Preferred Stock purchased by West Street Life Sciences I, LP, WSLS Offshore Investments, SLP, WSLS Emp Onshore Investments, L.P., WSLS Emp Offshore Investments, L.P. and Broad Street Principal Investments LLC, which together with their affiliates, hold more than 5% of our outstanding capital stock. Colin Walsh, a member of our board of directors, is affiliated with Goldman Sachs & Co. LLC. |
Investors’ Rights Agreement
In connection with our Series C Preferred Stock financing, we entered into the IRA with certain holders of our redeemable convertible preferred stock, including entities with which certain of our directors are affiliated and who hold more than 5% of our outstanding common stock. Under the IRA, these stockholders are entitled to rights with respect to the registration of their shares under the Securities Act following this offering, and the registration rights provisions included in the IRA will not terminate as a result of this offering. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
Indemnification Agreements
We have entered into, and in connection with this offering we intend to enter into, indemnification agreements with each of our directors and executive officers. The indemnification agreements, our restated certificate of incorporation and our restated bylaws will require us to indemnify our directors to the fullest extent permitted by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and executive officers. See the section titled “Executive Compensation—Limitations on Liability and Indemnification Matters” for additional information.
Policies and Procedures for Related Party Transactions
In connection with this offering, we intend to adopt a written related person transactions policy that provides that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock, and any members of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter into a material related person transaction with us without the review and approval of our audit committee, or a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict of interest. We expect the policy to provide that any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members or affiliates in which the amount involved exceeds $120,000 will be presented to our audit committee (or the committee composed solely of independent directors, if applicable) for review, consideration and approval. In approving or rejecting any such proposal, we expect that our audit committee (or the committee
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composed solely of independent directors, if applicable) will consider the relevant facts and circumstances available and deemed relevant to the audit committee (or the committee composed solely of independent directors, if applicable), including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
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The following table and accompanying footnotes set forth certain information with respect to the beneficial ownership of shares of our common stock as of , 2026, and as adjusted to reflect the shares of our common stock to be issued and sold in this offering, for:
| • | each of our directors; |
| • | each of our named executive officers; |
| • | all of our current directors and executive officers as a group; and |
| • | each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock. |
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, to our knowledge, the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of our common stock that they beneficially owned, subject to applicable community property laws.
The percentage of shares beneficially owned prior to this offering is based on (i) shares of our common stock outstanding as of , 2026, including shares of unvested restricted stock subject to repurchase and (ii) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock as of into an aggregate of shares of our common stock in connection with the completion of this offering. The percentage of beneficial ownership after this offering is based on shares of our common stock outstanding, assuming (i) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into shares of our common stock as described above and (ii) the issuance of shares of our common stock in this offering, assuming that the underwriters do not exercise their over-allotment option in part or in full. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to stock options held by that person or entity that are currently exercisable or that will become exercisable within 60 days of , 2026. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Attovia Therapeutics, Inc., 1091 Industrial Road, San Carlos, California 94070.
| Name of Beneficial Owner |
Number of Shares Beneficially Owned |
Percentage of Shares Beneficially Owned |
||||||||||
| Before Offering |
After Offering |
|||||||||||
| Greater than 5% Stockholders |
||||||||||||
| Frazier Life Sciences XI, L.P.(1) |
% | % | ||||||||||
| Alamar HoldCo, LLC(2) |
% | % | ||||||||||
| venBio Global Strategic Fund IV, L.P.(3) |
% | % | ||||||||||
| Entities affiliated with Goldman Sachs & Co. LLC(4) |
% | % | ||||||||||
| Deep Track Biotechnology Master Fund, Ltd(5) |
% | % | ||||||||||
| Directors and Named Executive Officers |
||||||||||||
| Tao Fu(6) |
% | % | ||||||||||
| Petter Veiby(7) |
% | % | ||||||||||
| Hubert Chen(8) |
% | % | ||||||||||
| Mitchell Gold(9) |
% | % | ||||||||||
| Rebecca Luse(10) |
% | % | ||||||||||
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| Name of Beneficial Owner |
Number of Shares Beneficially Owned |
Percentage of Shares Beneficially Owned |
||||||||||
| Before Offering |
After Offering |
|||||||||||
| Aaron Royston(11) |
% | % | ||||||||||
| John W. Smither(12) |
% | % | ||||||||||
| James Topper |
% | % | ||||||||||
| Colin Walsh(13) |
% | % | ||||||||||
| Angie You(14) |
% | % | ||||||||||
| All executive officers and directors as a group (12 persons)(15) |
% | % | ||||||||||
| * | Represents beneficial ownership of less than 1%. |
| (1) | Consists of shares of common stock held by Frazier Life Sciences XI, L.P. (FLS XI). FHMLS XI, L.P. (FHMLS XI) is the general partner of FLS XI, and FHMLS XI, L.L.C. is the general partner of FHMLS XI. FHMLS XI, L.L.C. is managed by an investment committee of three managing partners that acts by majority vote. Accordingly, no members of such committee are attributed beneficial ownership of the securities directly held by FLS XI. The address for each of the aforementioned entities is c/o Frazier Life Sciences, 1001 Page Mill Rd., Building 4, Suite B, Palo Alto, CA 94304. Each of the individual members of the investment committee of FHMLS XI, L.L.C., including Dr. Topper, declines beneficial ownership of the holdings of FLS XI except to the extent of his pecuniary interest therein. |
| (2) | Consists of shares of common stock held directly by Alamar HoldCo, LLC. The address for the entities is 47071 Bayside Pkwy, Fremont, CA 94538. |
| (3) | Consists of shares of common stock held by venBio Global Strategic Fund IV, L.P. (venBio). VenBio Global Strategic GP IV, LLC (GP IV) is the sole general partner of venBio. Robert Adelman, Richard Gaster, Aaron Royston, and Corey Goodman are members of GP IV, and therefore, Mr. Adelman, Mr. Goodman, Mr. Gaster, Mr. Royston and GP IV may be deemed to share voting and investment power with regard to the shares of common stock held by venBio. The address for each of the aforementioned entities is c/o venBio Partners, LLC, 1700 Owens Street, Suite 595, San Francisco, CA 94158. |
| (4) | Consists of (1) shares of common stock held by Broad Street; (2) shares of common stock held by WS I; (3) shares of common stock held by WSLS Off; (4) shares of common stock held by WSLS On; and (5) shares of common stock held by WSLS OS. Broad Street is a wholly owned subsidiary of Goldman Sachs & Co., LLC and may be a beneficial owner of common stock held by Broad Street. The address for each of the aforementioned entities is c/o Goldman Sachs & Co. LLC, 200 West Street, 28th Floor, New York, NY 10282. |
| (5) | Consists of (1) shares of common stock held by Deep Track Biotechnology Master Fund, Ltd. The address for the entity is 200 Greenwich Avenue, 3rd Floor, Greenwich, CT 06830. |
| (6) | Consists of (1) shares of common stock held directly by Mr. Fu; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (7) | Consists of (1) shares of common stock held directly by Mr. Veiby; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (8) | Consists of (1) shares of common stock held directly by Dr. Chen; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (9) | Consists of shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (10) | Consists of shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (11) | Consists of (1) shares of common stock held directly by Dr. Royston; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (12) | Consists of (1) shares of common stock held directly by Mr. Smither; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (13) | Dr. Walsh is a Managing Director of Goldman Sachs & Co. LLC, and therefore, he may be deemed to share voting and investment power with regard to shares of common stock held by the affiliated entities of Goldman Sachs & Co LLC, as described in footnote (4) above. The address for Dr. Walsh is c/o Goldman Sachs & Co. LLC, 200 West Street, 28th Floor, New York, NY 10282. |
| (14) | Consists of (1) shares of common stock held directly by Dr. You; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
| (15) | This total includes the securities beneficially owned by all of our directors and officers as a group, including, without limitation, the securities described in footnotes (6) through (14). It also includes an aggregate: (1) shares of common stock; and (2) shares of common stock underlying stock options to purchase shares of common stock that are exercisable within 60 days of . |
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The following description summarizes the most important terms of our capital stock, as will be in effect following this offering. Because it is only a summary, it does not contain all the information that may be important to you. We expect to adopt a restated certificate of incorporation and restated bylaws that will become effective upon the completion of this offering, and this description summarizes provisions that are expected to be included in these documents. For a complete description, you should refer to our restated certificate of incorporation and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.
General
Upon the completion of this offering, our authorized capital stock will consist of 500,000,000 shares of our common stock, $0.0001 par value per share, and 10,000,000 shares of our undesignated preferred stock, $0.0001 par value per share.
Pursuant to the provisions of our current certificate of incorporation, all of our redeemable convertible preferred stock will automatically convert into common stock in connection with the completion of this offering. Our Series A-1 Preferred Stock, our Series A-2 Preferred Stock, our Series B Preferred Stock and our Series C Preferred Stock will convert at a ratio of 1-for-1. Assuming the effectiveness of this conversion as of March 31, 2026, there were shares of our common stock issued, held by approximately stockholders of record, and no shares of our redeemable convertible preferred stock outstanding. Our board of directors is authorized, without stockholder approval, to issue additional shares of our capital stock.
Common Stock
Dividend Rights
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See the section titled “Dividend Policy” for additional information.
Voting Rights
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our restated certificate of incorporation, which means that holders of a majority of the shares of our common stock will be able to elect all of our directors. Our restated certificate of incorporation will establish a classified board of directors, to be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
No Preemptive or Similar Rights
Our common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions.
Right to Receive Liquidation Distributions
Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating
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preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of our preferred stock.
Preferred Stock
After the completion of this offering, no shares of our preferred stock will be outstanding. Pursuant to our restated certificate of incorporation that will become effective upon the completion of this offering, our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights of the shares of each series and any of their qualifications, limitations or restrictions, in each case without further vote or action by our stockholders. Our board of directors will also be able to increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding and not above the number of shares of that series authorized, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of our Company and might adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock.
Stock Options
As of March 31, 2026, we had outstanding options to purchase an aggregate of shares of our common stock, with a weighted-average exercise price of $ per share under our 2023 Plan.
Registration Rights
Pursuant to the terms of the IRA immediately following this offering, the holders of shares of our common stock will be entitled to rights with respect to the registration of such shares under the Securities Act as described below. We refer to these shares collectively as registrable securities.
These rights are provided under the terms of the IRA between us and the holders of these shares, which was entered into in connection with our redeemable convertible preferred stock financings prior to this offering.
Demand Registration Rights
Beginning from the earlier of five years after March 31, 2026 or 180 days after the effective date of this registration statement, the holders of a majority of the registrable securities issued or issuable upon conversion of shares of preferred stock may make a request to us for the registration under the Securities Act of at least 40% of the registrable securities then outstanding. Within 10 days after the date such request is given, we are obligated to provide notice of such request to all holders of registrable securities other than the holders that initiated the request and, as soon as practicable and in any event within 60 days after the date such request is given, file a Form S-1 registration statement under the Securities Act covering all registrable securities that the initiating holders requested to be registered and any additional registrable securities requested to be included in such registration by any other holders. We are only required to file two registration statements that are declared effective upon exercise of these demand registration rights. We may postpone taking action with respect to such filing not more than once during any 12-month period for a total period of not more than 90 days, if after receiving a request for registration, we furnish to the holders requesting such registration a certificate signed by our Chief Executive Officer stating that, in the good faith judgment of our board of directors, it would be materially detrimental to us. Such Form S-1 demand registration rights shall not be made available to any holder
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that is (i) any individual, corporation, partnership, trust, limited liability company, association or other entity or government that is a “foreign person” within the meaning of Section 721 of the Defense Production Act, as amended (the DPA) or (ii) any individual, corporation, partnership, trust, limited liability company, association or other entity through whose investment a “foreign person” within the meaning of the DPA would obtain any DPA triggering rights, which mean (A) “control” as defined in the DPA, (B) access to any “material non-public technical information” as defined in the DPA in the possession of the Company, (C) membership or observer rights on the board of directors or the right to nominate an individual to a position on the board of directors, (D) any involvement, other than through the voting of shares, in substantive decision-making of the Company regarding (1) the use, development, acquisition or release of any Company “critical technology” as defined in the DPA, (2) the use, development, acquisition, safekeeping or release of “sensitive personal data” as defined in the DPA of U.S. citizens maintained or collected by the Company or (3) the management, operation, manufacture or supply of “covered investment critical infrastructure” as defined in the DPA.
The underwriters of any underwritten offering will have the right to limit the number of shares registered by these holders if they determine that marketing factors require limitation, in which case the number of shares to be registered will be apportioned, in proportion (as nearly as practicable), to the number of registrable securities owned by each holder or in such other proportion as shall mutually be agreed to by all such selling holders. However, the number of shares to be registered by these holders cannot be reduced unless all other securities are first entirely excluded from the underwriting.
Form S-3 Registration Rights
The holders of at least 30% of the then-outstanding registrable securities can request that we register all or part of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3, including for an offering to be made on a continuous or delayed basis pursuant to Rule 415 of the Securities Act, and if the anticipated aggregate price to the public of the shares offered, net of selling expenses, is at least $5.0 million. Within 10 days after such request is given, we are obligated to provide notice of such request to all holders of registrable securities other than the initiating holders and as soon as practicable and in any event within 45 days, file a Form S-3 registration statement covering all registrable securities that the initiating holders requested to be registered and any additional registrable securities requested to be included in such registration by any other holders. We are only required to file two registration statements on Form S-3 in a 12-month period. We may postpone taking action with respect to such filing not more than once during any 12-month period for a period of not more than 90 days if, after receiving a request for registration, we furnish to the holders requesting such registration a certificate signed by our Chief Executive Officer stating that, in the good faith judgment of our board of directors, it would be materially detrimental to us; provided that we may not register any securities for our own account or that of any other stockholder during such 90-day period other than under certain circumstances. In the case of a registration statement on Form S-3, to the extent the Company is then a “well-known seasoned issuer,” we are obligated to file and cause to be immediately effective an automatic registration statement as defined in Rule 405 of the Securities Act.
The underwriters of any underwritten offering will have the right to limit the number of shares registered by these holders if they determine that marketing factors require limitation, in which case the number of shares to be registered will be apportioned, in proportion (as nearly as practicable), to the number of registrable securities owned by each holder or in such other proportion as shall mutually be agreed to by all such selling holders. However, the number of shares to be registered by these holders cannot be reduced unless all other securities are first entirely excluded from the underwriting.
Piggyback Registration Rights
If we register any of our securities for public sale solely for cash, holders of then-outstanding registrable securities or their permitted transferees will have the right to include their registrable securities in the registration statement. However, this right does not apply to our first underwritten public offering of our common stock
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under the Securities Act. If the underwriters determine that less than all the registrable securities requested to be registered can be included in the offering, the number of registrable shares to be registered will be allocated among holders of our registrable securities, in proportion (as nearly as practicable) to the amount of registrable securities owned by each such holder or in such other proportions as shall mutually be agreed to by all such holders. However, the number of shares to be registered by holders of registrable securities cannot be reduced unless all other securities (other than as offered by us) are first entirely excluded. The number of registrable securities included in the offering may not be reduced below 30% of the total number of securities included in such offering, except for in connection with an initial public offering, in which case the selling holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. If a holder elects not to include all of its registrable securities in any registration statement thereafter filed by us, such holder will nevertheless continue to have the right to include any registrable securities in a subsequent registration statement or registration statements as may be filed by us with respect to offerings or our securities, subject to the terms and conditions of the IRA.
Expenses of Registration Rights
We generally will pay all expenses, other than underwriting discounts and selling commissions, incurred in connection with each of the registrations described above, including all registration, filing and qualification fees; printers’ and accounting fees; fees and disbursements of our counsel; and the reasonable fees and disbursements, not to exceed $50,000, of one counsel for the selling holders, provided, however, that the registrations described above are not subsequently withdrawn at the request of the holders of a majority of the registrable securities to be registered (in which case all selling holders shall bear such expenses pro rata based upon the number of registrable securities that were to be included in the withdrawn registration) unless the holders of a majority of the registrable securities agree to forfeit their right to a registration as described above.
Expiration of Registration Rights
The registration rights described above will expire, with respect to any particular holder of these rights, on the earliest to occur of (i) the closing of a deemed liquidation event, as defined in our restated certificate of incorporation, in which the consideration received by the investors in such deemed liquidation event is in the form of cash and/or publicly traded securities, or if the investors receive registration rights from the acquiring company or other successor to us reasonably comparable to those set forth in the IRA, (ii) such time after this offering as the registrable securities held by such holder may be sold within any three-month period without restriction pursuant to Rule 144 or a similar exemption under the Securities Act (and without the requirement for us to be in compliance with the current public information required under Rule 144(c)(1) of the Securities Act) and such holder (together with its affiliates, as that term is defined under Rule 144 of the Securities Act) hold less than one percent of our outstanding capital stock, or (iii) the fifth anniversary of this offering (or such later date that is 180 days following the expiration of all deferrals of our obligations pursuant to the IRA that remain in effect as of the fifth anniversary of the initial public offering).
Anti-Takeover Provisions
The provisions of the DGCL, our restated certificate of incorporation and our restated bylaws, as we expect they will be in effect upon the completion of this offering, could have the effect of delaying, deferring or discouraging another person from acquiring control of our Company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
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Delaware Law
We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date on which the person became an interested stockholder unless:
| • | prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
| • | the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (i) shares owned by persons who are directors and also executive officers and (ii) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
| • | at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66.67% of the outstanding voting stock that is not owned by the interested stockholder. |
Generally, a business combination includes a merger, asset or stock sale, or other transaction or series of transactions together resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 of the DGCL may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
Restated Certificate of Incorporation and Restated Bylaw Provisions
Our restated certificate of incorporation and our restated bylaws, as we expect they will be in effect upon the completion of this offering, include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our Company, including the following:
| • | Board of Directors Vacancies. Our restated certificate of incorporation and restated bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management. |
| • | Classified Board. Our restated certificate of incorporation and restated bylaws will provide that our board of directors is classified into three classes of directors, each with staggered three-year terms. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors. See the section titled “Management—Classified Board of Directors” for additional information. |
| • | Stockholder Action; Special Meetings of Stockholders. Our restated certificate of incorporation will provide that our stockholders may not take action by written consent but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock |
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| would not be able to amend our restated bylaws or remove directors without holding a meeting of our stockholders called in accordance with our restated bylaws. Further, our restated certificate of incorporation and restated bylaws will provide that special meetings of our stockholders may be called only by a majority of our board of directors, the Chairman of our board of directors, our Chief Executive Officer or our President, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors. |
| • | Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws also will specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our Company. |
| • | No Cumulative Voting. The DGCL provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our restated certificate of incorporation and restated bylaws will not provide for cumulative voting. |
| • | Directors Removed Only for Cause. Our restated certificate of incorporation will provide that stockholders may remove directors only for cause and only by the affirmative vote of the holders of at least two-thirds of our outstanding common stock. |
| • | Amendment of Charter Provisions. Any amendment of the above expected provisions in our restated certificate of incorporation will require approval by the holders of at least two-thirds of our outstanding common stock, unless such amendments are approved by two thirds of our entire board of directors, in which case stockholders can approve by a simple majority. |
| • | Issuance of Undesignated Preferred Stock. Our board of directors has the authority, without further action by the stockholders, to issue up to shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by merger, tender offer, proxy contest or other means. |
| • | Choice of Forum. Our restated bylaws will provide that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation or our restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Our restated bylaws will also provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, which we refer to as a Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal courts or other state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court. While neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act, Section 27 of the Exchange |
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| Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder also must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholder’s ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, executive officers, other employees or agents of our Company, which may discourage lawsuits against us and our directors, executive officers and other employees. |
Transfer Agent and Registrar
Upon the completion of this offering, the transfer agent and registrar for our common stock will be Fidelity Stock Transfer Solutions LLC. The transfer agent and registrar’s address is 245 Summer Street, Boston, Massachusetts 02210.
Listing
We have applied to list our common stock on the Nasdaq Global Market under the symbol “ATTO,” and this offering is contingent upon obtaining such approval.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of our common stock, including shares issued upon exercise of outstanding options, in the public market following this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.
Upon the completion of this offering, based on shares of our capital stock outstanding as of March 31, 2026, including shares of unvested restricted stock subject to repurchase, we will have a total of shares of our common stock outstanding, assuming (i) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into an aggregate of shares of our common stock and (ii) the issuance of shares of common stock in this offering, assuming that the underwriters do not exercise their over-allotment option in part or in full. Of these outstanding shares, all of the shares of our common stock sold in this offering will be freely tradable, except that any shares purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act can only be sold in compliance with the Rule 144 limitations described below.
The remaining outstanding shares of our common stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated under the Securities Act, which rules are summarized below. In addition, substantially all of our security holders have, or will have, entered into market standoff agreements with us or lock-up agreements with the underwriters under which they have agreed, subject to specific exceptions, not to sell any of our stock for at least 180 days following the date of this prospectus, as described below.
Lock-Up Agreements
We, our officers, directors and holders of substantially all of our securities, have agreed with the underwriters that for a period of 180 days, after the date of this prospectus, among other things and subject to certain exceptions, we or they will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to sell, or otherwise dispose of or transfer any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, request or demand that we file a registration statement related to our common stock or enter into any swap or other agreement that transfers to another, in whole or in part, directly or indirectly, the economic consequence of ownership of the common stock, or publicly declare an intention to do any of the foregoing. Upon expiration of the lock-up period, certain of our stockholders will have the right to require us to register their shares under the Securities Act. See the subsection titled “Registration Rights” below and the section titled “Description of Capital Stock—Registration Rights.”
Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC may, in their sole discretion and at any time or from time to time before the termination of the lock-up period, in certain cases without public notice, release all or any portion of the securities subject to lock-up agreements. There are no existing agreements between the underwriters and any of our stockholders who will execute a lock-up agreement providing consent to the sale of shares prior to the expiration of the lock-up period. See the section titled “Underwriters” for additional information.
Upon the expiration of the lock-up period, substantially all of the shares subject to such lock-up restrictions will become eligible for sale, subject to the limitations discussed above.
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Rule 144
In general, Rule 144 provides that once we have been subject to public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares of our common stock proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.
In general, Rule 144 provides that our affiliates or persons selling shares of our common stock on behalf of our affiliates are entitled to sell upon expiration of the lock-up and market standoff agreements described above, within any three-month period, a number of shares of our common stock that does not exceed the greater of:
| • | 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after the completion of this offering; or |
| • | the average reported weekly trading volume of shares of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. |
Sales under Rule 144 by our affiliates or persons selling shares of our common stock on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our Company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits our affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701 and are subject to the lock-up and market standoff agreements described above.
Form S-8 Registration Statement
In connection with this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering all of the shares of our common stock subject to outstanding options, outstanding shares of restricted stock and the shares of our common stock reserved for issuance under our equity incentive plans. We expect to file this registration statement as soon as permitted under the Securities Act. However, the shares registered on Form S-8 held by affiliates may be subject to the volume limitations and the manner of sale, notice and public information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up and market standoff agreements to which they are subject. Of the shares of our common stock that were subject to options outstanding as of March 31, 2026, options to purchase shares of common stock were vested as of March 31, 2026. Shares of our common stock underlying outstanding options will not be eligible for sale until the expiration of the lock-up and market standoff agreements to which they are subject.
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Registration Rights
We have granted demand, piggyback and Form S-3 registration rights to certain of our stockholders to sell our common stock. Registration of the sale of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following summary describes the material U.S. federal income tax consequences of the ownership and disposition of shares of our common stock acquired in this offering by Non-U.S. Holders (as defined below). This discussion does not address all aspects of U.S. federal income taxation relating thereto, does not discuss the potential application of the alternative minimum tax or Medicare contribution tax on net investment income, and does not deal with state or local tax laws, any U.S. federal non-income tax laws such as gift and estate tax laws, except to the limited extent provided below, or any non-U.S. tax laws that may be relevant to Non-U.S. Holders in light of their particular circumstances.
Special rules different from those described below may apply to certain Non-U.S. Holders that are subject to special treatment under the U.S. Internal Revenue Code of 1986, as amended (the Code), such as:
| • | insurance companies, banks, investment funds and other financial institutions; |
| • | tax-exempt organizations (including private foundations) and tax-qualified retirement plans; |
| • | foreign governments and international organizations; |
| • | broker-dealers and traders in securities; |
| • | certain former citizens or long-term residents of the United States; |
| • | persons required for U.S. federal income tax purposes to conform the timing of income accruals to their financial statements under Section 451(b) of the Code; |
| • | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; |
| • | persons that own, or are deemed to own, actually or constructively (including but not limited for purposes of Section 897 of the Code), more than 5% of our common stock; |
| • | “controlled foreign corporations,” “passive foreign investment companies” and corporations that accumulate earnings to avoid U.S. federal income tax; |
| • | persons that hold our common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment or other risk reduction strategy; |
| • | persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); and |
| • | partnerships and other entities or arrangements treated as pass-through entities for U.S. federal income tax purposes, and investors in such entities (regardless of their places of organization or formation). |
Such Non-U.S. Holders are urged to consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.
If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds our common stock, the U.S. federal income tax treatment of the partnership and the partners thereof generally will depend on the status of the partner and the activities of the partnership. Partnerships holding our common stock and the partners in such partnerships are urged to consult their tax advisors about the particular U.S. federal income tax consequences to them of holding and disposing of our common stock.
Furthermore, the discussion below is based upon the provisions of the Code, U.S. Treasury Regulations promulgated thereunder, published rulings and administrative pronouncements of the U.S. Internal Revenue Service (IRS), and judicial decisions, in each case as of the date hereof, and such authorities may be repealed, revoked or modified, possibly retroactively, or could be subject to differing interpretations which could result in U.S. federal income tax consequences different from those discussed below. We have not requested a ruling from
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the IRS with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will not take a contrary position regarding the tax consequences described herein, or that any such contrary position would not be sustained by a court.
PROSPECTIVE INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK PURSUANT TO THIS OFFERING SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING OF OUR COMMON STOCK IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION, INCLUDING ANY STATE, LOCAL OR NON-U.S. TAX CONSEQUENCES OR ANY U.S. FEDERAL NON-INCOME TAX CONSEQUENCES, AND THE POSSIBLE APPLICATION OF TAX TREATIES.
Definition of Non-U.S. Holder
For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of our common stock, other than a partnership or other entity or arrangement treated as a partnership or other pass-through entity for U.S. federal income tax purposes, that is not, for U.S. federal income tax purposes:
| • | an individual who is a citizen or resident (including a “green card” holder) of the United States; |
| • | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
| • | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
| • | a trust that (i) is subject to the primary supervision of a court within the United States and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person. |
If you are an individual who is not a U.S. citizen, you may, in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Generally, for this purpose, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are counted.
Resident aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Individuals who are uncertain of their status as resident or nonresident aliens for U.S. federal income tax purposes are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership or disposition of our common stock.
Distributions on Our Common Stock
We do not expect to make any distributions on our common stock in the foreseeable future (see the subsection titled “—Dividend Policy” above). If we do make distributions on our common stock, however, such distributions will constitute dividends for U.S. tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a Non-U.S. Holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as gain realized on the sale or exchange of our common stock as described below under the section titled “Material U.S. Federal Income Tax Consequences to Non-U.S. Holders– Gain on Disposition of Our Common Stock.”
Subject to the discussions below under the sections titled “Material U.S. Federal Income Tax Consequences to Non-U.S. Holders—Backup Withholding and Information Reporting” and “—Foreign Accounts,” any
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distribution on our common stock that is treated as a dividend paid to a Non-U.S. Holder will generally be subject to U.S. federal withholding tax at a 30% rate on the gross amount of the dividends or such lower rate as may be specified by an applicable income tax treaty between the United States and the Non-U.S. Holder’s country of tax residence. To obtain a reduced rate of withholding under an income tax treaty, a Non-U.S. Holder generally will be required to provide the applicable withholding agent with a properly executed IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate form, certifying the Non-U.S. Holder’s entitlement to benefits under the income tax treaty. Such form must be provided prior to the payment of dividends and generally must be updated periodically. If a Non-U.S. Holder holds stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to such agent. The holder’s agent may then be required to provide certification to the applicable withholding agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. withholding tax under an income tax treaty, you should consult with your own tax advisor to determine if you are able to obtain a refund of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS.
We generally are not required to withhold tax on dividends paid to a Non-U.S. Holder that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the holder maintains in the United States) if a properly executed IRS Form W-8ECI, stating that the dividends are so connected, is furnished to the applicable withholding agent. In general, such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the same rates applicable to United States persons.
A corporate Non-U.S. Holder receiving effectively connected dividends may also be subject to an additional “branch profits tax,” which is imposed, under certain circumstances, at a rate of 30% (or such lower rate as may be specified by an applicable treaty) on the corporate Non-U.S. Holder’s effectively connected earnings and profits, subject to certain adjustments.
Gain on Disposition of Our Common Stock
Subject to the discussions below under the sections titled “Material U.S. Federal Income Tax Consequences to Non-U.S. Holders—Backup Withholding and Information Reporting” and “—Foreign Accounts,” a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax with respect to gain realized on a sale or other disposition of our common stock unless:
| (i) | the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the holder maintains in the United States); |
| (ii) | the Non-U.S. Holder is a nonresident alien who is an individual and is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are met; or |
| (iii) | we are or have been a “United States real property holding corporation” within the meaning of Code Section 897(c)(2) at any time within the shorter of the five-year period preceding such disposition or the Non-U.S. Holder’s holding period in the common stock. |
If you are a Non-U.S. Holder described in (a) above, you will be required to pay tax on the net gain derived from the sale at the same U.S. federal income tax rates applicable to United States persons. Corporate Non-U.S. Holders described in (i) above may also be subject to the additional branch profits tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) of their effectively connected earnings and profits for the taxable year, as adjusted for certain items. If you are an individual Non-U.S. Holder described in (ii) above, you will be required to pay a flat 30% tax on the gain derived from the sale, which gain may be offset by certain U.S. source capital losses (even though you are not considered a resident of the United States), provided you have timely filed U.S. federal income tax returns with respect to such losses. With respect to (iii) above, in general, we would be a USRPHC if U.S. real property interests as defined in the Code and the
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Treasury Regulations comprised (by fair market value) at least half of the sum of our worldwide real property interests plus our other assets used or held for use in a trade or business. We believe that we are not, and do not anticipate becoming, a USRPHC. However, there can be no assurance that we will not become a USRPHC in the future. Even if we were to be treated as a USRPHC, gain realized by a Non-U.S. Holder on a disposition of our common stock would not be subject to U.S. federal income tax so long as (i) the Non-U.S. Holder owned, directly, indirectly or constructively, no more than 5% of our common stock at all times within the shorter of (A) the five-year period preceding the disposition or (B) the Non-U.S. Holder’s holding period and (ii) our common stock is regularly traded on an established securities market. There can be no assurance that our common stock will qualify as regularly traded on an established securities market.
U.S. Federal Estate Tax
The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and, therefore, will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of tax residence provides otherwise. The terms “resident” and “nonresident” are defined differently for U.S. federal estate tax purposes than for U.S. federal income tax purposes. Investors are urged to consult their own tax advisors regarding the U.S. federal estate tax consequences of the acquisition, ownership or disposition of our common stock.
Backup Withholding and Information Reporting
Annual reports are required to be filed with the IRS, by us or certain financial middlemen, with respect to any distributions we pay on our common stock, including the amount of any such distributions, the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the holder to whom any such dividends are paid. These information reporting requirements apply even if no withholding was required because the dividends were effectively connected with the holder’s conduct of a U.S. trade or business, or withholding was reduced or eliminated by an applicable income tax treaty. Pursuant to tax treaties or certain other agreements, the IRS may make its reports available to tax authorities in the holder’s country of tax residence.
Distributions paid by us (or our paying agents) to a Non-U.S. Holder may also be subject to U.S. federal backup withholding, currently at a 24% rate. U.S. federal backup withholding generally will not apply to payments to a Non-U.S. Holder of dividends or on the gross proceeds of a disposition of our common stock who provides a properly executed IRS Form W-8BEN, IRS Form W-8BEN-E, or IRS Form W-8 ECI, as applicable, or otherwise establishes an exemption, provided that the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person.
Under current U.S. federal income tax law, U.S. information reporting and backup withholding requirements generally will apply to the proceeds of a disposition of our common stock effected by or through a U.S. broker or a U.S. office of any broker, U.S. or non-U.S., unless the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, or IRS Form W-8 ECI, as applicable, or otherwise establishes an exemption.
Generally, U.S. information reporting and backup withholding requirements will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker. Information reporting and backup withholding requirements may, however, apply to a payment of disposition proceeds if the broker has actual knowledge, or reason to know, that the holder is, in fact, a United States person. For information reporting purposes, certain brokers with substantial U.S. ownership or operations will generally be treated in a manner similar to U.S. brokers.
Backup withholding is not an additional tax. If backup withholding is applied to you, you should consult with your own tax advisor to determine whether you have overpaid your U.S. federal income tax, and whether you are able to obtain a tax refund or credit of the overpaid amount.
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Foreign Accounts
In addition, U.S. federal withholding taxes may apply under the Foreign Account Tax Compliance Act (FATCA) , as reflected in Sections 1471 through 1474 of the Code, on certain types of payments, including dividends paid to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on our common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined under FATCA), unless (i) the foreign financial institution agrees to undertake certain diligence and reporting obligations, (ii) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. The 30% federal withholding tax described in this paragraph cannot be reduced under an income tax treaty with the United States. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally also would apply to payments of gross proceeds from the sale or other disposition of common stock. Under proposed regulations, however, no withholding will apply with respect to payments of gross proceeds. The preamble to the proposed regulations specifies that taxpayers are permitted to rely on such proposed regulations pending finalization.
Prospective investors should consult their tax advisors regarding the potential implications of FATCA on their investment in our common stock.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAW, AS WELL AS TAX CONSEQUENCES ARISING UNDER ANY U.S. FEDERAL, STATE, LOCAL, OR NON-U.S. INCOME AND NON-INCOME TAX LAWS OR UNDER ANY APPLICABLE TAX TREATY.
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Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares of common stock indicated below:
| Name |
Number of |
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| Morgan Stanley & Co. LLC |
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| Leerink Partners LLC |
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| Citigroup Global Markets Inc. |
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| RBC Capital Markets, LLC |
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| LifeSci Capital LLC |
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| Total |
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The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.
The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.
The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.
| Total | ||||||
| Per Share | No Exercise | Full Exercise | ||||
| Public offering price |
$ | $ | $ | |||
| Underwriting discounts and commissions to be paid by us |
$ | $ | $ | |||
| Proceeds, before expenses, to us |
$ | $ | $ | |||
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The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ . We have also agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority up to $ .
The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.
We have applied to list our common stock on the Nasdaq Global Market under the trading symbol “ATTO” and this offering is contingent upon obtaining approval of such listing.
We and all of our directors and officers and the holders of substantially all of our securities have entered into lock-up agreements with the underwriters agreeing that, subject to certain exceptions, without the prior written consent of Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (the restricted period):
| • | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock; |
| • | submit or file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or |
| • | enter into any hedging, swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; |
whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person have agreed that, without the prior written consent of Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC on behalf of the underwriters, we or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.
With respect to us, the restrictions described in the immediately preceding paragraph do not apply to:
| • | the sale of shares to the underwriters; |
| • | the issuance by us of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing; or |
| • | facilitating the establishment of a trading plan on behalf of any of our stockholders, officers or directors pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of our common stock, provided that (i) such plan does not provide for the transfer of common stock during the restricted period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by us regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period. |
With respect to our directors, officers and securityholders, the restrictions described above do not apply to:
| • | transactions relating to shares of common stock or other securities acquired in this offering or in open market transactions after the completion of this offering, provided that no filing under Section 16(a) of the Exchange Act or other public announcement shall be required or shall be voluntarily made during the restricted period in connection with subsequent sales of common stock or other securities acquired in this offering or in such open market transactions; |
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| • | transfers of shares of common stock or any security convertible into common stock as (i) a bona fide gift; or to a charitable organization or educational institution, (ii) to an immediate family member of the holder or to any trust for the direct or indirect benefit of the holder or an immediate family member of the holder, or if the holder is a trust, to a grantor, trustee or beneficiary of the trust (including such beneficiary’s estate) of the holder, (iii) to any corporation, partnership, limited liability company, investment fund, trust or other entity of which the holder and the immediate family of the holder are the legal and beneficial owner of all of the outstanding equity securities or similar interests, or (iv) by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or an immediate family member of the holder; provided that in the case of any transfer or distribution pursuant to this clause (b), (A) such transfer shall not involve a disposition for value, (B) each donee, distributee or transferee shall sign and deliver a lock-up agreement and (C) no public disclosure or filing shall be made voluntarily during the restricted period, and to the extent a filing under Section 16(a) of the Exchange Act is required during the restricted period as a result of transfers made pursuant to this clause (b), it shall clearly indicate that the filing relates to the circumstances described in this clause (b), including that the securities remain subject to the terms of the lock-up agreement; |
| • | if the holder is a corporation, partnership, limited liability company, trust or other business entity, transfers, dispositions or distributions of shares of common stock or any security convertible into or exercisable or exchangeable for shares of common stock (i) to another corporation, partnership, limited liability company, investment fund trust or other business entity that is a subsidiary or an affiliate (within the meaning set forth in Rule 405 under the Securities Act and including the subsidiaries of the holder) of the holder, (ii) to any investment fund or other entity controlling, controlled by, managing or managed by or under common control or management with the holder (including, for the avoidance of doubt, where the holder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership) or (iii) to its current or former stockholders, limited partners, general partners, managers, members, beneficiaries or other equityholders or to the estate of any such stockholders, limited partners, general partners, members, beneficiaries or equityholders; provided that in the case of any transfer or distribution pursuant to this clause (c), (i) each transferee, donee or distributee shall sign and deliver a lock-up agreement, (ii) no filing under Section 16(a) of the Exchange Act or other public announcement, reporting a reduction in beneficial ownership of shares of common stock, shall be required or shall be voluntarily made during the restricted period (other than a required filing on Schedule 13D, 13F or 13G) and (iii) such transfer shall not involve a disposition for value; |
| • | facilitating the establishment or amendment of a trading plan on behalf of a shareholder, officer or director of ours pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that (i) such plan does not provide for the transfer of common stock during the restricted period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the holder or us regarding the establishment or amendment of such plan during the restricted period, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period; |
| • | the transfer of shares of common stock or any other securities to us to satisfy any tax, including estimated tax, remittance or other payment obligations of the holder arising in connection with a vesting event of our securities, upon the settlement of restricted stock units or the payment due for the exercise of options (including a transfer to us for the “net” or “cashless” exercise of options) or other rights to purchase our securities, in all such cases pursuant to equity awards granted under a stock incentive plan other equity award plan described in this prospectus; provided that any remaining shares of common stock or other securities received upon such vesting, settlement, or exercise shall be subject to the terms of the lock-up agreement; and provided further, that no filing under Section 16(a) of the Exchange Act or other public announcement, reporting a reduction in beneficial ownership of shares of common stock, shall be voluntarily made during the restricted period and, to the extent a filing under |
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| Section 16(a) of the Exchange Act is required during the restricted period as a result of transfers made pursuant to this clause (e), such filing shall clearly indicate that the filing relates to the circumstances described in this clause (e), including that (i) the securities remain subject to the terms of the lock-up agreement and (ii) no securities were sold by the holder; |
| • | the transfer of shares of common stock or any other securities that occurs by operation of law pursuant to a qualified domestic order or other court order in connection with divorce settlement, provided that (i) the transferee shall sign and deliver a lock-up agreement, (ii) no public disclosure or filing shall be voluntarily made during the restricted period and (iii) any filing required under Section 16(a) of the Exchange Act during the restricted period shall clearly indicate in the footnotes thereto that the filing relates to the circumstances described in this clause, including that the securities remain subject to the terms of the lock-up agreement; |
| • | transfers to us (A) from any of our employees upon death, disability or termination of employment, in each case, of such employee or (B) pursuant to any contractual arrangement as in effect on the date of this prospectus and described in this prospectus or in an exhibit filed with the registration statement related to this offering that provides for the repurchase of shares of common stock in connection with the termination of the holder’s employment with or service to us; provided that in the case of clause (B), no public disclosure or filing under Section 16(a) of the Exchange Act shall be made voluntarily during the restricted period, and to the extent a filing under Section 16(a) of the Exchange Act is required during the restricted period as a result of transfers made pursuant to this clause, it shall clearly indicate that the filing relates to the circumstances described in this clause; |
| • | the conversion of shares of our redeemable convertible preferred stock into shares of common stock as described in this prospectus, provided that, in each case such shares shall continue to be subject to the restrictions on transfer set forth in the lock-up agreement; |
| • | the transfer of shares of common stock or other securities pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction that is approved by our board of directors, made to all holders of common stock involving a change of control, provided that, in the event that the tender offer, merger, consolidation or other such transaction is not completed, the common stock owned by the holder shall remain subject to the restrictions contained in the lock-up agreement; or |
| • | the exercise of stock option awards and the settlement of restricted stock units or other equity awards granted pursuant to equity incentive plans described in this prospectus; provided that (i) the shares of common stock received upon such exercise, vesting or settlement shall remain subject to the restrictions contained in the lock-up agreement and (ii) no public disclosure or filing under Section 16(a) of the Exchange Act shall be made voluntarily during the restricted period, and to the extent a filing under Section 16(a) of the Exchange Act is required during the restricted period as a result of transfers made pursuant to this clause, it shall clearly indicate that the filing relates to the circumstances described in this clause. |
Morgan Stanley & Co. LLC, Leerink Partners LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time.
In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess
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of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.
We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.
In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.
Pricing of the Offering
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.
Selling Restrictions
Canada
The shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of
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the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
In relation to each Member State of the European Economic Area (each, a Relevant State), no shares have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the EU Prospectus Regulation (as defined below), except that offers of shares may be made to the public in that Relevant State at any time under the following exemptions under the EU Prospectus Regulation:
| (i) | to any legal entity which is a qualified investor as defined under Article 2 of the EU Prospectus Regulation; |
| (ii) | to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the EU Prospectus Regulation), subject to obtaining the prior consent of the representatives; or |
| (iii) | in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation, |
provided that no such offer of shares shall require us or any of the representatives to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to the shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase any shares, and the expression “EU Prospectus Regulation” means Regulation (EU) 2017/1129 (as amended).
United Kingdom
Each underwriter has represented and agreed that:
| (i) | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and |
| (ii) | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom. |
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No shares have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the shares which has been approved by the Financial Conduct Authority, except that the shares may be offered to the public in the United Kingdom at any time:
| (i) | to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation (as defined below); |
| (ii) | to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or |
| (iii) | in any other circumstances falling within Section 86 of the FSMA, |
provided that no such offer of the shares shall require us or any of the representatives to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to the shares in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any shares and the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
This prospectus is only for distribution to and directed at: (i) in the United Kingdom, persons having professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005, as amended (the Order), and high net worth entities falling within Article 49(2)(a) to (d) of the Order; (ii) persons who are outside the United Kingdom; and (iii) any other person to whom it can otherwise be lawfully distributed (all such persons together, Relevant Persons). Any investment or investment activity to which this prospectus relates is available only to and will be engaged in only with Relevant Persons, and any person who is not a Relevant Person should not rely on it.
Hong Kong
The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares of common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Japan
The shares of common stock have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person (as defined below) or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” means any person resident in Japan, including any corporation or other entity organized under the laws of Japan.
223
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the shares of common stock were not offered or sold or caused to be made the subject of an invitation for subscription or purchase and will not be offered or sold or caused to be made the subject of an invitation for subscription or purchase, and this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock, has not been circulated or distributed, nor will it be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore (as modified or amended from time to time, the SFA)) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
| (i) | a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
| (ii) | a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, |
securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the securities pursuant to an offer made under Section 275 of the SFA except:
| (a) | to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; |
| (b) | where no consideration is or will be given for the transfer; |
| (c) | where the transfer is by operation of law; or |
| (d) | as specified in Section 276(7) of the SFA. |
Switzerland
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the SIX) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this prospectus nor any other offering or marketing material relating to us, the offering, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offering of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA and the offering of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the shares.
224
Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the DFSA). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the Corporations Act), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons (Exempt Investors) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring the shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Israel
In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock under the Israeli Securities Law, 5728 - 1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728 - 1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions (the Addressed Investors); or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728 - 1968, subject to certain conditions (the Qualified Investors). The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase shares of common stock in addition to the 35 Addressed Investors. The company has not and will not take any action that would require it to publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728 - 1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for our common stock to any person within the State of Israel, other than to Qualified Investors and up to 35 Addressed Investors.
225
Qualified Investors may have to submit written evidence that they meet the definitions set out in of the First Addendum to the Israeli Securities Law, 5728 - 1968. In particular, we may request, as a condition to be offered common stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728 - 1968; (ii) which of the categories listed in the First Addendum to the Israeli Securities Law, 5728 - 1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728 - 1968 and the regulations promulgated thereunder in connection with the offer to be issued common stock; (iv) that the shares of common stock that it will be issued are, subject to exemptions available under the Israeli Securities Law, 5728 - 1968: (a) for its own account; (b) for investment purposes only; and (c) not issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728 - 1968; and (v) that it is willing to provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration containing, inter alia, the Addressed Investor’s name, address and passport number or Israeli identification number.
226
The validity of the shares of our common stock offered by this prospectus will be passed upon for us by Fenwick & West LLP, San Francisco, California. As of the date of this prospectus, individuals and entities associated with Fenwick & West LLP beneficially own an aggregate of less than 0.001% of our common stock. Cooley LLP, San Diego, California is acting as counsel for the underwriters in connection with this offering.
The financial statements as of December 31, 2025 and 2024 and for the years then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For further information about us and the common stock offered hereby, reference is made to the registration statement and the exhibits filed therewith. Statements contained in this prospectus concerning the contents of any contract or any document are not necessarily complete. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The exhibits to the registration statement should be reviewed for the complete contents of these contracts and documents.
We currently do not file periodic reports with the SEC. Upon the completion of this offering, we will be required to file periodic reports, proxy statements and other information with the SEC pursuant to the Exchange Act. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.
We also maintain a website at https://www.attovia.com. Upon completion of this offering, you may access our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC on our website free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our common stock. We have included our website in this prospectus solely as an inactive textual reference.
227
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Audited Consolidated Financial Statements as of and for the Years Ended December 31, 2024 and 2025 | Page | |||
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 238) |
F-2 | |||
| F-3 | ||||
| Consolidated Statements of Operations and Comprehensive Loss |
F-4 | |||
| Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit |
F-5 | |||
| F-6 | ||||
| F-8 | ||||
| Unaudited Condensed Consolidated Financial Statements as of and for the Three Months Ended March 31, 2025 and 2026 | Page | |||
| F-38 | ||||
| Condensed Consolidated Statements of Operations and Comprehensive Loss |
F-39 | |||
| F-40 | ||||
| F-41 | ||||
| F-42 | ||||
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Attovia Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying 2025 consolidated financial statements of Attovia Therapeutics, Inc. and its subsidiaries and the 2024 financial statements of Attovia Therapeutics, Inc. (collectively referred to as the “Company”), which comprise the balance sheets as of December 31, 2025 and 2024, and the related statements of operations and comprehensive loss, of redeemable convertible preferred stock and stockholders’ deficit and of cash flows for the years then ended, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
San Jose, California
June 5, 2026
We have served as the Company’s auditor since 2024.
F-2
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 30,632 | $ | 40,193 | ||||
| Marketable securities |
38,691 | 112,075 | ||||||
| Prepaid expenses and other current assets (including related party amounts of $25 and $0 at December 31, 2024 and 2025, respectively) |
3,159 | 4,027 | ||||||
|
|
|
|
|
|||||
| Total current assets |
72,482 | 156,295 | ||||||
| Restricted cash |
607 | 404 | ||||||
| Property and equipment, net |
3,234 | 3,492 | ||||||
| Operating lease right-of-use asset, net |
— | 4,373 | ||||||
| Other non-current assets |
393 | 1,329 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 76,716 | $ | 165,893 | ||||
|
|
|
|
|
|||||
| Liabilities, redeemable convertible preferred stock, and stockholders’ deficit |
||||||||
| Current liabilities: |
||||||||
| Accounts payable (including related party amounts of $250 and $39 at December 31, 2024 and 2025, respectively) |
$ | 4,140 | $ | 3,551 | ||||
| Accrued expenses and other current liabilities |
3,582 | 5,535 | ||||||
| Operating lease liability, current portion |
— | 1,921 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
7,722 | 11,007 | ||||||
| Preferred stock tranche liability |
6,638 | — | ||||||
| Operating lease liability, net of current portion |
— | 3,341 | ||||||
| Other non-current liabilities |
228 | 755 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
14,588 | 15,103 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies (Note 6) |
||||||||
| Redeemable convertible preferred stock - $0.0001 par value; 134,447,726 and 199,902,270 shares authorized at December 31, 2024 and 2025; 96,265,908 and 199,902,270 shares issued and outstanding at December 31, 2024 and 2025; aggregate liquidation preference of $113,350 and $255,850 at December 31, 2024 and 2025, respectively |
108,953 | 258,226 | ||||||
| Stockholders’ deficit: |
||||||||
| Common stock - $0.0001 par value; 206,195,000 and 284,023,000 shares authorized at December 31, 2024 and 2025; 41,117,250 and 41,871,320 shares issued and outstanding at December 31, 2024 and 2025, respectively |
4 | 4 | ||||||
| Additional paid-in capital |
3,487 | 3,471 | ||||||
| Accumulated other comprehensive income |
67 | 99 | ||||||
| Accumulated deficit |
(50,383 | ) | (111,010 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ deficit |
(46,825 | ) | (107,436 | ) | ||||
|
|
|
|
|
|||||
| Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit |
$ | 76,716 | $ | 165,893 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Revenue |
||||||||
| Collaboration revenue |
$ | — | $ | 1,350 | ||||
|
|
|
|
|
|||||
| Total revenue |
— | 1,350 | ||||||
| Operating expenses |
||||||||
| Research and development (including related party amounts of $300 and $471 for the years ended December 31, 2024 and 2025, respectively) |
33,864 | 54,153 | ||||||
| General and administrative (including related party amounts of $832 and $239 for the years ended December 31, 2024 and 2025, respectively) |
7,689 | 14,356 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
41,553 | 68,509 | ||||||
|
|
|
|
|
|||||
| Loss from operations |
(41,553 | ) | (67,159 | ) | ||||
|
|
|
|
|
|||||
| Other income (expense): |
||||||||
| Interest income |
3,437 | 6,627 | ||||||
| Change in fair value of preferred stock tranche liability |
(1,674 | ) | (170 | ) | ||||
| Other income (expense), net |
(11 | ) | 75 | |||||
|
|
|
|
|
|||||
| Total other income (expense), net |
1,752 | 6,532 | ||||||
|
|
|
|
|
|||||
| Net loss |
$ | (39,801 | ) | $ | (60,627 | ) | ||
|
|
|
|
|
|||||
| Less: Accretion of redeemable convertible preferred stock to its redemption value |
(5,245 | ) | (271 | ) | ||||
|
|
|
|
|
|||||
| Net loss attributable to common stockholders |
$ | (45,046 | ) | $ | (60,898 | ) | ||
|
|
|
|
|
|||||
| Net loss per share attributable to common stockholders, basic and diluted |
$ | (1.37 | ) | $ | (1.66 | ) | ||
|
|
|
|
|
|||||
| Weighted-average common shares outstanding, basic and diluted |
32,806,601 | 36,690,341 | ||||||
|
|
|
|
|
|||||
| Other comprehensive income: |
||||||||
| Unrealized gain on available-for-sale marketable securities, net |
67 | 32 | ||||||
|
|
|
|
|
|||||
| Net loss and other comprehensive loss |
$ | (39,734 | ) | $ | (60,595 | ) | ||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit
(in thousands, except share and per share amounts)
| Redeemable Convertible Preferred Stock |
Common Stock | Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
| Balance at January 1, 2024 |
30,425,000 | $ | 26,046 | 40,000,000 | $ | 4 | $ | 7,262 | $ | (10,582 | ) | $ | — | $ | (3,316 | ) | ||||||||||||||||||
| Issuance of Series A-2 redeemable convertible preferred stock, net of issuance cost of $18 |
27,659,090 | 30,407 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of Series B redeemable convertible preferred stock, net of issuance cost of $280 and preferred stock tranche liability of $4,964 |
38,181,818 | 47,255 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Accretion of Series B redeemable convertible preferred stock to its redemption value |
— | 5,245 | — | — | (5,245 | ) | — | — | (5,245 | ) | ||||||||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | 1,388 | — | — | 1,388 | ||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options |
— | — | 1,117,250 | — | 76 | — | — | 76 | ||||||||||||||||||||||||||
| Vesting of early exercised stock options |
— | — | — | — | 6 | — | — | 6 | ||||||||||||||||||||||||||
| Unrealized gain on marketable |
— | — | — | — | — | — | 67 | 67 | ||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (39,801 | ) | — | (39,801 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at December 31, 2024 |
96,265,908 | $ | 108,953 | 41,117,250 | $ | 4 | $ | 3,487 | $ | (50,383 | ) | $ | 67 | $ | (46,825 | ) | ||||||||||||||||||
| Issuance of Series B redeemable convertible preferred stock and settlement of preferred stock tranche liability of $6,808, net of issuance costs of $35 |
38,181,818 | 59,273 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of Series C redeemable convertible preferred stock, net of issuance cost of $271 |
65,454,544 | 89,729 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Accretion of Series C redeemable convertible preferred stock to its redemption value |
— | 271 | — | — | (271 | ) | — | — | (271 | ) | ||||||||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | 2,388 | — | — | 2,388 | ||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options |
— | — | 754,070 | — | 194 | — | — | 194 | ||||||||||||||||||||||||||
| Vesting of early exercised stock options |
— | — | — | — | 73 | — | — | 73 | ||||||||||||||||||||||||||
| Distribution of investment in EndPath Radio Therapeutics, Inc. as in-kind dividend |
— | — | — | — | (2,400 | ) | — | — | (2,400 | ) | ||||||||||||||||||||||||
| Unrealized gain on marketable |
— | — | — | — | — | — | 32 | 32 | ||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (60,627 | ) | — | (60,627 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at December 31, 2025 |
199,902,270 | $ | 258,226 | 41,871,320 | $ | 4 | $ | 3,471 | $ | (111,010 | ) | $ | 99 | $ | (107,436 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | (39,801 | ) | $ | (60,627 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
| Stock-based compensation expense |
1,388 | 2,388 | ||||||
| Depreciation expense |
313 | 804 | ||||||
| Loss on disposal of property and equipment |
7 | 7 | ||||||
| Net accretion of discounts on marketable securities |
(681 | ) | (2,658 | ) | ||||
| Non-cash lease expense |
528 | 1,398 | ||||||
| Change in fair value of preferred stock tranche liability |
1,674 | 170 | ||||||
| Write-off of deferred offering costs |
— | 393 | ||||||
| Non-cash consideration for collaboration revenue |
— | (1,350 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Prepaid expenses and other current assets |
(1,948 | ) | (420 | ) | ||||
| Accounts payable |
1,718 | 180 | ||||||
| Accrued and other current liabilities |
2,305 | 1,123 | ||||||
| Operating lease liability |
(538 | ) | (509 | ) | ||||
| Other non-current assets |
— | (98 | ) | |||||
|
|
|
|
|
|||||
| Net cash used in operating activities |
(35,035 | ) | (59,199 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from investing activities |
||||||||
| Maturities of marketable securities |
8,000 | 150,750 | ||||||
| Purchases of marketable securities |
(46,032 | ) | (221,892 | ) | ||||
| Purchases of property and equipment |
(1,772 | ) | (2,313 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(39,804 | ) | (73,455 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities |
||||||||
| Proceeds from issuance of common stock upon exercise of stock options |
310 | 194 | ||||||
| Proceeds from issuance of Series A-2 redeemable convertible preferred stock, net of issuance costs |
30,407 | — | ||||||
| Proceeds from issuance of Series B redeemable convertible preferred stock including the tranche liability, net of issuance costs |
52,219 | — | ||||||
| Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs |
— | 52,465 | ||||||
| Proceeds from issuance of Series C redeemable convertible preferred stock, net of issuance costs |
— | 89,729 | ||||||
| Payments of deferred offering costs |
(19 | ) | (376 | ) | ||||
| Principal payments of finance lease liability |
(171 | ) | — | |||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
82,746 | 142,012 | ||||||
|
|
|
|
|
|||||
| Net change in cash, cash equivalents and restricted cash |
7,907 | 9,358 | ||||||
| Cash, cash equivalents and restricted cash at the beginning of the year |
23,332 | 31,239 | ||||||
|
|
|
|
|
|||||
| Cash, cash equivalents and restricted cash at the end of the year |
$ | 31,239 | $ | 40,597 | ||||
|
|
|
|
|
|||||
F-6
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Supplemental disclosures of noncash investing and financing activities |
||||||||
| Property and equipment purchases in accounts payable |
$ | 1,272 | $ | 28 | ||||
|
|
|
|
|
|||||
| Accretion of redeemable convertible preferred stock to its redemption value |
$ | 5,245 | $ | 271 | ||||
|
|
|
|
|
|||||
| Deferred offering costs in accounts payable and accrued and other current liabilities |
$ | 375 | $ | 1,229 | ||||
|
|
|
|
|
|||||
| Transfer of finance lease right-of-use asset to property and equipment, net after finance lease termination |
$ | 208 | $ | — | ||||
|
|
|
|
|
|||||
| Vesting of early exercised stock options |
$ | 6 | $ | 73 | ||||
|
|
|
|
|
|||||
| Right-of-use asset obtained in exchange for operating lease liability |
$ | — | $ | 5,771 | ||||
|
|
|
|
|
|||||
| Settlement of preferred stock tranche liability upon issuance of Series B redeemable convertible preferred stock |
$ | — | $ | 6,808 | ||||
|
|
|
|
|
|||||
| Distribution of investment in EndPath RadioTherapeutics, Inc. as in-kind dividend |
$ | — | $ | 2,400 | ||||
|
|
|
|
|
|||||
| Reconciliation of cash, cash equivalents and restricted cash |
||||||||
| Cash and cash equivalents |
$ | 30,632 | $ | 40,193 | ||||
| Restricted cash |
607 | 404 | ||||||
|
|
|
|
|
|||||
| Total cash, cash equivalents and restricted cash |
$ | 31,239 | $ | 40,597 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 1. | Organization and Nature of the Business |
Attovia Therapeutics, Inc. (the “Company”) is a clinical stage biotechnology company headquartered in San Carlos, California and focused on research and development of therapeutic products in the fields of immune-mediated diseases. The Company was incorporated in the State of Delaware on December 16, 2022 and subsequently commenced principal operations in June 2023.
As of December 31, 2025, the Company had two wholly owned subsidiaries, Attovia Therapeutics Cayman Co., Ltd., an exempted company incorporated in the Cayman Islands with limited liability in July 2025, and Attovia Therapeutics (Shanghai) Co., Ltd., a limited liability company incorporated in the People’s Republic of China in October 2025.
Liquidity
The Company has incurred significant net operating losses and negative cash flows from operations since inception and had an accumulated deficit of $111.0 million as of December 31, 2025. The Company has historically financed its operations primarily through the private placements of equity securities. To date, the Company has no product candidates approved for sale and therefore the Company has not generated any revenue from product sales. Management expects operating losses and negative cash flows to continue for the foreseeable future, until such time that it can generate significant sales of its product candidates currently in development or through collaboration or other agreements. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed in Note 2. While the Company has been able to raise financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.
As of December 31, 2025, the Company had cash, cash equivalents and marketable securities of $152.3 million, which management believes will be sufficient to fund the Company’s planned operations for at least 12 months from the date these consolidated financial statements are available to be issued.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
The consolidated financial statements and related disclosures have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Company’s consolidated financial statements include the accounts of its subsidiaries, and all intercompany transactions were eliminated upon consolidation. Prior to July 2025, the Company had no subsidiaries.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Such estimates include the fair value of marketable securities, the fair values of preferred stock tranche liabilities, the fair value of common stock, valuation of deferred tax assets, incremental borrowing rate for leases, accruals for research and development activities
F-8
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
and stock-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and regularly utilized by the Chief Operating Decision Maker (“CODM”) to assess the Company’s performance for capital and resource allocation decisions. The Company’s CODM is its Chief Executive Officer, who reviews such financial information on an aggregate company-level basis (see Note 15). The Company has determined it operates as a single operating segment and has one reportable segment, which is the research and development of therapeutic products in the fields of immune-mediated diseases. Revenue is generated exclusively from transactions with a party located in the United States. All long-lived assets are maintained in the United States of America.
Concentration of Credit Risk and of Significant Suppliers
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and restricted cash. The Company is exposed to credit risk from its deposits of cash and cash equivalents in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses on its deposits of cash and cash equivalents in 2024 and 2025.
The Company invests in money market funds, U.S. Treasury bills and notes, and other short-term fixed income securities which can be subject to certain credit risks. The Company mitigates these risks by investing in high-grade instruments, limiting its exposure to any one issuer and monitoring the ongoing creditworthiness of the financial institutions and issuers. The Company has not experienced any losses on its financial instruments.
The Company is dependent on third-party manufacturers to supply materials for research and development activities for the Company’s pipeline products, including preclinical and clinical studies and testing, and manufacturing activities. In particular, the Company relies on a small number of manufacturers for the supply of drug substance and drug product materials for its clinical assets. The Company’s preclinical and clinical studies and testing and manufacturing activities could be adversely affected by a significant interruption in the supply of materials from its suppliers. Two vendors representing 10% or more of the Company’s total purchases accounted for 46% and 40% of total purchases for the years ended December 31, 2024 and 2025, respectively.
Risks and Uncertainties
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance and reporting.
F-9
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The Company’s product candidates are still in either preclinical or clinical development and, to date, none of the Company’s product candidates have been approved for sale and, therefore, the Company has not generated any revenue from product sales.
There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. As of December 31, 2024 and 2025, cash and cash equivalents consisted of cash held in bank accounts, investments in money market funds and U.S. Treasury bills.
Restricted Cash
Restricted cash consists of cash that is restricted as to withdrawal or use in a form of bank’s outstanding letter of credit in connection with the lease of office, laboratory and storage spaces in San Carlos, California.
Marketable Securities
Marketable securities consist of U.S. Treasury bills and U.S. Treasury notes. As the Company’s entire investment portfolio is considered available for use in current operations and consists of maturities shorter than 12 months, the Company classifies all investments as available-for-sale and as current assets.
The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations and comprehensive loss.
Marketable securities are carried at fair value, with change in fair value reported as unrealized gains or losses in accumulated other comprehensive income, which is a separate component of stockholders’ deficit on the consolidated balance sheets. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. The Company regularly reviews its investment portfolio to determine if any security is impaired, which would require it to record an allowance for credit losses in the period any such determination is made. In making this judgment, the Company evaluates, among other things, the extent to which the fair value of a security is less than its amortized cost, its intent to sell or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the financial condition of the issuer and any changes thereto, and, as necessary, the portion of a decline in fair value that is credit-related. The Company did not record any credit losses in any of the financial periods presented. This assessment could change in the future due to new developments or changes in assumptions related to any particular security. Realized gains and losses, allowances for credit losses on available-for-sale securities, if any, are recorded on the consolidated statements of operations and comprehensive loss.
F-10
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Equity Method Investments
The Company utilizes the equity method to account for its investments in common stock, or in-substance common stock, when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The Company uses judgment when determining the level of influence over the operating and financial policies of the investee considering key factors including, among others, the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material contractual arrangements and obligations. Income and losses are allocated based upon relative ownership interest unless there is a substantive profit-sharing agreement in place.
The Company may elect the fair value option for its equity method investments on an investment-by-investment basis. For all equity method investments accounted for under the fair value option, the Company carries the equity method investment at fair value and records all subsequent changes in fair value as a component of other income (expense), net on the consolidated statements of operations and comprehensive loss. As of December 31, 2024 and 2025, the Company had no equity method investments.
Fair Value of Financial Instruments
The Company established the fair value of its assets and liabilities using the price that would be received to sell an asset or amount paid to transfer a liability in an orderly transaction between market participants at the measurement date and established a fair value hierarchy based on the inputs used to measure fair value.
Cash, accounts payable and accrued expenses and other current liabilities are carried at cost, which approximates fair value due to their relatively short maturities. Financial instruments, such as money market funds, marketable securities and preferred stock tranche liabilities are carried at fair value (see Note 3).
Deferred Offering Costs
Deferred offering costs, consisting of legal, accounting and other third-party fees directly relating to in-process equity financings or offerings are capitalized. The deferred offering costs will be offset against offering proceeds upon the completion of the financing or the offering. In the event the financing or the offering is terminated or postponed, deferred offering costs will be expensed immediately as a charge to general and administrative expenses on the consolidated statements of operations and comprehensive loss. As of December 31, 2024 and 2025, deferred offering costs of $0.4 million and $1.2 million, respectively, were capitalized and recorded as non-current assets on the consolidated balance sheets.
Property and Equipment, Net
Property and equipment, net is stated at cost less accumulated depreciation and amortization. Depreciation and amortization begin at the time the asset is placed in service. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the consolidated balance sheets, and any resulting gain or loss is reflected on the consolidated statements of operations and comprehensive loss in the period realized. Maintenance and repairs are expensed as incurred.
Impairment of Long-Lived Assets
Long-lived assets consist primarily of property and equipment, net, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the estimated
F-11
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
undiscounted future cash flows, which the assets or asset groups are expected to generate. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. The Company did not record any impairment of long-lived assets during the years ended December 31, 2024 and 2025.
Asset Acquisitions and Acquired In-Process Research and Development Expenses
The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the asset or group of assets, which includes transaction costs.
In determining whether an acquisition represents an asset acquisition, the Company first assesses whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition and no further assessment is performed. If substantially all of the fair value is not concentrated in a single asset or group of similar assets, the Company then assesses whether the Company acquired a substantive process capable of significantly contributing to the Company’s ability to create outputs.
Goodwill is not recognized in asset acquisitions. If acquired in-process technology assets, including licenses, know-how and patents are determined to not have an alternative future use, the cost is charged to research and development expenses at the acquisition date.
The Company accounts for contingent consideration identified in an asset acquisition that does not meet the definition of a derivative under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, when the payment becomes probable and reasonably estimable. Such amounts are expensed or capitalized based on the nature of the associated asset at the date the related contingency is recognized.
Research and Development Expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including compensation and benefits for research and development employees (including stock-based compensation), payments under licensing and research and development agreements, costs for contract research organizations (“CROs”), materials, supplies, consulting costs, and the allocated portions of facility costs, such as rent, utilities, insurance, information technology costs and general support services. Research and development costs are expensed within the consolidated statements of operations and comprehensive loss as incurred.
Accrued Research and Development Expenses
The Company has entered into various contract research and development agreements. The Company’s research and development accruals are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued expenses and other current liabilities on the consolidated balance sheets. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets on the consolidated balance sheets until the services are rendered.
F-12
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Leases
The Company determines if an arrangement is, or contains, a lease at inception and then classifies such lease as either an operating lease or finance lease based on the underlying terms and conditions of the contract. Leases with terms greater than one year are initially recognized on the consolidated balance sheets as right-of-use assets and lease liabilities based on the present value of lease payments over the expected lease term. Operating lease right-of-use assets are based on the corresponding lease liability adjusted for (i) payments made at or before the commencement date, (ii) initial direct costs incurred, and (iii) tenant incentives under the lease. The Company has elected not to apply the recognition requirements to any leases with a term of 12 months or less and which do not include any options to purchase the underlying assets that the Company is reasonably certain to exercise. As the implicit rate for the operating leases is not readily determinable, the Company uses its incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment.
The Company considers the lease term to be the noncancelable period that it has the right to use the underlying asset, together with any extension periods for which the option to exercise is considered reasonably certain.
Rent expense for operating leases is recognized on a straight-line basis over the lease term and is presented on the consolidated statements of operations and comprehensive loss. Variable lease payments are excluded from the right-of-use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s facility leases and to account for the lease and non-lease components as a single lease component.
A finance lease right-of-use asset is amortized on a straight-line basis over the shorter of estimated useful lives of the asset or the lease term. Interest expense from fixed payments on finance leases is recognized using the effective interest method. Finance lease right-of-use asset amortization and interest expense are recorded within general and administrative expenses and interest expense, respectively, within the Company’s consolidated statements of operations and comprehensive loss.
As of December 31, 2024, the Company had no right-of-use assets or lease liabilities.
Redeemable Convertible Preferred Stock
The Company records all shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of tranche liability, if applicable, and issuance costs. The redeemable convertible preferred stock is recorded outside of permanent equity because the holders of such stock have redemption features and certain liquidation rights in the event of a deemed liquidation that, in certain situations, are not solely within the control of the Company and would require the redemption of the then-outstanding redeemable convertible preferred stock.
The Company’s Series A-1 and A-2 redeemable convertible preferred stock are not redeemable, except in the event of a deemed liquidation. The Company has not adjusted the carrying values of the Series A-1 and A-2 redeemable convertible preferred stock to the liquidation preferences of such shares because it is uncertain whether or when a deemed liquidation event would occur that would obligate the Company to pay the liquidation preferences to holders of shares of such redeemable convertible preferred stock. Subsequent adjustments to the carrying values to the liquidation preferences will be made only when it becomes probable that such a deemed liquidation event will occur.
F-13
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The holders of the Series B and C redeemable convertible preferred stock have the option to require the Company to redeem their shares beginning in March 2035. As a result, these shares were considered probable of becoming redeemable since the redemption option depends solely on the passage of time. Therefore, the Series B and C redeemable convertible preferred stock is adjusted to its redemption value at each reporting date. Any accretion in the carrying amount of redeemable convertible preferred stock is accounted for as a deemed dividend and recorded against paid-in capital or, in the absence of available paid-in capital, against accumulated deficit.
Preferred Stock Tranche Liabilities
The Series A Purchase Agreement and Series B Purchase Agreement include contingent obligations for the Company to issue shares of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock, respectively, at future dates (the “preferred stock tranche liabilities”). The preferred stock tranche liabilities were determined to be freestanding instruments within the scope of ASC 480, Distinguishing Liabilities from Equity that should be accounted for at fair value and remeasured at fair value each reporting period with changes recognized on the consolidated statements of operations and comprehensive loss.
Revenue Recognition
Under ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps as prescribed by ASC 606:
| (i) | identify the contract(s) with a customer; |
| (ii) | identify the performance obligations in the contract; |
| (iii) | determine the transaction price; |
| (iv) | allocate the transaction price to the performance obligations in the contract; and |
| (v) | recognize revenue when (or as) the Company satisfies a performance obligation. |
A contract with a customer exists when (i) the Company enters into a legally enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.
All of the Company’s revenues are derived through a license agreement (see Note 5). The Company’s contract with the customer includes promises related to licenses of intellectual property, research and development services and options to request the Company to perform additional research and development services. At contract inception, if the contract is determined to be within the scope of ASC 606, the Company identifies the goods or services promised and determines the performance obligations by assessing whether each promised good or service is distinct. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own or
F-14
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract. Goods or services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if such options represent material rights, including if the price for the additional goods/services is at a significant and incremental discount to standalone selling price of such goods/services.
The transaction price is generally comprised of a fixed fee due at contract inception and at specified future dates, variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when the customer recognizes net sales of licensed products. The Company measures the transaction price based on the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods and/or services to the customer. The Company utilizes the “most likely amount” method to estimate the amount of variable consideration related to development and regulatory milestone payments (see Note 5). The Company evaluates whether the associated milestone event is considered most likely to be achieved and estimates the amount to be included in the transaction price. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The cumulative effect of changes to the estimated transaction price and estimated measure of progress to complete the Company’s performance obligation is recorded in the period in which changes are identified.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). As of December 31, 2025, the Company has not recognized any royalty revenue resulting from its collaboration arrangement.
Contract Liabilities
A contract liability is an obligation to transfer goods or services for which the Company has received consideration or has an unconditional right to receive an amount of consideration. The current portion of contract liability represents the amount that is expected to be recognized as revenue within one year from the balance sheet date.
F-15
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Stock-Based Compensation
The Company recognizes stock-based compensation expense based on the estimated fair value of stock-based awards on the date of grant, which for stock options is determined by using the Black-Scholes option-pricing model. The Black-Scholes option pricing model requires the input of subjective assumptions, including the fair value of the underlying common stock, the expected term of the stock option, the expected volatility of the price of the Company’s common stock, risk-free interest rates, and the dividend yield. The fair value of the restricted stock awards was determined based on the fair value of the Company’s common stock on the grant date. The assumptions used to determine the fair value of the stock option awards and restricted stock awards represent the Company’s best estimates. These estimates involve inherent uncertainties and the application of judgment.
Stock-based compensation expense is recognized over the awards’ vesting period on a straight-line basis and recorded as either research and development or general and administrative expenses on the consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. The Company has elected to recognize the actual forfeitures by reducing the employee and non-employee stock-based compensation expense in the same period as the forfeitures occur.
Shares purchased pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules. Proceeds from the early exercise of stock options are recorded as other non-current liabilities, and recognized to additional paid-in capital on the consolidated balance sheets upon vesting.
Income Taxes
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s history of operating losses, it is more likely than not that the deferred tax assets will not be fully realized, therefore a full valuation allowance has been recorded.
The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes any applicable interest and penalties related to income tax matters in its provision for income taxes.
Net Loss Per Share Attributable to Common Stockholders
Basic net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Net loss attributable to common stockholders is computed as net loss less accretion of redeemable convertible preferred stock. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, unvested restricted stock awards and stock options are considered to be potentially dilutive securities.
F-16
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock and unvested restricted stock awards are considered participating securities. The redeemable convertible preferred stock does not have a contractual obligation to share in the Company’s losses, and unvested restricted stock awards are considered contingently issuable shares for accounting purposes. Because the Company has reported a net loss for the reporting period presented, the diluted net loss per share of common stock is the same as basic net loss per common share for the reporting period.
Comprehensive Loss
Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from non-owner sources. The Company’s other comprehensive income for the years ended December 31, 2024 and 2025 consisted of unrealized gains or losses on marketable securities.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) under its ASC or other standard setting bodies and adopted by the Company as of the specified effective date, unless otherwise discussed below. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) and adopts new or revised accounting standards on the dates applicable to nonpublic entities unless early adopted.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024 for all public business entities and for fiscal years beginning after December 15, 2025 and for all other entities. Early adoption is permitted and should be applied either prospectively or retrospectively. The Company adopted this ASU during the year ended December 31, 2025. The adoption of this standard resulted in additional required disclosures, which are included in Note 11 - Income Taxes, but did not affect the Company’s operating results.
Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220), requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual periods beginning after December 15, 2027. The requirements of ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements and disclosures.
F-17
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 3. | Fair Value Measurements |
The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy which establishes three levels of inputs that may be used to measure fair value, as follows:
Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
The Company recognizes transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs.
Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable.
The following tables set forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy (in thousands):
| December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
||||||||||||||||
| Cash and cash equivalents |
||||||||||||||||
| Money market funds |
$ | 26,410 | $ | — | $ | — | $ | 26,410 | ||||||||
| U.S. Treasury bills |
— | 3,971 | — | 3,971 | ||||||||||||
| Marketable securities |
||||||||||||||||
| U.S. Treasury notes |
— | 30,746 | — | 30,746 | ||||||||||||
| U.S. Treasury bills |
— | 7,945 | — | 7,945 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total financial assets |
$ | 26,410 | $ | 42,662 | $ | — | $ | 69,072 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Liabilities: |
||||||||||||||||
| Preferred stock tranche liability |
$ | — | $ | — | $ | 6,638 | $ | 6,638 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total financial liabilities |
$ | — | $ | — | $ | 6,638 | $ | 6,638 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-18
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
||||||||||||||||
| Cash and cash equivalents |
||||||||||||||||
| Money market funds |
$ | 35,526 | $ | — | $ | — | $ | 35,526 | ||||||||
| U.S. Treasury bills |
— | 2,485 | — | 2,485 | ||||||||||||
| Marketable securities |
||||||||||||||||
| U.S. Treasury notes |
82,397 | — | — | 82,397 | ||||||||||||
| U.S. Treasury bills |
14,736 | 14,942 | — | 29,678 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total financial assets |
$ | 132,659 | $ | 17,427 | $ | — | $ | 150,086 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis (in thousands):
| Preferred Stock Tranche Liability |
||||
| Fair value as of January 1, 2024 |
$ | — | ||
| Fair value of Series B preferred stock liability at issuance |
4,964 | |||
| Change in the fair value of Series B preferred stock tranche liability |
1,674 | |||
|
|
|
|||
| Fair value as of December 31, 2024 |
$ | 6,638 | ||
| Change in the fair value of Series B preferred stock tranche liability |
170 | |||
| Fair value upon settlement |
(6,808 | ) | ||
|
|
|
|||
| Fair value as of December 31, 2025 |
$ | — | ||
|
|
|
|||
The fair value of the preferred stock tranche liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy (see Note 8).
There were no transfers in and out of Level 3 during the years ended December 31, 2024 and 2025.
| 4. | Balance Sheet Components |
Marketable Securities
Marketable securities, which are classified as available-for-sale, consisted of the following as of December 31, 2024 and 2025 (in thousands):
| December 31, 2024 | ||||||||||||||||
| Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Estimated Fair Value |
|||||||||||||
| U.S. Treasury notes |
$ | 30,684 | $ | 65 | $ | (3 | ) | $ | 30,746 | |||||||
| U.S. Treasury bills |
7,940 | 5 | — | 7,945 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Available-for-sale marketable securities |
$ | 38,624 | $ | 70 | $ | (3 | ) | $ | 38,691 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| December 31, 2025 | ||||||||||||||||
| Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Estimated Fair Value |
|||||||||||||
| U.S. Treasury notes |
$ | 82,309 | $ | 89 | $ | (1 | ) | $ | 82,397 | |||||||
| U.S. Treasury bills |
29,667 | 11 | — | 29,678 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Available-for-sale marketable securities |
$ | 111,976 | $ | 100 | $ | (1 | ) | $ | 112,075 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-19
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
All marketable securities held as of December 31, 2024 and 2025 had contractual maturities of less than one year.
As of December 31, 2024 and 2025, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the marketable securities, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. The Company considered the current and expected future economic and market conditions and determined that its investments were not significantly impacted. For all securities with a fair value less than their amortized cost basis, the Company determined the decline in fair value below amortized cost basis to be immaterial and non-credit related, and therefore no allowance for losses has been recorded. For the years ended December 31, 2024 and 2025, the Company did not recognize any impairment losses on its investments.
As of December 31, 2024 and 2025, accrued interest receivable was $0.1 million and $0.9 million, respectively, which were recorded in the prepaid expenses and other current assets on the consolidated balance sheets.
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands, except years):
| Estimated Useful Life (in years) |
December 31, | |||||||||||
| 2024 | 2025 | |||||||||||
| Laboratory equipment |
5 | $ | 1,820 | $ | 3,907 | |||||||
| Computer equipment and software |
3 | 139 | 245 | |||||||||
| Furniture and fixtures |
7 | — | 273 | |||||||||
| Leasehold improvements |
|
Lesser of estimated useful lives of 15 years or remaining lease term |
|
— | 136 | |||||||
| Construction in progress |
1,570 | 28 | ||||||||||
|
|
|
|
|
|||||||||
| 3,529 | 4,589 | |||||||||||
| Less: Accumulated depreciation |
(295 | ) | (1,097 | ) | ||||||||
|
|
|
|
|
|||||||||
| Property and equipment, net |
$ | 3,234 | $ | 3,492 | ||||||||
|
|
|
|
|
|||||||||
Depreciation and amortization expense for the years ended December 31, 2024 and 2025 were $0.3 million and $0.8 million, respectively.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Accrued compensation |
$ | 2,064 | $ | 3,103 | ||||
| Accrued research and development expenses |
1,008 | 1,069 | ||||||
| Accrued professional fees |
476 | 556 | ||||||
| Contract liability |
— | 450 | ||||||
| Other accrued expenses and current liabilities |
34 | 357 | ||||||
|
|
|
|
|
|||||
| Total accrued expenses and other current liabilities |
$ | 3,582 | $ | 5,535 | ||||
|
|
|
|
|
|||||
F-20
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 5. | License Agreements |
Alamar License Agreement
On June 1, 2023, the Company and Alamar Biosciences, Inc. (“Alamar”) entered into a Platform License Development Agreement (the “Alamar Platform License Agreement”). Under the Alamar Platform License Agreement, Alamar granted the Company an exclusive, sublicensable license to use the antibody engineering platform (the “ATTOBODY Platform”) within certain specified therapeutic fields.
In connection with the Alamar Platform License Agreement, the Company issued 22,562,123 shares of its common stock to Alamar as consideration for the license. Alamar is further entitled to certain development and regulatory milestone payments for an aggregate of up to $0.8 million and $3.5 million respectively, on a product-by-product basis as well as royalties on net sales of the covered products ranging in the low-single digit percentage rates. Milestone payments are contingent consideration and are accrued when it becomes probable that the underlying milestone will be achieved. The Company recorded $0.3 million as research and development expenses on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2024, related to achievement of development milestone for ATTO-1310. The Company recorded $0.3 million as research and development expenses on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2025, related to achievement of a development milestone for ATTO-3712. As of December 31, 2024, $0.3 million was included in accounts payable on the consolidated balance sheets in connection with these milestone payments. There were no accounts payable related to the milestone payments as of December 31, 2025. The remaining milestones were not probable to be achieved as of December 31, 2025. Royalties will be recognized as cost of sales when the covered products are sold and royalties are payable.
EndPath License Agreement and Equity Distribution
In July 2025, the Company entered into a license agreement with EndPath RadioTherapeutics, Inc. (formerly Isotovia Biosciences, Inc.) (“EndPath”) pursuant to which the Company granted EndPath an exclusive, worldwide license to certain of the Company’s ATTOBODY platform technology for use in the development and commercialization of radioligand products (the “EndPath Agreement”). Under the EndPath Agreement, the Company is responsible for using its ATTOBODY platform technology to generate and develop initial Attobodies directed to two initial targets. EndPath is responsible for subsequent development, regulatory, manufacturing and commercialization activities. The EndPath Agreement also provides EndPath with rights to request additional research services for up to two additional targets after the first anniversary of the agreement, subject to separate reimbursement.
As consideration for the license and related research and development obligations, the Company received 24,000,000 shares of EndPath common stock, of which 6,000,000 shares are subject to repurchase if specified conditions are not met, including the first accepted investigational new drug filing for a lead product, or certain termination events. The Company is also eligible to receive additional consideration under the EndPath Agreement of up to $14.5 million in development and regulatory milestone payments, up to $170.0 million in sales milestone payments, and low single-digit royalties on worldwide annual net sales of licensed products.
Upon receipt of the EndPath common stock, the Company concluded that its ownership interest met the criteria for equity method accounting. The Company elected the fair value option under ASC 825, Financial Instruments, and measured the EndPath common stock at fair value using an option pricing model based on EndPath’s Series A preferred stock.
The Company also concluded that the EndPath arrangement represents a contract with a customer within the scope of ASC 606. The Company identified separate performance obligations for each of the two initial
F-21
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
target programs, each consisting of the applicable license rights and related research and development services, together with related supporting activities. For purposes of determining revenue under the EndPath Agreement, the Company evaluated the EndPath common stock as noncash consideration received from a customer. The Company determined that the transaction price at inception was $1.8 million, representing the fair value of the 18,000,000 shares of EndPath common stock that were not subject to repurchase. The fair value of the 6,000,000 shares subject to repurchase was excluded from the transaction price at inception and as of December 31, 2025 because the underlying contingency had not been resolved and the Company determined that the amount was constrained. The Company recorded the fair value of 6,000,000 shares subject to repurchase as an asset with a corresponding customer deposit liability of $0.6 million, which was included in other non-current liabilities on the Company’s consolidated balance sheets. The customer deposit liability remains outstanding until the repurchase option lapses, is exercised or is otherwise resolved.
The Company recognizes revenue using a cost-based input method over the estimated research term. The Company recognized $1.4 million of collaboration revenue under the EndPath Agreement during the year ended December 31, 2025. As of December 31, 2025, the contract liability related to the EndPath Agreement was $0.4 million, which was included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.
In September 2025, the Company distributed the EndPath common stock received as noncash consideration under the EndPath Agreement, with an aggregate carrying value of $2.4 million, to holders of the Company’s outstanding capital stock. Following the distribution, the Company no longer held any EndPath common stock. The distribution was accounted for as an in-kind dividend and reduced the Company’s equity investment in EndPath to zero. There was no gain or loss recognized as a result of the distribution since there was no change in fair value of the investment in EndPath during the short holding period between the initial valuation date and the distribution date.
| 6. | Commitments and Contingencies |
Leases
In June 2023, the Company entered into a lease agreement with Alamar to lease approximately 8,287 square feet of office and laboratory spaces in Fremont, California, which is classified as an operating lease. The lease commenced on June 1, 2023, with an initial term of 18 months. After expiration of the initial term, the lease would continue on a month-to-month basis unless terminated by either party upon 30 days prior written notice. At the inception of the lease, the Company concluded that it was not reasonably likely to exercise such extension option. Monthly base rent payments were $49,044, subject to an annual 12% increase starting from February 1, 2024. The discount rate used to measure the lease liability for such operating lease upon recognition was 13.8%.
Between October 2023 and October 2024, the Company entered into four amendments to the lease agreement to increase the area of leased space, extend the lease term, adjust the monthly base rent for the remaining lease term, and make certain other changes to the lease terms. The first three amendments were accounted for as separate short-term lease contracts. The final amendment to the lease agreement, entered in October 2024, increased the leased area, extended the lease term until March 31, 2025, and adjusted the base rent for the remaining lease term to $63,261 per month. This final amendment was accounted for as a lease modification, but was determined to be immaterial to the Company’s consolidated financial statements.
In July 2024, the Company entered into a lease agreement to lease approximately 26,062 square feet of office, laboratory and storage spaces in San Carlos, California, which was classified as an operating lease. The lease commencement date was January 31, 2025, with an initial term of 40 months. After the expiration of the initial term, the Company has the option to extend the lease for an additional 60 months. At the
F-22
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
inception, the Company concluded that it was not reasonably likely to exercise such extension option. As of the commencement date, future lease payments totaled $6.7 million and the lease liability was calculated to be $5.8 million, which is equal to the present value of the future lease payments, discounted at an incremental borrowing rate of 8.2%. In conjunction with the agreement, the Company secured a letter of credit in the amount of $0.6 million and $0.4 million as of December 31, 2024 and 2025, respectively. The funds related to this letter of credit are presented as restricted cash on the Company’s consolidated balance sheets.
In September 2023, the Company entered into a lease agreement for certain laboratory equipment, which was classified as a finance lease. The lease expired in 2024, and the related expense for the year ended December 31, 2024 was immaterial.
The components of total lease cost related to leases for the years ended December 31, 2024 and 2025 were as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Operating lease cost |
$ | 680 | $ | 1,814 | ||||
| Variable lease cost |
199 | 704 | ||||||
| Short-term lease cost |
95 | 184 | ||||||
|
|
|
|
|
|||||
| Total lease cost |
$ | 974 | $ | 2,702 | ||||
|
|
|
|
|
|||||
During the years ended December 31, 2024 and 2025, cash paid for amounts included in operating lease liability of $0.6 million and $0.9 million, respectively, were included in cash flows from operating activities on the consolidated statements of cash flows.
The Company had no operating leases as of December 31, 2024. As of December 31, 2025, the weighted-average remaining lease term was 2.5 years, and the weighted average discount rate used to measure the lease liabilities for such operating leases upon recognition was 8.2%.
As of December 31, 2025, the future minimum lease commitments under the operating lease were as follows (in thousands):
| Year Ended December 31, |
||||
| 2026 |
$ | 2,254 | ||
| 2027 |
2,333 | |||
| 2028 |
1,200 | |||
|
|
|
|||
| Total future minimum lease payments |
$ | 5,787 | ||
| Less: Imputed interest |
(525 | ) | ||
|
|
|
|||
| Present value of operating lease liabilities |
$ | 5,262 | ||
|
|
|
|||
Legal Contingencies
From time to time, the Company may become involved in legal proceedings arising from the ordinary course of business. The Company records a liability for such matters when it is probable that future losses will be incurred and that such losses can be reasonably estimated. Significant judgment by the Company is required to determine both probability and the estimated amount. The Company was not a party to any material legal proceedings or claims and no liabilities were recorded for loss contingencies as of December 31, 2025 and 2024 that could have a material adverse effect on the Company’s financial position, results of operations or cash flows.
F-23
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Indemnification Agreements
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ liability insurance.
| 7. | Redeemable Convertible Preferred Stock |
As of December 31, 2024 and 2025, redeemable convertible preferred stock consisted of the following (in thousands, except share and price data):
| December 31, 2024 | ||||||||||||||||||||
| Shares Authorized |
Original Issue Price |
Shares Issued and Outstanding |
Carrying Value |
Liquidation Value |
||||||||||||||||
| Series A-1 |
30,425,000 | $ | 1.00 | 30,425,000 | $ | 26,046 | $ | 30,425 | ||||||||||||
| Series A-2 |
27,659,090 | $ | 1.10 | 27,659,090 | 30,407 | 30,425 | ||||||||||||||
| Series B |
76,363,636 | $ | 1.38 | 38,181,818 | 52,500 | 52,500 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
134,447,726 | 96,265,908 | $ | 108,953 | $ | 113,350 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Shares Authorized |
Original Issue Price |
Shares Issued and Outstanding |
Carrying Value |
Liquidation Value |
||||||||||||||||
| Series A-1 |
30,425,000 | $ | 1.00 | 30,425,000 | $ | 26,046 | $ | 30,425 | ||||||||||||
| Series A-2 |
27,659,090 | $ | 1.10 | 27,659,090 | 30,407 | 30,425 | ||||||||||||||
| Series B |
76,363,636 | $ | 1.38 | 76,363,636 | 111,773 | 105,000 | ||||||||||||||
| Series C |
65,454,544 | $ | 1.38 | 65,454,544 | 90,000 | 90,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
199,902,270 | 199,902,270 | $ | 258,226 | $ | 255,850 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
In June 2023, the Company entered into a Series A redeemable convertible preferred stock purchase agreement (the “Series A Purchase Agreement”) with certain investors and issued an aggregate of 30,425,000 shares of Series A-1 redeemable convertible preferred stock at $1.00 per share for total gross proceeds of $30.4 million. The issuance costs were $0.2 million.
The Series A Purchase Agreement also provided for the issuance and sale to the same investors of 27,659,090 shares of Series A-2 redeemable convertible preferred stock at $1.10 per share upon achieving certain milestone conditions (the “Series A Milestone Closing”) on or before December 1, 2025, or, at the option of the investors, any time before that date. The Series A milestone was achieved in December 2023, and upon the occurrence of the Series A Milestone Closing in January 2024, 27,659,090 shares of the Series A-2 redeemable convertible preferred stock were issued at a price of $1.10 per share, which resulted in gross cash proceeds of $30.4 million. The Series A-2 redeemable convertible preferred stock was recorded at fair value based on proceeds received, less issuance costs of less than $0.1 million.
F-24
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The issuance of shares of Series A-1 redeemable convertible preferred stock was recorded at the amount of proceeds received less issuance costs and the amount allocated to the preferred stock tranche liability (see Note 8).
In May 2024, the Company entered into the Series B redeemable convertible preferred stock purchase agreement (the “Series B Purchase Agreement”) with certain investors and issued 38,181,818 shares of Series B redeemable convertible preferred stock at $1.375 per share for total gross proceeds of $52.5 million. The Series B Purchase Agreement also provides for the issuance and sale to the same investors of an additional 38,181,818 shares of Series B redeemable convertible preferred stock (“Series B Second Tranche Shares”) on the same terms as the shares issued at the initial closing, upon achieving the first dosing milestone or if the achievement of such milestone conditions is waived in writing by the holders of at least 66% of the then-outstanding shares of Series B redeemable convertible preferred stock (the “Series B Requisite Holders”) and the Board of Directors of the Company, including a majority of the then seated Preferred Directors (the “Series B Milestone Closing”) on or before June 30, 2026, or, at the option of the investors, at any time before that date. The Series B redeemable convertible preferred stock was recorded at its fair value of $47.5 million, less issuance costs of $0.3 million.
In January 2025, upon the achievement of the Series B milestone, the remaining 38,181,818 shares of the Series B redeemable convertible preferred stock were issued at a price of $1.375 per share, which resulted in gross cash proceeds of $52.5 million. As a result of this issuance, the Series B preferred stock tranche liability of $6.8 million was settled and the Series B redeemable convertible preferred stock was recorded at its fair value of $59.3 million, less issuance costs of less than $0.1 million (see Note 8).
In March 2025, the Company issued 65,454,544 shares of its Series C redeemable convertible preferred stock at a purchase price of $1.375 per share for total gross proceeds of $90.0 million. The Series C redeemable convertible preferred stock was recorded at fair value based on proceeds received, less issuance costs of $0.3 million.
The rights, preferences, privileges and restrictions granted to or imposed on the respective classes of the Company’s capital shares or the holders thereof are as follows:
Liquidation Preference
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary or a deemed liquidation event, including a merger, acquisition or sale of all or substantially all of the Company’s assets, (each a “Liquidation Event”), the holders of Series C and Series B redeemable convertible preferred stock shall be entitled to receive on a pari passu basis, prior and in preference to any distribution of any of the assets of the Company to the holders of Series A-1 redeemable convertible preferred stock, Series A-2 redeemable convertible preferred stock and common stock, an amount per share equal to the original issue price, plus any dividends declared but unpaid thereon.
After full payment to holders of the Series C and Series B redeemable convertible preferred stock, the holders of Series A-1 and A-2 redeemable convertible preferred stock shall be entitled to receive on a pari passu basis, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, an amount per share equal to the applicable original issue price, plus any dividends declared but unpaid thereon.
If the assets and funds are insufficient to permit the payment to holders of the redeemable convertible preferred stock of the full preferential amounts, then the entire assets and funds legally available for distribution to stockholders shall be distributed ratably among the holders of the respective series of redeemable convertible preferred stock in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
F-25
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Upon completion of the distributions of the full amounts required above, all of the remaining assets of the Company available for distribution shall be distributed among the holders of redeemable convertible preferred stock and common stock pro rata on an as-converted basis, provided, however, that if the aggregate amount the holders of redeemable convertible preferred stock are entitled to receive shall exceed two and one-half times the applicable original issue price per share of the redeemable convertible preferred stock, as adjusted, plus any dividends declared but unpaid thereon (the “Participation Cap”), each holder of the redeemable convertible preferred stock shall only be entitled to receive the greater of (a) the Participation Cap and (b) the amount such holder would have received if all shares of such series of redeemable convertible preferred stock had been converted into common stock immediately prior to such Liquidation Event.
Conversion
Each share of redeemable convertible preferred stock is convertible, at the option of the holder thereof, at any time, into such number of fully paid and nonassessable shares of common stock as is determined by dividing the applicable original issue price by the conversion price of $1.00 for shares of Series A-1 redeemable convertible preferred stock, $1.10 for Series A-2 redeemable convertible preferred stock and $1.375 for shares of Series B and Series C redeemable convertible preferred stock, as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like, as well as any down-round anti-dilution adjustments.
Each share of redeemable convertible preferred stock will automatically be converted into shares of common stock at the then-effective conversion rate either (a) upon the closing of the sale of shares of common stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, that is either (i) approved by the holders of at least 66% of the outstanding shares of redeemable convertible preferred stock, voting together as a single class on an as-converted basis (“Requisite Holders”), including the Series B Requisite Holders and Series C Requisite Holders, or (ii) at a price of at least $1.65 per share, resulting in at least $100.0 million of gross proceeds to the Company and in connection with such offering the Company’s common stock is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or such other international exchange of equal stature, or (b) by vote or written consent of the Requisite Holders.
Dividends
The holders of the outstanding shares of Series C and Series B redeemable convertible preferred stock are entitled to receive, only when, as and if declared by the Company’s board of directors, out of any funds and assets legally available therefor, non-cumulative dividends at the rate of 8% of the original issue price for each share of Series C and Series B redeemable convertible preferred stock, prior and in preference to any dividends paid to the holders of Series A-1 redeemable convertible preferred stock, Series A-2 redeemable convertible preferred stock and common stock (other than dividends on shares of common stock payable in shares of common stock). The holders of the outstanding shares of Series A-2 and Series A-1 redeemable convertible preferred stock are entitled to receive, only when, as and if declared by the Company’s board of directors, out of any funds and assets legally available therefor, non-cumulative dividends at the rate of 8% of the original issue price for each share of Series A-1 and Series A-2 redeemable convertible preferred stock, prior and in preference to any dividends paid to the holders of common stock (other than dividends on shares of common stock payable in shares of common stock). After payment of the full amount of any dividends described above, any additional dividends are distributed among all holders of common stock and the redeemable convertible preferred stock on an as-converted basis. Whenever a dividend is payable in property other than cash, the value of such dividend is deemed to be the fair market value of such property as determined in good faith by the Company’s board of directors.
F-26
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
No dividends were declared as of December 31, 2024 and 2025.
Voting
The holders of each share of redeemable convertible preferred stock are entitled to the number of votes equal to the number of shares of common stock into which such shares of redeemable convertible preferred stock could be converted. With respect to such votes, the holders have full voting rights and powers equal to the voting rights and powers of common stock.
The holders of Series C redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect one director of the Company. The holders of Series B redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect one director of the Company. The holders of Series A-1 redeemable convertible preferred stock and Series A-2 redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect two directors of the Company. The holders of common stock, exclusively and as a separate class, are entitled to elect two directors of the Company. The holders of shares of redeemable convertible preferred stock and common stock are entitled, voting together as a combined class and on an as-converted basis, to elect the remaining directors of the Company.
Redemption
The shares of Series C redeemable convertible preferred stock shall be redeemed by the Company at a price per share equal to the applicable original issue price, plus all declared but unpaid dividends thereon, in one installment commencing not more than 60 days after receipt by the Company and the other holders of Series C redeemable convertible preferred stock of written notice requesting redemption of all shares of Series C redeemable convertible preferred stock held by such holder of Series C redeemable convertible preferred stock. The redemption can happen at any time on or after March 31, 2035, provided that a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, or a deemed liquidation event, has not occurred prior to that date.
The shares of Series B redeemable convertible preferred stock shall be redeemed by the Company at a price per share equal to the applicable original issue price, plus all declared but unpaid dividends thereon, in one installment commencing not more than 60 days after receipt by the Company and the other holders of Series B redeemable convertible preferred stock of written notice requesting redemption of all shares of Series B redeemable convertible preferred stock held by such holder of Series B redeemable convertible preferred stock. The redemption can happen at any time on or after March 31, 2035, provided that a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, or a deemed liquidation event, has not occurred prior to that date.
The shares of Series A-1 redeemable convertible preferred stock and Series A-2 redeemable convertible preferred stock are not redeemable other than upon the occurrence of a Liquidation Event.
| 8. | Preferred Stock Tranche Liabilities |
The Company determined that the contingent obligations to issue shares of Series A-2 redeemable convertible preferred stock and the Series B Second Tranche Shares at the Series A Milestone Closing and Series B Milestone Closing, respectively, represented freestanding instruments. These instruments, referred to as the Series A preferred stock tranche liability and Series B preferred stock tranche liability, respectively, were accounted for as a liability, initially recorded and subsequently remeasured at fair value until their settlement or expiration.
F-27
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The Series A-2 preferred stock tranche was settled in January 2024, and the fair value of the Series A preferred stock tranche liability as of December 31, 2023 and at the settlement date was negligible. The remeasurement of the Series A-2 preferred stock tranche liability as of the settlement date did not have an impact on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024. The Series B preferred stock tranche liability was initially recorded as a liability at $5.0 million. The Company remeasured the Series B preferred stock tranche liability as of December 31, 2024 and determined that the fair value of the liability was $6.6 million, and therefore recorded an approximately $1.7 million loss in its consolidated statements of operations and comprehensive loss during the year ended December 31, 2024. The Series B preferred stock tranche was settled in January 2025 when the Series B milestone was achieved (see Note 7). The Company remeasured the Series B preferred stock tranche liability in January 2025 and determined that the fair value of the liability was $6.8 million, and therefore recorded an approximately $0.2 million loss in its consolidated statements of operations and comprehensive loss during the year ended December 31, 2025.
The preferred stock tranche liabilities were valued using a probability-weighted present value calculation. In determining the fair value of the preferred stock tranche liabilities, estimates and assumptions impacting fair value included (i) discount rates, (ii) the expected term of the forward, and (iii) the probability of the tranche closing. Significant increases (decreases) in any of those inputs in isolation may result in a significant change in fair value measurement. The Company determined the per share future value of the Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock by back-solving to the original issue price of the Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock financings, respectively. In January 2025, upon the achievement of the Series B milestone, the Series B Milestone Closing was completed, and the associated Series B preferred stock tranche liability was settled. The fair value of the Series B redeemable convertible preferred stock was $1.55 per share and represented the only input used in determining the fair value of the Series B preferred stock tranche liability upon the Series B Milestone Closing.
The Series B preferred stock tranche liability was valued using the following assumptions:
| May 1, 2024 | December 31, 2024 | |||||||
| Discount rate |
5.40 | % | 4.40 | % | ||||
| Term of forward (years) |
0.67 | 0.04 | ||||||
| Probability of tranche closing |
75.0 | % | 97.5 | % | ||||
| 9. | Common Stock |
The Company is authorized to issue 284,023,000 shares of common stock with a par value of $0.0001. There were 41,871,320 shares of common stock issued and outstanding as of December 31, 2025.
The Company had reserved common stock, on an as-converted basis, for future issuance as follows:
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Conversion of redeemable convertible preferred shares |
96,265,908 | 199,902,270 | ||||||
| Share options issued and outstanding |
15,953,750 | 24,553,563 | ||||||
| Share options available for future grant |
4,857,896 | 4,171,026 | ||||||
|
|
|
|
|
|||||
| Total ordinary shares reserved |
117,077,554 | 228,626,859 | ||||||
|
|
|
|
|
|||||
F-28
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 10. | Share-based Compensation |
In 2023, the Company adopted the 2023 Equity Incentive Plan (“2023 Plan”), under which the Board of Directors can issue options to purchase shares of common stock. As of December 31, 2025, there were 30,595,909 shares of common stock authorized and reserved for issuance under the 2023 Plan. 4,171,026 shares of common stock remain available for future grants as of December 31, 2025.
Awards granted under the 2023 Plan may be either incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”) or stock appreciation rights (“SARs”). ISOs may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees and consultants. The Board of Directors of the Company has the authority to approve the option recipient, the number of shares, the term, and the exercise price. The exercise price of ISOs and NSOs shall not be less than 100% of the estimated fair value of the shares on the date of grant. The exercise price of ISOs shall be no less than 110% of the estimated fair value of the shares on the date of grant to any employee who, at the time of grant, owns shares representing more than 10% (“10% shareholder”) of the voting power of all classes of shares of the Company. The options usually have a term of 10 years (or no more than five years if granted to a 10% shareholder). Vesting conditions determined by the plan administrator may apply to stock options and may include continued service, performance and/or other conditions. Generally, options and restricted stock awards vest over a four-year period.
The Company had not granted any RSUs and SARs as of December 31, 2024 and 2025.
Options
A summary of stock option activity is set forth below:
| Outstanding Awards | ||||||||||||||||
| Number of Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term (in years) |
Aggregate Intrinsic Value (in thousands) |
|||||||||||||
| Outstanding, January 1, 2024 |
2,365,000 | $ | 0.17 | 9.64 | $ | 331 | ||||||||||
| Granted |
14,706,000 | $ | 0.38 | |||||||||||||
| Exercised |
(1,117,250 | ) | $ | 0.28 | $ | 261 | ||||||||||
|
|
|
|||||||||||||||
| Outstanding, January 1, 2025 |
15,953,750 | $ | 0.35 | 9.35 | $ | 4,662 | ||||||||||
| Granted |
9,388,300 | $ | 0.53 | |||||||||||||
| Exercised |
(754,070 | ) | $ | 0.26 | $ | 231 | ||||||||||
| Forfeited or expired |
(34,417 | ) | $ | 0.42 | ||||||||||||
|
|
|
|||||||||||||||
| Outstanding, December 31, 2025 |
24,553,563 | $ | 0.42 | 8.76 | $ | 2,621 | ||||||||||
|
|
|
|||||||||||||||
| Shares exercisable December 31, 2025 |
5,980,952 | $ | 0.36 | 8.35 | $ | 1,035 | ||||||||||
| Vested and expected to vest, December 31, 2025 |
24,553,563 | $ | 0.42 | 8.76 | $ | 2,621 | ||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock as of December 31, 2024 and 2025.
F-29
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The total fair value of options that vested during the years ended December 31, 2024 and 2025 was $0.2 million and $1.6 million, respectively. The weighted-average grant date fair value of options granted in the years ended December 31, 2024 and 2025 was $0.28 and $0.35 per share, respectively.
As of December 31, 2025, there was $5.4 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.8 years.
RSAs
In April 2023, the Company entered into restricted stock agreements with its management and employees, outside of the 2023 Plan, to grant 9,300,000 shares of restricted stock awards at a purchase price of $0.0001 per share, with an estimated grant date fair value of $0.29 per share.
The restricted stock awards vest over a four-year period starting on the grant date and have a one-year cliff vesting period. In the event the employees’ services are terminated, the Company reserves the right to repurchase unvested shares at the original purchase price, adjusted for any stock dividends, stock splits, reverse stock splits, or recapitalizations of the Company’s common stock occurring after the effective date of the applicable restricted stock agreement.
The restricted stock awards were accounted for as a compensatory arrangement under ASC Topic 718, Compensation-Stock Compensation. Shares purchased pursuant to these restricted stock awards participate in dividends and voting, are legally outstanding, and are presented as outstanding shares.
The stock-based compensation expense related to the restricted stock awards was $0.7 million for the year ended December 31, 2024, of which $0.2 million was recorded in research and development and $0.5 million in general and administrative expenses on the consolidated statements of operations and comprehensive loss. The stock-based compensation expense related to the restricted stock awards was $0.7 million for the year ended December 31, 2025, of which $0.2 million was recorded in research and development and $0.5 million in general and administrative expenses on the consolidated statements of operations and comprehensive loss. Fair value of shares vested during the years ended December 31, 2024 and 2025 was $1.1 million and $0.7 million, respectively.
Activity with respect to restricted stock awards was as follows:
| Restricted Stock Awards |
Weighted- Average Grant Date Fair Value |
|||||||
| Unvested at December 31, 2023 |
9,300,000 | $ | 0.29 | |||||
| Vested |
(3,875,000 | ) | $ | 0.29 | ||||
|
|
|
|
|
|||||
| Unvested at December 31, 2024 |
5,425,000 | $ | 0.29 | |||||
| Vested |
(2,325,000 | ) | $ | 0.29 | ||||
|
|
|
|
|
|||||
| Unvested at December 31, 2025 |
3,100,000 | $ | 0.29 | |||||
|
|
|
|
|
|||||
As of December 31, 2025, there was $0.9 million of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 1.3 years. No restricted stock awards were repurchased or cancelled during the years ended December 31, 2024 and 2025.
F-30
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Stock-Based Compensation Expense
The following table presents the classification of stock-based compensation expense related to awards granted to employees and non-employees (in thousands):
| Year Ended December 31, |
||||||||
| 2024 | 2025 | |||||||
| Research and development |
$ | 468 | $ | 798 | ||||
| General and administrative |
920 | 1,590 | ||||||
|
|
|
|
|
|||||
| Total stock-based compensation expense |
$ | 1,388 | $ | 2,388 | ||||
|
|
|
|
|
|||||
The Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of stock options granted was estimated using the following weighted-average assumptions:
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Expected volatility |
70.22% - 71.43% | 68.44% - 71.43% | ||||||
| Expected dividend yield |
0% | 0% | ||||||
| Expected term (in years) |
5.89 - 6.08 | 5.86 - 6.08 | ||||||
| Risk-free interest rate |
3.86% - 4.47% | 3.80% - 4.16% | ||||||
| Fair value of common stock |
$0.31 - $0.38 | $0.38 - $0.53 | ||||||
The assumptions are as follows:
| • | Expected volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. |
| • | Expected dividend yield. The expected dividend is assumed to be zero as dividends have never been paid and there are no current plans to pay dividends on common stock shares. |
| • | Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding and is based on the options’ vesting terms and contractual terms as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. |
| • | Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield with a maturity equal to the expected term of the option in effect at the time of grant. |
| • | Fair value of common stock. The fair value of the Company’s common stock is determined by its board of directors with input from management and third-party valuation specialists. The Company’s approach to estimate the fair value of the Company’s common stock is consistent with the methods outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Determining the best estimated fair value of the Company’s common stock requires significant judgment and management considers several factors, including the Company’s stage of development, equity market conditions affecting comparable public companies, significant milestones and progress of research and development efforts. |
F-31
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Based on the Company’s early stage of development and other relevant factors, the Company determined that an Option Pricing Method (“OPM”), primarily the OPM backsolve methodology, was the most appropriate method for allocating the enterprise value to determine the estimated fair value of its common stock for valuations performed from the Company’s inception through the end of 2024. Within the OPM framework, the backsolve method is used to infer the total equity value implied by a recent financing transaction or by an estimated equity value of the Company’s pipeline product candidates. The backsolve method involves the construction of an allocation model that takes into account the Company’s capital structure and the rights, preferences and privileges of each class of stock, and also assumes reasonable inputs for the other OPM variables, including expected time to liquidity, volatility, and risk-free rate. The total equity value is then iterated in the model until the model output value for the equity class sold in a recent financing round equals the price paid in that round. The OPM is generally utilized when specific future liquidity events are difficult to forecast (i.e., the enterprise has many choices and options available), and the enterprise’s value depends on how well it follows an uncharted path through the various possible opportunities and challenges. In determining the estimated fair value of the common stock, the Company’s board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, the Company applied discounts to reflect the lack of marketability of its common stock based on the weighted-average expected time to liquidity. The estimated fair value of the common stock at each grant date reflected a non-marketability discount partially based on the anticipated likelihood and timing of a future liquidity event.
For valuations beginning in March 2025, the Company began using a hybrid method that combines the Probability-Weighted Expected Return Method (“PWERM”), an accepted valuation method described in the Practice Aid and the OPM. The PWERM contemplated a scenario in which the Company remained private with an uncertain future exit and scenario(s) in which the Company exited via initial public offering (“IPO”). For the scenario in which the Company remained private, the Company utilized the OPM as discussed above. For the scenario(s) in which the Company exited via IPO, the Company utilized an analysis based on observed step-up multiples achieved at IPO for comparable public issuers in which the Company applied a step-up multiple believed to be achievable at IPO to the post-money valuation achieved by the Company in its most recent (or expected future cross-over) financing round. The resulting total equity value for the Company estimated for a scenario(s) in which the Company exited via IPO was then allocated to the Company’s share classes using a waterfall allocation analysis that treats all preferred securities as immediately converting to common stock at the time of an IPO event. In determining the estimated fair value of the common stock, the Company’s board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, the Company applied discounts to reflect the lack of marketability of its common stock based on the weighted-average expected time to liquidity in each of the contemplated exit scenarios. The estimated fair value of the common stock at each grant date reflected a non-marketability discount partially based on the anticipated likelihood and timing of a future liquidity event.
F-32
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 11. | Income Taxes |
Net loss before provision for income taxes was distributed geographically for the years ended December 31, 2024 and 2025 as follows (in thousands):
| Year Ended December 31, |
||||||||
| 2024 | 2025 | |||||||
| Domestic |
$ | (39,801 | ) | $ | (60,634 | ) | ||
| Foreign |
— | 7 | ||||||
|
|
|
|
|
|||||
| Total |
$ | (39,801 | ) | $ | (60,627 | ) | ||
|
|
|
|
|
|||||
There were no federal, state and local, or foreign provisions for income taxes recorded for the years ended December 31, 2024 and 2025, as the Company operated with taxable losses.
The income tax expense was zero for the year ended December 31, 2024. A reconciliation of the U.S. federal statutory income tax rate for the year ended December 31, 2024, presented under the disclosure requirements in effect prior to the adoption of ASU 2023-09, is as follows (in thousands):
| Year Ended December 31, 2024 |
||||
| Federal tax at statutory rate |
$ | (8,358) | ||
| State tax, net of federal benefit |
1 | |||
| Stock-based compensation expense |
291 | |||
| Credits |
(506 | ) | ||
| Other |
375 | |||
| Change in valuation allowance |
8,197 | |||
|
|
|
|||
| Income tax provision |
$ | — | ||
|
|
|
|||
Beginning with the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. See Note 2. Summary of Significant Accounting Policies – Recently Adopted Accounting Pronouncements section for additional details.
A reconciliation of U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025 is as follows (in thousands):
| Year Ended December 31, 2025 |
||||||||
| $ | % | |||||||
| Net loss before income taxes |
$ | (60,627 | ) | |||||
| U.S. federal statutory tax rate |
(12,732 | ) | 21.0 | % | ||||
| Research and development tax credits |
(655 | ) | 1.1 | % | ||||
| Changes in valuation allowance |
13,593 | -22.5 | % | |||||
| Change in unrecognized tax benefits |
(495 | ) | 0.8 | % | ||||
| Other |
289 | -0.4 | % | |||||
|
|
|
|
|
|||||
| Effective tax rate |
$ | — | 0.0 | % | ||||
|
|
|
|
|
|||||
F-33
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities as of December 31, 2024 and 2025 were as follows (in thousands):
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Deferred tax assets: |
||||||||
| Net operating loss carryforwards |
$ | 34 | $ | 4,746 | ||||
| Tax credits |
894 | 1,910 | ||||||
| Accrual and reserves |
433 | 827 | ||||||
| Research and development |
6,774 | 10,233 | ||||||
| Intangible assets |
1,927 | 5,725 | ||||||
| Depreciation and amortization |
18 | — | ||||||
| Lease liability |
— | 1,105 | ||||||
|
|
|
|
|
|||||
| Total deferred tax assets |
10,080 | 24,546 | ||||||
| Deferred tax liabilities: |
||||||||
| Depreciation and amortization |
— | (91 | ) | |||||
| Operating lease right-of-use assets |
— | (919 | ) | |||||
|
|
|
|
|
|||||
| Total deferred tax liabilities |
— | (1,010 | ) | |||||
| Valuation allowance |
(10,080 | ) | (23,536 | ) | ||||
|
|
|
|
|
|||||
| Net deferred tax assets |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
The following table represents the Company’s valuation allowance balance as of December 31, 2024 and 2025 (in thousands):
| Year Ended December 31, |
||||||||
| 2024 | 2025 | |||||||
| Beginning balance |
$ | 1,647 | $ | 10,080 | ||||
| Additions |
8,433 | 13,456 | ||||||
| Write-offs or deductions |
— | — | ||||||
|
|
|
|
|
|||||
| Ending balance |
$ | 10,080 | $ | 23,536 | ||||
|
|
|
|
|
|||||
A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. The Company believes that, based on a number of factors such as the history of operating losses, it is more likely than not that the deferred tax assets will not be fully realized, such that a full valuation allowance has been recorded. The valuation allowance was $23.5 million for the year ended December 31, 2025, primarily due to capitalized foreign research and development expenditures, intangible assets, and net operating loss carryforwards.
F-34
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The following table represents the Company’s U.S. federal and state net operating loss carryforwards and tax credits as of December 31, 2025 (in thousands):
| Amount | Begin to expire | |||||||
| Net operating losses, U.S. Federal |
$ | 24,151 | Do not expire | |||||
| Net operating losses, U.S. States |
$ | 15 | 2044 | |||||
| Tax credits, U.S. Federal |
$ | 1,193 | 2044 | |||||
| Tax credits, U.S. States |
$ | 1,335 | Do not expire | |||||
Utilization of some of the federal and state net operating loss and credit carryforwards may be subject to annual limitations due to the change in ownership provisions of the Internal Revenue Code of 1986, as amended (“I.R.C.”), and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. As of December 31, 2025, the Company has not yet performed an I.R.C. Section 382 study to determine whether it has experienced a change in ownership. As the Company has recorded a full valuation allowance, any potential limitation is not expected to have a material impact to the consolidated financial statements. On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBBA”) which extended or modified certain corporate tax provisions under the 2017 Tax Cuts and Jobs Act (“TCJA”). The OBBBA modified certain business deductions, including allowing for immediate expensing of U.S. research & development (“R&D”) expenditures, effective for the year ended December 31, 2025. The OBBBA also modified various international tax provisions which were set to change or expire after 2025 under the TCJA. The enactment of the OBBBA did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025.
The amounts of cash income taxes paid by the Company for the years ended December 31, 2024 and 2025 were immaterial.
Uncertain Tax Positions
A reconciliation of the beginning and ending balances of the unrecognized tax benefits for the years ended December 31, 2024 and 2025 was as follows (in thousands):
| Year Ended December 31, |
||||||||
| 2024 | 2025 | |||||||
| Beginning balance |
$ | 57 | $ | 639 | ||||
| Increase in tax positions in the current year |
582 | 575 | ||||||
| Decreases related to prior year’s tax position |
— | (495 | ) | |||||
|
|
|
|
|
|||||
| Ending balance |
$ | 639 | $ | 719 | ||||
|
|
|
|
|
|||||
The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized due to its full valuation allowance. For the year ended December 31, 2025, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits.
As of December 31, 2025, the Company was not under audit by the Internal Revenue Service or any state authority for income taxes for any open years. The Company’s domestic income tax returns are open to examination by the Internal Revenue Service and by state taxing authorities beginning with tax year 2023.
F-35
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
| 12. | Related Party Transactions |
Alamar License Agreement
In June 2023, the Company issued 22,562,123 shares of its common stock to Alamar, an existing holder of the Company’s common stock, in exchange for the in-process research and development asset acquired under the Alamar License Agreement (see Note 5). Alamar owned 7,437,877 shares of the Company’s common stock prior to this transaction, which was received by Alamar upon the Company’s incorporation in December 2022.
Alamar Lease Agreement
In June 2023, the Company entered into a lease agreement with Alamar, which was amended four times between October 2023 and October 2024, to lease approximately 10,422 square feet of office and laboratory spaces in Fremont, California.
Other Services Agreements
In June 2023, the Company entered into a Services Agreement (the “Services Agreement”) with Alamar, under which Alamar will provide initial clerical, executive, and administrative services. In February 2024, the Company entered into a research services agreement (together with the Services Agreement, the “Services Agreements”) for Alamar to provide certain research diagnostic services. Under both Services Agreements, the Company paid $0.2 million and $0.2 million to Alamar during the years ended December 31, 2024 and 2025, and had a prepaid balance of less than $0.1 million as of December 31, 2024. There was no prepaid balance related to the Services Agreement as of December 31, 2025.
| 13. | Net Loss Per Share |
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| Numerator: |
||||||||
| Net loss |
$ | (39,801) | $ | (60,627) | ||||
| Accretion of redeemable convertible preferred stock to its redemption value |
(5,245 | ) | (271 | ) | ||||
|
|
|
|
|
|||||
| Net loss attributable to common stockholders |
(45,046 | ) | (60,898 | ) | ||||
| Denominator: |
||||||||
| Weighted-average common shares outstanding |
40,383,709 | 41,544,720 | ||||||
| Less: Weighted average common shares subject to repurchase |
(7,577,108 | ) | (4,854,379 | ) | ||||
|
|
|
|
|
|||||
| Weighted-average shares used in computing basic and diluted net loss per share |
32,806,601 | 36,690,341 | ||||||
|
|
|
|
|
|||||
| Net loss per share attributable to common stockholders, basic and diluted |
$ | (1.37) | $ | (1.66) | ||||
|
|
|
|
|
|||||
F-36
Attovia Therapeutics, Inc.
Notes to Consolidated Financial Statements
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:
| December 31, | ||||||||
| 2024 | 2025 | |||||||
| Redeemable convertible preferred stock |
96,265,908 | 199,902,270 | ||||||
| Options to purchase common stock |
15,953,750 | 24,553,563 | ||||||
| Unvested restricted stock awards |
5,425,000 | 3,100,000 | ||||||
| Unvested early exercised common stock options |
637,667 | 414,000 | ||||||
|
|
|
|
|
|||||
| Total |
118,282,325 | 227,969,833 | ||||||
|
|
|
|
|
|||||
| 14. | Employee Benefit Plans |
The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. The Company’s contributions to the 401(k) Plan were $0.1 million and $0.2 million for the years ended December 31, 2024 and 2025, respectively.
| 15. | Segment Reporting |
The CODM uses net loss to measure segment loss and assesses performance against expectations to make resource allocation decisions. In making this assessment, the CODM reviews and evaluates net loss to monitor budget versus actual results and to analyze cash flows for purposes of allocating resources and assessing financial performance. Additionally, the CODM reviews and uses significant expense categories included within net loss as well as the disaggregated amounts within research and development expenses and general and administrative expenses indicated in the table below to manage the Company’s operations. The measure of segment assets is reported on the consolidated balance sheets as total assets.
In addition to the significant expense categories included within net loss presented on the Company’s consolidated statements of operations and comprehensive loss, the following table provides disaggregated amounts that comprised research and development expenses (in thousands):
| Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| External costs |
||||||||
| Clinical, manufacturing, and preclinical services |
$ | 21,375 | $ | 37,106 | ||||
| Professional consulting services |
1,834 | 2,417 | ||||||
| Consumables and other research and development costs |
3,132 | 3,122 | ||||||
| Internal costs |
||||||||
| Personnel-related costs |
6,993 | 10,686 | ||||||
| Facilities and overhead costs |
530 | 822 | ||||||
|
|
|
|
|
|||||
| Total research and development expenses |
$ | 33,864 | $ | 54,153 | ||||
|
|
|
|
|
|||||
| 16. | Subsequent Events |
The Company evaluated subsequent events from December 31, 2025 to June 5, 2026, the day on which these consolidated financial statements were available to be issued. No subsequent events have been identified for disclosure to or adjustment on the consolidated financial statements.
F-37
Attovia Therapeutics, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share amounts)
| December 31, 2025 | March 31, 2026 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 40,193 | $ | 43,297 | ||||
| Marketable securities |
112,075 | 89,325 | ||||||
| Prepaid expenses and other current assets |
4,027 | 4,020 | ||||||
|
|
|
|
|
|||||
| Total current assets |
156,295 | 136,642 | ||||||
| Restricted cash |
404 | 404 | ||||||
| Property and equipment, net |
3,492 | 3,510 | ||||||
| Operating lease right-of-use asset, net |
4,373 | 3,980 | ||||||
| Other non-current assets |
1,329 | 1,550 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 165,893 | $ | 146,086 | ||||
|
|
|
|
|
|||||
| Liabilities, redeemable convertible preferred stock, and stockholders’ deficit |
||||||||
| Current liabilities: |
||||||||
| Accounts payable (including related party amounts of $39 and $33 at December 31, 2025 and March 31, 2026, respectively) |
$ | 3,551 | $ | 2,561 | ||||
| Accrued expenses and other current liabilities |
5,535 | 5,260 | ||||||
| Operating lease liability, current portion |
1,921 | 1,978 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
11,007 | 9,799 | ||||||
| Operating lease liability, net of current portion |
3,341 | 2,826 | ||||||
| Other non-current liabilities |
755 | 750 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
15,103 | 13,375 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies (Note 6) |
||||||||
| Redeemable convertible preferred stock - $0.0001 par value; 199,902,270 shares authorized, issued and outstanding at December 31, 2025 and March 31, 2026; aggregate liquidation preference of $255,850 at December 31, 2025 and March 31, 2026 |
258,226 | 258,226 | ||||||
| Stockholders’ deficit: |
||||||||
| Common stock - $0.0001 par value; 284,023,000 shares authorized at December 31, 2025 and March 31, 2026; 41,871,320 and 41,907,870 shares issued and outstanding at December 31, 2025 and March 31, 2026, respectively |
4 | 4 | ||||||
| Additional paid-in capital |
3,471 | 4,174 | ||||||
| Accumulated other comprehensive income (loss) |
99 | (27 | ) | |||||
| Accumulated deficit |
(111,010 | ) | (129,666 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ deficit |
(107,436 | ) | (125,515 | ) | ||||
|
|
|
|
|
|||||
| Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit |
$ | 165,893 | $ | 146,086 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-38
Attovia Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(in thousands, except share and per share amounts)
| Three Months Ended March 31, | ||||||||
| 2025 | 2026 | |||||||
| Operating expenses |
||||||||
| Research and development (including related party amounts of $7 and $60 for the three months ended March 31, 2025 and 2026, respectively) |
$ | 11,856 | $ | 16,746 | ||||
| General and administrative (including related party amounts of $239 and $0 for the three months ended March 31, 2025 and 2026, respectively) |
4,248 | 3,209 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
16,104 | 19,955 | ||||||
|
|
|
|
|
|||||
| Loss from operations |
(16,104 | ) | (19,955 | ) | ||||
|
|
|
|
|
|||||
| Other income (expense) |
||||||||
| Interest income |
1,126 | 1,326 | ||||||
| Change in fair value of preferred stock tranche liability |
(170 | ) | — | |||||
| Other income (expense), net |
(3 | ) | (27 | ) | ||||
|
|
|
|
|
|||||
| Total other income (expense), net |
953 | 1,299 | ||||||
|
|
|
|
|
|||||
| Net loss |
$ | (15,151 | ) | $ | (18,656 | ) | ||
|
|
|
|
|
|||||
| Less: Accretion of redeemable convertible preferred stock to its redemption value |
(271 | ) | — | |||||
|
|
|
|
|
|||||
| Net loss attributable to common stockholders |
$ | (15,422 | ) | $ | (18,656 | ) | ||
|
|
|
|
|
|||||
| Net loss per share attributable to common stockholders, basic and diluted |
$ | (0.44 | ) | $ | (0.48 | ) | ||
|
|
|
|
|
|||||
| Weighted-average common shares outstanding, basic and diluted |
35,364,476 | 38,583,067 | ||||||
|
|
|
|
|
|||||
| Other comprehensive income |
||||||||
| Unrealized loss on available-for-sale marketable securities, net |
(24 | ) | (126 | ) | ||||
|
|
|
|
|
|||||
| Net loss and other comprehensive loss |
$ | (15,175 | ) | $ | (18,782 | ) | ||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-39
Attovia Therapeutics, Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit
(unaudited)
(in thousands, except share and per share amounts)
| Redeemable Convertible Preferred Stock |
Common Stock | Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
96,265,908 | $ | 108,953 | 41,117,250 | $ | 4 | $ | 3,487 | $ | (50,383 | ) | $ | 67 | $ | (46,825 | ) | ||||||||||||||||||
| Issuance of Series B redeemable convertible preferred stock and settlement of preferred stock tranche liability of $6,808, net of issuance costs of $35 |
38,181,818 | 59,273 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of Series C redeemable convertible preferred stock, net of issuance cost of $271 |
65,454,544 | 89,729 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Accretion of Series C redeemable convertible preferred stock to its redemption value |
— | 271 | — | — | (271 | ) | — | — | (271 | ) | ||||||||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | 462 | — | — | 462 | ||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options |
— | — | 221,040 | — | 45 | — | — | 45 | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities, net |
— | — | — | — | — | — | (24 | ) | (24 | ) | ||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (15,151 | ) | — | (15,151 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at March 31, 2025 |
199,902,270 | $ | 258,226 | 41,338,290 | $ | 4 | $ | 3,723 | $ | (65,534 | ) | $ | 43 | $ | (61,764 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
| Balance at December 31, 2025 |
199,902,270 | $ | 258,226 | 41,871,320 | $ | 4 | $ | 3,471 | $ | (111,010 | ) | $ | 99 | $ | (107,436 | ) | ||||||||||||||||||
| Stock-based compensation expense |
— | — | — | — | 686 | — | — | 686 | ||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options |
— | — | 36,550 | — | 11 | — | — | 11 | ||||||||||||||||||||||||||
| Vesting of early exercised stock options |
— | — | — | — | 6 | — | — | 6 | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities, net |
— | — | — | — | — | — | (126 | ) | (126 | ) | ||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (18,656 | ) | — | (18,656 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at March 31, 2026 |
199,902,270 | $ | 258,226 | 41,907,870 | $ | 4 | $ | 4,174 | $ | (129,666 | ) | $ | (27 | ) | $ | (125,515 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-40
Attovia Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2025 | 2026 | |||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | (15,151 | ) | $ | (18,656 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
| Stock-based compensation expense |
462 | 686 | ||||||
| Depreciation expense |
143 | 242 | ||||||
| Net accretion of discounts on marketable securities |
(406 | ) | (265 | ) | ||||
| Non-cash lease expense |
253 | 393 | ||||||
| Change in fair value of preferred stock tranche liability |
170 | — | ||||||
| Loss on disposal of property and equipment |
6 | — | ||||||
| Write-off of deferred offering costs |
364 | — | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Prepaid expenses and other current assets |
1,249 | 122 | ||||||
| Accounts payable |
186 | (113 | ) | |||||
| Accrued and other current liabilities |
(1,209 | ) | (103 | ) | ||||
| Operating lease liability |
(12 | ) | (458 | ) | ||||
| Other non-current assets |
(186 | ) | 11 | |||||
|
|
|
|
|
|||||
| Net cash used in operating activities |
(14,131 | ) | (18,141 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from investing activities |
||||||||
| Maturities of marketable securities |
18,000 | 43,000 | ||||||
| Purchases of marketable securities |
(45,502 | ) | (20,226 | ) | ||||
| Purchases of property and equipment |
(1,792 | ) | (288 | ) | ||||
|
|
|
|
|
|||||
| Net cash (used in) provided by investing activities |
(29,294 | ) | 22,486 | |||||
|
|
|
|
|
|||||
| Cash flows from financing activities |
||||||||
| Proceeds from issuance of common stock upon exercise of stock options |
45 | 11 | ||||||
| Payments of deferred offering costs |
(345 | ) | (1,252 | ) | ||||
| Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs |
52,465 | — | ||||||
| Proceeds from issuance of Series C redeemable convertible preferred stock, net of issuance costs |
89,729 | — | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
141,894 | (1,241 | ) | |||||
|
|
|
|
|
|||||
| Net change in cash, cash equivalents and restricted cash |
98,469 | 3,104 | ||||||
| Cash, cash equivalents and restricted cash at the beginning of the period |
31,239 | 40,597 | ||||||
|
|
|
|
|
|||||
| Cash, cash equivalents and restricted cash at the end of the period |
$ | 129,708 | $ | 43,701 | ||||
|
|
|
|
|
|||||
| Supplemental disclosures of noncash investing and financing activities |
||||||||
| Deferred offering costs in accounts payable and accrued and other current liabilities |
$ | 30 | $ | 209 | ||||
|
|
|
|
|
|||||
| Property and equipment purchases in accounts payable |
$ | 23 | $ | — | ||||
|
|
|
|
|
|||||
| Accretion of redeemable convertible preferred stock to its redemption value |
$ | 271 | $ | — | ||||
|
|
|
|
|
|||||
| Right-of-use asset obtained in exchange for operating lease liability |
$ | 5,771 | $ | — | ||||
|
|
|
|
|
|||||
| Settlement of preferred stock tranche liability upon issuance of Series B redeemable convertible preferred stock |
$ | 6,808 | $ | — | ||||
|
|
|
|
|
|||||
| Vesting of early exercised stock options |
$ | — | $ | 6 | ||||
|
|
|
|
|
|||||
| Reconciliation of cash, cash equivalents and restricted cash |
||||||||
| Cash and cash equivalents |
$ | 129,101 | $ | 43,297 | ||||
| Restricted cash |
607 | 404 | ||||||
|
|
|
|
|
|||||
| Total cash, cash equivalents and restricted cash |
$ | 129,708 | $ | 43,701 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-41
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| 1. | Organization and Nature of the Business |
Attovia Therapeutics, Inc. (the “Company”) is a clinical stage biotechnology company headquartered in San Carlos, California and focused on research and development of therapeutic products in the fields of immune-mediated diseases. The Company was incorporated in the State of Delaware on December 16, 2022 and subsequently commenced principal operations in June 2023.
As of March 31, 2026, the Company had two wholly owned subsidiaries, Attovia Therapeutics Cayman Co., Ltd., an exempted company incorporated in the Cayman Islands with limited liability in July 2025, and Attovia Therapeutics (Shanghai) Co., Ltd., a limited liability company incorporated in the People’s Republic of China in October 2025.
Liquidity
The Company has incurred significant net operating losses and negative cash flows from operations since inception and had an accumulated deficit of $129.7 million as of March 31, 2026. The Company has historically financed its operations primarily through the private placements of equity securities. To date, the Company has no product candidates approved for sale and therefore the Company has not generated any revenue from product sales. Management expects operating losses and negative cash flows to continue for the foreseeable future, until such time that it can generate significant sales of its product candidates currently in development or through collaboration or other agreements. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed under Risks and Uncertainties in Note 2. While the Company has been able to raise financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.
As of March 31, 2026, the Company had cash, cash equivalents and marketable securities of $132.6 million, which management believes will be sufficient to fund the Company’s planned operations for at least 12 months from the date these condensed consolidated financial statements are available to be issued.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
The condensed consolidated financial statements and related disclosures are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting.
The Company’s unaudited condensed consolidated financial statements include the accounts of its subsidiaries, and all intercompany transactions were eliminated upon consolidation. Prior to July 2025, the Company had no subsidiaries.
Unaudited Interim Financial Information
The condensed consolidated balance sheet as of December 31, 2025 was derived from the Company’s audited consolidated financial statements but does not contain all of the footnote disclosures from the consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2025 and 2026, have been
F-42
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
prepared by the Company, pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of March 31, 2026 and condensed consolidated results of operations, condensed consolidated statements of redeemable convertible preferred stock and stockholders’ deficit and condensed consolidated cash flows for the three months ended March 31, 2025 and 2026 have been made. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.
Other than policies noted below, there have been no changes from the significant accounting policies and estimates disclosed in Note 2 in the Company’s audited consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Such estimates include the fair value of marketable securities, the fair values of preferred stock tranche liabilities, the fair value of common stock, valuation of deferred tax assets, incremental borrowing rate for leases, accruals for research and development activities and stock-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and regularly utilized by the Chief Operating Decision Maker (“CODM”) to assess the Company’s performance for capital and resource allocation decisions. The Company’s CODM is its Chief Executive Officer, who reviews such financial information on an aggregate company-level basis (see Note 14). The Company has determined it operates as a single operating segment and has one reportable segment, which is the research and development of therapeutic products in the fields of immune-mediated diseases. Revenue is generated exclusively from transactions with a party located in the United States. All long-lived assets are maintained in the United States of America.
Concentration of Credit Risk and of Significant Suppliers
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and restricted cash. The Company is exposed to credit risk from its deposits of cash and cash equivalents in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses on its deposits of cash and cash equivalents in 2025 and 2026.
The Company invests in money market funds, U.S. Treasury bills and notes, and other short-term fixed income securities which can be subject to certain credit risks. The Company mitigates these risks by
F-43
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
investing in high-grade instruments, limiting its exposure to any one issuer and monitoring the ongoing creditworthiness of the financial institutions and issuers. The Company has not experienced any losses on its financial instruments.
The Company is dependent on third-party manufacturers to supply materials for research and development activities for the Company’s pipeline products, including preclinical and clinical studies and testing, and manufacturing activities. In particular, the Company relies on a small number of manufacturers for the supply of drug substance and drug product materials for its clinical assets. The Company’s preclinical and clinical studies and testing and manufacturing activities could be adversely affected by a significant interruption in the supply of materials from its suppliers.
Risks and Uncertainties
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance and reporting.
The Company’s product candidates are still in either preclinical or clinical development and, to date, none of the Company’s product candidates have been approved for sale and, therefore, the Company has not generated any revenue from product sales.
There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) under its Accounting Standards Codification (“ASC”) or other standard setting bodies and adopted by the Company as of the specified effective date, unless otherwise discussed below. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) and adopts new or revised accounting standards on the dates applicable to nonpublic entities unless early adopted.
Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220), requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments are
F-44
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual periods beginning after December 15, 2027. The requirements of ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2024-03 on its condensed consolidated financial statements and disclosures.
| 3. | Fair Value Measurements |
The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy which establishes three levels of inputs that may be used to measure fair value, as follows:
Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
The Company recognizes transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs.
Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable.
The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy (in thousands):
| December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
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| Cash and cash equivalents |
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| Money market funds |
$ | 35,526 | $ | — | $ | — | $ | 35,526 | ||||||||
| U.S. Treasury bills |
— | 2,485 | — | 2,485 | ||||||||||||
| Marketable securities |
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| U.S. Treasury notes |
82,397 | — | — | 82,397 | ||||||||||||
| U.S. Treasury bills |
14,736 | 14,942 | — | 29,678 | ||||||||||||
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| Total financial assets |
$ | 132,659 | $ | 17,427 | $ | — | $ | 150,086 | ||||||||
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F-45
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| March 31, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
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| Cash and cash equivalents |
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| Money market funds |
$ | 42,447 | $ | — | $ | — | $ | 42,447 | ||||||||
| Marketable securities |
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| U.S. Treasury notes |
74,467 | — | — | 74,467 | ||||||||||||
| U.S. Treasury bills |
— | 14,858 | — | 14,858 | ||||||||||||
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| Total financial assets |
$ | 116,914 | $ | 14,858 | $ | — | $ | 131,772 | ||||||||
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The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis (in thousands):
| Preferred Stock Tranche Liability |
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| Fair value as of December 31, 2024 |
$ | 6,638 | ||
| Change in the fair value of Series B preferred stock tranche liability |
170 | |||
| Fair value upon settlement |
(6,808 | ) | ||
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| Fair value as of March 31, 2025 |
$ | — | ||
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The fair value of the preferred stock tranche liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy (see Note 8).
There were no transfers in and out of Level 3 during the three months ended March 31, 2025 and 2026.
| 4. | Balance Sheet Components |
Marketable Securities
Marketable securities, which are classified as available-for-sale, consisted of the following as of December 31, 2025 and March 31, 2026 (in thousands):
| December 31, 2025 | ||||||||||||||||
| Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Estimated Fair Value |
|||||||||||||
| U.S. Treasury notes |
$ | 82,309 | $ | 89 | $ | (1 | ) | $ | 82,397 | |||||||
| U.S. Treasury bills |
29,667 | 11 | — | 29,678 | ||||||||||||
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| Available-for-sale marketable securities |
$ | 111,976 | $ | 100 | $ | (1 | ) | $ | 112,075 | |||||||
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| March 31, 2026 | ||||||||||||||||
| Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Estimated Fair Value |
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| U.S. Treasury notes |
$ | 74,496 | $ | 12 | $ | (41 | ) | $ | 74,467 | |||||||
| U.S. Treasury bills |
14,859 | — | (1 | ) | 14,858 | |||||||||||
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| Available-for-sale marketable securities |
$ | 89,355 | $ | 12 | $ | (42 | ) | $ | 89,325 | |||||||
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All marketable securities held as of December 31, 2025 and March 31, 2026 had contractual maturities of less than one year.
F-46
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of December 31, 2025 and March 31, 2026, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the marketable securities, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. The Company considered the current and expected future economic and market conditions and determined that its investments were not significantly impacted. For all securities with a fair value less than their amortized cost basis, the Company determined the decline in fair value below amortized cost basis to be immaterial and non-credit related, and therefore no allowance for losses has been recorded. For the three months ended March 31, 2025 and 2026, the Company did not recognize any impairment losses on its investments.
As of December 31, 2025 and March 31, 2026, accrued interest receivable was $0.9 million and $0.7 million, respectively, which were recorded in the prepaid expenses and other current assets on the condensed consolidated balance sheets.
Property and Equipment, Net
Property and equipment, net consists of the following (in thousands, except years):
| Estimated Useful Life (in years) |
December 31, 2025 | March 31, 2026 | ||||||||||
| Laboratory equipment |
5 | $ | 3,907 | $ | 4,195 | |||||||
| Computer equipment and software |
3 | 245 | 245 | |||||||||
| Furniture and fixtures |
7 | 273 | 273 | |||||||||
| Leasehold improvements |
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Lesser of estimated useful lives of 15 years or remaining lease term |
|
136 | 136 | |||||||
| Construction in progress |
28 | — | ||||||||||
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| 4,589 | 4,849 | |||||||||||
| Less: Accumulated depreciation |
(1,097 | ) | (1,339 | ) | ||||||||
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| Property and equipment, net |
$ | 3,492 | $ | 3,510 | ||||||||
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Depreciation and amortization expense for the three months ended March 31, 2025 and 2026 was $0.1 million and $0.2 million, respectively.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| December 31, 2025 |
March 31, 2026 |
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| Accrued compensation |
$ | 3,103 | $ | 1,292 | ||||
| Accrued research and development expenses |
1,069 | 2,710 | ||||||
| Accrued professional fees |
556 | 502 | ||||||
| Contract liability |
450 | 450 | ||||||
| Other accrued expenses and current liabilities |
357 | 306 | ||||||
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| Total accrued expenses and other current liabilities |
$ | 5,535 | $ | 5,260 | ||||
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F-47
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| 5. | License Agreements |
Alamar License Agreement
On June 1, 2023, the Company and Alamar Biosciences, Inc. (“Alamar”) entered into a Platform License Development Agreement (the “Alamar Platform License Agreement”). Under the Alamar Platform License Agreement, Alamar granted the Company an exclusive, sublicensable license to use the antibody engineering platform (the “ATTOBODY Platform”) within certain specified therapeutic fields.
In connection with the Alamar Platform License Agreement, the Company issued 22,562,123 shares of its common stock to Alamar as consideration for the license. Alamar is further entitled to certain development and regulatory milestone payments for an aggregate of up to $0.8 million and $3.5 million respectively, on a product-by-product basis as well as royalties on net sales of the covered products ranging in the low-single digit percentage rates. Milestone payments are contingent consideration and are accrued when it becomes probable that the underlying milestone will be achieved. The Company recorded $0.3 million as research and development expenses on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2024, related to achievement of a development milestone for ATTO-1310. The Company recorded $0.3 million as research and development expenses on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2025, related to achievement of a development milestone for ATTO-3712. The remaining milestones were not probable to be achieved as of March 31, 2026. Royalties will be recognized as cost of sales when the covered products are sold and royalties are payable.
EndPath License Agreement and Equity Distribution
In July 2025, the Company entered into a license agreement with EndPath RadioTherapeutics, Inc. (formerly Isotovia Biosciences, Inc.) (“EndPath”) pursuant to which the Company granted EndPath an exclusive, worldwide license to certain of the Company’s ATTOBODY platform technology for use in the development and commercialization of radioligand products (the “EndPath Agreement”). Under the EndPath Agreement, the Company is responsible for using its ATTOBODY platform technology to generate and develop initial Attobodies directed to two initial targets.
As consideration for the license and related research and development obligations, the Company received 24,000,000 shares of EndPath common stock, of which 6,000,000 shares are subject to repurchase if specified conditions are not met, including the first accepted investigational new drug filing for a lead product, or certain termination events. The Company is also eligible to receive additional consideration under the EndPath Agreement of up to $14.5 million in development and regulatory milestone payments, up to $170.0 million in sales milestone payments, and low single-digit royalties on worldwide annual net sales of licensed products.
The EndPath arrangement represents a contract with a customer within the scope of ASC 606, Revenue from Contracts with Customers. The Company identified separate performance obligations for each of the two initial target programs, each consisting of the applicable license rights and related research and development services, together with related supporting activities.
As of December 31, 2025 and March 31, 2026, the Company recorded the fair value of 6,000,000 shares subject to repurchase as an asset with a corresponding customer deposit liability of $0.6 million, which was included in other non-current liabilities on the Company’s condensed consolidated balance sheets. The customer deposit liability remains outstanding until the repurchase option lapses, is exercised or is otherwise resolved.
F-48
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of December 31, 2025 and March 31, 2026, the contract liability related to the EndPath Agreement was $0.4 million, which was included in accrued expenses and other current liabilities on the Company’s condensed consolidated balance sheets.
The EndPath common stock was recorded upon receipt at fair value as an equity investment. In September 2025, the Company distributed the EndPath common stock received as noncash consideration under the EndPath Agreement, with an aggregate carrying value of $2.4 million, to holders of the Company’s outstanding capital stock. Following the distribution, the Company no longer held any EndPath common stock. The distribution was accounted for as an in-kind dividend and reduced the Company’s equity investment in EndPath to zero. There was no gain or loss recognized as a result of the distribution.
On March 18, 2026, the Company entered into an amendment with EndPath related to the targets being developed. The amendment had no material impact on the condensed consolidated financial statements.
| 6. | Commitments and Contingencies |
Leases
The Company leases its office, laboratory and storage spaces in San Carlos, California under a non-cancelable operating lease with a lease term of 40 months.
As of March 31, 2026, the future minimum lease commitments under the operating lease were as follows (in thousands):
| Year Ended December 31, |
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| 2026 (remainder of the year) |
$ | 1,701 | ||
| 2027 |
2,333 | |||
| 2028 |
1,200 | |||
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| Total future minimum lease payments |
$ | 5,234 | ||
| Less: Imputed interest |
(430 | ) | ||
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| Present value of operating lease liabilities |
$ | 4,804 | ||
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Legal Contingencies
From time to time, the Company may become involved in legal proceedings arising from the ordinary course of business. The Company records a liability for such matters when it is probable that future losses will be incurred and that such losses can be reasonably estimated. Significant judgment by the Company is required to determine both probability and the estimated amount. Management is currently not aware of any legal matters that could have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Indemnification Agreements
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be
F-49
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ liability insurance.
| 7. | Redeemable Convertible Preferred Stock |
As of December 31, 2025 and March 31, 2026, redeemable convertible preferred stock consisted of the following (in thousands, except share and price data):
| December 31, 2025 and March 31, 2026 | ||||||||||||||||||||
| Shares Authorized |
Original Issue Price |
Shares Issued and Outstanding |
Carrying Value |
Liquidation Value |
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| Series A-1 |
30,425,000 | $ | 1.00 | 30,425,000 | $ | 26,046 | $ | 30,425 | ||||||||||||
| Series A-2 |
27,659,090 | $ | 1.10 | 27,659,090 | 30,407 | 30,425 | ||||||||||||||
| Series B |
76,363,636 | $ | 1.38 | 76,363,636 | 111,773 | 105,000 | ||||||||||||||
| Series C |
65,454,544 | $ | 1.38 | 65,454,544 | 90,000 | 90,000 | ||||||||||||||
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199,902,270 | 199,902,270 | $ | 258,226 | $ | 255,850 | ||||||||||||||
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In May 2024, the Company entered into the Series B redeemable convertible preferred stock purchase agreement (the “Series B Purchase Agreement”) with certain investors and issued 38,181,818 shares of Series B redeemable convertible preferred stock at $1.375 per share for total gross proceeds of $52.5 million. The Series B Purchase Agreement also provides for the issuance and sale to the same investors of an additional 38,181,818 shares of Series B redeemable convertible preferred stock (“Series B Second Tranche Shares”) on the same terms as the shares issued at the initial closing, upon achieving the first dosing milestone or if the achievement of such milestone conditions is waived in writing by the holders of at least 66% of the then-outstanding shares of Series B redeemable convertible preferred stock (the “Series B Requisite Holders”) and the Board of Directors of the Company, including a majority of the then seated Preferred Directors (the “Series B Milestone Closing”) on or before June 30, 2026, or, at the option of the investors, at any time before that date. The Series B redeemable convertible preferred stock was recorded at its fair value of $47.5 million, less issuance costs of $0.3 million.
In January 2025, upon the achievement of the Series B milestone, the remaining 38,181,818 shares of the Series B redeemable convertible preferred stock were issued at a price of $1.375 per share, which resulted in gross cash proceeds of $52.5 million. As a result of this issuance, the Series B preferred stock tranche liability of $6.8 million was settled and the Series B redeemable convertible preferred stock was recorded at its fair value of $59.3 million, less issuance costs of less than $0.1 million (see Note 8).
In March 2025, the Company issued 65,454,544 shares of its Series C redeemable convertible preferred stock at a purchase price of $1.375 per share for total gross proceeds of $90.0 million. The Series C redeemable convertible preferred stock was recorded at fair value based on proceeds received, less issuance costs of $0.3 million.
F-50
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The rights, preferences, privileges and restrictions granted to or imposed on the respective classes of the Company’s capital shares or the holders thereof are as follows:
Liquidation Preference
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary or a deemed liquidation event, including a merger, acquisition or sale of all or substantially all of the Company’s assets, (each a “Liquidation Event”), the holders of Series C and Series B redeemable convertible preferred stock shall be entitled to receive on a pari passu basis, prior and in preference to any distribution of any of the assets of the Company to the holders of Series A-1 redeemable convertible preferred stock, Series A-2 redeemable convertible preferred stock and common stock, an amount per share equal to the original issue price, plus any dividends declared but unpaid thereon.
After full payment to holders of the Series C and Series B redeemable convertible preferred stock, the holders of Series A-1 and A-2 redeemable convertible preferred stock shall be entitled to receive on a pari passu basis, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, an amount per share equal to the applicable original issue price, plus any dividends declared but unpaid thereon.
If the assets and funds are insufficient to permit the payment to holders of the redeemable convertible preferred stock of the full preferential amounts, then the entire assets and funds legally available for distribution to stockholders shall be distributed ratably among the holders of the respective series of redeemable convertible preferred stock in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
Upon completion of the distributions of the full amounts required above, all of the remaining assets of the Company available for distribution shall be distributed among the holders of redeemable convertible preferred stock and common stock pro rata on an as-converted basis, provided, however, that if the aggregate amount the holders of redeemable convertible preferred stock are entitled to receive shall exceed two and one-half times the applicable original issue price per share of the redeemable convertible preferred stock, as adjusted, plus any dividends declared but unpaid thereon (the “Participation Cap”), each holder of the redeemable convertible preferred stock shall only be entitled to receive the greater of (a) the Participation Cap and (b) the amount such holder would have received if all shares of such series of redeemable convertible preferred stock had been converted into common stock immediately prior to such Liquidation Event.
Conversion
Each share of redeemable convertible preferred stock is convertible, at the option of the holder thereof, at any time, into such number of fully paid and nonassessable shares of common stock as is determined by dividing the applicable original issue price by the conversion price of $1.00 for shares of Series A-1 redeemable convertible preferred stock, $1.10 for Series A-2 redeemable convertible preferred stock and $1.375 for shares of Series B and Series C redeemable convertible preferred stock, as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like, as well as any down-round anti-dilution adjustments.
Each share of redeemable convertible preferred stock will automatically be converted into shares of common stock at the then-effective conversion rate either (a) upon the closing of the sale of shares of common stock to the public in a firm-commitment underwritten public offering pursuant to an effective
F-51
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
registration statement under the Securities Act of 1933, as amended, that is either (i) approved by the holders of at least 66% of the outstanding shares of redeemable convertible preferred stock, voting together as a single class on an as-converted basis (“Requisite Holders”), including the Series B Requisite Holders and Series C Requisite Holders, or (ii) at a price of at least $1.65 per share, resulting in at least $100.0 million of gross proceeds to the Company and in connection with such offering the Company’s common stock is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or such other international exchange of equal stature, or (b) by vote or written consent of the Requisite Holders.
Dividends
The holders of the outstanding shares of Series C and Series B redeemable convertible preferred stock are entitled to receive, only when, as and if declared by the Company’s board of directors, out of any funds and assets legally available therefor, non-cumulative dividends at the rate of 8% of the original issue price for each share of Series C and Series B redeemable convertible preferred stock, prior and in preference to any dividends paid to the holders of Series A-1 redeemable convertible preferred stock, Series A-2 redeemable convertible preferred stock and common stock (other than dividends on shares of common stock payable in shares of common stock). The holders of the outstanding shares of Series A-2 and Series A-1 redeemable convertible preferred stock are entitled to receive, only when, as and if declared by the Company’s board of directors, out of any funds and assets legally available therefor, non-cumulative dividends at the rate of 8% of the original issue price for each share of Series A-1 and Series A-2 redeemable convertible preferred stock, prior and in preference to any dividends paid to the holders of common stock (other than dividends on shares of common stock payable in shares of common stock). After payment of the full amount of any dividends described above, any additional dividends are distributed among all holders of common stock and the redeemable convertible preferred stock on an as-converted basis. Whenever a dividend is payable in property other than cash, the value of such dividend is deemed to be the fair market value of such property as determined in good faith by the Company’s board of directors.
No dividends were declared as of December 31, 2025 and March 31, 2026.
Voting
The holders of each share of redeemable convertible preferred stock are entitled to the number of votes equal to the number of shares of common stock into which such shares of redeemable convertible preferred stock could be converted. With respect to such votes, the holders have full voting rights and powers equal to the voting rights and powers of common stock.
The holders of Series C redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect one director of the Company. The holders of Series B redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect one director of the Company. The holders of Series A-1 redeemable convertible preferred stock and Series A-2 redeemable convertible preferred stock, exclusively and as a separate class, are entitled to elect two directors of the Company. The holders of common stock, exclusively and as a separate class, are entitled to elect two directors of the Company. The holders of shares of redeemable convertible preferred stock and common stock are entitled, voting together as a combined class and on an as-converted basis, to elect the remaining directors of the Company.
Redemption
The shares of Series C redeemable convertible preferred stock shall be redeemed by the Company at a price per share equal to the applicable original issue price, plus all declared but unpaid dividends thereon, in one
F-52
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
installment commencing not more than 60 days after receipt by the Company and the other holders of Series C redeemable convertible preferred stock of written notice requesting redemption of all shares of Series C redeemable convertible preferred stock held by such holder of Series C redeemable convertible preferred stock. The redemption can happen at any time on or after March 31, 2035, provided that a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, or a deemed liquidation event, has not occurred prior to that date.
The shares of Series B redeemable convertible preferred stock shall be redeemed by the Company at a price per share equal to the applicable original issue price, plus all declared but unpaid dividends thereon, in one installment commencing not more than 60 days after receipt by the Company and the other holders of Series B redeemable convertible preferred stock of written notice requesting redemption of all shares of Series B redeemable convertible preferred stock held by such holder of Series B redeemable convertible preferred stock. The redemption can happen at any time on or after March 31, 2035, provided that a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, or a deemed liquidation event, has not occurred prior to that date.
The shares of Series A-1 redeemable convertible preferred stock and Series A-2 redeemable convertible preferred stock are not redeemable other than upon the occurrence of a Liquidation Event.
| 8. | Preferred Stock Tranche Liability |
The Company determined that the contingent obligation to issue shares of the Series B Second Tranche Shares at the Series B Milestone Closing represented a freestanding instrument. This instrument, referred to as the Series B preferred stock tranche liability, was accounted for as a liability, initially recorded and subsequently remeasured at fair value until the settlement or expiration.
The Series B preferred stock tranche was settled in January 2025 when the Series B milestone was achieved (see Note 7). The Company remeasured the Series B preferred stock tranche liability in January 2025 and determined that the fair value of the liability was $6.8 million, and recorded an approximately $0.2 million loss in its condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2025.
The preferred stock tranche liability was valued using a probability-weighted present value calculation. In determining the fair value of the preferred stock tranche liability, estimates and assumptions impacting fair value included (i) discount rates, (ii) the expected term of the forward, and (iii) the probability of the tranche closing. Significant increases (decreases) in any of those inputs in isolation may result in a significant change in fair value measurement. The Company determined the per share future value of the Series B redeemable convertible preferred stock back-solving to the original issue price of the Series B redeemable convertible preferred stock financings. In January 2025, upon the achievement of the Series B milestone, the Series B Milestone Closing was completed, and the associated Series B preferred stock tranche liability was settled. The fair value of the Series B redeemable convertible preferred stock was $1.55 per share and represented the only input used in determining the fair value of the Series B preferred stock tranche liability upon the Series B Milestone Closing.
| 9. | Common Stock |
The Company is authorized to issue 284,023,000 shares of common stock with a par value of $0.0001. There were 41,907,870 shares of common stock issued and outstanding as of March 31, 2026.
F-53
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company had reserved common stock, on an as-converted basis, for future issuance as follows:
| December 31, 2025 |
March 31, 2026 |
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| Conversion of redeemable convertible preferred shares |
199,902,270 | 199,902,270 | ||||||
| Share options issued and outstanding |
24,553,563 | 25,127,513 | ||||||
| Share options available for future grant |
4,171,026 | 3,560,526 | ||||||
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| Total ordinary shares reserved |
228,626,859 | 228,590,309 | ||||||
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| 10. | Share-based Compensation |
In 2023, the Company adopted the 2023 Equity Incentive Plan (“2023 Plan”), under which the Board of Directors can issue options to purchase shares of common stock. As of March 31, 2026, there were 30,595,909 shares of common stock authorized and reserved for issuance under the 2023 Plan. 3,560,526 shares of common stock remain available for future grants as of March 31, 2026.
Awards granted under the 2023 Plan may be either incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”) or stock appreciation rights (“SARs”). ISOs may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees and consultants. The Board of Directors of the Company has the authority to approve the option recipient, the number of shares, the term, and the exercise price. The exercise price of ISOs and NSOs shall not be less than 100% of the estimated fair value of the shares on the date of grant. The exercise price of ISOs shall be no less than 110% of the estimated fair value of the shares on the date of grant to any employee who, at the time of grant, owns shares representing more than 10% (“10% shareholder”) of the voting power of all classes of shares of the Company. The options usually have a term of 10 years (or no more than five years if granted to a 10% shareholder). Vesting conditions determined by the plan administrator may apply to stock options and may include continued service, performance and/or other conditions. Generally, options and restricted stock awards vest over a four-year period.
The Company had not granted any RSUs and SARs as of March 31, 2026.
Options
A summary of stock option activity is set forth below:
| Outstanding Awards | ||||||||||||||||
| Number of Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term (in years) |
Aggregate Intrinsic Value (in thousands) |
|||||||||||||
| Outstanding, January 1, 2026 |
24,553,563 | $ | 0.42 | 8.76 | $ | 2,621 | ||||||||||
| Granted |
610,500 | $ | 0.86 | |||||||||||||
| Exercised |
(36,550 | ) | $ | 0.31 | $ | 20 | ||||||||||
|
|
|
|||||||||||||||
| Outstanding, March 31, 2026 |
25,127,513 | $ | 0.43 | 8.55 | $ | 10,704 | ||||||||||
|
|
|
|||||||||||||||
| Shares exercisable March 31, 2026 |
7,020,642 | $ | 0.36 | 8.11 | $ | 3,524 | ||||||||||
| Vested and expected to vest, March 31, 2026 |
25,127,513 | $ | 0.43 | 8.55 | $ | 10,704 | ||||||||||
F-54
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock as of March 31, 2026.
The total fair value of options that vested during the three months ended March 31, 2025 and 2026 was $0.1 million and $0.3 million, respectively. No options were granted during the three months ended March 31, 2025. The weighted-average grant date fair value of options granted during the three months ended March 31, 2026 was $0.56.
As of March 31, 2026, there was $5.3 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.6 years.
RSAs
In April 2023, the Company entered into restricted stock agreements with its management and employees, outside of the 2023 Plan, to grant 9,300,000 shares of restricted stock awards at a purchase price of $0.0001 per share, with an estimated grant date fair value of $0.29 per share.
The restricted stock awards vest over a four-year period starting on the grant date and have a one-year cliff vesting period. In the event the employees’ services are terminated, the Company reserves the right to repurchase unvested shares at the original purchase price, adjusted for any stock dividends, stock splits, reverse stock splits, or recapitalizations of the Company’s common stock occurring after the effective date of the applicable restricted stock agreement.
The restricted stock awards were accounted for as a compensatory arrangement under ASC Topic 718, Compensation-Stock Compensation. Shares purchased pursuant to these restricted stock awards participate in dividends and voting, are legally outstanding, and are presented as outstanding shares.
The stock-based compensation expense related to the restricted stock awards was $0.2 million for the three months ended March 31, 2025 and 2026, of which $0.1 million was recorded in research and development and $0.1 million in general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss. Fair value of shares vested during the three months ended March 31, 2025 and 2026 was $0.2 million.
Activity with respect to restricted stock awards was as follows:
| Restricted Stock Awards |
Weighted- Average Grant Date Fair Value |
|||||||
| Unvested at January 1, 2026 |
3,100,000 | $ | 0.29 | |||||
| Vested |
(581,250 | ) | $ | 0.29 | ||||
|
|
|
|
|
|||||
| Unvested at March 31, 2026 |
2,518,750 | $ | 0.29 | |||||
|
|
|
|
|
|||||
As of March 31, 2026, there was $0.7 million of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 1.1 years. No restricted stock awards were repurchased or cancelled during the three months ended March 31, 2025 and 2026.
F-55
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Stock-Based Compensation Expense
The following table presents the classification of stock-based compensation expense related to awards granted to employees and non-employees (in thousands):
| Three Months Ended March 31, |
||||||||
| 2025 | 2026 | |||||||
| Research and development |
$ | 154 | $ | 239 | ||||
| General and administrative |
308 | 447 | ||||||
|
|
|
|
|
|||||
| Total stock-based compensation expense |
$ | 462 | $ | 686 | ||||
|
|
|
|
|
|||||
The Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of stock options granted was estimated using the following weighted-average assumptions:
| Three Months Ended March 31, 2026 |
||||
| Expected volatility |
69.25% - 69.45 | % | ||
| Expected dividend yield |
0 | % | ||
| Expected term (in years) |
5.96 - 6.05 | |||
| Risk-free interest rate |
3.62% - 3.82 | % | ||
| Fair value of common stock |
$ 0.86 | |||
The assumptions are as follows:
| • | Expected volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. |
| • | Expected dividend yield. The expected dividend is assumed to be zero as dividends have never been paid and there are no current plans to pay dividends on common stock shares. |
| • | Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding and is based on the options’ vesting terms and contractual terms as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. |
| • | Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield with a maturity equal to the expected term of the option in effect at the time of grant. |
| • | Fair value of common stock. The fair value of the Company’s common stock is determined by its board of directors with input from management and third-party valuation specialists. The Company’s approach to estimate the fair value of the Company’s common stock is consistent with the methods outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Determining the best estimated fair value of the Company’s common stock requires significant judgment and management considers several factors, including the Company’s stage of development, equity market conditions affecting comparable public companies, significant milestones and progress of research and development efforts. |
F-56
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company utilized a hybrid method that combines the Probability-Weighted Expected Return Method (“PWERM”), an accepted valuation method described in the Practice Aid, and the Option Pricing Method (“OPM”). The PWERM contemplated a scenario in which the Company remained private with an uncertain future exit and scenario(s) in which the Company exited via initial public offering (“IPO”). For the scenario in which the Company remained private, the Company utilized the OPM, primarily the OPM backsolve methodology. The Company determined this was the most appropriate method for determining the fair value of its common stock based on the stage of development and other relevant factors.
For the scenario(s) in which the Company exited via IPO, the Company utilized an analysis based on observed step-up multiples achieved at IPO for comparable public issuers in which the Company applied a step-up multiple believed to be achievable at IPO to the post-money valuation achieved by the Company in its most recent (or expected future cross-over) financing round. The resulting total equity value for the Company estimated for a scenario(s) in which the Company exited via IPO was then allocated to the Company’s share classes using a waterfall allocation analysis that treats all preferred securities as immediately converting to common stock at the time of an IPO event.
For the scenario(s) in which the Company remained private, the Company utilized the backsolve method to infer the total equity value implied by a recent financing transaction or by an estimated equity value of the Company’s pipeline product candidates. The backsolve method involves the construction of an allocation model that accounts for the Company’s capital structure and the rights, preferences and privileges of each class of stock, and also assumes reasonable inputs for the other OPM variables, including expected time to liquidity, volatility, and risk-free rate. The total equity value is then iterated in the model until the model output value for the equity class sold in a recent financing round equals the price paid in that round. The OPM is generally utilized when specific future liquidity events are difficult to forecast (i.e., the enterprise has many choices and options available), and the enterprise’s value depends on how well it follows an uncharted path through the various possible opportunities and challenges.
In determining the estimated fair value of the common stock, the Company’s board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, the Company applied discounts to reflect the lack of marketability of its common stock based on the weighted-average expected time to liquidity in each of the contemplated exit scenarios. The estimated fair value of the common stock at each grant date reflected a non-marketability discount partially based on the anticipated likelihood and timing of a future liquidity event.
| 11. | Related Party Transactions |
Alamar License Agreement
In June 2023, the Company issued 22,562,123 shares of its common stock to Alamar, an existing holder of the Company’s common stock, in exchange for the in-process research and development asset acquired under the Alamar Platform License Agreement (see Note 5). Alamar owned 7,437,877 shares of the Company’s common stock prior to this transaction, which was received by Alamar upon the Company’s incorporation in December 2022.
Alamar Lease Agreement
In June 2023, the Company entered into a lease agreement with Alamar, which was amended four times between October 2023 and October 2024, to lease approximately 10,422 square feet of office and laboratory spaces in Fremont, California.
F-57
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Other Services Agreements
In June 2023, the Company entered into a Services Agreement (the “Services Agreement”) with Alamar, under which Alamar will provide initial clerical, executive, and administrative services. In February 2024, the Company entered into a research services agreement (together with the Services Agreement, the “Services Agreements”) for Alamar to provide certain research diagnostic services. Under both Services Agreements, the Company recognized expense of less than $0.1 million and less than $0.1 million during the three months ended March 31, 2025 and 2026, respectively, and had an accounts payable balance of less than $0.1 million as of December 31, 2025 and March 31, 2026.
| 12. | Net Loss Per Share |
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
| Three Months Ended March 31, |
||||||||
| 2025 | 2026 | |||||||
| Numerator: |
||||||||
| Net loss |
$ | (15,151 | ) | $ | (18,656 | ) | ||
| Accretion of redeemable convertible preferred stock to its redemption value |
(271 | ) | — | |||||
|
|
|
|
|
|||||
| Net loss attributable to common stockholders |
(15,422 | ) | (18,656 | ) | ||||
| Denominator: |
||||||||
| Weighted-average common shares outstanding |
41,207,559 | 41,877,483 | ||||||
| Less: Weighted-average common shares subject to repurchase |
(5,843,083 | ) | (3,294,416 | ) | ||||
|
|
|
|
|
|||||
| Weighted-average shares used in computing basic and diluted net loss per share |
35,364,476 | 38,583,067 | ||||||
|
|
|
|
|
|||||
| Net loss per share attributable to common stockholders, basic and diluted |
$ | (0.44 | ) | $ | (0.48 | ) | ||
|
|
|
|
|
|||||
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:
| Three Months Ended March 31, |
||||||||
| 2025 | 2026 | |||||||
| Redeemable convertible preferred stock |
199,902,270 | 199,902,270 | ||||||
| Options to purchase common stock |
15,732,710 | 25,127,513 | ||||||
| Unvested restricted stock awards |
4,843,750 | 2,518,750 | ||||||
| Unvested early exercised common stock options |
637,667 | 414,000 | ||||||
|
|
|
|
|
|||||
| Total |
221,116,397 | 227,962,533 | ||||||
|
|
|
|
|
|||||
F-58
Attovia Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| 13. | Employee Benefit Plans |
The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. The Company’s contributions to the 401(k) Plan were $0.1 million for each of the three months ended March 31, 2025 and 2026.
| 14. | Segment Reporting |
The CODM uses net loss to measure segment loss and assesses performance against expectations to make resource allocation decisions. In making this assessment, the CODM reviews and evaluates net loss to monitor budget versus actual results and to analyze cash flows for purposes of allocating resources and assessing financial performance. Additionally, the CODM reviews and uses significant expense categories included within net loss as well as the disaggregated amounts within research and development expenses and general and administrative expenses indicated in the table below to manage the Company’s operations. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
In addition to the significant expense categories included within net loss presented on the Company’s condensed consolidated statements of operations and comprehensive loss, the following table provides disaggregated amounts that comprised research and development expenses (in thousands):
| Three Months Ended March 31, |
||||||||
| 2025 | 2026 | |||||||
| External costs |
||||||||
| Clinical, manufacturing, and preclinical services |
$ | 8,010 | $ | 11,895 | ||||
| Professional consulting services |
528 | 618 | ||||||
| Consumables and other research and development costs |
553 | 752 | ||||||
| Internal costs |
||||||||
| Personnel-related costs |
2,512 | 3,017 | ||||||
| Facilities and overhead costs |
253 | 464 | ||||||
|
|
|
|
|
|||||
| Total research and development expenses |
$ | 11,856 | $ | 16,746 | ||||
|
|
|
|
|
|||||
| 15. | Subsequent Events |
The Company evaluated subsequent events from March 31, 2026 to June 5, 2026, the day on which these condensed consolidated financial statements were available to be issued. No subsequent events have been identified for disclosure to or adjustment on the condensed consolidated financial statements.
F-59
Shares
Common Stock
Prospectus
| Morgan Stanley | Leerink Partners | Citigroup | RBC Capital Markets |
LifeSci Capital
, 2026
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all costs and expenses, other than underwriting discounts and commissions, paid or payable by the Registrant in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, Inc. (FINRA) filing fee and the Nasdaq Global Market (Nasdaq) listing fee:
| Amount Paid or to Be Paid | ||||
| SEC registration fee |
$ | 13,810 | ||
| FINRA filing fee |
15,500 | |||
| Nasdaq listing fee |
* | |||
| Printing and engraving expenses |
* | |||
| Legal fees and expenses |
* | |||
| Accounting fees and expenses |
* | |||
| Blue Sky, qualification fees and expenses |
* | |||
| Transfer agent and registrar fees and expenses |
* | |||
| Miscellaneous expenses |
* | |||
|
|
|
| ||
| Total |
$ | * | ||
|
|
|
| ||
| * | To be completed by amendment. |
Item 14. Indemnification of Directors and Officers.
Section 145 of the DGCL, authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers under certain circumstances and subject to certain limitations. The terms of Section 145 of the DGCL are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act.
As permitted by the DGCL, the registrant’s restated certificate of incorporation to be effective upon the completion of this offering contains provisions that eliminate the personal liability of its directors and officers for monetary damages for any breach of fiduciary duties as a director or officer, except liability for the following:
| • | any breach of the director’s or officer’s duty of loyalty to the registrant or its stockholders; |
| • | acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
| • | with respect to directors, under Section 174 of the DGCL (regarding unlawful dividends and stock purchases); or |
| • | any transaction from which the director or officer derived an improper personal benefit. |
As permitted by the DGCL, the registrant’s restated bylaws to be effective upon the completion of this offering, provide that;
| • | the registrant is required to indemnify its directors and officers to the fullest extent permitted by the DGCL, subject to limited exceptions; |
| • | the registrant may indemnify its other employees and agents as set forth in the DGCL; |
II-1
| • | the registrant is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the DGCL, subject to limited exceptions; and |
| • | the rights conferred in the restated bylaws are not exclusive. |
Prior to the completion of this offering, the registrant intends to enter into indemnification agreements with each of its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the registrant’s restated certificate of incorporation and restated bylaws and to provide additional procedural protections. There is no pending litigation or proceeding involving a director or executive officer of the registrant for which indemnification is sought. Reference is also made to the underwriting agreement to be filed as Exhibit 1.1 to this registration statement, which provides for the indemnification of executive officers, directors and controlling persons of the registrant against certain liabilities. The indemnification provisions in the registrant’s restated certificate of incorporation, restated bylaws and the indemnification agreements entered into or to be entered into between the registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification of the registrant’s directors and executive officers for liabilities arising under the Securities Act.
The registrant has directors’ and officers’ liability insurance for securities matters.
Item 15. Recent Sales of Unregistered Securities.
The following lists set forth information regarding all securities sold or granted by the registrant since July 1, 2023 through the date of this prospectus that were not registered under the Securities Act, and the consideration, if any, received by the registrant for such securities:
| (a) | Stock Option Grants |
From July 1, 2023 through the date of this prospectus, the registrant has granted to its employees, directors, consultants and other service providers options to purchase an aggregate of 27,210,300 shares of its common stock under the 2023 Plan, with exercise prices ranging from $0.17 to $0.86 per share. The issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans. The shares of the registrant’s common stock issued upon the exercise of options are deemed to be restricted securities for purposes of the Securities Act.
| (b) | Preferred Stock |
In two closings in June 2023 and January 2024, the registrant sold an aggregate of 30,425,000 shares of its Series A-1 redeemable convertible preferred stock (Series A-1 Preferred Stock) at a price per share of $1.00 and 27,659,090 shares of its Series A-2 redeemable convertible preferred stock (Series A-2 Preferred Stock and together with the Series A-1 Preferred Stock, the Series A Preferred Stock) at a price per share of $1.10 for total gross proceeds of approximately $60.8 million (the Series A Preferred Stock Financing). Each share of Series A Preferred Stock will automatically convert into one share of the registrant’s common stock in connection with the completion of this offering. Pursuant to the current investors’ rights agreement, holders of the Series A Preferred Stock are entitled to certain registration rights. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
II-2
In two closings in May 2024 and January 2025, the registrant sold an aggregate of 76,363,636 shares of its Series B redeemable convertible preferred stock (Series B Preferred Stock) at a price per share of $1.375 for total gross proceeds of approximately $105.0 million (the Series B Preferred Stock Financing). The Series B Financing is split into two equal tranches of $52.5 million, the first of which funded on May 1, 2024 and the second of which funded on January 21, 2025. Each share of Series B Preferred Stock will automatically convert into one share of the registrant’s common stock in connection with the completion of this offering. Pursuant to our current investors’ rights agreement, holders of our Series B Preferred Stock are entitled to certain registration rights. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
In a closing in March 2025, the registrant sold an aggregate of 65,454,544 shares of its Series C redeemable convertible preferred stock (Series C Preferred Stock) at a price per share of $1.375 for total gross proceeds of approximately $90.0 million (the Series C Preferred Stock Financing). Each share of Series C Preferred Stock will automatically convert into one share of the registrant’s common stock in connection with the completion of this offering. Pursuant to our current investors’ rights agreement, holders of our Series C Preferred Stock are entitled to certain registration rights. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering, and the registrant believes each transaction was exempt from the registration requirements of the Securities Act as stated above. All recipients of the foregoing transactions either received adequate information about the registrant or had access, through their relationships with the registrant, to such information. Furthermore, the registrant affixed appropriate legends to the share certificates and instruments issued in each foregoing transaction setting forth that the securities had not been registered and the applicable restrictions on transfer.
| (c) | Common Stock |
From July 1, 2023 through the date of this prospectus, the registrant has issued an aggregate of 2,075,660 shares of common stock for cash with purchase prices ranging from $0.17 to $0.38 per share. The issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
| Exhibit Number |
Description of Exhibit | |
| 1.1* | Form of Underwriting Agreement. | |
| 3.1 | Amended and Restated Certificate of Incorporation, as currently in effect. | |
| 3.2 | Form of Restated Certificate of Incorporation to be effective upon the completion of this offering. | |
| 3.3 | Bylaws, as currently in effect. | |
| 3.4 | Form of Restated Bylaws, to be effective upon the completion of this offering. | |
| 4.1* | Form of Common Stock Certificate. | |
| 4.2 | Amended and Restated Investors’ Rights Agreement, dated March 31, 2025, by and among the Registrant and certain of its stockholders. | |
| 5.1* | Opinion of Fenwick & West LLP. | |
II-3
| * | To be filed by amendment. |
| † | The Registrant has omitted portions of the exhibit (indicated by “[*]”) as permitted under Item 601(b)(10) of Regulation S-K. |
| ^ | The Registrant has omitted schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request. |
| (b) | Financial Statement Schedules. |
No financial statement schedules are provided because the information called for is not required or is shown either in the consolidated financial statements or notes.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
II-4
The undersigned registrant hereby undertakes that:
| (i) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
| (ii) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
II-5
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Carlos, State of California, on the 14th day of July, 2026.
| ATTOVIA THERAPEUTICS, INC. | ||
| By: | /s/ Tao Fu | |
| Tao Fu | ||
| Chief Executive Officer | ||
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Tao Fu and Steven Chan, and each one of them, as his or her true and lawful attorneys-in-fact, proxies and agents, each with full power of substitution and resubstitution and full power to act without the other, for him or her in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, proxies and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, proxies and agents, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.
| Signature |
Title |
Date | ||
| /s/ Tao Fu Tao Fu |
Chief Executive Officer, President and Director (Principal Executive Officer) |
July 14, 2026 | ||
| /s/ Steven Chan Steven Chan |
Chief Financial Officer (Principal Financial and Accounting Officer) |
July 14, 2026 | ||
| /s/ Mitchell Gold Mitchell Gold, M.D. |
Director | July 14, 2026 | ||
| /s/ Rebecca Luse Rebecca Luse |
Director | July 14, 2026 | ||
| /s/ Aaron Royston Aaron Royston, M.D. |
Director | July 14, 2026 | ||
| /s/ John W. Smither John W. Smither |
Director | July 14, 2026 | ||
II-6
| Signature |
Title |
Date | ||
| /s/ James Topper James Topper, M.D., Ph.D. |
Director | July 14, 2026 | ||
| /s/ Colin Walsh Colin Walsh, Ph.D. |
Director | July 14, 2026 | ||
| /s/ Angie You Angie You, Ph.D. |
Director | July 14, 2026 | ||
II-7
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
ATTOVIA THERAPEUTICS, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Attovia Therapeutics, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),
DOES HEREBY CERTIFY:
1. That the name of this corporation is Attovia Therapeutics, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on December 16, 2022.
2. That the Board of Directors of this corporation (the “Board of Directors”) duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:
FIRST: The name of this corporation is Attovia Therapeutics, Inc. (the “Corporation”).
SECOND: The address of the registered office of the Corporation in the State of Delaware is 3500 South DuPont Highway in the City of Dover, County of Kent, 19901. The name of the corporation’s registered agent at such address is Incorporating Services, Ltd.
THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 284,023,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”) and (ii) 199,902,270 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
| A. | COMMON STOCK |
1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.
2. Voting. The holders of the Common Stock are entitled to one (1) vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one (1) or more Series of Preferred Stock that may be required by the terms of this Restated Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.
| B. | PREFERRED STOCK |
30,425,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A-1 Preferred Stock”, 27,659,090 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A-2 Preferred Stock” (together with the Series A-1 Preferred Stock, the “Series A Preferred Stock”), 76,363,636 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B Preferred Stock”, and 65,454,544 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C Preferred Stock”, each such Series with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. Unless otherwise indicated, references to “Sections” in this Part B of this Article Fourth refer to sections of Part B of this Article Fourth. References to “Preferred Stock” mean collectively, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
1. Dividends.
1.1 Non-Cumulative Series C Preferred Stock and Series B Preferred Stock Dividend Preference. The holders of then outstanding shares of Series C Preferred Stock and Series B Preferred Stock shall be entitled to receive, only when, as and if declared by the Board of Directors, out of any funds and assets legally available therefor, dividends at the rate of 8% of the applicable Original Issue Price (as defined below) (the “Dividend Amount”) for each share of Series C Preferred Stock and Series B Preferred Stock, on a pari passu basis, prior and in preference to any dividends paid to the holders of Series A Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). The right to receive dividends on shares of Series C Preferred Stock and Series B Preferred Stock pursuant to the preceding sentence of this Section 1.1 shall not be cumulative, and no right to dividends shall accrue to holders of Series C Preferred Stock and Series B Preferred Stock by reason of the fact that dividends on said shares are not declared. Payment of any dividends to the holders of Series C Preferred Stock and Series B Preferred Stock shall be on a pro rata, pari passu basis in proportion to the applicable Dividend Amount for each of the Series C Preferred Stock and Series B Preferred Stock. The Corporation shall not declare, pay or set aside any dividends on
shares of any other class or Series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Restated Certificate of Incorporation) the holders of the Series C Preferred Stock and Series B Preferred Stock then outstanding shall first receive, or simultaneously receive, in addition to the dividends payable pursuant to the first sentence of this Section 1.1, a dividend on each outstanding share of Series C Preferred Stock and Series B Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or Series that is convertible into Common Stock, that dividend per share of Series C Preferred Stock or Series B Preferred Stock, as applicable, as would equal the product of (A) the dividend payable on each share of such class or Series determined, if applicable, as if all shares of such class or Series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series C Preferred Stock or Series B Preferred Stock, as applicable, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or Series that is not convertible into Common Stock, at a rate per share of Series C Preferred Stock or Series B Preferred Stock, as applicable, determined by (A) dividing the amount of the dividend payable on each share of such class or Series of capital stock by the original issuance price of such class or Series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the applicable Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one (1) class or Series of capital stock of the Corporation, the dividend payable to the holders of Series C Preferred Stock and Series B Preferred Stock pursuant to this Section 1.1 shall be calculated based upon the dividend on the class or Series of capital stock that would result in the highest Series C Preferred Stock and Series B Preferred Stock dividend. The “Original Issue Price” shall mean, with respect to the Series A-1 Preferred Stock, $1.00 per share, with respect to the Series A-2 Preferred Stock, $1.10 per share, with respect to the Series B Preferred Stock, $1.375 per share, and with respect to the Series C Preferred Stock, $1.375 per share, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the applicable Preferred Stock.
1.2 Non-Cumulative Series A Preferred Stock Dividend Preference. After payment or setting aside for payment of all declared but unpaid dividends on the Series C Preferred Stock and the Series B Preferred Stock as specified above, the holders of then outstanding shares of Series A Preferred Stock shall be entitled to receive, only when, as and if declared by the Board of Directors, out of any funds and assets legally available therefor, dividends at the rate of 8% of the Original Issue Price (as defined below) for each share of Series A Preferred Stock, prior and in preference to any dividends paid to the holders of Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). The right to receive dividends on shares of Series A Preferred Stock pursuant to the preceding sentence of this Section 1.2 shall not be cumulative, and no right to dividends shall accrue to holders of Series A Preferred Stock by reason of the fact that dividends on said shares are not declared. The Corporation shall not declare, pay or set aside any dividends on shares of Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Restated Certificate of Incorporation and only after payment or setting aside for payment of any dividends set forth in Section 1.1) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, in addition to the
dividends payable pursuant to the first sentence of this Section 1.2, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or Series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or Series determined, if applicable, as if all shares of such class or Series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or Series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or Series of capital stock by the original issuance price of such class or Series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Original Issue Price; provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one ( 1 ) class or Series of capital stock of the Corporation, the dividend payable to the holders of Series A Preferred Stock pursuant to this Section 1.2 shall be calculated based upon the dividend on the class or Series of capital stock that would result in the highest Series A Preferred Stock dividend.
1.3 Participation. If, after dividends in the full preferential amount specified in Section 1.1 and Section 1.2 for the Preferred Stock have been paid or set apart for payment in any calendar year of the Corporation, the Board of Directors shall declare additional dividends out of funds legally available therefor in that calendar year, subject to the obtaining of any consents required elsewhere in this Restated Certificate of Incorporation, then such additional dividends shall be declared pro rata on the Common Stock and the Preferred Stock (without duplication of any identical amounts required to be declared pursuant to Section 1.1 or Section 1.2 on a pari passu basis according to the number of shares of Common Stock held by such holders. For this purpose, each holder of shares of Preferred Stock is to be treated as holding the greatest whole number of shares of Common Stock then issuable upon conversion of all shares of Preferred Stock held by such holder pursuant to Sections 4 and 5.
1.4 Non-Cash Dividends. Whenever a dividend provided for in this Section 1 shall be payable in property other than cash, the value of such dividend shall be deemed to be the fair market value of such property as determined in good faith by the Board of Directors.
2. Liquidation, Dissolution or Winding Up: Certain Mergers, Consolidations and Asset Sales.
2.1 Preferential Payments to Holders of Series C Preferred Stock and Series B Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series C Preferred Stock and Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event (as defined below), out of the consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds (as defined below), on a pari passu basis based on their respective Liquidation Amounts (as defined below) and before any payment shall be made to the holders of Series A Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share equal
to one (1) times the Original Issue Price for the Series C Preferred Stock or Series B Preferred Stock, as applicable, plus any dividends declared but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock and Series B Preferred Stock the full amount to which they shall be entitled under this Section 2.1, the holders of shares of Series C Preferred Stock and Series B Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
2.2 Preferential Payments to Holders of Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment or setting aside for payment to the holders of the Series C Preferred Stock and the Series B Preferred Stock of the full amounts specified above, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event (as defined below), out of the consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds (as defined below), before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to one (1) times the Original Issue Price, plus any dividends declared but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under this Section 2.2, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
2.3 Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment in full of all amounts required to be paid to the holders of shares of Preferred Stock pursuant to Sections 2.1 and 2.2, the remaining assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Preferred Stock pursuant to Sections 2.1 and 2.2 or the remaining Available Proceeds, as the case may be, shall be distributed among the holders of the shares of Preferred Stock and Common Stock pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock pursuant to the terms of this Restated Certificate of Incorporation immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event of the Corporation; provided, however, that if the aggregate amount the holders of shares of any Series of Preferred Stock are entitled to receive under Sections 2.1 and 2.2 as stated above and this Section 2.3 shall exceed two and one-half times (2.5x) the applicable Original Issue Price per share of such Series of Preferred Stock (subject to appropriate adjustment in the event of a stock split, stock dividend, combination, reclassification, or similar event affecting the applicable Series of Preferred Stock), plus any dividends declared but unpaid thereon (the “Participation Cap”), each holder of shares of such Series of Preferred Stock shall only be entitled to receive on a per share basis (in respect of its shares of such Series of Preferred Stock)
upon such liquidation, dissolution, winding up or Deemed Liquidation Event of the Corporation, the greater of (a) the Participation Cap and (b) the amount such holder would have received if all shares of such Series of Preferred Stock (together with any other Series of Preferred Stock that would also receive a greater amount on an as-converted basis) had been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event of the Corporation. For the avoidance of doubt, in applying distributions upon a liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event that involves escrow, installment or contingent payments, the holders of Preferred Stock will be entitled to an amount, re-calculated at the time of each escrow, installment or contingent payment and applied on a cumulative basis, that is the greater of (a) the Participation Cap and (b) the amount such holder would have received if all shares of such Series of Preferred Stock (together with any other Series of Preferred Stock that would also receive a greater amount on an as-converted basis) had been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event of the Corporation. The aggregate amount which a holder of a share of Preferred Stock is entitled to receive under Sections 2.1, 2.2 and 2.3 is hereinafter referred to as the “Liquidation Amount.”
2.4 Deemed Liquidation Events.
2.4.1 Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis (the “Requisite Holders”) elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event; provided that, the treatment of any particular transaction or Series of related transactions as a Deemed Liquidation Event with respect to (i) the Series C Preferred Stock may not be waived without the written consent of the holders of at least 66% of the then outstanding shares of Series C Preferred Stock (voting exclusively and as a separate class) (the “Requisite Series C Holders”) and (ii) the Series B Preferred Stock may not be waived without the written consent of the holders of at least 66% of the then outstanding shares of Series B Preferred Stock (voting exclusively and as a separate class) (the “Requisite Series B Holders”):
(a) a merger, consolidation, statutory conversion, transfer, domestication or continuance in which
| (i) | the Corporation is a constituent party or |
| (ii) | a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger, consolidation, statutory conversion, transfer, domestication or continuance, |
except any such merger, consolidation, statutory conversion, transfer, domestication or continuance involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger, consolidation, statutory conversion, transfer, domestication or continuance continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger, consolidation, statutory conversion, transfer, domestication or continuance, at least a majority by voting power of the capital stock of (I) the surviving or resulting corporation or entity; or (2) if the surviving or resulting corporation or entity is a wholly owned subsidiary of another corporation or entity immediately following such merger, consolidation, statutory conversion, transfer, domestication or continuance, the parent corporation or entity of such surviving or resulting corporation or entity;
(b) (1) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or Series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or (2) the sale or disposition (whether by merger, consolidation, statutory conversion, transfer, domestication or continuance or otherwise, and whether in a single transaction or a Series of related transactions) of one ( 1 ) or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation; or
(c) a transaction or Series of related transactions in which a person, or a group of related persons, acquires from stockholders of the Corporation shares representing more than fifty percent (50%) of the outstanding voting power of the Corporation other than in connection with a bona fide equity financing primarily for capital raising purposes.
2.4.2 Effecting a Deemed Liquidation Event.
(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Section 2.4.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be allocated to the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 2.3.
(b) In the event of a Deemed Liquidation Event referred to in Section 2.4.1(a)(ii) or 2.4.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (1) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90’th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) if the Requisite Holders so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth (I50’h) day after such Deemed Liquidation Event (“DLE Redemption Date”), to redeem all outstanding shares of Preferred Stock at a price per share equal to the aggregate amount entitled thereto under Sections 2.1, 2.2 and 2.3; provided, that if the definitive agreements governing such Deemed Liquidation Event contain contingent indemnification obligations on the part of the Corporation and prohibit the Corporation from
distributing all or a portion of the Available Proceeds while such indemnification obligations remain outstanding, then the DLE Redemption Date shall automatically be extended to the date that is ten business days following the date on which such prohibition expires. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall first redeem a pro rata portion of each holder’s shares of Series C Preferred Stock or Series B Preferred Stock, as applicable, to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and, second, if after the redemption of all shares of Series C Preferred Stock and Series B Preferred Stock, the Available Proceeds are not sufficient to redeem all outstanding shares of Series A Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Series A Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and thereafter, the Corporation shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. The provisions of Section 6 shall apply, with such necessary changes in the details thereof as are necessitated by the context, to the redemption of the Preferred Stock pursuant to this Section 2.4.2(6). Prior to the distribution or redemption provided for in this Section 2.4.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business. In connection with a distribution or redemption provided for in Section 2.4.2, the Corporation shall send written notice of the redemption (the “Company Redemption Notice”) to each holder of record of Preferred Stock. Each Company Redemption Notice shall state:
| (i) | the number of shares of Preferred Stock held by the holder that the Corporation shall redeem on the date specified in the Company Redemption Notice; |
| (ii) | the redemption date and the price per share at which the shares of Preferred Stock are being redeemed; and |
| (iii) | for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed. |
If the Company Redemption Notice shall have been duly given, and if payment is tendered or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Preferred Stock so called for redemption shall not have been surrendered, all rights with respect to such shares shall forthwith after the date terminate, except only the right of the holders to receive the payment without interest upon surrender of any such certificate or certificates therefor.
2.4.3 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such Deemed Liquidation Event. The value of such property, rights or securities shall be determined in good faith by the Board of Directors.
2.4.4 Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Section 2.4.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Merger Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 2.3 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 2.3 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Section 2.4.4, consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.
3. Voting.
3.1 General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of this Restated Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class and on an as-converted to Common Stock basis.
3.2 Election of Directors. The holders of record of the shares of Series C Preferred Stock, voting together as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series C Preferred Director”), the holders of record of the shares of Series B Preferred Stock shall be entitled to elect one (1) director of the Corporation (the “Series B Preferred Director”), the holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors of the Corporation (the “Series A Directors” and collectively with the Series C Preferred Director and the Series B Preferred Director, and each, a “Preferred Director”) and the holders of record of the shares of Common Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors of the Corporation; provided, however, for administrative convenience, the initial Series C Preferred Director may also be appointed by the Board of Directors in connection with the approval of the initial issuance of Series C Preferred Stock without a separate action by the holders of Series C
Preferred Stock. Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or Series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. If the holders of shares of Preferred Stock or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first sentence of this Section 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the Preferred Stock or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than (i) by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class or (ii) by the Board of Directors pursuant to the language below. The holders of record of the shares of Common Stock and of any other class or Series of voting stock (including the Preferred Stock), exclusively and voting together as a single class and on an as-converted to Common Stock basis, shall be entitled to elect the balance of the total number of directors of the Corporation. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or Series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Notwithstanding the provisions of Section 223(a)(1) and 223(a)(2) of the General Corporation Law, any vacancy, including newly created directorships resulting from any increase in the authorized number of directors or amendment of this Restated Certificate of Incorporation, and vacancies created by removal or resignation of a director, may be filled (either contingently or otherwise) by a majority of the directors then in office, though less than a quorum, or by a sole remaining director then in office, even if such directors or such sole remaining director were not elected by the holders of the class, classes or Series that are entitled to elect a director or directors to office under the provisions, and such electing director or directors shall specify at the time of such election the specific vacant directorship being filled, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced; provided, however, that where such vacancy occurs among the directors elected by the holders of a class or Series of stock, the holders of shares of such class or Series may override the Board of Directors’ action to fill such vacancy by (i) voting for their own designee to fill such vacancy at a meeting of the Corporation’s stockholders or (ii) written consent, if the consenting stockholders hold a sufficient number of shares to elect their designee at a meeting of the stockholders. The rights of the holders of the Series C Preferred Stock under the first sentence of this Section 3.2 shall terminate on the first date following the date the first share of Series C Preferred Stock was issued on which there are issued and outstanding less than 4,545,454 shares of Series C Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series C Preferred Stock), the rights of the holders of the Series B Preferred Stock under the first sentence of this Section 3.2 shall terminate on the first date following the date the first share of Series B Preferred Stock was issued on which there are issued and outstanding less than 4,545,457 shares of Series B Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series B Preferred Stock), and the rights of the holders of the Series A Preferred Stock under the first sentence of this Section 3.2 shall terminate on the first date following the date the first share of Series A-1 Preferred Stock was issued on which there are issued and outstanding less than 7,606,250 shares of Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Preferred Stock).
3.3 Preferred Stock Protective Provisions. At any time when at least 24,066,477 shares of Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, recapitalization, reclassification, conversion or otherwise, do any of the following without (in addition to any other vote required by law or this Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect; provided, however, that a consent or resolution of the Board of Directors approving any of the following items that is contingent upon receipt of the stockholder consent required pursuant to this Section 3.3 shall not, solely by reason thereof, be deemed to be an action or transaction entered into in violation hereof.
3.3.1 liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger, consolidation, statutory conversion, transfer, domestication or continuance or any other Deemed Liquidation Event, or consent to any of the foregoing;
3.3.2 amend, alter or repeal any provision of this Restated Certificate of Incorporation or Bylaws of the Corporation;
3.3.3 alter or change the rights, preferences or privileges of the Preferred Stock;
3.3.4 (i) create, authorize the creation of, or reclassify any capital stock, or (ii) increase the authorized number of shares of Preferred Stock, Common Stock, or any additional class or Series of capital stock of the Corporation;
3.3.5 purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price thereof or the fair market value;
3.3.6 create or adopt any new equity (or equity-linked) compensation plan, or amend or adopt any new or existing equity (or equity-linked) compensation plan to increase the aggregate number of shares reserved thereunder, unless approved by the Board of Directors, including the affirmative approval of a majority of the Preferred Directors then seated;
3.3.7 create, or authorize the creation of, or issue, or authorize the issuance of any debt security or create any lien or security interest (except for purchase money liens or statutory liens of landlords, mechanics, materialmen, workmen, warehousemen and other similar persons arising or incurred in the ordinary course of business), or incur other indebtedness for borrowed money, including but not limited to obligations and contingent obligation under guarantees, or permit any subsidiary to take any such action with respect to any debt security lien, security interest or other indebtedness for borrowed money, if the aggregate indebtedness of the Corporation and its subsidiaries for borrowed money following such action would exceed $500,000, unless such debt security has received the prior approval of the Board of Directors, including the approval of a majority of the Preferred Directors then seated;
3.3.8 create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one (I) or more other subsidiaries) by the Corporation, or permit any subsidiary to create, or authorize the creation of, or issue or obligate itself to issue, any shares of any class or Series of capital stock to any third party, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or Series of related transactions) of all or substantially all of the assets of such subsidiary;
3.3.9 increase or decrease the authorized number of directors constituting the Board of Directors;
3.3.10 enter into a transaction with one or more of the directors, officers, or stockholders who hold at least 10% of the outstanding voting power of all then-outstanding shares of stock of the Corporation, unless such transaction has been approved by a majority of the disinterested members of the Board of Directors; provided, however, that this restriction shall not apply to reimbursement for reasonable expenses incurred on behalf of the Corporation, standard employee benefits generally made available to all employees, standard indemnification agreements between the Corporation and its directors and officers, and confidentiality and intellectual property assignment agreements between the Corporation and its directors and officers; or
3.3.11 amend this Section 3.3.
3.4 Series C Preferred Stock Protective Provisions. At any time when at least 8,181,818 shares of Series C Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, recapitalization, reclassification, conversion or otherwise, do any of the following without (in addition to any other vote required by law or this Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Series C Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect; provided, however, that a consent or resolution of the Board of Directors approving any of the following items that is contingent upon receipt of the stockholder consent required pursuant to this Section 3.4 shall not, solely by reason thereof, be deemed to be an action or transaction entered into in violation hereof.
3.4.1 amend, alter or repeal any provision of this Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the Series C Preferred Stock in a manner disproportionate to the other Series of Preferred Stock, provided, however, that the Series C Preferred Stock shall not be deemed to have been adversely affected in a manner disproportionate to the other Series of Preferred Stock in connection with the sale of the Corporation’s capital stock by the Corporation in a bona fide equity financing for capital raising purposes solely because of (i) proportional differences in the amounts of respective original issue prices, liquidation preferences, or redemption prices that arise out of differences in the original issue price of the Series C Preferred Stock vis-a-vis or in comparison to other outstanding Series of Preferred Stock, (ii) the creation, authorization or issuance of any additional class or Series of capital stock having rights, preferences, privileges senior to, on parity with, or junior to the Series C Preferred Stock or (iii) inclusion of any additional Series of Preferred Stock in the voting thresholds applicable to the holders of Preferred Stock;
3.4.2 increase the authorized number of shares of Series C Preferred Stock; or
3.4.3 amend this Section 3.4.
3.5 Series B Preferred Stock Protective Provisions. At any time when at least 9,545,454 shares of Series B Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, recapitalization, reclassification, conversion or otherwise, do any of the following without (in addition to any other vote required by law or this Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Series B Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect; provided, however, that a consent or resolution of the Board of Directors approving any of the following items that is contingent upon receipt of the stockholder consent required pursuant to this Section 3.5 shall not, solely by reason thereof, be deemed to be an action or transaction entered into in violation hereof.
3.5.1 amend, alter or repeal any provision of this Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the Series B Preferred Stock in a manner disproportionate to the other Series of Preferred Stock, provided, however, that the Series B Preferred Stock shall not be deemed to have been adversely affected in a manner disproportionate to the other Series of Preferred Stock in connection with the sale of the Corporation’s capital stock by the Corporation in a bona fide equity financing for capital raising purposes solely because of (i) proportional differences in the amounts of respective original issue prices, liquidation preferences, or redemption prices that arise out of differences in the original issue price of the Series B Preferred Stock vis-a-vis or in comparison to other outstanding Series of Preferred Stock, (ii) the creation, authorization or issuance of any additional class or Series of capital stock having rights, preferences, privileges senior to, on parity with, or junior to the Series B Preferred Stock or (iii) inclusion of any additional Series of Preferred Stock in the voting thresholds applicable to the holders of Preferred Stock;
3.5.2 increase the authorized number of shares of Series B Preferred Stock; or
3.5.3 amend this Section 3.5.
3.6 Series A Preferred Stock Protective Provisions. At any time when at least 14,521,022 shares of Series A Preferred Stock (which number is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, recapitalization, reclassification, conversion or otherwise, do any of the following without (in addition to any other vote required by law or this Restated Certificate of Incorporation) the written consent or affirmative vote of the holders of at least 66% of the shares of Series A Preferred Stock (the “Requisite Series A Holders”) given in writing or by vote at a meeting, consenting or voting (as the case may be) together as a single class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect; provided, however, that a consent or resolution of the Board of Directors approving any of the following items that is contingent upon receipt of the stockholder consent required pursuant to this Section 3.6 shall not, solely by reason thereof, be deemed to be an action or transaction entered into in violation hereof.
3.6.1 amend, alter or repeal any provision of this Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the Series A Preferred Stock in a manner disproportionate to the other Series of Preferred Stock, provided, however, that the Series A Preferred Stock shall not be deemed to have been adversely affected in a manner disproportionate to the other Series of Preferred Stock in connection with the sale of the Corporation’s capital stock by the Corporation in a bona fide equity financing for capital raising purposes solely because of (i) proportional differences in the amounts of respective original issue prices, liquidation preferences, or redemption prices that arise out of differences in the original issue price of the Series A Preferred Stock vis-a-vis or in comparison to other outstanding Series of Preferred Stock, (ii) the creation, authorization or issuance of any additional class or Series of capital stock having rights, preferences, privileges senior to, on parity with, or junior to the Series A Preferred Stock or (iii) inclusion of any additional Series of Preferred Stock in the voting thresholds applicable to the holders of Preferred Stock;
3.6.2 increase the authorized number of shares of Series A Preferred Stock; or
3.6.3 amend this Section 3.6.
4. Optional Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):
4.1 Right to Convert.
4.1.1 Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the applicable Original Issue Price by the applicable Conversion Price (as defined below) in effect at the time of conversion. The “Conversion Price” applicable to the Series C Preferred Stock shall initially be equal to $1.375, the Conversion Price applicable to the Series B Preferred Stock shall initially be equal to $1.375, the Conversion Price applicable to the Series A-1 Preferred Stock shall initially be equal to $1.00 and the Conversion Price applicable to the Series A-2 Preferred Stock shall initially be equal to $1.10. Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.
4.1.2 Termination of Conversion Rights. In the event of a notice of redemption of any shares of Preferred Stock pursuant to Section 2.4.2(b) or Section 6.1, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock; provided that the foregoing termination of Conversion Rights shall not affect the amount(s) otherwise paid or payable in accordance with Section 2.1, Section 2.2 and Section 2.3 to holders of Preferred Stock pursuant to such liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event.
4.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the number of shares of Common Stock to be issued upon conversion of the Preferred Stock shall be rounded to the nearest whole share.
4.3 Mechanics of Conversion.
4.3.1 Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account
of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, and (ii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.
4.3.2 Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Restated Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Conversion Price for any Series of Preferred Stock below the then par value of the shares of Common Stock issuable upon conversion of such Series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price.
4.3.3 Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
4.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the Conversion Price shall be made for any declared but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.
4.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
4.4 Adjustments to Conversion Price for Diluting Issues.
4.4.1 Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:
(a) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 4.4.3 below, deemed to be issued) by the Corporation after the Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):
| (i) | as to any Series of Preferred Stock shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on such Series of Preferred Stock or issuable upon conversion of such Series of Preferred Stock; |
| (ii) | shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 4.5, 4.6, 4.7 or 4.8; |
| (iii) | shares of Common Stock issued pursuant to an underwritten public offering in which all outstanding shares of Preferred Stock are automatically converted into shares of Common Stock; |
| (iv) | shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors; |
| (v) | shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security; |
| (vi) | shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors, including the approval of a majority of the Preferred Directors then seated; or |
| (vii) | shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors, including the approval of a majority of the Preferred Directors then seated; or |
| (viii) | shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to (A) the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, (B) a purchase of assets of, or a purchase of more than fifty percent (50%) of the outstanding equity securities of, another entity, or other reorganization, (C) an acqui-hire transaction with another entity, (D) a licensing arrangement or other strategic transaction, provided that in each case, such issuances are approved by the Board of Directors of the Corporation, including the approval of a majority of the Preferred Directors then seated; or |
| (ix) | shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board of Directors, including the approval of a majority of the Preferred Directors then seated. |
(b) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
(c) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
(d) “Original Issue Date” means the date on which the first share of Series C Preferred Stock is issued.
4.4.2 No Adjustment of Conversion Price. No adjustment in the Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the Requisite Holders agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; provided that, (i) with respect to the Series C Preferred Stock, such written notice must also be provided by the Requisite Series C Holders and (ii) with respect to the Series B Preferred Stock, such written notice must also be provided by the Requisite Series B Holders.
4.4.3 Deemed Issue of Additional Shares of Common Stock.
(a) If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Conversion Price of any Series of Preferred Stock pursuant to the terms of Section 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Price of such Series of Preferred Stock computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of
such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Conversion Price applicable to a Series of Preferred Stock to an amount which exceeds the lower of (i) the Conversion Price for such Series of Preferred Stock in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Conversion Price for any Series of Preferred Stock that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.
(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Conversion Price of a Series of Preferred Stock pursuant to the terms of Section 4.4.4 (either because the consideration per share (determined pursuant to Section 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the applicable Conversion Price then in effect, or because such Option or Convertible Security was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Section 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.
(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Conversion Price of any Series of Preferred Stock pursuant to the terms of Section 4.4.4, the Conversion Price of such Series of Preferred Stock shall be readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.
(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Conversion Price of a Series of Preferred Stock provided for in this Section 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Section 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Conversion Price of a Series of Preferred Stock that would result under the terms of this
Section 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price for such Series of Preferred Stock that such issuance or amendment took place at the time such calculation can first be made. In the event an Option or Convertible Security contains alternative conversion terms, such as a cap on the valuation of the Corporation at which such conversion will be effected, or circumstances where the Option or Convertible Security may be repaid in lieu of conversion, then the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of such Option or Convertible Security shall be deemed not calculable until such time as the applicable conversion terms are determined.
4.4.4 Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4.4.3), without consideration or for a consideration per share less than the Conversion Price of a series of Preferred Stock in effect immediately prior to such issuance or deemed issuance, then the Conversion Price for such Series of Preferred Stock shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1* (A + B) ÷ (A + C).
For purposes of the foregoing formula, the following definitions shall apply:
(a) “CP2” shall mean the Conversion Price of such Series of Preferred Stock in effect immediately after such issuance or deemed issuance of Additional Shares of Common Stock
(b) “CP1” shall mean the Conversion Price of such Series of Preferred Stock in effect immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock;
(c) “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);
(d) “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued or deemed issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CPI); and
(e) “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.
4.4.5 Determination of Consideration. For purposes of this Section 4.4, the consideration received by the Corporation for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property. Such consideration shall:
| (i) | insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest; |
| (ii) | insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and |
| (iii) | in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors. |
(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing:
| (i) | The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by |
| (ii) | the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities. |
4.4.6 Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a Series of related transactions and that would result in an adjustment to the Conversion Price of a Series of Preferred Stock pursuant to the terms of Section 4.4.4, then, upon the final such issuance, the Conversion Price for such Series of Preferred Stock shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).
4.5 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Conversion Price of each Series of Preferred Stock in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such Series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Conversion Price of each Series of Preferred Stock in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such Series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this Section shall become effective at the close of business on the date the subdivision or combination becomes effective.
4.6 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Conversion Price of each Series of Preferred Stock in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price of each Series of Preferred Stock then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.
Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price of each Series of Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price of each Series of Preferred Stock shall be adjusted pursuant to this Section as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of such Series of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of such Series of Preferred Stock had been converted into Common Stock on the date of such event.
4.7 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
4.8 Adjustment for Merger or Reorganization, etc. Subject to the provisions of Section 2.4, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Sections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one (1) share of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Conversion Price of each Series of Preferred Stock) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Preferred Stock.
4.9 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price of each Series of Preferred Stock pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such Series of Preferred Stock a certificate setting
forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which such Series of Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Preferred Stock.
4.10 Notice of Record Date. In the event:
(a) the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or Series or any other securities, or to receive any other security; or
(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,
then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.
5. Mandatory Conversion.
5.1 Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public that is either (i) approved by the Requisite Holders, including the Requisite Series C Holders and the Requisite Series B Holders, or (ii) at a price of at least $1.65 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, resulting in at least $100,000,000.00 of gross proceeds to the Corporation and in connection with such offering the Common Stock is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or such other international exchange of equal stature, as
approved by the Board of Directors, including a majority of the Preferred Directors then seated (a “Qualified Public Offering”) or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Requisite Holders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”); then (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated pursuant to Section 4.1.1 and (ii) such shares may not be reissued by the Corporation.
5.2 Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Section 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
6. Redemption.
6.1 General. Unless prohibited by Delaware law governing distributions to stockholders, shares of Series C Preferred Stock and/or Series B Preferred Stock held by any Redeeming Holder (as defined below) shall be redeemed by the Corporation at a price per share of such Series C Preferred Stock and/or Series B Preferred Stock equal to the applicable Original Issue Price, plus all declared but unpaid dividends thereon (the “Redemption Price”), in one installment commencing not more than 60 days after receipt by the Corporation and the other holders of Series C Preferred Stock and/or Series B Preferred Stock (the “Non-Requesting Holders”), at any time on or after March 31, 2035 (the “Redemption Start Date”), from any
holder of Series C Preferred Stock and/or Series B Preferred Stock (the “Redeeming Holder”) of written notice (the “Redemption Notice”) requesting redemption of all shares of Series C Preferred Stock and/or Series B Preferred Stock held by such Redeeming Holder and/or its Affiliates (the “Redemption Request”); provided that, a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, or a Deemed Liquidation Event, has not occurred prior to the Redemption Start Date; provided, further, that the Corporation covenants to permit the Non-Requesting Holders a period of not more than 10 days after receipt by such Non-Requesting Holders of the Redemption Request to deliver to the Corporation a Redemption Request as it pertains to the Series C Preferred Stock and/or Series B Preferred Stock held by such Non-Requesting Holder prior to undertaking any steps set forth hereafter in this Section 6.1. Upon receipt of a Redemption Request, the Corporation shall apply all of its assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders and shall take all reasonable action not prohibited by law (including Delaware law governing distributions to stockholders and the fiduciary duties of the Board of Directors) to generate, as promptly as practical, funds which the Corporation is not prohibited from using to redeem all shares of Series C Preferred Stock and/or Series B Preferred Stock requested to be redeemed (including by way of incurrence of indebtedness, issuance of equity or a Deemed Liquidation Event), and at any time and from time to time thereafter when the Corporation has such additional funds, such funds will immediately be used to redeem the balance of the shares of Series C Preferred Stock and/or Series B Preferred Stock which the Corporation has not fully redeemed in accordance with this Section 6. Notwithstanding the consent rights of the Requisite Holders, the Requisite Series C Holders or the Requisite Series B Holders set forth in this Restated Certificate of Incorporation, the Requisite Holders, the Requisite Series C Holders and the Requisite Series B Holders shall not have the right to consent to or otherwise restrict a transaction or the incurrence of indebtedness by the Corporation if the direct purpose of such transaction or incurrence of indebtedness is to raise the funds necessary to effect the full redemption of any shares of Series C Preferred Stock and/or Series B Preferred Stock to be redeemed pursuant to this Section 6, and such redemption in full is effective concurrently with such transaction or incurrence. The date of each such installment provided in the Redemption Notice shall be referred to as a “Redemption Date.” If on any Redemption Date Delaware law governing distributions to stockholders prevents the Corporation from redeeming all shares of Series C Preferred Stock and/or Series B Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.
6.2 Surrender of Certificates; Payment. On or before the applicable Redemption Date, each holder of shares of Series C Preferred Stock and/or Series B Preferred Stock to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Series C Preferred Stock and/or Series B Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Series C Preferred Stock and/or Series B Preferred Stock shall promptly be issued to such holder.
6.3 Interest. If any shares of Series C Preferred Stock and/or Series B Preferred Stock are not redeemed for any reason on any Redemption Date, all such unredeemed shares shall remain outstanding and entitled to all the rights and preferences provided herein, and the Corporation shall pay interest on the Redemption Price applicable to such unredeemed shares at an aggregate per annum rate equal to 8% (increased by I% each month following the Redemption Date until the Redemption Price, and any interest thereon, is paid in full), with such interest to accrue daily in arrears and be compounded annually; provided, however, that in no event shall such interest exceed the maximum permitted rate of interest under applicable law (the “Maximum Permitted Rate”), provided, however, that the Corporation shall take all such actions as may be necessary, including, without limitation, making any applicable governmental filings, to cause the Maximum Permitted Rate to be the highest possible rate. In the event any provision hereof would result in the rate of interest payable hereunder being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided, however, that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable Redemption Date to the extent permitted by law.
6.4 Rights Subsequent to Redemption. If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Series C Preferred Stock and/or Series B Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Series C Preferred Stock and/or Series B Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Series C Preferred Stock and/or Series B Preferred Stock shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.
7. Redeemed or Otherwise Acquired Shares. Unless approved by the Board of Directors and the Requisite Holders, any shares of Preferred Stock that are redeemed, converted or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption, conversion or acquisition. The Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
8. Waiver. Except as otherwise set forth herein, (a) any of the rights, powers, preferences and other terms of the Preferred Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the Requisite Holders and (b) any of the rights, powers, preferences and other terms of any Series of Preferred Stock set forth herein may be waived on behalf of all holders of such Series of Preferred Stock by the affirmative written consent or vote of the Requisite Series C Holders, Requisite Series B Holders or Requisite Series A Holders, as the case may be.
9. Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.
FIFTH: Subject to any additional vote required by this Restated Certificate of Incorporation or the Bylaws of the Corporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.
SIXTH: Subject to any additional vote required by this Restated Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set firth in the Bylaws of the Corporation. Each director shall be entitled to one (1) vote on each matter presented to the Board of Directors.
SEVENTH: Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
EIGHTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
NINTH: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.
TENTH: To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through provisions of the Bylaws of the Corporation, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.
Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not (a) adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification or (b) increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.
ELEVENTH: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee, affiliate or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, the persons referred to in clauses (i) and (ii) are “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation while such Covered Person is performing services in such capacity. Any repeal or modification of this Article Eleventh will only be prospective and will not affect the rights under this Article Eleventh in effect at the time of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained elsewhere in this Restated Certificate of Incorporation, the affirmative vote of the Requisite Holders will be required to amend or repeal, or to adopt any provisions inconsistent with this Article Eleventh.
TWELFTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten ( I 0) days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
THIRTEENTH: For purposes of Section 500 of the California Corporations Code (to the extent applicable), in connection with any repurchase of shares of capital stock permitted under this Restated Certificate of Incorporation from employees, officers, directors or consultants of the Corporation in connection with a termination of employment or services pursuant to agreements or arrangements approved by the Board of Directors (in addition to any other consent required under this Restated Certificate of Incorporation), such repurchase may be made without regard to any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined in Section 500 of the California Corporations Code). Accordingly, for purposes of making any calculation under California Corporations Code Section 500 in connection with such repurchase, the amount of any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined therein) shall be deemed to be zero (0).
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3. That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.
4. That this Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.
[Signature Page Follows]
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 28th day of March, 2025.
| By: | /s/ Tao Fu | |
| Tao Fu, President |
Exhibit 3.2
ATTOVIA THERAPEUTICS, INC.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Attovia Therapeutics, Inc., a Delaware corporation, hereby certifies as follows:
1. The name of this corporation is “Attovia Therapeutics, Inc.” The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was December 16, 2022 under the name Attovia Therapeutics, Inc.
2. The Amended and Restated Certificate of Incorporation of this corporation attached hereto as Exhibit A, which is incorporated herein by this reference, and which restates, integrates and further amends the provisions of the Certificate of Incorporation of this corporation as previously amended and/or supplemented, has been duly adopted by this corporation’s Board of Directors and by the stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, with the approval of this corporation’s stockholders having been given by written consent without a meeting in accordance with Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its duly authorized officer and the foregoing facts stated herein are true and correct.
| Dated: [_], 2026 | ATTOVIA THERAPEUTICS, INC. | |||||
| By: |
| |||||
| Name: Tao Fu | ||||||
| Title: Chief Executive Officer and President | ||||||
EXHIBIT A
ATTOVIA THERAPEUTICS, INC.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
ARTICLE I: NAME
The name of the corporation is Attovia Therapeutics, Inc. (the “Corporation”).
ARTICLE II: AGENT FOR SERVICE OF PROCESS
The address of the registered office of the Corporation in the State of Delaware is 3500 South DuPont Highway in the City of Dover, County of Kent, 19901. The name of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III: PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (as amended from time to time, the “General Corporation Law”).
ARTICLE IV: AUTHORIZED STOCK
| 1. | Authorized Shares. |
1.1 The total number of shares of all classes of capital stock that the Corporation has authority to issue is five hundred and ten million (510,000,000) shares, consisting of two classes: five hundred million (500,000,000) shares of Common Stock, $0.0001 par value per share (“Common Stock”), and ten million (10,000,000) shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).
1.2 Irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, but subject to the rights of the holders of any series of Preferred Stock then outstanding, the number of authorized shares of any class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by a vote of the holders of the stock of the Corporation entitled to vote thereon, voting as a single class.
1.3 For the avoidance of doubt, the Corporation expressly elects to be governed by Section 242(d) of the General Corporation Law
| 2. | Preferred Stock. |
2.1. The Board of Directors of the Corporation (the “Board”) is authorized, subject to any limitations prescribed by the laws of the State of Delaware, by resolution or resolutions adopted from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, and, by filing a certificate of designation pursuant to the applicable laws of the
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State of Delaware (each such certificate, a “Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights (and the qualifications, limitations or restrictions thereof) of the shares of each such series and, except where otherwise provided in the applicable Certificate of Designation, to increase (but not above the total number of authorized shares of the Preferred Stock) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series.
2.2 Except as otherwise expressly provided in this Amended and Restated Certificate of Incorporation (as the same may be amended and/or restated from time to time, including pursuant to the terms of any Certificate of Designation designating a series of Preferred Stock, this “Certificate of Incorporation”), (i) any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and (ii) any such new series may have powers, preferences and rights, including, without limitation, voting powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, any series of the Preferred Stock or any future class or series of capital stock of the Corporation.
3. Common Stock. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law or this Certificate of Incorporation, holders of shares of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding class or series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together as a class with the holders of one or more other such class or series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock).
ARTICLE V: AMENDMENT OF BYLAWS
The Board shall have the power to adopt, amend or repeal the Bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships (the “Whole Board”). The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that except as otherwise provided in this Certificate of Incorporation, and in addition to any requirements of law, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws; provided, further, that, in the case of any proposed adoption, amendment or repeal of any provision of the Bylaws that is both (i) approved by at least two-thirds (2/3) of the Whole Board and (ii) submitted to the stockholders for adoption thereby, then, except as otherwise provided in this Certificate of Incorporation, only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class (in addition to any requirements of law), shall be required to adopt, amend or repeal any such provision of the Bylaws.
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ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS
1. Director Powers. Except as otherwise provided by the General Corporation Law or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
2. Number of Directors. Subject to the special rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution of the Board.
3. Classified Board. Subject to the special rights of the holders of one or more class or series of Preferred Stock to elect directors, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”). The Board is authorized to assign members of the Board already in office to such classes of the Classified Board effective at the time the classification of the Board becomes effective. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering the offer and sale of Common Stock to the public (the “Initial Public Offering Closing”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the Initial Public Offering Closing, and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the Initial Public Offering Closing. At each succeeding annual meeting of stockholders following the Initial Public Offering Closing, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election.
4. Term and Removal. Each director shall hold office until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon notice to the Corporation given in writing or by any electronic transmission. Subject to the special rights of the holders of any class or series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. No decrease in the number of directors constituting the Board shall shorten the term of any director.
5. Board Vacancies and Newly Created Directorships. Subject to the special rights of the holders of any class or series of Preferred Stock, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. Any director elected in accordance with the preceding sentence shall serve for the remainder of the term of the class of director in which the vacancy or new directorship was created and shall hold office until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal.
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6. Determination of Ambiguity. In case of an ambiguity in the application of any provision set forth in Sections 2, 3, 4, 5 or 6 of this Article VI or in the meaning of any term or definition set forth in Sections 2, 3, 4, 5 or 6 of this Article VI (including any such term used in any other provision of this Certificate of Incorporation), the Board, or a committee thereof, shall have the power to determine, in good faith, the application of any such provision or any such term or definition. Such determination shall be evidenced in a writing adopted by the Board (or a committee thereof, as applicable), and such writing shall be made available for inspection by any holder of capital stock of the Corporation at the principal executive offices of the Corporation.
7. Vote by Ballot. Election of directors need not be by written ballot unless the Bylaws shall so provide.
ARTICLE VII: DIRECTOR AND OFFICER LIABILITY
1. Limitation of Liability. To the fullest extent permitted by law, neither a director of the Corporation nor an officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director or officer, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.
2. Change in Rights. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director or officer of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.
ARTICLE VIII: MATTERS RELATING TO STOCKHOLDERS
1. No Action by Written Consent of Stockholders. Subject to the rights of any series of Preferred Stock then outstanding, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders of the Corporation by written consent in lieu of a meeting.
2. Special Meeting of Stockholders. Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer of the Corporation, the Lead Independent Director (as defined in the Bylaws), or the Board acting pursuant to a resolution adopted by a majority of the Whole Board and may not be called by the stockholders or any other person or persons.
3. Advance Notice of Stockholder Nominations and Business Transacted at Annual or Special Meetings. Advance notice of stockholder nominations for the election of directors of the Corporation at, and of proper business to be brought by stockholders before, any annual or special meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws. Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the notice of meeting.
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ARTICLE IX: SEVERABILITY
If any provision of this Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Certificate of Incorporation (including, without limitation, all portions of any section of this Certificate of Incorporation containing any such provision held to be invalid, illegal, or unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect.
ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, except as otherwise provided in this Certificate of Incorporation, and in addition to any other vote required by law, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to amend or repeal, or adopt any provision inconsistent with this Certificate of Incorporation (other than Section 1.1 of Article IV); provided, further, that if two-thirds (2/3) of the Whole Board has approved such amendment or repeal of, or adoption of any provision inconsistent with, the provisions of this Certificate of Incorporation, then, except as otherwise provided in this Certificate of Incorporation, only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class (in addition to any other vote required by law), shall be required to approve such amendment or repeal of, or adoption of any provision inconsistent with, the provisions of this Certificate of Incorporation.
* * * * * * * * * * *
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Exhibit 3.3
BYLAWS OF
ATTOVIA THERAPEUTICS, INC.
(A DELAWARE CORPORATION)
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I OFFICES |
1 | |||||||
| 1.1 |
Registered Office | 1 | ||||||
| 1.2 |
Offices | 1 | ||||||
| ARTICLE II MEETINGS OF STOCKHOLDERS |
1 | |||||||
| 2.1 |
Location | 1 | ||||||
| 2.2 |
Timing | 1 | ||||||
| 2.3 |
Notice of Meeting | 1 | ||||||
| 2.4 |
Stockholders’ Records | 1 | ||||||
| 2.5 |
Special Meetings | 2 | ||||||
| 2.6 |
Notice of Meeting | 2 | ||||||
| 2.7 |
Business Transacted at Special Meeting | 2 | ||||||
| 2.8 |
Quorum; Meeting Adjournment; Presence by Remote Means | 2 | ||||||
| 2.9 |
Voting Thresholds | 3 | ||||||
| 2.10 |
Number of Votes Per Share | 3 | ||||||
| 2.11 |
Action by Written Consent of Stockholders; Electronic Consent; Notice of Action | 3 | ||||||
| ARTICLE III DIRECTORS |
4 | |||||||
| 3.1 |
Authorized Directors | 4 | ||||||
| 3.2 |
Vacancies | 4 | ||||||
| 3.3 |
Board Authority | 5 | ||||||
| 3.4 |
Location of Meetings | 5 | ||||||
| 3.5 |
First Meeting | 5 | ||||||
| 3.6 |
Regular Meetings | 5 | ||||||
| 3.7 |
Special Meetings | 5 | ||||||
| 3.8 |
Quorum | 6 | ||||||
| 3.9 |
Action Without a Meeting | 6 | ||||||
| 3.10 |
Telephonic Meetings | 6 | ||||||
| 3.11 |
Committees | 6 | ||||||
| 3.12 |
Minutes of Meetings | 6 | ||||||
| 3.13 |
Compensation of Directors | 7 | ||||||
| 3.14 |
Removal of Directors | 7 | ||||||
| ARTICLE IV NOTICES |
7 | |||||||
| 4.1 |
Notice | 7 | ||||||
| 4.2 |
Waiver of Notice | 7 | ||||||
| 4.3 |
Electronic Notice | 7 | ||||||
| ARTICLE V OFFICERS |
8 | |||||||
| 5.1 |
Required and Permitted Officers | 8 | ||||||
| 5.2 |
Appointment of Required Officers | 8 | ||||||
| 5.3 |
Appointment of Permitted Officers | 8 | ||||||
| 5.4 |
Officer Compensation | 8 | ||||||
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| 5.5 |
Term of Office; Vacancies | 8 | ||||||
| 5.6 |
Chairman Presides | 8 | ||||||
| 5.7 |
Absence of Chairman | 9 | ||||||
| 5.8 |
Powers of Chief Executive Officer | 9 | ||||||
| 5.9 |
Chief Executive Officer’s Signature Authority | 9 | ||||||
| 5.10 |
Absence of Chief Executive Officer | 9 | ||||||
| 5.11 |
Powers of President | 9 | ||||||
| 5.12 |
Absence of President | 9 | ||||||
| 5.13 |
Duties of Secretary | 9 | ||||||
| 5.14 |
Duties of Assistant Secretary | 10 | ||||||
| 5.15 |
Duties of Treasurer | 10 | ||||||
| 5.16 |
Disbursements and Financial Reports | 10 | ||||||
| 5.17 |
Treasurer’s Bond | 10 | ||||||
| 5.18 |
Duties of Assistant Treasurer | 10 | ||||||
| ARTICLE VI CERTIFICATE OF STOCK |
11 | |||||||
| 6.1 |
Stock Certificates | 11 | ||||||
| 6.2 |
Facsimile Signatures | 11 | ||||||
| 6.3 |
Lost Certificates | 11 | ||||||
| 6.4 |
Transfer of Stock | 11 | ||||||
| 6.5 |
Fixing a Record Date | 12 | ||||||
| 6.6 |
Registered Stockholders | 12 | ||||||
| ARTICLE VII GENERAL PROVISIONS |
12 | |||||||
| 7.1 |
Dividends | 12 | ||||||
| 7.2 |
Reserve for Dividends | 12 | ||||||
| 7.3 |
Checks | 12 | ||||||
| 7.4 |
Fiscal Year | 12 | ||||||
| 7.5 |
Corporate Seal | 12 | ||||||
| 7.6 |
Indemnification | 13 | ||||||
| 7.7 |
Conflicts with Certificate of Incorporation | 14 | ||||||
| ARTICLE VIII AMENDMENTS |
14 | |||||||
| ARTICLE IX LOANS TO OFFICERS |
14 | |||||||
| ARTICLE X RECORDS AND REPORTS |
14 | |||||||
| ARTICLE XI STOCK TRANSFERS |
15 | |||||||
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BYLAWS
OF
ATTOVIA THERAPEUTICS, INC.
ARTICLE I
OFFICES
1.1 Registered Office. The registered office shall be in the City of Dover, County of Kent, State of Delaware.
1.2 Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Location. All meetings of the stockholders for the election of directors shall be held in San Mateo, California, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting; provided, however, that the Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211 of the Delaware General Corporations Law (“DGCL”). Meetings of stockholders for any other purpose may be held at such time and place, if any, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof, or a waiver by electronic transmission by the person entitled to notice.
2.2 Timing. Annual meetings of stockholders, commencing with the year 2023, shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting.
2.3 Notice of Meeting. Written notice of any stockholder meeting stating the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given to each stockholder entitled to vote at such meeting not fewer than ten (10) nor more than sixty (60) days before the date of the meeting.
2.4 Stockholders’ Records. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address (but not the electronic address or other electronic contact information) of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at
least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
2.5 Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the Chief Executive Officer and shall be called by the Chief Executive Officer or secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning at least fifty percent (50%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.
2.6 Notice of Meeting. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. The means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting shall also be provided in the notice.
2.7 Business Transacted at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
2.8 Quorum; Meeting Adjournment; Presence by Remote Means.
(a) Quorum; Meeting Adjournment. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
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(b) Presence by Remote Means. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:
(i) participate in a meeting of stockholders; and
(ii) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.
2.9 Voting Thresholds. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.
2.10 Number of Votes Per Share. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote by such stockholder or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.
2.11 Action by Written Consent of Stockholders; Electronic Consent; Notice of Action.
(a) Action by Written Consent of Stockholders. Unless otherwise provided by the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken, is signed in a manner permitted by law by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Written stockholder consents shall bear the date of signature of each stockholder who signs the consent in the manner permitted by law and shall be delivered to the corporation as provided in subsection (b) below. No written consent shall be effective to take the action set forth therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation in the manner provided above, written consents signed by a sufficient number of stockholders to take the action set forth therein are delivered to the corporation in the manner provided above.
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(b) Electronic Consent. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the corporation can determine (1) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (2) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the corporation or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board of Directors of the corporation.
(c) Notice of Action. Prompt notice of any action taken pursuant to this Section 2.11 shall be provided to the stockholders in accordance with Section 228(e) of the DGCL.
ARTICLE III
DIRECTORS
3.1 Authorized Directors. The number of directors that shall constitute the whole Board of Directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting of the stockholders, except as provided in Section 3.2 of this Article, and each director elected shall hold office until his or her successor is elected and qualified. Directors need not be stockholders.
3.2 Vacancies. Unless otherwise provided in the corporation’s certificate of incorporation, as it may be amended, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board of Directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.
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3.3 Board Authority. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.
3.4 Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.
3.5 First Meeting. The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.
3.6 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.
3.7 Special Meetings. Special meetings of the Board of Directors may be called by the Chief Executive Officer upon notice to each director; special meetings shall be called by the Chief Executive Officer or secretary in like manner and on like notice on the written request of two (2) directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the Chief Executive Officer or secretary in like manner and on like notice on the written request of the sole director. Notice of any special meeting shall be given to each director at his or her business or residence in writing, or by telegram, facsimile transmission, telephone communication or electronic transmission (provided, with respect to electronic transmission, that the director has consented to receive the form of transmission at the address to which it is directed). If mailed, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company at least twenty-four (24) hours before such meeting. If by facsimile transmission or other electronic transmission, such notice shall be transmitted at least twenty-four (24) hours before such meeting. If by telephone, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws as provided under Section 8.1 of Article VIII hereof. A meeting may be held at any time without notice if all the directors are present (except as otherwise provided by law) or if those not present waive notice of the meeting in writing, either before or after such meeting.
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3.8 Quorum. At all meetings of the Board of Directors, the greater of (a) a majority of the directors at any time in office, and (b) one-third of the number of directors fixed by the Board of Directors or by the stockholders pursuant to Section 3.1 of Article III hereof shall constitute a quorum for the transaction of business and any act of a majority of the directors present at any meeting at which there is a quorum shall be an act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
3.9 Action Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing, writings, electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee.
3.10 Telephonic Meetings. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or any committee, by means of conference telephone or other means of communication by which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.
3.11 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these bylaws.
3.12 Minutes of Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
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3.13 Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
3.14 Removal of Directors. Unless otherwise provided by the certificate of incorporation or these bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
4.1 Notice. Unless otherwise provided in these bylaws, whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his or her address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.
4.2 Waiver of Notice. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
4.3 Electronic Notice.
(a) Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders and directors, any notice to stockholders or directors given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder or director to whom the notice is given. Any such consent shall be revocable by the stockholder or director by written notice to the corporation. Any such consent shall be deemed revoked if (1) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent and (2) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
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(b) Effective Date of Notice. Notice given pursuant to subsection (a) of this section shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder or director has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder or director of such specific posting, upon the later of (i) such posting and (ii) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder or director. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
(c) Form of Electronic Transmission. For purposes of these bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
ARTICLE V
OFFICERS
5.1 Required and Permitted Officers. The officers of the corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer and/or a president, a treasurer and a secretary. The Board of Directors may elect from among its members a Chairman of the Board and a Vice-Chairman of the Board. The Board of Directors may also choose one or more vice-presidents, assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.
5.2 Appointment of Required Officers. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a Chief Executive Officer and/or a president, a treasurer, and a secretary and may choose vice-presidents.
5.3 Appointment of Permitted Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
5.4 Officer Compensation. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors.
5.5 Term of Office; Vacancies. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
5.6 Chairman Presides. Unless the Board of Directors appoints a Chairman of the Board, the Chief Executive Officer shall be the Chairman of the Board, so long as the Chief Executive Officer is a director of the corporation. The Chairman of the Board shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time, assigned to him or her by the Board of Directors and as may be provided by law.
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5.7 Absence of Chairman. In the absence of the Chairman of the Board, the Vice-Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time, assigned to him or her by the Board of Directors and as may be provided by law.
THE CIDEF EXECUTIVE OFFICER
5.8 Powers of Chief Executive Officer. The Chief Executive Officer shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.
5.9 Chief Executive Officer’s Signature Authority. The Chief Executive Officer shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Executive Officer may sign certificates for shares of stock of the corporation.
5.10 Absence of Chief Executive Officer. In the absence of the Chief Executive Officer or in the event of his or her inability or refusal to act, the president shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.
THE PRESIDENT AND VICE-PRESIDENTS
5.11 Powers of President. Unless the Board of Directors appoints a president of the corporation, the Chief Executive Officer shall be the president of the corporation. The president of the corporation shall have such powers as required by law and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
5.12 Absence of President. In the absence of the president or in the event of his or her inability or refusal to act, the vice-president, if any, (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
5.13 Duties of Secretary. The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He or she shall give, or cause to be given,
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notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he or she shall be. He or she shall have custody of the corporate seal of the corporation and he or she, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his or her signature.
5.14 Duties of Assistant Secretary. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
5.15 Duties of Treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.
5.16 Disbursements and Financial Reports. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors, at its regular meetings or when the Board of Directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the corporation.
5.17 Treasurer’s Bond. If required by the Board of Directors, the treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the corporation.
5.18 Duties of Assistant Treasurer. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of the treasurer’s inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
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ARTICLE VI
CERTIFICATE OF STOCK
6.1 Stock Certificates. Every holder of stock in the corporation shall be entitled to have a certificate, signed by or in the name of the corporation by any two authorized officers of the corporation, certifying the number of shares owned by him or her in the corporation.
Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
6.2 Facsimile Signatures. Any or all of the signatures on the certificate may be facsimile. In the event that any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the corporation with the same effect as if such officer, transfer agent or registrar were still acting as such at the date of issue.
6.3 Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issuance of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
6.4 Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
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6.5 Fixing a Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
6.6 Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote as such owner, to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
7.1 Dividends. Dividends upon the capital stock of the corporation, if any, subject to the provisions of the certificate of incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the certificate of incorporation.
7.2 Reserve for Dividends. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their sole discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors think conducive to the interests of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
7.3 Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
7.4 Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.
7.5 Corporate Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.
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7.6 Indemnification. The corporation shall, to the fullest extent authorized under the laws of the State of Delaware, as those laws may be amended and supplemented from time to time, indemnify any director made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of being a director of the corporation or a predecessor corporation or a director or officer of another corporation, if such person served in such position at the request of the corporation; provided, however, that the corporation shall indemnify any such director or officer in connection with a proceeding initiated by such director or officer only if such proceeding was authorized by the Board of Directors of the corporation. The indemnification provided for in this Section 7.6 shall: (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under these bylaws, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director, and (iii) inure to the benefit of the heirs, executors and administrators of a person who has ceased to be a director. The corporation’s obligation to provide indemnification under this Section 7.6 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person.
Expenses incurred by a director of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he or she is or was a director of the corporation (or was serving at the corporation’s request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized by relevant sections of the DGCL. Notwithstanding the foregoing, the corporation shall not be required to advance such expenses to an agent who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors of the corporation that alleges willful misappropriation of corporate assets by such agent, disclosure of confidential information in violation of such agent’s fiduciary or contractual obligations to the corporation or any other willful and deliberate breach in bad faith of such agent’s duty to the corporation or its stockholders.
The foregoing provisions of this Section 7.6 shall be deemed to be a contract between the corporation and each director who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.
The Board of Directors in its sole discretion shall have power on behalf of the corporation to indemnify any person, other than a director, made a party to any action, suit or proceeding by reason of the fact that he or she, his or her testator or intestate, is or was an officer or employee of the corporation.
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To assure indemnification under this Section 7.6 of all directors, officers and employees who are determined by the corporation or otherwise to be or to have been “fiduciaries” of any employee benefit plan of the corporation that may exist from time to time, Section 145 of the DGCL shall, for the purposes of this Section 7.6, be interpreted as follows: an “other enterprise” shall be deemed to include such an employee benefit plan, including without limitation, any plan of the corporation that is governed by the Act of Congress entitled “Employee Retirement Income Security Act of 1974,” as amended from time to time; the corporation shall be deemed to have requested a person to serve the corporation for purposes of Section 145 of the DGCL, as administrator of an employee benefit plan where the performance by such person of his or her duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed“fines.”
7.7 Conflicts with Certificate of Incorporation. In the event of any conflict between the provisions of the corporation’s certificate of incorporation and these bylaws, the provisions of the certificate of incorporation shall govern.
ARTICLE VIII
AMENDMENTS
8.1 These bylaws may be altered, amended or repealed, or new bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the certificate of incorporation at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal bylaws is conferred upon the Board of Directors by the certificate of incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal bylaws.
ARTICLE IX
LOANS TO OFFICERS
9.1 The corporation may lend money to, or guarantee any obligation of or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
ARTICLE X
RECORDS AND REPORTS
10.1 The application and requirements of Section 1501 of the California General Corporation Law are hereby expressly waived to the fullest extent permitted thereunder.
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ARTICLE XI
STOCK TRANSFERS
11.1 Stock Transfer Agreements. The corporation shall have the power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by DGCL.
11.2 Restrictions on Transfer.
(a) Restrictions on Transfer. No stockholder of the corporation (a “Stockholder”) may sell, assign, transfer, pledge, encumber, grant an economic or participation interest in, contractually transfer the economic benefits of, or in any manner dispose of (“Transfer”) any share of common stock not issued upon the conversion of preferred stock or founders preferred stock of the corporation (a “Share”), whether voluntarily or by operation of law, or by gift or otherwise, other than by means of a Permitted Transfer (as defined below). If any provision(s) of any agreement(s) currently in effect by and between the corporation and any Stockholder (the “Stockholder Agreement(s)”) conflicts with this Section 11.2 of the Bylaws, this Section 11.2 shall govern, and the remaining provision(s) of the Stockholder Agreement(s) that do not conflict with this Section 11.2 shall continue in full force and effect.
(b) Permitted Transfers. For purposes of this Section 11.2, a “Permitted Transfer” shall mean any of the following:
(i) any Transfer by a Stockholder of any or all of such Stockholder’s Shares to the corporation;
(ii) any Transfer by a Stockholder of any or all of such Stockholder’s Shares to such Stockholder’s Immediate Family (as defined below) or a trust or other entity for the benefit of such Stockholder or such Stockholder’s Immediate Family;
(iii) any Transfer by a Stockholder of any or all of such Stockholder’s Shares effected pursuant to such Stockholder’s beneficiary designation, will or the laws of intestate succession;
(iv) if a Stockholder is a partnership, limited liability company, or corporation, any Transfer by such Stockholder of any or all of such Stockholder’s Shares to the partners, members, retired partners, retired members, stockholders, and/or Affiliates (as defined below) of such Stockholder; provided that no Stockholder may Transfer any of such Stockholder’s Shares to a Special Purpose Entity (as defined below) pursuant to this subsection (iv); and/or
(v) any Transfer of Shares approved by the Board of Directors.
Notwithstanding the foregoing, if a Permitted Transfer is approved pursuant to subsection (v) of this Section 11.2(b) and the Shares of the transferring party are subject to rights of first refusal and/or co-sale rights pursuant to these Bylaws or a Stockholder Agreement (the “First Refusal and Co-Sale Rights”), the persons and/or entities entitled to the First Refusal and Co-Sale Rights shall be permitted to exercise their respective First Refusal and Co-Sale Rights in conjunction with that specific Permitted Transfer without any additional approval of the Board of Directors.
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(c) Certain Definitions. For purposes of this Section 11.2:
(i) “Affiliate” shall mean any person or entity who or which, directly or indirectly, controls, is controlled by, or is under common control with the relevant Stockholder, including, without limitation, any general partner, managing partner, limited partner, manager, managing member, officer or director of such Stockholder or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, shares the same management or advisory company with, or is otherwise affiliated with, such Stockholder.
(ii) “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, or any Spousal Equivalent.
(iii) “Liquidation Event” shall mean any transaction defined as a “Liquidation Event” in the certificate of incorporation or, if such term is not defined in the certificate of incorporation, shall mean (A) the closing of the sale, transfer or other disposition of all or substantially all of the corporation’s assets, (B) the consummation of the merger or consolidation of the corporation with or into another entity (except a merger or consolidation in which the holders of capital stock of the corporation immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the capital stock of the corporation or the surviving or acquiring entity in substantially identical proportions and with substantially identical rights, preferences, privileges and restrictions as existed immediately prior to such transaction), (C) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the corporation’s securities), of the corporation’s securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting stock of the corporation (or the surviving or acquiring entity) or (D) a liquidation, dissolution or winding up of the corporation; provided, however, that a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of the corporation’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the corporation’s securities immediately prior to such transaction.
(iv) “Special Purpose Entity” shall mean an entity that holds or would hold only Shares or has or would have a class or series of security holders with beneficial interests primarily in Shares (including for such purpose an entity that holds cash and/or cash equivalents intended to purchase Shares).
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(v) “Spousal Equivalent” shall mean an individual who: (A) is in an exclusive, continuous, committed relationship with the relevant Stockholder, has been in that relationship for the twelve (12) months prior to the relevant date and intends to be in that relationship indefinitely; (B) has no such relationship with any other person and is not married to any other person; (C) shares a principal residence with the relevant Stockholder; (D) is at least 18 years of age and legally and mentally competent to consent to contract; (E) is not related by blood to the relevant stockholder to a degree of kinship that would prevent marriage from being recognized under the law of the state in which the individual and the relevant Stockholder reside; and (F) is jointly responsible with the relevant Stockholder for each other’s common welfare and financial obligations.
(d) Void Transfers. Any Transfer of Shares shall be null and void unless the terms, conditions and provisions of this Section 11.2 are strictly observed and followed.
(e) Termination of Restriction on Transfer. The foregoing restriction on Transfer shall lapse upon the earlier of (i) immediately prior to the consummation of a Liquidation Event, or (ii) immediately prior to the corporation’s first firm commitment underwritten public offering of its securities pursuant to a registration statement under the Securities Act of 1933, as amended, or (iii) the corporation’s initial listing of its common stock on a national securities exchange by means of an effective registration statement on Form S-1 filed by this corporation with the Securities and Exchange Commission.
(f) Legends. The certificates representing Shares shall bear on their face the following legend so long as the foregoing restriction on Transfer remains in effect:
“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE BYLAWS OF THE CORPORATION. COPIES OF THE BYLAWS OF THE CORPORATION MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.”
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CERTIFICATE OF SECRETARY OF
ATTOVIA THERAPEUTICS, INC.
The undersigned, Yuling Luo, hereby certifies that he or she is the duly elected and acting Secretary of ATTOVIA THERAPEUTICS, INC., a Delaware corporation (the “Corporation”), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by Action by Written Consent in Lieu of Organizational Meeting by the Directors on December 16, 2022.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his or her name this 16th day of December, 2022.
| /s/Yuling Luo |
| Yuling Luo, Secretary |
Exhibit 3.4
Attovia Therapeutics, Inc.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
As Amended and Restated on [_], 2026
ATTOVIA THERAPEUTICS, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
TABLE OF CONTENTS
| Page | ||||||
| Article I: Meetings of STOCKHOLDERS |
1 | |||||
| Section 1.1: |
Annual Meetings | 1 | ||||
| Section 1.2: |
Special Meetings | 1 | ||||
| Section 1.3: |
Notice of Stockholders’ Meetings | 1 | ||||
| Section 1.4: |
Adjournments | 1 | ||||
| Section 1.5: |
Quorum | 2 | ||||
| Section 1.6: |
Organization | 2 | ||||
| Section 1.7: |
Voting; Proxies | 2 | ||||
| Section 1.8: |
Fixing Date for Determination of Stockholders of Record | 3 | ||||
| Section 1.9: |
List of Stockholders Entitled to Vote | 3 | ||||
| Section 1.10: |
Inspectors of Elections. | 4 | ||||
| Section 1.11: |
Conduct of Meetings | 4 | ||||
| Section 1.12: |
Advance Notice Procedures. | 5 | ||||
| Article II: BOARD OF DIRECTORS |
15 | |||||
| Section 2.1: |
Number; Qualifications | 15 | ||||
| Section 2.2: |
Election; Resignation; Removal; Vacancies | 15 | ||||
| Section 2.3: |
Regular Meetings | 15 | ||||
| Section 2.4: |
Special Meetings | 15 | ||||
| Section 2.5: |
Remote Meetings Permitted | 16 | ||||
| Section 2.6: |
Quorum; Vote Required for Action | 16 | ||||
| Section 2.7: |
Organization | 16 | ||||
| Section 2.8: |
Unanimous Action by Directors in Lieu of a Meeting | 16 | ||||
| Section 2.9: |
Powers | 16 | ||||
| Section 2.10: |
Compensation of Directors | 16 | ||||
| Section 2.11: |
Confidentiality | 16 | ||||
| Section 2.12 |
Emergency Bylaws | 17 | ||||
| Article III: COMMITTEES |
17 | |||||
| Section 3.1: |
Committees | 17 | ||||
| Section 3.2: |
Committee Rules | 17 | ||||
| Article IV: OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR |
18 | |||||
| Section 4.1: |
Generally | 18 | ||||
| Section 4.2: |
Chief Executive Officer | 18 | ||||
| Section 4.3: |
Chairperson of the Board | 18 | ||||
| Section 4.4: |
Lead Independent Director | 18 | ||||
| Section 4.5: |
President | 19 | ||||
| Section 4.6: |
Chief Financial Officer | 19 | ||||
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| Section 4.7: |
Treasurer | 19 | ||||
| Section 4.8: |
Vice President | 19 | ||||
| Section 4.9: |
Secretary | 19 | ||||
| Section 4.10: |
Delegation of Authority | 19 | ||||
| Section 4.11: |
Removal | 19 | ||||
| Article V: STOCK |
20 | |||||
| Section 5.1: |
Certificates; Uncertificated Shares | 20 | ||||
| Section 5.2: |
Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares | 20 | ||||
| Section 5.3: |
Other Regulations | 20 | ||||
| Article VI: INDEMNIFICATION |
20 | |||||
| Section 6.1: |
Indemnification of Officers and Directors | 20 | ||||
| Section 6.2: |
Advancement of Expenses | 21 | ||||
| Section 6.3: |
Non-Exclusivity of Rights | 21 | ||||
| Section 6.4: |
Indemnification of Others and Additional Rights | 22 | ||||
| Section 6.5: |
Right of Indemnitee to Bring Suit | 22 | ||||
| Section 6.6: |
Nature of Rights | 22 | ||||
| Section 6.7: |
Amendment or Repeal | 22 | ||||
| Section 6.8: |
Insurance | 23 | ||||
| Section 6.9: |
Indemnification for Successful Defense | 23 | ||||
| Article VII: NOTICES |
23 | |||||
| Section 7.1: |
Notice. | 23 | ||||
| Section 7.2: |
Waiver of Notice | 23 | ||||
| Article VIII: MISCELLANEOUS |
24 | |||||
| Section 8.1: |
Fiscal Year | 24 | ||||
| Section 8.2: |
Seal | 24 | ||||
| Section 8.3: |
Form of Records | 24 | ||||
| Section 8.4: |
Reliance Upon Books and Records | 24 | ||||
| Section 8.5: |
Certificate of Incorporation Governs | 24 | ||||
| Section 8.6: |
Severability | 24 | ||||
| Section 8.7: |
Time Periods | 24 | ||||
| Article IX: AMENDMENT |
25 | |||||
| Article X: CHOICE OF FORUM; EXCLUSIVE FORUM |
25 | |||||
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ATTOVIA THERAPEUTICS, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
As Adopted [_], 2026 and
As Effective [_], 2026
ARTICLE I: MEETINGS OF STOCKHOLDERS
Section 1.1: Annual Meetings. If required by applicable law, an annual meeting of stockholders shall be held for the election of directors and such other proper business at such date and time as the Board of Directors (the “Board”) of Attovia Therapeutics, Inc. (the “Corporation”), or its designee, shall each year fix. The meeting may be held either at a place, within or without the State of Delaware as permitted by the Delaware General Corporation Law (the “DGCL”) as the Board, or its designee, shall fix, or solely by means of remote communication as the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.
Section 1.2: Special Meetings. Special meetings of stockholders for any purpose or purposes shall be called in the manner set forth in the Amended and Restated Certificate of Incorporation of the Corporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”). The special meeting may be held either at a place, within or without the State of Delaware as the Board, or its designee, shall fix, or solely by means of remote communication as the Board in its sole discretion may determine. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.
Section 1.3: Notice of Stockholders’ Meetings. Notice of all meetings of stockholders shall be given in accordance with applicable law (including, without limitation, as set forth in Section 7.1 of these Bylaws) stating the date, time and place, if any, of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for determining the stockholders entitled to notice of the meeting). In the case of a special meeting, such notice shall also set forth the purpose or purposes for which the meeting is called. Unless otherwise required by applicable law or the Certificate of Incorporation, notice of any meeting of stockholders shall be given not less than ten (10), nor more than sixty (60), days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.
Section 1.4: Adjournments. Notwithstanding Section 1.5 of these Bylaws, the chairperson of the meeting shall have the power to adjourn the meeting to another time, date and place (if any), regardless of whether a quorum is present, at any time and for any reason. Any meeting of stockholders, annual or special, may be adjourned from time to time (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication), and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof and the means of remote communication (if any) by which stockholders and
proxy holders may be deemed to be present in person and vote at such adjourned meeting are (i) announced at the meeting at which the adjournment is taken, (ii) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication or (iii) set forth in the notice of meeting given in accordance with Section 222(a) of the DGCL; provided, however, that if the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If, after the adjournment, a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section 1.3 of these Bylaws, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. If a quorum is present at the original meeting, it shall also be deemed present at the adjourned meeting. To the fullest extent permitted by applicable law, the Board may postpone, reschedule or cancel at any time and for any reason any previously scheduled special or annual meeting of stockholders before it is to be held, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 1.3 hereof or otherwise, in which case notice shall be provided to the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.
Section 1.5: Quorum. Except as otherwise required by applicable law, the Certificate of Incorporation, these Bylaws or the rules of any applicable stock exchange on which the Corporation’s securities are listed, at each meeting of stockholders the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of stock is required by applicable law, the Certificate of Incorporation, these Bylaws or the rules of any applicable stock exchange on which the Corporation’s securities are listed, the holders of a majority of the voting power of the shares of such class or classes or series of the stock issued and outstanding and entitled to vote on such matter, present in person or represented by proxy at the meeting, shall constitute a quorum entitled to take action with respect to the vote on such matter. If a quorum shall fail to attend any meeting, the chairperson of the meeting or the stockholders, by the affirmative vote of a majority of the votes cast affirmatively or negatively with respect thereto, may adjourn the meeting. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.
Section 1.6: Organization. Meetings of stockholders shall be presided over by (a) such person as the Board may designate, or (b) in the absence of such designation, the Chairperson of the Board, or (c) in the absence of such person, the Lead Independent Director, or (d) in the absence of such person, the Chief Executive Officer of the Corporation, or (e) in the absence of such person, the President of the Corporation, or (f) in the absence of such person, by a Vice President of the Corporation. Such person shall be the chairperson of the meeting. The Secretary of the Corporation (the “Secretary”) shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 1.7: Voting; Proxies. Each stockholder of record entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be required in the Certificate of Incorporation, directors shall be elected by a
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plurality of the votes cast by the holders of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. At all meetings of stockholders at which a quorum is present, unless a different or minimum vote is provided by applicable law, rule or regulation applicable to the Corporation or its securities, the rules or regulations of any applicable stock exchange on which the Corporation’s securities are listed, the Certificate of Incorporation or these Bylaws, in which case such different or minimum vote shall be the applicable vote on the matter, every matter other than the election of directors shall be decided by the affirmative vote of a majority of the votes cast affirmatively or negatively with respect thereto (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of each class or series, the holders of a majority of the voting power of the shares of stock of that class or series present in person or represented by proxy at the meeting voting for or against such matter).
Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for exclusive use by the Board.
Section 1.8: Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by applicable law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than sixty (60) days prior to such action. If no such record date is fixed by the Board, then the record date for determining stockholders for any such purpose shall be at close of business on the day on which the Board adopts the resolution relating thereto.
Section 1.9: List of Stockholders Entitled to Vote. The Corporation shall prepare, no later than the tenth (10th) day before each meeting of stockholders, a complete list of stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order and showing the address of each stockholder and the number of shares
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registered in the name of each stockholder. Nothing in this Section 1.9 shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of ten (10) days ending on the day before the meeting date, either (a) on a reasonably accessible electronic network as permitted by applicable law (provided that the information required to gain access to the list is provided with the notice of the meeting), or (b) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. Except as otherwise provided by applicable law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 1.9 or to vote in person or by proxy at any meeting of stockholders.
Section 1.10: Inspectors of Elections.
1.10.1 Applicability. Unless otherwise required by the Certificate of Incorporation or by applicable law, the following provisions of this Section 1.10 shall apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange, (b) authorized for quotation on an interdealer quotation system of a registered national securities association, or (c) held of record by more than two thousand (2,000) stockholders. In all other cases, observance of the provisions of this Section 1.10 shall be optional, and at the discretion of the Board.
1.10.2 Appointment. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairperson of the meeting shall appoint one or more inspectors to act at the meeting.
1.10.3 Duties of Inspectors. Inspectors of election shall take all actions as contemplated under Section 231 of the DGCL. The inspectors of election shall perform their duties with strict impartiality and according to the best of their ability.
Section 1.11: Conduct of Meetings. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairperson of a meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairperson of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting, (b) rules and procedures for maintaining order at the meeting and the safety of those present, (c) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting or the Board shall determine, (d) restrictions on entry to the meeting after the time fixed for the commencement thereof, (e) limitations on the time allotted to questions or comments by participants, (f) restrictions on the use of audio/video recording devices and cell phones, (g) procedures for complying with any state and local laws and regulations concerning safety and security, (h) procedures (if any) requiring attendees to provide the Corporation advance notice of their intent to attend the meeting,
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and (i) any additional attendance or other procedures or requirements for proponents submitting a proposal pursuant to Rule 14a-8 promulgated under the Exchange Act (defined below). The Board, or, at a meeting of stockholders (but subject to any rules and regulation adopted by, and the supervision of, the Board), the chairperson of the meeting shall, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power to determine that a proposed director nomination or business matter was not properly brought before the meeting and to disregard any such nomination or business matter not properly brought before the meeting, notwithstanding that proxies or votes in respect thereof may have been received by the Corporation, which shall be disregarded. Unless and to the extent determined by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.12: Advance Notice Procedures.
1.12.1 Annual Meeting of Stockholders.
(a) Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only: (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the Board or any committee thereof or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice required by this Section 1.12.1 and at the time of such meeting, who is entitled to vote at such meeting and who complies with the requirements and procedures set forth in this Section 1.12 in all applicable respects (the “Record Stockholder”), or (iv) as may be provided in the certificate of designations for any series of Preferred Stock. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder and any successors thereto, the “Exchange Act”)).
For nominations or other business to be properly brought before an annual meeting by a Record Stockholder (or a Qualified Representative (as defined below) thereof) pursuant to Section 1.12.1(a) of these Bylaws:
(i) the Record Stockholder must have given timely notice thereof in writing to the Secretary and provide any updates or supplements to such notice at the times and in the forms required by this Section 1.12.1;
(ii) such business (other than the nomination of persons for election to the Board) must otherwise be a proper matter for stockholder action under Delaware law;
(iii) each Proposing Person (as defined below) shall have complied with the applicable requirements of the Exchange Act (including, without limitation, the applicable requirements of Rule 14a-19) and any Securities and Exchange Commission Staff interpretations relating thereto;
(iv) in the case of a proposal other than the nomination of persons for election or reelection to the Board, (A) if a Proposing Person (as defined below) has provided the Corporation with a Solicitation Notice (as defined below), such Proposing Person (or the group of which such Proposing Person is a part) must have delivered, or made available, a proxy statement and form of proxy to holders of at least the percentage of the voting power of the Corporation’s
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shares required under applicable law to carry any such proposal and must have included in such materials the Solicitation Notice, or (B) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 1.12, a Proposing Person (or a group of which a Proposing Person is a part) must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 1.12; and
(v) in the case of a proposal for the nomination of persons for election or reelection to the Board, if the Proposing Person (or a group of which such Proposing Person is a part) provided notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such Proposing Person must have delivered to the Secretary, no later than five (5) business days prior to the annual meeting or any adjournment, rescheduling, postponement or other delay thereof, reasonable evidence sufficient to demonstrate that the requirements of Rule 14a-19 have been satisfied; and,
(b) To be timely, a Record Stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than 5:00 p.m. Eastern Time on the ninetieth (90th) day nor earlier than the one hundred and twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the Record Stockholder to be timely must be so delivered (A) no earlier than the one hundred and twentieth (120th) day prior to such annual meeting and (B) no later than 5:00 p.m. Eastern Time on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which Public Announcement (as defined below) of the date of such meeting is first made by the Corporation. In no event shall an adjournment, postponement, or rescheduling (or the Public Announcement thereof) of an annual meeting for which notice has been given or a Public Announcement of the meeting date has been made commence a new time period (or extend any time period) for providing the Record Stockholder’s notice. For purposes of this Section 1.12.1, the 2026 annual meeting of stockholders shall be deemed to have been held on June 3, 2026. Notwithstanding anything in this Section 1.12.1 to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is increased and there is no Public Announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board made by the Corporation at least ten (10) days prior to the last day a stockholder may deliver a notice in accordance with the first sentence of this paragraph, a stockholder’s notice required by this Section 1.12.1 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than 5:00 p.m. Eastern Time on the tenth (10th) day following the day on which such Public Announcement is first made by the Corporation.
(c) As to each person whom the Record Stockholder proposes to nominate for election or reelection as a director, in addition to the matters set forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:
(i) the name, age, business address and residence address of such proposed nominee;
(ii) the principal occupation or employment of such proposed nominee;
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(iii) the class, series and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such proposed nominee, or his or her respective affiliates and associates;
(iv) the date or dates such shares were acquired and the investment intent of such acquisition, as well as evidence of such date(s);
(v) all other information relating to such proposed nominee that would be required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or would be otherwise required, in each case pursuant to and in accordance with Section 14(a) (or any successor provision) under the Exchange Act;
(vi) whether such proposed nominee would qualify as an independent director under the requirements of the stock exchange upon which the Corporation’s Common Stock is primarily traded and the Policies (as defined below);
(vii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among any Proposing Person, on the one hand, and such proposed nominee, and his or her respective affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to the U.S. federal securities laws or the rules and regulations promulgated thereunder (including Item 404 promulgated under Regulation S-K) if any Proposing Person were the “registrant” for purposes thereof and the proposed nominee were a director or executive officer of such registrant;
(viii) the date or dates of first contact between any Proposing Person and such proposed nominee with respect to (A) the Corporation or (B) any proposed nomination of any person or persons for election or reelection to the Board;
(ix) a description of any position of such proposed nominee as an officer or director of, or any material relationship with, any Competitor (as defined below) within the past three (3) years;
(x) a description of any business or personal interests that could place such proposed nominee in a potential conflict of interest with the Corporation or any of its affiliates and how the proposed nominee, if elected, intends to mitigate or reconcile any such potential conflict of interest; and
(xi) all completed and signed questionnaires, representations and agreements required by Section 1.12.2 of these Bylaws.
The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine whether such proposed nominee would qualify as an independent director of the Corporation under the Exchange Act, applicable stock exchange rules and the Policies.
(d) As to any business, other than the nomination of a person for election or reelection as a director, that the Record Stockholder proposes to bring before the meeting, in addition to the matters set forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:
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(i) a brief description of the business desired to be brought before the meeting;
(ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed amendment);
(iii) the reasons for conducting such business at the meeting; and
(iv) any material interest in such business of any Proposing Person, including any anticipated benefit to any Proposing Person therefrom.
(e) As to each Proposing Person, the Record Stockholder’s notice shall set forth:
(i) the current name and address of such Proposing Person, including, if applicable, their name and address as they appear on the Corporation’s stock ledger;
(ii) (1) the class or series and number of shares of stock of the Corporation that are directly or indirectly owned of record or beneficially owned by such Proposing Person, including any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future, and (2) a certification regarding whether such Proposing Person has complied with all applicable federal, state and other legal requirements in connection with such Proposing Person’s acquisition of shares of capital stock or other securities of the Corporation, if any, and/or such Proposing Person’s acts or omissions as a stockholder or beneficial owner of the Corporation;
(iii) a description of any of the following that are held directly or indirectly by, on behalf of or for the benefit of such Proposing Person: (x) any Derivative Instrument (as defined below), (y) any rights to dividends on the shares of any class or series of shares of the Corporation that are separated or separable from the underlying shares of the Corporation; or (z) any Short Interest (as defined below), including, in each case, the date thereof, the class, series and number of securities involved therein, the material economic or voting terms thereof, and the identities of all persons party thereto;
(iv) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or limited liability company of which such Proposing Person is, directly or indirectly, a general partner, manager or managing member or, directly or indirectly, controls a general partner, manager or managing member of such a general or limited partnership or limited liability company;
(v) any direct or indirect material interest of such Proposing Person in any material contract or agreement with the Corporation, any affiliate of the Corporation or any Competitor (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);
(vi) a description of any of the following that are held directly or indirectly by, on behalf of or for the benefit of such Proposing Person: (x) any significant equity interests in any Competitor or (y) any Derivative Instruments or Short Interests in any Competitor (including, the case of any Derivative Instrument or Short Interest, the date such instrument or interest was acquired, the class, series and number of securities involved therein, the material economic or voting terms thereof, and the identities of all persons party thereto);
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(vii) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any Competitor, on the other hand;
(viii) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) pertaining to the Corporation and its securities, if such a statement were required to be filed under the Exchange Act by such Proposing Person, regardless of whether the requirement to file a Schedule 13D is applicable;
(ix) any other information relating to such Proposing Person that would be required to be disclosed in proxy materials or other filings required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business or nomination proposed to be brought before the meeting pursuant to Section 14(a) (or any successor provision) under the Exchange Act;
(x) to the extent known by a Proposing Person, the names and addresses of any stockholder or beneficial owner that has provided or will provide financial support or material assistance in support of the nomination or business and a description of the nature of such support or assistance;
(xi) a description of any agreement, arrangement or understanding (including the identities of all the parties thereto) between or among such Proposing Person on the one hand and any other person or persons, on the other hand, with respect to, relating to, or in connection with the nomination or business;
(xii) a representation that the Record Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and that such Record Stockholder (or a Qualified Representative thereof) will appear at the meeting to propose such business or nomination;
(xiii) a representation whether such Proposing Person intends (or is part of a group that intends) to (x) in the case of a proposal other than the nomination of persons for election to the Board, deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to approve the proposal (an affirmative statement of such intent being a “Solicitation Notice”) and, if so, the name of each participant (as defined in Item 4 of Exchange Act Schedule 14A) in such solicitation, (y) in the case of a nomination or nominations, solicit the holders of shares representing at least 67% of the voting power of the shares entitled to vote on the election of directors in support of director nominees other than the Corporation’s nominees in accordance with Rule 14a-19, and the name of each participant (as defined in Item 4 of Exchange Act Schedule 14A) in such solicitation, and/or (z) otherwise solicit proxies from stockholders in support of such proposal or nomination;
(xiv) a description of any pending or, to such Proposing Person’s knowledge, threatened legal proceeding in which such Proposing Person is a party or participant involving the Corporation or, to such Proposing Person’s knowledge, any current or former officer, director, affiliate or associate of the Corporation; and
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(xv) a description of any proxy (other than a revocable proxy given in response to a proxy solicitation made to more than ten (10) persons), contract, arrangement, or relationship pursuant to which the Proposing Person has a right to vote, directly or indirectly, any shares or other securities of the Corporation.
The disclosures to be made pursuant to the foregoing clauses (ii), (iii), (iv) and (vi) shall not include any information with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner.
(f) A stockholder providing written notice required by this Section 1.12.1 or Section 1.12.3, as applicable, shall update and supplement such notice, and any other information provided to the Corporation, in writing, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for determining the stockholders entitled to notice of the meeting and (ii) 5:00 p.m. Eastern Time on the tenth (10th) business day prior to the meeting or any adjournment, postponement or rescheduling thereof. In the case of an update pursuant to clause (i) of the foregoing sentence, such update shall be received by the Secretary at the principal executive office of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to notice of the meeting, and in the case of an update pursuant to clause (ii) of the foregoing sentence, such update shall be received by the Secretary at the principal executive office of the Corporation not later than eight (8) business days prior to the date for the meeting and, if practicable, any adjournment, postponement or rescheduling thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned, postponed or rescheduled). Notwithstanding the foregoing, if a Proposing Person (x) no longer plans to solicit proxies in accordance with its representation(s) pursuant to Section 1.12.1(e)(xiii) or (y) becomes aware of any inaccuracy or change in information submitted to the Corporation, then the stockholder providing the written notice shall inform the Corporation thereof and update such notice by delivering a writing to the Secretary at the principal executive offices of the Corporation no later than two (2) business days after the occurrence of such change or after such time the Proposing Person became so aware, as applicable. For the avoidance of doubt, the obligation to update as set forth in this paragraph shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or nomination or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of the stockholders. If a stockholder providing written notice fails to provide any written update in accordance with this Section 1.12, the information as to which such written update relates shall be deemed not to have been provided in accordance with these Bylaws.
(g) Notwithstanding anything in Section 1.12 or any other provision of these Bylaws to the contrary, any person who a majority of the Whole Board (as defined below) has determined, in good faith, to have violated Section 2.11 of these Bylaws or a Board Confidentiality Policy (as defined below) while serving as a director of the Corporation in the preceding five (5) years shall be ineligible to be nominated for election or reelection as a member of the Board, absent a prior waiver for such nomination approved by two-thirds of the Whole Board.
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1.12.2 Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee of any stockholder for election or reelection as a director of the Corporation, the person proposed to be nominated must complete, sign and deliver (in accordance with the time periods prescribed for delivery of notice under Section 1.12 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a questionnaire in substantially the same form as the Corporation requests of the Board’s nominees for director (which form shall be provided within ten (10) days following a written request therefor by a stockholder) and a signed representation and agreement (the form of which shall be provided within ten (10) days following a written request therefor by a stockholder):
(a) that such person is not and will not become a party to any Voting Commitment (as defined below) that (i) has not been disclosed to the Corporation or (ii) could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law;
(b) that such person is not and will not become a party to any Compensation Arrangement (as defined below) that has not been disclosed to the Corporation;
(c) that such person, if elected as a director of the Corporation, will comply with all informational and similar requirements of applicable insurance policies and laws and regulations in connection with service or action as a director of the Corporation;
(d) a statement as to whether such person, if elected as a director of the Corporation, intends to comply with the Policies;
(e) that such person acknowledges and agrees that, if elected as a director of the Corporation, he or she must and will act in the best interests of the Corporation and its stockholders generally and not in the interests of any individual constituencies;
(f) that such person consents to being named as a nominee in any proxy materials relating to the Corporation’s meeting at which the nominee’s election as a director will be considered/voted upon, agrees to serve if elected as a director, and intends to serve as a director for the full term for which such individual is to stand for election;
(g) that such person’s candidacy or, if elected, Board membership, would not violate applicable state or federal law, the Certificate of Incorporation, these Bylaws, or the rules of any stock exchange on which shares of the Corporation’s Common Stock are traded; and
(h) that such person, if elected as a director, acknowledges and agrees that he or she must and will provide facts, statements, and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects, and that do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
1.12.3 Special Meetings of Stockholders.
(a) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of such meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of such meeting (i) by or at the direction of the Board or any committee thereof or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice and other procedures set forth in
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this Section 1.12 in all applicable respects. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, for nominations to be properly brought before such meeting by a stockholder (or a Qualified Representative thereof) pursuant to Section 1.12.3(a)(ii) of these Bylaws:
(i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation setting forth such information, representations, certifications and agreements required by Section 1.12.1 and Section 1.12.2 and provide any updates or supplements to such notice at the times and in the forms required by this Section 1.12, in each case, with respect to stockholder nominations of persons for election to the Board at an annual meeting of stockholders;
(ii) each Proposing Person shall have complied with the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder (including, without limitation, the applicable requirements of Rule 14a-19), as such rules and regulations may be amended from time to time by the Securities and Exchange Commission, including any Securities and Exchange Commission Staff interpretations relating thereto; and
(iii) if the Proposing Person (or a group of which such Proposing Person is a part) provided notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such Proposing Person must have delivered to the Secretary, no later than five (5) business days prior to the special meeting or any adjournment, rescheduling or postponement or other delay thereof, reasonable evidence sufficient to demonstrate that the requirements of Rule 14a-19 have been satisfied.
(b) To be timely, a stockholder’s notice required by this Section 1.12.3 of these Bylaws shall be delivered to the Secretary at the principal executive offices of the Corporation (i) no earlier than the one hundred and twentieth (120th) day prior to such special meeting and (ii) no later than 5:00 p.m. Eastern Time on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall an adjournment, postponement or rescheduling (or the Public Announcement thereof) of a special meeting commence a new time period (or extend any time period) for providing such notice.
1.12.4 General.
(a) Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 1.12 shall be eligible to be elected or reelected as directors at a meeting of stockholders and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.12. Except as otherwise provided by applicable law or these Bylaws, the Board or, at a meeting of stockholders (but subject to any rules and regulation adopted by, and the supervision of, the Board), the chairperson of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the applicable requirements and procedures set forth in this Section 1.12 (including the Proposing Persons and any nominee, as applicable, acting in a manner consistent with any representation required hereby, satisfying the information requirements set forth herein with accurate and complete information and complying with all
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applicable laws, rules and regulations referred to herein) and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded (and any such nominee shall be disqualified from standing for election or re-election), notwithstanding that proxies in respect of such business or nominations may have been received by the Corporation. If a stockholder provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act and subsequently fails to comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act, including the provision to the Corporation of notices required thereunder in a timely manner, then any such nominee shall be disqualified and the Corporation shall disregard any proxies or votes solicited for such stockholder’s director nominees. Notwithstanding the foregoing provisions of this Section 1.12, unless otherwise required by applicable law, if the stockholder (or a Qualified Representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded (and any such nominee shall be disqualified from standing for election or reelection), and such proposed business shall not be transacted, notwithstanding that proxies or votes in respect thereof may have been received by the Corporation. Notwithstanding the foregoing provisions of Section 1.12, unless otherwise permitted by applicable law, no stockholder shall solicit proxies in support of director nominees other than the Corporation’s nominees unless such stockholder has complied with Rule 14a-19 promulgated under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Corporation of notices required thereunder in a timely manner.
(b) The number of nominees a stockholder may nominate for election at a meeting of stockholders (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected by the stockholders generally at such meeting. In addition, a stockholder may not designate any substitute or alternate nominees unless such stockholder provides timely notice of such substitute or alternate nominee(s) in accordance with Section 1.12.1, in the case of an annual meeting, or Section 1.12.2, in the case of a special meeting (and such notice contains all of the information, representations, agreements, questionnaires and certifications with respect to such substitute or alternate nominee(s) that are required by the Bylaws with respect to nominees for director election submitted by a stockholder).
(c) Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth herein, for the avoidance of doubt including, but not limited to, Rule 14a-19 of the Exchange Act, and any failure to comply therewith shall be deemed a failure to comply with this Section 1.12. Nothing in this Section 1.12 shall be deemed to affect any rights of (i) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of the Corporation’s Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.
(d) For purposes of these Bylaws the following definitions shall apply:
(i) “affiliate” and “associate” shall have the meanings ascribed thereto in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”); provided, however, that the term “partner” as used in the definition of “associate” shall not include any limited partner that is not involved in the management of the relevant partnership;
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(ii) “Compensation Arrangement” shall mean any direct or indirect compensatory payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, including any agreement, arrangement or understanding with respect to any direct or indirect compensation, reimbursement or indemnification in connection with candidacy, nomination, service or action as a nominee or as a director of the Corporation;
(iii) “Competitor” shall mean any entity that the Board determines, in good faith, provides products or services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates, a list of which entities shall be maintained by the Corporation and provided within ten (10) days following a request therefor by a stockholder;
(iv) “Derivative Instrument” shall mean any derivative interest in the Corporation’s equity securities, including without limitation any option, warrant, convertible security, stock appreciation right, cash-settled equity swap, total return swap, synthetic equity position or similar derivative arrangement or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether settled in cash or stock or other property or securities;
(v) “Policies” shall mean all publicly disclosed corporate governance, conflict of interest, stock ownership requirements, confidentiality and training policies and guidelines of the Corporation applicable to directors;
(vi) “Proposing Person” shall mean (1) the Record Stockholder providing the notice of business proposed to be brought before an annual meeting or the Record Stockholder (or stockholder, in the case of a special meeting) providing notice of nomination of persons for election to the Board at a stockholder meeting, (2) any beneficial owner on whose behalf the proposal or nomination is made, and (3) any affiliate or associate of the foregoing persons;
(vii) “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act or by such other means as is reasonably designed to inform the public or stockholders of the Corporation in general of such information;
(viii) a “Qualified Representative” of a stockholder shall mean a person who is (i) a duly authorized officer, manager, trustee or partner of such stockholder or (ii) authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as a proxy at the meeting of stockholders, which writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission must be delivered to the Secretary at the principal executive offices of the Corporation by no later than 5:00 p.m. Eastern Time on the fifth (5th) business day before such meeting of stockholders;
(ix) “Short Interest” shall mean any short interest in any security of the Corporation that a person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any increase or decrease in the value of the subject security or any other agreement, arrangement or understanding (including without limitation any borrowing or lending of shares) the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such person with respect to any share of stock of the Corporation; and
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(x) “Voting Commitment” shall mean any agreement, arrangement or understanding with, or any commitment or assurance given to, any person or entity as to how a person will act or vote on any issue or question as a director of the Corporation.
ARTICLE II: BOARD OF DIRECTORS
Section 2.1: Number; Qualifications. The total number of directors constituting the Whole Board shall be fixed from time to time in the manner set forth in the Certificate of Incorporation and the term “Whole Board” shall have the meaning specified in the Certificate of Incorporation. No decrease in the authorized number of directors constituting the Whole Board shall shorten the term of any incumbent director. Directors need not be stockholders of the Corporation.
Section 2.2: Election; Resignation; Removal; Vacancies. Election of directors need not be by written ballot. Subject to the special rights of holders of any series of the Corporation’s Preferred Stock to elect directors, each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at a later time or upon the happening of an event. Subject to the special rights of holders of any series of the Corporation’s Preferred Stock to elect directors, directors may be removed only as provided by the Certificate of Incorporation and applicable law. All vacancies occurring in the Board and any newly created directorships resulting from any increase in the authorized number of directors shall be filled in the manner set forth in the Certificate of Incorporation.
Section 2.3: Regular Meetings. Regular meetings of the Board may be held at such places (if any), within or without the State of Delaware, and at such times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board.
Section 2.4: Special Meetings. Special meetings of the Board may be called by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director or a majority of the members of the Board then in office and may be held at any time, date or place (if any), within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place (if any) of such meeting shall be given, orally, in writing or by electronic transmission (including electronic mail), by or at the direction of the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given personally or by telephone, hand delivery or electronic transmission; provided, however, that if, under the circumstances, the Chairperson of the Board, the Lead Independent Director, the Chief Executive Officer or the majority members of the Board calling a special meeting deems that more immediate action is necessary or appropriate, notice may be delivered on the day of such special meeting. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting.
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Section 2.5: Remote Meetings Permitted. Members of the Board, or any committee of the Board, may participate in a meeting of the Board or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to conference telephone or other communications equipment shall constitute presence in person at such meeting.
Section 2.6: Quorum; Vote Required for Action. At all meetings of the Board, a majority of the Whole Board shall constitute a quorum for the transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time. Except as otherwise provided herein or in the Certificate of Incorporation, or required by applicable law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
Section 2.7: Organization. Meetings of the Board shall be presided over by (a) the Chairperson of the Board, or (b) in the absence of such person, the Lead Independent Director, or (c) in such person’s absence, the Chief Executive Officer, if a director, or (d) in such person’s absence or if such person is not a director, a director chosen by the Board at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8: Unanimous Action by Directors in Lieu of a Meeting. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the writing or writings or electronic transmission or transmissions shall be filed with the minutes of proceedings of the Board or the committee thereof, as applicable. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.9: Powers. The Board may exercise all of the powers of the Corporation except as otherwise provided by the DGCL, the Certificate of Incorporation or these Bylaws.
Section 2.10: Compensation of Directors. Members of the Board, as such, may receive, pursuant to a resolution of the Board, fees and other compensation for their services as directors, including without limitation their services as members of committees of the Board. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
Section 2.11: Confidentiality. Each director shall (i) maintain the confidentiality of any non-public information learned in their capacities as directors, including communications among Board members in their capacities as directors, and (ii) shall not share any such information with any third-party person or entity who has not entered into a specific written agreement with the Corporation, as approved by the Board, providing otherwise with respect to such information. The Board may adopt a board confidentiality policy further implementing and interpreting this Section 2.11 (a “Board Confidentiality Policy”).
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Section 2.12 Emergency Bylaws. This Section 2.12 shall be operative during any emergency condition as contemplated by Section 110 of the DGCL (an “Emergency”), notwithstanding any different or conflicting provisions in these Bylaws, the Certificate of Incorporation or the DGCL. In the event of any Emergency the director or directors in attendance at a meeting of the Board or a standing committee thereof shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board as they shall deem necessary and appropriate. In the event that no directors are able to attend a meeting of the Board or any committee thereof in an Emergency, then the Designated Officers in attendance shall serve as directors, or committee members, as the case may be, for the meeting and will have full powers to act as directors, or committee members, as the case may be, of the Corporation. Except as the Board may otherwise determine, during any Emergency, the Corporation and its directors and officers, may exercise any authority and take any action or measure contemplated by Section 110 of the DGCL. For purposes of this Section 2.12, the term “Designated Officer” means an officer identified on a numbered list of officers of the Corporation who shall be deemed to be, in the order in which they appear on the list, directors of the Corporation, or members of a committee of the Board, as the case may be, to the extent required to obtain a quorum at a meeting, which list of Designated Officers shall be approved by the Board from time to time but in any event prior to such time or times as an Emergency may have occurred.
ARTICLE III: COMMITTEES
Section 3.1: Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting of such committee who are not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving, adopting, or recommending to the stockholders any action or matter (other than the election or removal of members of the Board) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation.
Section 3.2: Committee Rules. Each committee shall keep records of its proceedings and make such reports as the Board may from time to time request. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these Bylaws. Except as otherwise provided in the Certificate of Incorporation, these Bylaws or the resolution of the Board designating the committee, any committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to any such subcommittee any or all of the powers and authority of the committee.
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ARTICLE IV: OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR
Section 4.1: Generally. The officers of the Corporation shall consist of a Chief Executive Officer (who may be the Chairperson of the Board or the President), a President, a Secretary and a Treasurer and may consist of such other officers, including, without limitation, a Chief Financial Officer, and one or more Vice Presidents, Assistant Secretaries or Assistant Treasurers, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided, however, that the Board may empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Except as otherwise provided by applicable law, by the Certificate of Incorporation or these Bylaws, each officer shall hold office until such officer’s successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal. Any number of offices may be held by the same person. Any officer may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at some later time or upon the happening of some later event. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board (or, if empowered by the Board, the Chief Executive Officer) and the Board may, in its discretion, leave unfilled, for such period as it may determine, any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal.
Section 4.2: Chief Executive Officer. Subject to the control of the Board and such supervisory powers, if any, as may be given by the Board, the powers and duties of the Chief Executive Officer of the Corporation are:
(a) to have general supervision, direction and control of the business and affairs of the Corporation; and
(b) to affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the Corporation; to sign certificates for shares of stock of the Corporation (if any); and to have general charge of the property of the Corporation and to supervise and control all officers, agents and employees of the Corporation.
The person holding the office of President shall be the Chief Executive Officer of the Corporation unless the Board shall designate another person to be the Chief Executive Officer.
Section 4.3: Chairperson of the Board. Subject to the provisions of Section 2.7 of these Bylaws, the Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties as provided in these Bylaws and as the Board may from time to time prescribe. The Chairperson of the Board shall not be deemed an officer of the Corporation unless otherwise determined by the Board.
Section 4.4: Lead Independent Director. The Board may, in its discretion, elect a lead independent director from among its members that are independent directors as determined under rules of the exchange upon which the Corporation’s Common Stock is primarily traded (such director, the “Lead Independent Director”). The Lead Independent Director shall preside at all meetings or sessions of independent directors and exercise such other powers and duties as may from time to time be assigned to him or her by the Board or as prescribed by these Bylaws.
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Section 4.5: President. The person holding the office of Chief Executive Officer shall be the President of the Corporation unless the Board shall have designated one individual as the President and a different individual as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President, or as the Board or the Chief Executive Officer may from time to time prescribe.
Section 4.6: Chief Financial Officer. The person holding the office of Chief Financial Officer shall be the Treasurer of the Corporation unless the Board shall have designated another person as the Treasurer of the Corporation. Subject to the direction of the Board and the Chief Executive Officer, the Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of Chief Financial Officer, or as the Board or the Chief Executive Officer may from time to time prescribe.
Section 4.7: Treasurer. The person holding the office of Treasurer shall be the Chief Financial Officer of the Corporation unless the Board shall have designated another person as the Chief Financial Officer of the Corporation. The Treasurer shall have custody of all monies and securities of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board or the Chief Executive Officer may from time to time prescribe.
Section 4.8: Vice President. Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President or as the Board or the Chief Executive Officer may from time to time prescribe. A Vice President may be designated by the Board to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.
Section 4.9: Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board or the Chief Executive Officer may from time to time prescribe.
Section 4.10: Delegation of Authority. The Board may from time to time delegate the powers or duties of any officer of the Corporation to any other officers or agents of the Corporation, notwithstanding any provision hereof.
Section 4.11: Removal. Any officer of the Corporation shall serve at the pleasure of the Board and may be removed at any time, with or without cause, by the Board; provided that if the Board has empowered the Chief Executive Officer to appoint any officer of the Corporation, then such officer may also be removed by the Chief Executive Officer, with or without cause. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.
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ARTICLE V: STOCK
Section 5.1: Certificates; Uncertificated Shares. The shares of capital stock of the Corporation shall be uncertificated shares; provided, however, that the resolution of the Board that the shares of capital stock of the Corporation shall be uncertificated shares shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the foregoing, the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be certificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation, by any two authorized officers of the Corporation (it being understood that each of the Chairperson of the Board, the Vice-Chairperson of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary and any Assistant Secretary of the Corporation shall be an authorized officer for such purpose), representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
Section 5.3: Other Regulations. Subject to applicable law, the Certificate of Incorporation and these Bylaws, the issue, transfer, conversion and registration of shares represented by certificates and of uncertificated shares shall be governed by such other regulations as the Board may establish (or such other rules and procedures as the Corporation’s transfer agent may require).
ARTICLE VI: INDEMNIFICATION
Section 6.1: Indemnification of Officers and Directors. Each person who was or is made a party to, or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, legislative, investigative, preliminary, informal or formal, or any other type whatsoever, including any investigation or any arbitration or other alternative dispute resolution (including but not limited to giving testimony or responding to a subpoena) and including any appeal of any of the foregoing (a “Proceeding”), by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a director or officer of the Corporation or a Reincorporated Predecessor (as defined below) or, while serving as a director or officer of the Corporation or a
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Reincorporated Predecessor, is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise or non-profit entity, including service with respect to employee benefit plans (for purposes of this Article VI, an “Indemnitee”), shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expenses, costs, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith, provided such Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. Such indemnification shall continue as to an Indemnitee who has ceased to be a director or officer of the Corporation or a Reincorporated Predecessor or, while serving as a director or officer of the Corporation or a Reincorporated Predecessor, is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise or non-profit entity, including service with respect to employee benefit plans and shall inure to the benefit of such Indemnitees’ heirs, executors and administrators. Notwithstanding the foregoing, subject to Section 6.5 of this Article VI, the Corporation shall indemnify any such Indemnitee seeking indemnity in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board or such indemnification is authorized by an agreement approved by the Board. As used in this Article VI, (i) the term the “Reincorporated Predecessor” means a corporation that is merged with and into the Corporation in a statutory merger where (a) the Corporation is the surviving corporation of such merger, and (b) the primary purpose of such merger is to change the corporate domicile of the Reincorporated Predecessor to Delaware, and (ii) an “officer” of the Corporation means an officer of the Corporation designated by the Board to be entitled to the indemnification and advancement rights set forth in this Article VI and an “officer” of a Reincorporated Predecessor means an officer of a Reincorporated Predecessor elected or appointed by the governing body thereof.
Section 6.2: Advancement of Expenses. Except as otherwise provided in a written indemnification agreement between the Corporation and the Indemnitee, the Corporation shall pay all reasonable expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding in advance of its final disposition; provided, however, that the advancement of such expenses (i.e., payment of such expenses as incurred or otherwise in advance of the final disposition of the Proceeding) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay such amounts if it shall ultimately be determined by final judicial decision from which there is no appeal that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise. Any advances of expenses or undertakings to repay pursuant to this Section 6.2 shall be unsecured, interest free and without regard to Indemnitee’s ability to pay.
Section 6.3: Non-Exclusivity of Rights. The rights conferred on any person in this Article VI shall not be exclusive of any other right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote or consent of stockholders or disinterested directors, or otherwise.
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Section 6.4: Indemnification of Others and Additional Rights. The Corporation may grant rights to indemnification and to the advancement of expenses to any person who is or was a director, officer, employee or agent of the Corporation or Reincorporated Predecessor, or any person who is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or other enterprise or non-profit entity, including employee benefit plans. Such rights may be greater than those provided in this Article VI.
Section 6.5: Right of Indemnitee to Bring Suit. The following shall apply to the extent not in conflict with any written indemnification agreement between the Corporation and the Indemnitee:
6.5.1 Right to Bring Suit. If a claim under Section 6.1 or 6.2 of this Article VI is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the Indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee also shall be entitled to be paid, to the fullest extent permitted by applicable law, the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that the Indemnitee has not met any applicable standard for indemnification set forth in applicable law. In any suit brought by the Corporation to recover the advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in applicable law.
6.5.2 Effect of Determination. Neither the absence of a determination by or on behalf of the Corporation prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable law, nor an actual determination by or on behalf of the Corporation that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.
6.5.3 Burden of Proof. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI, or otherwise, shall be on the Corporation.
Section 6.6: Nature of Rights. The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director or officer and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.
Section 6.7: Amendment or Repeal. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI and existing at the time of such amendment, repeal or modification.
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Section 6.8: Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise or non-profit entity against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Section 6.9: Indemnification for Successful Defense. To the extent that an Indemnitee has been successful on the merits or otherwise in defense of any Proceeding (or in defense of any claim, issue or matter therein), such Indemnitee shall be indemnified under this Section 6.9 against expenses (including attorneys’ fees) actually and reasonably incurred in connection with such defense. Indemnification under this Section 6.9 shall not be subject to satisfaction of a standard of conduct, and the Corporation may not assert the failure to satisfy a standard of conduct as a basis to deny indemnification or recover amounts advanced, including in a suit brought pursuant to Section 6.5 (notwithstanding anything to the contrary therein); provided, however, that, any Indemnitee who is not a current or former director or officer (as such term is defined in the final sentence of Section 145(c)(1) of the DGCL) of the Corporation shall be entitled to indemnification under Section 6.1 and this Section 6.9 only if such Indemnitee has satisfied the applicable standard of conduct required for indemnification under Section 145(a) or Section 145(b) of the DGCL.
ARTICLE VII:NOTICES
Section 7.1: Notice.
7.1.1 Form and Delivery. Except as otherwise required by applicable law, notice may be given in writing directed to a stockholder’s mailing address as it appears on the records of the Corporation and shall be given: (a) if mailed, when notice is deposited in the U.S. mail, postage prepaid; and (b) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address. So long as the Corporation is subject to the Securities and Exchange Commission’s proxy rules set forth in Regulation 14A under the Exchange Act, notice shall be given in the manner required by such rules. To the extent permitted by such rules, or if the Corporation is not subject to Regulation 14A, notice may be given by electronic mail directed to the stockholder’s electronic mail address as it appears on the records of the Corporation, and if so given, shall be given when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by Section 232(e) of the DGCL. If notice is given by electronic mail, such notice shall comply with the applicable provisions of Sections 232(a) and 232(d) of the DGCL. Notice may be given by other forms of electronic transmission with the consent of a stockholder in the manner permitted by Section 232(b) of the DGCL and shall be deemed given as provided therein.
7.1.2 Affidavit of Giving Notice. An affidavit of the Secretary or an Assistant Secretary of the Corporation or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Section 7.2: Waiver of Notice. Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver of notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance
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of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any waiver of notice.
ARTICLE VIII: MISCELLANEOUS
Section 8.1: Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board.
Section 8.2: Seal. The Board may provide for a corporate seal, which may have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board.
Section 8.3: Form of Records. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of, any other information storage device, method or one or more electronic networks or databases (including one or more distributed electronic networks or databases), electronic or otherwise, provided that the records so kept can be converted into clearly legible paper form within a reasonable time and otherwise comply with the DGCL. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to any provision of the DGCL.
Section 8.4: Reliance Upon Books and Records. A member of the Board, or a member of any committee designated by the Board shall, in the performance of such person’s duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 8.5: Certificate of Incorporation Governs. In the event of any conflict between the provisions of the Certificate of Incorporation and these Bylaws, the provisions of the Certificate of Incorporation shall govern.
Section 8.6: Severability. If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation) shall remain in full force and effect.
Section 8.7: Time Periods. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used (unless otherwise specified herein), the day of the doing of the act shall be excluded, and the day of the event shall be included.
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ARTICLE IX: AMENDMENT
Notwithstanding any other provision of these Bylaws, any alteration, amendment or repeal of these Bylaws, and any adoption of new Bylaws, shall require the approval of the Board or the stockholders of the Corporation as expressly provided in the Certificate of Incorporation.
ARTICLE X: CHOICE OF FORUM; EXCLUSIVE FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim that is based upon a breach of a fiduciary duty owed by, or other wrongdoing by, any current or former director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (iii) any action asserting a claim against the Corporation or any current or former director, officer, stockholder, employee or agent of the Corporation arising pursuant to any provision of the General Corporation Law, the Certificate of Incorporation or these Bylaws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (iv) any action to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or these Bylaws; (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine; or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation Law. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, or any successor thereto. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article X. Failure to enforce the foregoing provisions of this Article X would cause the Corporation irreparable harm, and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.
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CERTIFICATION OF AMENDED AND RESTATED BYLAWS
OF
ATTOVIA THERAPEUTICS, INC.
(a Delaware Corporation)
I, Steven Chan, certify that I am Secretary of Attovia Therapeutics, Inc. a Delaware corporation (the “Corporation”), that I am duly authorized to make and deliver this certification, that the attached Bylaws are a true and complete copy of the Amended and Restated Bylaws of the Corporation in effect as of the date of this certificate.
Dated: [_], 2026
|
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| Steven Chan |
| Secretary |
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Exhibit 4.2
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made as of March 31, 2025, by and among Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor” and each of the stockholders listed on Schedule B hereto, each of whom is referred to herein as a “Key Holder”.
RECITALS
WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series B Preferred Stock and/or shares of Common Stock issued upon conversion thereof and possess registration rights, information rights, rights of first offer, and other rights pursuant to that certain Amended and Restated Investors’ Rights Agreement dated as of May 1, 2024, by and among the Company and such Existing Investors (the “Prior Agreement”); and
WHEREAS, the undersigned Existing Investors are holders of a sufficient number of the securities of the Company as are required to amend the Prior Agreement, and desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement; and
WHEREAS, the Company and certain of the Investors are parties to that certain Series C Preferred Stock Purchase Agreement of even date herewith by and among the Company and such Investors (the “Purchase Agreement”), under which certain of the Company’s and such Investors’ obligations are conditioned upon the execution and delivery of this Agreement by the undersigned parties.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1 “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, limited partner, member, managing member, manager, officer, employee or director or trustee of such Person, or any trust fund for the benefit of any of the foregoing or any Affiliate of any of the foregoing, or any venture capital fund or other investment fund now or hereafter existing that is controlled by one (1) or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person. For purposes of this definition, the terms “control”, “controlling”, “controlled by” and “under common control with,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by agreement, as trustee or executor or otherwise.
1.2 “Alamar” mean Alamar HoldCo, LLC.
1.3 “Board of Directors” means the board of directors of the Company.
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1.4 “Certificate of Incorporation” means the Company’s Restated Certificate of Incorporation, as amended and/or restated from time to time.
1.5 “Common Stock” means shares of the Company’s Common Stock, par value $0.0001 per share.
1.6 “CTA” means the Corporate Transparency Act, 31 U.S.C § 5336, and all rules and regulations promulgated thereunder, as each may be amended or replaced from time to time.
1.7 “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.
1.8 “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.
1.9 “DPA” means Section 721 of the Defense Production Act, as amended, including all implementing regulations thereof.
1.10 “DPA Triggering Rights” means (i) “control” (as defined in the DPA); (ii) access to any “material non-public technical information” (as defined in the DPA) in the possession of the Company; (iii) membership or observer rights on the Board of Directors or equivalent governing body of the Company or the right to nominate an individual to a position on the Board of Directors or equivalent governing body of the Company; (iv) any involvement, other than through the voting of shares, in substantive decision-making of the Company regarding (x) the use, development, acquisition or release of any Company “critical technology” (as defined in the DPA); (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Company, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA).
1.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.12 “Excluded Registration” means (i) a registration relating to the sale or grant of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.
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1.13 “Foreign Person” means either (i) a Person or government that is a “foreign person” within the meaning of the DPA or (ii) a Person through whose investment a “foreign person” within the meaning of the DPA would obtain any DPA Triggering Rights.
1.14 “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.
1.15 “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits forward incorporation of substantial information by reference to other documents filed by the Company with the SEC.
1.16 “Frazier” means Frazier Life Sciences XI, L.P.
1.17 “GAAP” means generally accepted accounting principles in the United States as in effect from time to time.
1.18 “Governmental Authority” means the government of the United States or any other country, any state or other political subdivision thereof, any self-regulatory organization, any national securities exchange or trading system, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to the government, and any corporation or other entity owned or controlled (whether throughthe ownership of securities or other ownership interests, by contract or otherwise) by any of the foregoing.
1.19 “GS” means West Street Life Sciences I, L.P., WSLS Offshore Investments, SLP, WSLS Emp Onshore Investments, L.P., WSLS Emp Offshore Investments, L.P., and Broad Street Principal Investments LLC, together with their respective Affiliates.
1.20 “Holder” means any holder of Registrable Securities who is a party to this Agreement.
1.21 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, life partner or similar statutorily-recognized domestic partner, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships of a natural person referred to herein.
1.22 “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.
1.23 “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.
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1.24 “Key Holder Registrable Securities” means any shares of Common Stock held by Alamar.
1.25 “Major Investor” means (i) any Investor that, individually or together with such Investor’s Affiliates holds at least 2,900,000 shares of Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification); and (ii) Alamar for so long as Alamar holds at least 22,500,000 shares of the Common Stock (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification).
1.26 “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.
1.27 “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
1.28 “Preferred Director” means any director of the Company that the holders of record of Preferred Stock (or series thereof) are entitled to elect, exclusively and as a separate class, pursuant to the Certificate of Incorporation.
1.29 “Preferred Stock” means, collectively, shares of the Company’s Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock.
1.30 “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) the Key Holder Registrable Securities, (iii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, held by the Investors after the date hereof; and (iv) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i), (ii) and (iii) above; excluding in all cases (other than the restrictions on transfer legend requirements in Section 2.12), however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement.
1.31 “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.
1.32 “Restricted Securities” means the securities of the Company required to be notated with the legend set forth in Section 2.12(b) hereof.
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1.33 “Sanctioned Party” means any Person: (i) organized under the laws of, ordinarily resident in, or located in a country or territory that is the subject of comprehensive Sanctions (which as of the date of this Agreement comprise Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk, and Luhansk regions of Ukraine (“Restricted Countries”)); (ii) 50% or more owned or controlled by the government of a Restricted Country; or (iii) (A) designated on a sanctioned parties list administered by the United States, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, Sectoral Sanctions Identification List (collectively, “Designated Parties”); or (B) 50% or more owned or, where relevant under applicable Sanctions, controlled, individually or in the aggregate, by one or more Designated Party, in each case only to the extent that dealings with such Person is are prohibited pursuant to applicable Sanctions.
1.34 “Sanctions” means applicable laws and regulations pertaining to trade and economic sanctions administered by the United States.
1.35 “SEC” means the Securities and Exchange Commission.
1.36 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.
1.37 “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.
1.38 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.39 “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.
1.40 “Series A-1 Preferred Stock” means shares of the Company’s Series A-1 Preferred Stock, $0.0001 par value per share.
1.41 “Series A-2 Preferred Stock” means shares of the Company’s Series A-2 Preferred Stock, $0.0001 par value per share.
1.42 “Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, $0.0001 par value per share.
1.43 “Series C Preferred Stock” means shares of the Company’s Series C Preferred Stock, $0.0001 par value per share.
1.44 “SPAC Transaction” means any business combination pursuant to which the Company is merged into, or otherwise combines with, a special purpose acquisition company or its subsidiary (collectively, a “SPAC”) immediately following the consummation of which the common stock or share capital of the SPAC or its successor entity is listed on a national securities exchange.
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2. Registration Rights. The Company covenants and agrees as follows:
2.1 Demand Registration.
(a) Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of a majority of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to at least forty percent (40%) of the Registrable Securities then outstanding, then the Company shall: (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3; provided, however, that this right to request the filing of a Form S-1 registration statement shall in no event be made available to any Holder that is a Foreign Person.
(b) Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least thirty percent (30%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement (including for an offering to be made on a continuous or delayed basis pursuant to SEC Rule 415 (which request may include, without limitation, a shelf registration under SEC Rule 415)) with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $5 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3; provided, that, in the case of a registration statement pursuant to this Section 2.1(b), to the extent the Company is then a well-known seasoned issuer (within the meaning of Rule 405 promulgated by the SEC under the Securities Act), it shall file and cause to be immediately effective an automatic registration statement as defined in Rule 405 promulgated by the SEC under the Securities Act.
(c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona
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fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred twenty (120) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such one hundred twenty (120) day period other than an Excluded Registration.
(d) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a), (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected two (2) registrations pursuant to Section 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b), (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two (2) registrations pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d); provided, that if such withdrawal is during a period the Company has deferred taking action pursuant to Section 2.1(c), then the Initiating Holders may withdraw their request for registration and such registration will not be counted as “effected” for purposes of this Section 2.1(d). Notwithstanding the foregoing, in no event shall a registration be deemed to have been effected (i) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other Governmental Authority for any reason other than a misrepresentation or an omission by any Holder and, as a result thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration statement or (ii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than solely by reason of an act or omission by any Holder.
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2.2 Company Registration. If the Company proposes to register any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in the IPO), the Company shall, at such time, promptly give each (but in no less than five (5) days in advance of filing such registration statement) Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6. If a Holder elects not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in a subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.
2.3 Underwriting Requirements.
(a) If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Board of Directors and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting; provided, however, that no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be several and not joint, and limited to an amount equal to the net proceeds from the offering received by such Holder. Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to in writing by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.
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(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their reasonable discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to in writing by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering or (iii) notwithstanding (ii) above, any Registrable Securities which are not Key Holder Registrable Securities be excluded from such underwriting unless all Key Holder Registrable Securities are first excluded from such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.
(c) For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.
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2.4 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to sixty (60) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;
(b) prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement; provided, however, that as far in advance as reasonably practicable before filing any registration statement or any supplement or amendment thereto (for purposes of this Section 2.4, supplements and amendments shall not be deemed to include any filing that the Company is required to make pursuant to the Exchange Act), the Company shall furnish to GS and its representatives copies of all documents proposed to be filed (including, without limitation, all exhibits and documents to be incorporated by reference therein, subject to confidentiality obligations binding upon the Company) and provide GS and its representatives the opportunity to object to any information that names or references GS (or any of its Affiliates), and the Company may (in its discretion and good faith determination) make any corrections reasonably requested by GS prior to filing such registration statement or supplement or amendment thereto.
(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;
(d) use its reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
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(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;
(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;
(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and
(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.
In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.
2.5 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.
2.6 Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $50,000 , of one counsel for the selling Holders selected by Holders of a majority of the Registrable
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Securities to be registered (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, (x) one or more Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to such parties at the time of their request and have withdrawn the request with reasonable promptness after learning of such information or (y) the registration is interfered with by any stop order, injunction or other requirement of the SEC or any other Governmental Authority for any reason other than a misrepresentation or omission by any Holder, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 (other than fees and disbursements of counsel to any Holder, other than the Selling Holder Counsel, which shall be borne solely by the Holder engaging such counsel) shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.
2.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
2.8 Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the Affiliates, partners, members, officers, directors, and stockholders of each such Holder (and the partners, members, officers, directors, employees and stockholders of each Holder’s Affiliates); legal counsel and accountants for each such Holder (and any of such Holder’s Affiliates); any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration, unless the Holder, underwriter, controlling Person or other aforementioned Person furnished in
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writing to the Company an explicit notice particularly identifying the incorrect or misleading information at least two (2) business days prior to the filing of any such registration statement, amendment thereto or other document or supplement information expressly for use in such registration statement or other document or supplement which corrected or made not misleading information previously furnished to the Company.
(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration and has not been corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the claim; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld, conditioned or delayed; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Section 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder; and provided further that the indemnity agreement contained in this Section 2.8(b) shall not apply to the extent that such Holder has furnished in writing to the Company an explicit notice particularly identifying the incorrect or misleading information at least two (2) business days prior to the filing of any such registration statement, amendment thereto or other document or supplement information which corrected or made not misleading information previously furnished to the Company.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable
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time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, only to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.
(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control; provided, however, that any matter expressly provided for or addressed by the foregoing provisions of this Section 2.8 that is not expressly provided for or addressed by the underwriting agreement shall be controlled by the foregoing provisions.
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(f) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement or any provision(s) of this Agreement.
2.9 Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:
(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;
(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and
(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) a such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).
2.10 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, including Holders of a majority of the Registrable Securities held by Investors then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would (i) allow such holder or prospective holder to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are include; or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to Registrable Securities acquired by any additional Investor that becomes a party to this Agreement in accordance with Section 6.9.
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2.11 “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the public filing of the final prospectus for the IPO by the Company for its own behalf of shares of its Common Stock or any other equity securities under the Securities Act on a registration statement (other than an Excluded Registration) on Form S-1, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days), or such other period as may be requested by the Company or an underwriter to accommodate any applicable regulatory restrictions, (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 2.11 (A) shall only apply to an IPO, (B) shall not apply to (i) the sale of any shares to an underwriter pursuant to an underwriting agreement in an IPO or to the establishment of a trading plan pursuant to Rule 10b5-1, provided that such plan does not permit transfers during the restricted period, or (ii) the transfer of any shares to any trust for the direct or indirect benefit of the Holder or one or more of the Holder’s Immediate Family Members, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and (C) shall be applicable to the Holders only if all officers and directors of the Company and stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock) are subject to the same restrictions. The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters (if applicable) shall apply pro rata to all Company stockholders that are subject to such agreements, based on the number of shares subject to such agreements.
2.12 Restrictions on Transfer.
(a) The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. Notwithstanding the foregoing, the Company shall not require any transferee of shares pursuant to an effective registration statement or, following the IPO, SEC Rule 144, in each case, to be bound by the terms of this Section 2.12.
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(b) Each certificate, instrument, or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be notated with a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.
(c) The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction or following the IPO, the transfer is made pursuant to SEC Rule 144, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer, provided that no such notice shall be required in connection if the intended sale, pledge or transfer complies with SEC Rule 144. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a notice, legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144; or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that with respect to transfers under the foregoing clause (y), each transferee agrees in writing to be subject to the terms of this Section 2.12. Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate
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restrictive legend set forth in Section 2.12(b), except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act and the Company will use commercially reasonable efforts to cause any such legend to be removed.
2.13 Termination of Registration Rights.
(a) The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Sections 2.1 or 2.2 shall terminate upon the earliest to occur of:
(i) the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, in which the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities, or if the Investors receive registration rights from the acquiring company or other successor to the Company reasonably comparable to those set forth in this Section 2;
(ii) such time after consummation of the IPO as SEC Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation, during a three (3)-month period without registration (and without the requirement for the Company to be in compliance with the current public information required under subsection (c)(1) of SEC Rule 144) and such Holder (together with its “affiliates” determined under SEC Rule 144) holds less than one percent (1%) of the outstanding capital stock of the Company;
(iii) the fifth (5th) anniversary of the IPO (or such later date that is one hundred eighty (180) days following the expiration of all deferrals of the Company’s obligations pursuant to Section 2 that remain in effect as of the fifth (5th) anniversary of the IPO).
(b) The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Sections 2.1 or 2.2 shall be suspended during any time as such Holder is a Sanctioned Party.
3. Information and Observer Rights.
3.1 Delivery of Financial Statements. The Company shall deliver to each Major Investor, provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company:
(a) as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements prepared in accordance with GAAP, which financial statements shall be reviewed or audited by independent public accountants of nationally recognized standing selected by the Company;
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(b) as soon as practicable, but in any event within forty-five (45) days after the end of each quarter of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP);
(c) as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company (such budget and business plan that is approved by the Board of Directors, including the at least one Preferred Director (as defined in the Certificate of Incorporation) is collectively referred to herein as the “Budget”);
(d) such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 3.1(d) to provide information (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in a form acceptable to the Company); (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel; or (iii) that the Company reasonably determines in good faith the disclosure of which would cause a conflict of interest with respect to a Major Investor and/or third parties engaged in business with the Company.
If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.
Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.
3.2 Inspection. The Company shall permit each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information that it reasonably and in good
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faith considers to be a trade secret or confidential information, the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel, or that the Company reasonably determines in good faith the disclosure of which would cause a conflict of interest with respect to a Major Investor and/or third parties engaged in business with the Company.
3.3 Observer Rights.
(a) As long as Frazier continues to hold at least 8,125,000 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of Frazier to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
(b) As long as Alamar or its Affiliates (which, for purposes of this Section 3.3(b), “Affiliates” shall include the stockholders of Alamar who may receive Common Stock in a dividend or other distribution) continues to hold at least 15,000,000 shares of Common Stock, the Company shall invite a representative of Alamar to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Person or its representative is a competitor of the Company or for other similar reasons.
(c) As long as Illumina Innovation Fund II, L.P. (“IIF”) continues to hold at least 1,250,000 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of IIF to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
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(d) As long as GS continues to hold at least 4,545,457 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of GS to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets.
(e) As long as EcoR1 Capital Fund, L.P. and EcoR1 Capital Fund Qualified, L.P. (collectively, “EcoR1”) continues to hold at least 1,818,181 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of EcoR1 to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
(f) As long as Nextech VII Oncology SCSp (“Nextech”) continues to hold at least 1,818,181 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of Nextech to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
(g) As long as Vida Ventures III, L.P. and Vida Ventures III-A, L.P. (collectively “Vida Ventures”) continues to hold at least 2,181,818 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of Vida Ventures to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
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(h) As long as Sanofi Ventures LLC together with its Affiliates (collectively “Sanofi”) owns not less than 7,272,727 shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock), the Company shall invite a representative of Sanofi to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if such Investor or its representative is a competitor of the Company or for other similar reasons.
3.4 Termination of Information and Observer Rights. The covenants set forth in Section 3.1, Section 3.2 and Section 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(b), 12(g) or 15(d) of the Exchange Act, (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first, provided, that, with respect to clause (iii), the covenants set forth in Section 3.1 shall only terminate if the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities or if the Investors receive financial information from the acquiring company or other successor to the Company comparable to those set forth in Section 3, or (iv) with respect to any Investor that is or becomes a Sanctioned Party, for so long as such Investor is a Sanctioned Party.
3.5 Confidentiality. Each Holder agrees that such Holder will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor or make decisions with respect to its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.5 by such Holder), (b) is or has been independently developed or conceived by such Holder without use of the Company’s confidential information, or (c) is or has been made known or disclosed to such Holder by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that a Holder may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent reasonably necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Holder, if such prospective purchaser agrees to be bound by the provisions of this Section 3.5; (iii) to any existing or prospective Affiliate, partner, limited partner, member, stockholder, or wholly owned subsidiary of such Holder (excluding portfolio companies and similar Persons) with a need to know such information, provided that such Holder informs such Person that such information is
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confidential and directs such Person to maintain the confidentiality of such information (and provided further, in each of the foregoing cases (i)-(iii), that no Holder may disclose confidential information to any Person that is a competitor of the Company; or (iv) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that such Holder promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.
3.6 Limitation of Foreign Person Investors. Notwithstanding the covenants set forth in Section 3.1 and Section 3.2, the Company shall not provide any Investor that is a Foreign Person access to any “material non-public technical information” within the meaning of the DPA.
3.7 Waiver of Statutory Information Rights. Each Investor hereby acknowledges and agrees that until the consummation of the IPO, such Investor shall hereby be deemed to have unconditionally and irrevocably, to the fullest extent permitted by law, on behalf of such Investor and all beneficial owners of the shares of Common Stock or Preferred Stock owned by such Investor (a “Beneficial Owner”), waived any rights such Investor or a Beneficial Owner might otherwise have had under Section 220 of the Delaware General Corporation Law (or under similar rights under other applicable law) to inspect for any proper purpose and to make copies and extracts from the Company’s stock ledger, a list of its stockholders and its other books and records or the books and records of any subsidiary. This waiver applies only in such Investor’s capacity as a stockholder and does not affect any other information and inspection rights such Investor may expressly have pursuant to Sections 3.1 and 3.2 of this Agreement. Each Investor hereby further warrants and represents that such Investor has reviewed this waiver with its legal counsel, and that such Investor knowingly and voluntarily waives its rights otherwise provided by Section 220 of the Delaware General Corporation Law (or under similar rights under other applicable law).
4. Rights to Future Stock Issuances.
4.1 Right of First Offer. Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself, (ii) its Affiliates and (iii) its beneficial interest holders, such as limited partners, members or any other Person having “beneficial ownership,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act; provided, that such Affiliate or beneficial owner (x) is not a competitor and (y) agrees to enter into this Agreement and each of the Amended and Restated Voting Agreement of even date herewith among the Company, the Investors and the other parties named therein and as amended and/or restated from time to time (the “Voting Agreement”), as an “Investor” under each such agreement; and provided that the Company shall not be obligated to offer or sell any New Securities to any person or entity that is a Sanctioned Party.
(a) The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.
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(b) By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held by such Major Investor) bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and any other Derivative Securities then outstanding). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares. A Major Investor’s election may be conditioned on the consummation of the transaction described in the Offer Notice. The closing of any sale pursuant to this Section 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.1(c).
(c) If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Section 4.1.
(d) The right of first offer in this Section 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Certificate of Incorporation); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Preferred Stock issued pursuant to Section 1.3 of the Purchase Agreement.
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(e) If GS exercises the right of first offer in this Section 4.1, upon GS’s written request, the Company shall create a class of shares (the “BHCA New Securities”) identical to the shares being offered pursuant to this Section 4.1 in all respects, except that such BHCA New Securities shall not have any voting rights or other rights as GS may request, so that GS may purchase such BHCA New Securities.
4.2 Termination. The covenants set forth in Section 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, or (ii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, in which the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities, or if the Investors receive participation rights from the acquiring company or other successor to the Company reasonably comparable to those set forth in this Section 4, whichever event occurs first and, as to each Major Investor, in accordance with Section 4.1(e).
5. Additional Covenants.
5.1 Insurance. The Company shall maintain from financially sound and reputable insurers Directors and Officers liability insurance in an amount and on terms and conditions satisfactory to the Board of Directors, and will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board of Directors determines that such insurance should be discontinued. Notwithstanding any other provision of this Section 5.1 to the contrary, for so long as a Preferred Director is serving on the Board of Directors, the Company shall, within ninety (90) days following the Initial Closing (as defined in the Purchase Agreement) obtain a Directors and Officers liability insurance policy with respect to each such Preferred Director in an amount of at least $5 million and not cease to maintain such policy in a amount of $5 million unless approved by such Preferred Director, shall include the Investor entitled to designate such Preferred Director pursuant to the Voting Agreement as additional insureds in such policy, and shall annually, within one hundred twenty (120) days after the end of each fiscal year of the Company, deliver to the Investors a certification that such a Directors and Officers liability insurance policy remains in effect.
5.2 Employee Agreements. Unless otherwise approved by the Board of Directors, including at least one Preferred Director, the Company (a) will cause each Person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure, proprietary rights assignment and non-solicitation agreement; and (b) shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee.
5.3 Employee Stock. Unless otherwise approved by the Board of Directors, including at least one Preferred Director, all future employees of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 2.11.
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5.4 Qualified Small Business Stock. The Company shall use commercially reasonable efforts to refrain from taking any action that could reasonably be expected to cause the shares of Series A-1 Preferred Stock and Series A-2 Preferred Stock issued pursuant to that certain Series A Purchase Agreement dated as of June 1, 2023, by and between the Company and the parties thereto, as well as any shares into which such shares are converted, within the meaning of Section 1202(f) of the Internal Revenue Code (the “Code”), to fail to qualify as “qualified small business stock” as defined in Section 1202(c) of the Code; provided, however, that such requirement shall not be applicable if the Board of Directors determines, in its good-faith business judgment, that such qualification is inconsistent with the best interests of the Company. The Company shall submit to its stockholders (including the Investors) and to the Internal Revenue Service any reports that may be required under Section 1202(d)(1)(C) of the Code. The Company shall use commercially reasonable efforts to ensure the accuracy of any such report, but in no event shall the Company be liable to the Investors or any other person for any damages arising from any errors or inaccuracies in such report, unless made by the Company in a fraudulent manner.
5.5 Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Certificate of Incorporation, or elsewhere, as the case may be.
5.6 Indemnification Matters. The Company hereby acknowledges that one (1) or more of the Preferred Directors nominated to serve on the Board of Directors by one (1) or more Investors may have certain rights to indemnification, advancement of expenses and/or insurance provided by one (1) or more of the Investors and certain of their Affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Preferred Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Preferred Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Preferred Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Preferred Director to the extent legally permitted and as required by the Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Preferred Director), without regard to any rights such Preferred Director may have against the Investor Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Investor Indemnitors from any and all claims against the Investor Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Investor Indemnitors on behalf of any such Preferred Director with respect to any claim for which such Preferred Director has sought indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Preferred Director against the Company. The Preferred Directors and the Investor Indemnitors are intended third-party beneficiaries of this Section 5.6 and shall have the right, power and authority to enforce the provisions of this Section 5.6 as though they were a party to this Agreement.
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5.7 Right to Conduct Activities. The Company hereby agrees and acknowledges that each of (a) Frazier (together with its Affiliates), (b) IIF (together with its Affiliates), (c) GS (together with its Affiliates), (d) Deep Track Biotechnology Master Fund, Ltd. (together with its Affiliates “Deep Track”), (e) Vida Ventures (together with its Affiliates) and (f) Nextech (together with its Affiliates) (each of (a), (b), (c), (d), (e) and (f) a “VC Fund” and together, the “VC Funds”) is a professional investment organization, and as such reviews the business plans and related proprietary information of many enterprises, some of which may compete directly or indirectly with the Company’s business (as currently conducted or as currently propose to be conducted), and engage in activities, including investing in, financing and advising companies that may be competitive with or which may have products or services which compete directly or indirectly with the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from evaluating or purchasing securities, including publicly traded securities, of a particular enterprise, or engaging in any business, activity or operating, including, without limitation, evaluating or purchasing securities, including public traded securities, or a particular enterprise, or investing in, financing, advising or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company; and the Company hereby agrees that, to the extent permitted under applicable law, the each VC Fund shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by such VC Fund in any entity competitive with the Company, or (ii) actions taken by any partner, officer, employee or other representative of such VC Fund to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the VC Funds from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.
5.8 Anti-Harassment Policy. The Company shall maintain in effect (i) a Code of Conduct governing appropriate workplace behavior and (ii) an Anti-Harassment and Discrimination Policy prohibiting discrimination and harassment at the Company.
5.9 FCPA. The Company covenants that it shall not (and shall not permit any of its subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to) promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, including any Non-U.S. Official (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), in each case, in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company further covenants that it shall (and shall cause each of its subsidiaries and Affiliates to) cease all of its or their respective activities, as well as remediate any actions taken by the Company, its subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company shall promptly notify each Investor if the Company becomes aware of any Enforcement Action (as defined in
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the Purchase Agreement). The Company shall, and shall cause any direct or indirect subsidiary or entity controlled by it, whether now in existence or formed in the future, to comply with the FCPA. Upon request by an Investor, the Company agrees to provide responsive information and/or certifications to such Investor concerning its compliance with applicable anti-corruption laws The Company shall use its commercially reasonable efforts to cause any direct or indirect subsidiary, whether now in existence or formed in the future, to comply in all material respects with all applicable laws.
5.10 Corporate Transparency Act. Each Investor that is or has any Affiliate that may reasonably be deemed to be a “beneficial owner” (as defined in the CTA) agrees to provide the Company with any information reasonably necessary to enable the Company to comply with its reporting and disclosure requirements under the CTA. Each Investor may satisfy the requirements of this Section 5.10 by providing a “FinCEN identifier” (as defined in the CTA) to the Company in lieu of other required information (to the extent permitted by the CTA and authorized by FinCEN).
5.11 Cybersecurity. The Company shall continue to use commercially reasonable efforts to (a) identify and restrict access (including through physical and/or technical controls) to the Company’s confidential business information and trade secrets and any information about identified or identifiable natural persons maintained, disclosed or otherwise processed by or on behalf of the Company (collectively, “Protected Data”) to those individuals who have a need to access it and (b) implement and maintain reasonable physical, technical and administrative safeguards (“Cybersecurity Solutions”) designed to protect the confidentiality, integrity and availability of its technology and systems (including servers, laptops, desktops, cloud, containers, virtual environments and data centers and/or other Company or vendor systems and applications that process Protected Data, or are used to provide, host or enable the Company’s operations or services) and all Protected Data. The Company shall use commercially reasonable efforts to ensure that the Cybersecurity Solutions to the extent determined necessary by the Company or the Board of Directors, are backed by a breach prevention warranty from the vendor certifying the effectiveness of such solutions. The Company shall evaluate on a periodic basis at least annually whether such safeguards should be updated to maintain a level of security appropriate to the risk posed to Company systems and Protected Data. The Company shall educate its employees, agents and contractors about the proper use and storage of Protected Data, including periodic training as determined reasonably necessary by the Company or the Board of Directors.
5.12 CFIUS and Foreign Person Limitations.
(a) Unless otherwise approved by the Board of Directors, the Company will not provide to any Foreign Person any DPA Triggering Rights. No Investor who is a Foreign Person shall be permitted to obtain any DPA Triggering Rights or a voting equity interest in the Company that exceeds nine and nine-tenths percent (9.9%) of the Company’s total voting securities pursuant to the Purchase Agreement, Section 4 of this Agreement, or otherwise, including by way of any secondary transaction(s), without the approval of the Board of Directors.
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(b) Each Investor covenants that it will notify the Company in advance of permitting any Foreign Person affiliated with Investor, whether affiliated as a limited partner or otherwise, to obtain through Investor any DPA Triggering Rights.
5.13 Matters Requiring Preferred Director Approval. During such time or times as the holders of Preferred Stock are entitled to elect a Preferred Director and such seat is filled, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include at least one Preferred Director:
(a) make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;
(b) make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business;
(c) guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;
(d) make any investment inconsistent with any investment policy approved by the Board of Directors;
(e) incur any aggregate indebtedness in excess of $500,000 that is not already included in the Budget (as defined in Section 3.1(c)), other than trade credit incurred in the ordinary course of business;
(f) hire, terminate, or change the compensation of the executive officers, including approving any option grants or stock awards to executive officers;
(g) change the principal business of the Company, enter new lines of business, or exit the current line of business;
(h) sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business;
(i) enter into any corporate strategic relationship involving the payment, contribution, or assignment by the Company or to the Company of money or assets greater than five hundred thousand dollars ($500,000);
(j) enter into an agreement in respect of, or consummate a SPAC Transaction; or
(k) file a registration statement with the Securities and Exchange Commission for the initial listing of the Common Stock (or other equity securities of the Company) on the Nasdaq Stock Market, the New York Stock Exchange or another exchange or marketplace approved by the Board of Directors by means of an effective registration statement filed by the Company with the Securities and Exchange Commission, without a related underwritten offering of such Common Stock (or other equity securities).
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5.14 Termination of Covenants. The covenants set forth in this Section 5, except for Sections 5.5 and 5.6, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) upon a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first, or (iii) with respect to any obligation to an Investor that is or becomes a Sanctioned Party, for so long as such Holder is a Sanctioned Party; provided, that, with respect to clause (ii), the covenants set forth in Section 5 shall only terminate if the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities or if the acquiring company or other successor to the Company agrees to covenants comparable to those set forth in Section 5.
6. Miscellaneous.
6.1 Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one (1) or more of such Holder’s Immediate Family Members; (iii) after such transfer, together with its Affiliates, would be a Major Investor or (iv) has acquired such Registrable Securities in connection with a Regulatory Event pursuant to Section 15 of that certain letter agreement by and between the Company and GS dated as of May 1, 2024; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11; and (z) such assignee is not a Sanctioned Party. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall, as a condition to the applicable transfer, establish a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.
6.2 Governing Law. This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.
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6.3 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.
6.5 Notices.
(a) All notices and other communications given or made pursuant to this Agreement shall be in writing (including electronic mail as permitted in this Agreement) and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on their signature page, Schedule A hereto, or (as to the Company) to the principal office of the Company and to the attention of the Chief Executive Officer, or in any case to such email address or address as subsequently modified by written notice given in accordance with this Section 6.5.
(b) Consent to Electronic Notice. Each Investor and Key Holder consents to the delivery of any stockholder notice pursuant to the Delaware General Corporation Law (the “DGCL”), as amended or superseded from time to time, by electronic transmission pursuant to Section 232 of the DGCL (or any successor thereto) at the electronic mail address set forth below such Investor’s or Key Holder’s name on the Schedules hereto, as updated from time to time by notice to the Company, or as on the books of the Company. To the extent that any notice given by means of electronic mail is returned or undeliverable for any reason, the foregoing consent shall be deemed to have been revoked until a new or corrected electronic mail address has been provided, and such attempted electronic notice shall be ineffective and deemed not have been given. Each Investor and Key Holder agrees to promptly notify the Company of any change in its electronic mail address, and that failure to do so shall not affect the foregoing.
6.6 Amendments and Waivers. Any term of this Agreement may be amended, modified or terminated and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of at least a majority of the Registrable Securities then outstanding held by the Investors, excluding, for the avoidance of doubt, the Key Holder Registrable Securities; provided that the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. For the avoidance of doubt, Registrable Securities do not include any shares held by a person or entity that is a Sanctioned Party.
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Notwithstanding the foregoing,
(a) this Agreement may not be amended, modified or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, modification, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction; provided, however, if, after giving effect to any waiver of Section 4 or any provision pertaining to Section 4 with respect to a particular transaction, a Major Investor in fact purchases New Securities in such transaction (such Major Investor, a “Participating Investor”), the aforementioned waiver shall be deemed to apply to any Major Investor only if that Major Investor has been provided the opportunity to purchase a proportional number of the New Securities in such transaction based on the pro rata purchase right of each Major Investor set forth in Section 4, assuming a transaction size determined based upon the amount purchased by the Participating Investor that invested the largest percentage in such transaction), provided further that the Company may in its sole discretion waive compliance with any provision of this Agreement if observance of the terms would cause the Company or any Investor to be in violation of applicable Sanctions,
(b) any amendment, modification, termination or waiver that would adversely alter, change or increase the obligations of the Key Holders hereunder in a manner disproportionate to any adverse effect on the rights of the Investors hereunder shall also require approval from the Key Holders holding a majority of the shares of Registrable Securities then held by the Key Holders,
(c) Sections 3.1 and 3.2, Section 4 and any other section of this Agreement specifically applicable to the Major Investors (including this clause (c) of this Section 6.6) may be amended, modified, terminated or waived with only the written consent of the Company and the holders of at least 66% of the Registrable Securities then outstanding and held by the Major Investors (other than the Registrable Securities held by Alamar in its capacity as a Major Investor, unless such amendment, modification, termination or waiver would adversely impact Alamar as compared to the other Major Investors),
(d) Section 3.3(a) may be amended, modified, terminated or waived with only the written consent of the Company and Frazier,
(e) Section 3.3(b) and clause (ii) of the definition of “Major Investor” (solely with respect to Alamar) may be amended, modified, terminated or waived with only the written consent of the Company and Alamar,
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(f) Section 3.3(c) may be amended, modified, terminated or waived with only the written consent of the Company and IIF,
(g) Section 3.3(d), Section 4.1(e), Section 5.7 (solely with respect to its applicability to GS) and Section 6.1(iv), may be amended, modified, terminated or waived with only the written consent of the Company and GS,
(h) Section 3.3(e) and this Section 6.6(h) may be amended, modified, terminated or waived with only the written consent of the Company and EcoR1,
(i) Section 3.3(f) and Section 5.7 (as it pertains to Nextech) may be amended, modified, terminated or waived with only the written consent of the Company and Nextech;
(j) Section 3.3(g), Section 5.7 (as it pertains to Vida Ventures), and this Section 6.6(j) may be amended, modified, terminated or waived only with the written consent of the Company and Vida Ventures;
(k) Section 5.7 (as pertains to Deep Track) may be amended, modified, terminated or waived with only the written consent of the Company and Deep Track;
(l) Section 3.3(h) may be amended, modified, terminated or waived only with the written consent of the Company and Sanofi; and
(m) Schedule A and Schedule B hereto may be amended by the Company from time to time to add transferees of any Registrable Securities in compliance with the terms of this Agreement without the consent of the other parties; and Schedule A hereto may also be amended by the Company after the date of this Agreement without the consent of the other parties to add information regarding any additional Investor who becomes a party to this Agreement in accordance with Section 6.9.
The Company shall give prompt notice of any amendment, modification or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination, or waiver. Any amendment, modification, termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one (1) or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
6.7 Severability. In case any one (1) or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.
6.8 Aggregation of Stock; Apportionment. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliates may apportion such rights as among themselves in any manner they deem appropriate.
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6.9 Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of Series C Preferred Stock after the date hereof, pursuant to the Purchase Agreement, any purchaser of such shares of Series C Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.
6.10 Entire Agreement. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect. This Agreement (including any Schedules hereto) together with the, Certificate of Incorporation and other Transaction Agreements (as defined in the Purchase Agreement), constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.
6.11 Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
WAIVER OF JURY TRIAL: TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION AGREEMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
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6.12 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| COMPANY: | ||
| ATTOVIA THERAPEUTICS, INC. | ||
| By: | /s/ Tao Fu | |
| Name: | Tao Fu | |
| Title: | Chief Executive Officer |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| DEEP TRACK BIOTECHNOLOGY MASTER FUND, LTD. | ||
| By: | /s/ Nir Messafi | |
| Name: | Nir Messafi | |
| Title: | Authorized Person |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| VIDA VENTURES III, LP | ||
| By: Vida Ventures GP III, L.L.C. | ||
| its General Partner | ||
| By: | /s/ Helen S. Kim | |
| Name: | Helen S. Kim | |
| Title: | Sr. Managing Director |
| VIDA VENTURES III-A, LP | ||
| By: Vida Ventures GP III, L.L.C. | ||
| its General Partner | ||
| By: | /s/ Helen S. Kim | |
| Name: | Helen S. Kim | |
| Title: | Sr. Managing Director |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| SANOFI VENTURES LLC | ||
| By: | /s/ Jason P. Hafler | |
| Name: | Jason P. Hafler | |
| Title: | Managing Director |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| MIRAE ASSET CAPITAL LIFE SCIENCE INCEPTION I, LP | ||
| By: | /s/ Naveen M. Krishnan | |
| Name: | Naveen M. Krishnan, MD | |
| Title: | Authorized Signatory |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| WEST STREET LIFE SCIENCES I, L.P. | ||
| By: Goldman Sachs & Co. LLC, as Investment Manager | ||
| By: | /s/ Colin Walsh | |
| Name: | Colin Walsh | |
| Title: | Managing Director |
| WSLS OFFSHORE INVESTMENTS, SLP | ||
| By: Goldman Sachs & Co. LLC, as Investment Manager | ||
| By: | /s/ Colin Walsh | |
| Name: | Colin Walsh | |
| Title: | Managing Director |
| WSLS EMP ONSHORE INVESTMENTS, L.P. | ||
| By: Goldman Sachs & Co. LLC, as Investment Manager | ||
| By: | /s/ Colin Walsh | |
| Name: | Colin Walsh | |
| Title: | Managing Director |
| WSLS EMP OFFSHORE INVESTMENTS, L.P. | ||
| By: Goldman Sachs & Co. LLC, as Investment Manager | ||
| By: | /s/ Colin Walsh | |
| Name: | Colin Walsh | |
| Title: | Managing Director |
| BROAD STREET PRINCIPAL INVESTMENTS LLC | ||
| By: | /s/ Colin Walsh | |
| Name: | Colin Walsh | |
| Title: | Vice President |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| FRAZIER LIFE SCIENCES XI, L.P. | ||
| By: FHMLS XI, L.P. | ||
| Its general Partner | ||
| By: FHMLS XI, L.L.C. | ||
| Its general Partner | ||
| By: | /s/ James Topper | |
| Name: | James Topper | |
| Title: | Managing Director |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| ILLUMINA INNOVATION FUND II, L.P. | ||
| By: Illumina Innovation Fund II GP, L.L.C. | ||
| Its General Partner | ||
| By: | /s/ Ron Mazumder | |
| Name: | Ron Mazumder | |
| Title: | Partner |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| VENBIO GLOBAL STRATEGIC FUND IV, L.P. | ||
| By: venBio Global Strategic GP IV, LLC | ||
| Its General Partner | ||
| By: | /s/ Aaron Royston | |
| Name: | Aaron Royston | |
| Title: | Managing Partner |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| CORMORANT PRIVATE HEALTHCARE FUND V, LP | ||
| By: Cormorant Private Healthcare GP V, LLC | ||
| By: | /s/ Bihua Chen | |
| Name: | Bihua Chen | |
| Title: | Managing Member |
| CORMORANT GLOBAL HEALTHCARE MASTER FUND, LP | ||
| By: Cormorant Global Healthcare GP, LLC | ||
| By: | /s/ Bihua Chen | |
| Name: | Bihua Chen | |
| Title: | Managing Member |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| NEXTECH VII ONCOLOGY SCSP | ||
| By: | /s/ Ian Charoub | |
| Name: | Ian Charoub | |
| Title: | Manager of Nextech VII GP S.a.r.l. acting in its capacity as general partner of Nextech VII Oncology SCSp |
| By: | /s/ Costas Constaninides | |
| Name: | Costas Constaninides | |
| Title: | Manager of Nextech VII GP S.a.r.l. acting in its capacity as general partner of Nextech VII Oncology SCSp |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| ECOR1 CAPITAL FUND, L.P. | ||
| By: EcoR1 Capital, LLC, its General Partner | ||
| By: | /s/ Oleg Nodelman | |
| Name: | Oleg Nodelman | |
| Title: | Manager |
| ECOR1 CAPITAL FUND QUALIFIED, L.P. | ||
| By: EcoR1 Capital, LLC, its General Partner | ||
| By: | /s/ Oleg Nodelman | |
| Name: | Oleg Nodelman | |
| Title: | Manager |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| MW XO HEALTH INNOVATIONS FUND II, LP | ||
| By: Marshall Wace North America, LP | ||
| Its: Investment Manager | ||
| By: Marshall Wace LLC | ||
| Its: General Partner of the Investment Manager | ||
| By: | /s/ Jon May | |
| Name: | Jon May | |
| Title: | Head of Legal |
| By: | /s/ Des Anderson | |
| Name: | Des Anderson | |
| Title: | Chief Operating Officer |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| INVESTORS: | ||
| REDMILE BIOPHARMA INVESTMENTS III, L.P. | ||
| By: Redmile Biopharma Investments III (GP), LLC, its general partner | ||
| By: | /s/ Josh Garcia | |
| Name: | Josh Garcia | |
| Title: | Authorized Signatory |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.
| KEY HOLDER: | ||
| ALAMAR BIOSCIENCES, INC. | ||
| By: | /s/ Yuling Luo | |
| Name: | Yuling Luo | |
| Title: | Chief Executive Officer |
[SIGNATURE PAGE TO ATTOVIA THERAPEUTICS, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]
SCHEDULE A
INVESTORS
Name and Address
Deep Track Biotechnology Master Fund, Ltd.
With a copy (which copy shall not constitute notice) to:
Schulte Roth & Zabel LLP
Vida Ventures III, L.P.
c/o Vida Ventures Management Co. LLC
Vida Ventures III-A, L.P.
c/o Vida Ventures Management Co. LLC
Mirae Asset Capital Life Science Inception I, LP
Sanofi Ventures LLC
West Street Life Sciences I, LP
c/o Goldman Sachs & Co. LLC
WSLS Offshore Investments, SLP
c/o Goldman Sachs & Co. LLC
WSLS Emp Onshore Investments, L.P.
c/o Goldman Sachs & Co. LLC
WSLS Emp Offshore Investments, L.P.
c/o Goldman Sachs & Co. LLC
Broad Street Principal Investments LLC
c/o Goldman Sachs & Co. LLC
Cormorant Private Healthcare Fund V, LP
Cormorant Global Healthcare Master Fund, LP
Nextech VII Oncology SCSp
EcoR1 Capital Fund Qualified, L.P.
EcoR1 Capital Fund, L.P.
Frazier Life Sciences XI, L.P.
Logos Opportunities Fund IV LP
Redmile Biopharma Investments III, L.P.
MW XO Health Innovations Fund II, LP
c/o Marshall Wace North America, LP
VenBio Global Strategic Fund IV, L.P.
Illumina Innovation Fund II, L.P.
F&W Investments LP - Series 2022
Bio Intech, Ltd.
SCHEDULE B
KEY HOLDERS
Alamar HoldCo, LLC
Exhibit 10.1
FORM OF INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of _____________, 2026 is made by and between Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), and _____________________, a director, officer or key employee of the Company or one of the Company’s Subsidiaries or Affiliates (as those terms are defined below) or other service provider who satisfies the definition of Indemnifiable Person set forth below (“Indemnitee”).
RECITALS
A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as representatives of corporations unless they are protected by comprehensive liability insurance and indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no relationship to the compensation of such representatives;
B. The members of the Board of Directors of the Company (the “Board”) have concluded that to retain and attract talented and experienced individuals to serve as representatives of the Company and its Subsidiaries and Affiliates and to encourage such individuals to take the business risks necessary for the success of the Company and its Subsidiaries and Affiliates, it is necessary for the Company to contractually indemnify certain of its representatives and the representatives of its Subsidiaries and Affiliates, and to assume for itself maximum liability for Expenses and Other Liabilities (as those terms are defined below) in connection with claims against such representatives in connection with their service to the Company and its Subsidiaries and Affiliates;
C. Section 145 of the Delaware General Corporation Law (the “DGCL” and such section, “Section 145”) empowers the Company to indemnify by agreement its officers, directors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations, partnerships, joint ventures, trusts or other enterprises. The Amended and Restated Bylaws of the Company (the “Bylaws”) require indemnification of the directors and officers of the Company subject to specific terms and conditions. The Bylaws and Section 145 expressly provide that the indemnification pursuant thereto is not exclusive and contemplate that contracts may be entered into between the Company and members of the Board, officers, and other persons with respect to indemnification;
D. This Agreement is a supplement to and in furtherance of the Bylaws and any resolutions adopted pursuant thereto, as well as any rights of Indemnitees under the DGCL or any directors and officers liability insurance policy or other applicable insurance policies, and this Agreement shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and
E. The Company desires and has requested Indemnitee to serve or continue to serve as a representative of the Company and/or its Subsidiaries or Affiliates free from undue concern about inappropriate claims for damages arising out of or related to such services to the Company and/or its Subsidiaries or Affiliates.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
(a) Affiliate. For purposes of this Agreement, “Affiliate” of the Company means any corporation, partnership, limited liability company, joint venture, trust or other enterprise or non-profit entity in respect of which Indemnitee is or was or will be serving as a director, officer, trustee, manager, member, partner, employee, agent, attorney, consultant, member of the entity’s governing body (whether constituted as a board of directors, board of managers, general partner or otherwise), fiduciary, or in any other similar capacity at the request, election or direction of the Company, and including, but not limited to, any employee benefit plan of the Company or a Subsidiary or Affiliate of the Company.
(b) Change in Control. For purposes of this Agreement, “Change in Control” means any event or circumstance where (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a Subsidiary or a trustee or other fiduciary holding securities under an employee benefit plan of the Company or Subsidiary, is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding capital stock, (ii) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 1(b)(i), 1(b)(iii) or 1(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the outstanding capital stock of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into capital stock of the surviving entity) at least 50% of the total voting power represented by the capital stock of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
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(c) Expenses. For purposes of this Agreement, “Expenses” means all reasonable and reasonably documented direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements, and other out-of-pocket costs) actually paid or incurred by Indemnitee in connection with the investigation, defense or appeal of, or being a witness or otherwise involved in (i) a Proceeding (as defined below), or establishing or enforcing a right to indemnification under this Agreement, Section 145 or otherwise; provided, however, that Expenses shall not include any judgments, fines, taxes (including excise taxes or penalties related to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or other benefit plans) or amounts paid in settlement of a Proceeding; (ii) any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent; or (iii) recovery under any directors and officers liability insurance policies or other applicable insurance policies maintained by the Company, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
(d) Indemnifiable Event. For purposes of this Agreement, “Indemnifiable Event” means any event or occurrence related to Indemnitee’s service for the Company or any Subsidiary or Affiliate as an Indemnifiable Person (as defined below), or by reason of anything done or not done, or any act or omission, by Indemnitee in any such capacity.
(e) Indemnifiable Person. For the purposes of this Agreement, “Indemnifiable Person” means any person who is or was a director, officer, trustee, manager, member, partner, employee, attorney, consultant, member of an entity’s governing body (whether constituted as a board of directors, board of managers, general partner or otherwise) or other agent or fiduciary of the Company or a Subsidiary or Affiliate of the Company.
(f) Independent Counsel. For purposes of this Agreement, “Independent Counsel” means legal counsel who (i) has not performed services for the Company or Indemnitee in the five years preceding the time in question and who would not, under applicable standards of professional conduct, have a conflict of interest in representing either the Company or Indemnitee, and (ii) is selected by Indemnitee and approved by the Board, which approval may not be unreasonably withheld, delayed or conditioned.
(g) Independent Director. For purposes of this Agreement, “Independent Director” means a member of the Board who is not a party to the Proceeding for which a claim for advancement or indemnification is made under this Agreement.
(h) Other Liabilities. For purposes of this Agreement, “Other Liabilities” means any and all liabilities of any type whatsoever, including, but not limited to, judgments, fines, penalties, taxes (including excise taxes or penalties related to ERISA or other benefit plans), and amounts paid in settlement, and all interest, taxes, assessments and other charges paid or payable in connection with or in respect of any such judgments, fines, or penalties or amounts paid in settlement.
(i) Proceeding. For the purposes of this Agreement, “Proceeding” means any threatened, pending, or completed action, suit, claim or other proceeding, whether civil, criminal, administrative, investigative, legislative or any other type whatsoever, preliminary, informal or formal, including any arbitration or other alternative dispute resolution and including any appeal of any of the foregoing.
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(j) Subsidiary. For purposes of this Agreement, “Subsidiary” means any entity of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company.
2. Agreement to Serve. Indemnitee agrees to serve and/or continue to serve as an Indemnifiable Person in the capacity or capacities in which Indemnitee currently serves the Company as an Indemnifiable Person, and any additional capacity or capacities in which Indemnitee may agree to serve, until such time as Indemnitee’s service in a particular capacity shall end according to the terms of an agreement, the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) or Bylaws, governing law, or otherwise. Nothing contained in this Agreement is intended to create any right to continued employment or other form of service for the Company or a Subsidiary or Affiliate of the Company by Indemnitee.
3. Mandatory Indemnification.
(a) Agreement to Indemnify. In the event Indemnitee is a person who was or is a party to or witness in or is threatened to be made a party to or witness in any Proceeding by reason of an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses and Other Liabilities incurred by Indemnitee in connection with (including in preparation for) such Proceeding to the fullest extent not prohibited by the provisions of the Bylaws or the DGCL, as the same may be amended from time to time (but only to the extent that such amendment permits the Company to provide broader indemnification rights than the Bylaws or the DGCL permitted prior to the adoption of such amendment), provided that such indemnification is subject to the exclusions set forth in Section 9 below. The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the Bylaws, vote of the Company’s stockholders or disinterested directors or applicable law.
(b) Company Obligations Primary. The Company hereby acknowledges that Indemnitee may have rights to advancement and/or indemnification for Expenses and Other Liabilities provided by a venture capital firm or other sponsoring organization (“Other Indemnitor”). The Company agrees with Indemnitee that the Company is the indemnitor of first resort of Indemnitee with respect to matters for which advancement and/or indemnification is provided under this Agreement and that the Company will be obligated to make all payments due to or for the benefit of Indemnitee under this Agreement without regard to any rights that Indemnitee may have against the Other Indemnitor. To the extent not in contravention of any insurance policy purchased by the Company, Subsidiary or Affiliate, the Company hereby waives any equitable rights to contribution or indemnification from the Other Indemnitor in respect of any amounts paid to Indemnitee hereunder. The Company further agrees that no reimbursement of Other Liabilities or payment of Expenses by the Other Indemnitor to or for the benefit of Indemnitee shall affect the obligations of the Company hereunder, and that the Company shall be obligated to repay the Other Indemnitor for all amounts so paid or reimbursed to the extent that the Company has an obligation to pay Indemnitee for such Expenses or Other Liabilities hereunder.
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4. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Expenses or Other Liabilities but not entitled, however, to indemnification for the total amount of such Expenses or Other Liabilities, the Company shall nevertheless indemnify Indemnitee for such total amount except as to the portion thereof for which indemnification is prohibited by the Bylaws, this Agreement or the DGCL. In any review, process and/or Proceeding to determine the extent of indemnification to which Indemnitee is entitled, the Company shall bear the burden to establish, by clear and convincing evidence, the lack of a successful resolution of a particular claim, issue or matter and which amounts sought in indemnity are allocable to claims, issues or matters that were not successfully resolved.
5. Liability Insurance. So long as Indemnitee shall continue to serve the Company or a Subsidiary or Affiliate of the Company as an Indemnifiable Person and thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding as a result of an Indemnifiable Event, the Company shall use reasonable efforts to maintain in full force and effect for the benefit of Indemnitee as an insured (i) directors and officers liability insurance issued by one or more reputable insurers and having the policy amount and deductible deemed appropriate by the Board and providing in all respects coverage at least comparable to and in the same amount as that provided to the Chairman of the Board or the Chief Executive Officer of the Company, and (ii) any renewal, replacement or substitute directors and officers liability insurance policies issued by one or more reputable insurers providing in all respects coverage at least comparable to and in the same amount as that being provided to the Chairman of the Board or the Chief Executive Officer of the Company. The purchase, establishment and maintenance of any such insurance or other arrangements shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such insurance or other arrangement. In the event of a Change in Control subsequent to the date of this Agreement, or the Company’s becoming insolvent (including but not limited to being placed into receivership, an assignment for the benefit of creditors, or entering the federal bankruptcy process), the Company shall use reasonable efforts to maintain in force any and all insurance policies then maintained by the Company for the purpose of providing coverage to the Company’s officers or directors (including but not limited to directors and officers liability, fiduciary and employment practices insurance) for a fixed period of no less than six years thereafter. Such coverage shall be non-cancelable and shall be placed and serviced by the Company’s incumbent insurance broker or a broker selected by a majority of the non-management members of the Board.
6. Mandatory Advancement of Expenses. If requested by Indemnitee, the Company shall advance, to the fullest extent permitted by law, prior to the final disposition of the Proceeding, all Expenses reasonably incurred by Indemnitee in connection with (including in preparation for) a Proceeding not initiated by Indemnitee (and any Proceeding initiated by Indemnitee to the extent such Proceeding is initiated by Indemnitee in accordance with clauses
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(i)-(iii) of Section 9(a) of this Agreement) related to an Indemnifiable Event within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. The right to advances under this Section shall in all events continue until final disposition of any Proceeding, including any appeal therefrom and/or a final adjudication not subject to further appeal. Indemnitee hereby undertakes to repay such amounts advanced if, and only if and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Bylaws or the DGCL and no additional form of undertaking with respect to such obligation to repay shall be required. Indemnitee’s undertaking to repay any Expenses advanced to Indemnitee hereunder shall be unsecured and shall not be subject to the accrual or payment of any interest thereon. This Section 6 shall not apply to any request for advancement of Expenses made by Indemnitee for which such advancement of Expenses is excluded pursuant to Section 9 of this Agreement.
7. Notice and Other Indemnification Procedures.
(a) Notification. Promptly after receipt by Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, unless the Company is a named co-defendant with Indemnitee (or the Company is the recipient of such threat), Indemnitee shall, if Indemnitee believes the advancement of and/or indemnification for Expenses and Other Liabilities with respect thereto may be sought from the Company under this Agreement, notify the Company in writing of the commencement or threat of commencement thereof. The written notification to the Company shall include, in reasonable detail, a description of the nature of and facts related to the Proceeding. However, a failure by Indemnitee to notify the Company promptly following Indemnitee’s receipt of such notice shall not relieve the Company from any liability that it may have to Indemnitee except to the extent that the Company is materially prejudiced in its defense of such Proceeding as a result of such failure, provided, however, that the Company shall have the burden to prove the existence of such material prejudice by clear and convincing evidence.
(b) Insurance Notice and Other Matters. If, at the time of the receipt of a notice of the commencement of a Proceeding pursuant to Section 7(a) above, the Company has director and officer liability insurance and/or any other type of insurance that might provide coverage to Indemnitee in effect, the Company shall give prompt notice of the commencement of such Proceeding on behalf of Indemnitee to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all commercially reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such insurance policies. In addition, the Company will instruct the insurers and the Company’s insurance broker that they may communicate directly with Indemnitee regarding such Proceeding.
(c) Assumption of Defense. In the event the Company shall be obligated to advance Expenses for any Proceeding against Indemnitee, the Company, if deemed appropriate by the Company, shall be entitled to assume the defense of such Proceeding as provided herein. Such defense by the Company may include the representation of two or more parties by one attorney or law firm as permitted under the ethical rules and legal requirements related to joint
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representations. Following delivery of written notice to Indemnitee of the Company’s election to assume the defense of such Proceeding, the approval by Indemnitee (which approval shall not be unreasonably withheld, delayed or conditioned) of counsel designated by the Company, and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. If (i) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have notified the Board in writing that Indemnitee or separate counsel for Indemnitee has reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, (iii) the Company fails to employ counsel to assume the defense of such Proceeding, or (iv) after a Change in Control, the employment of counsel by Indemnitee has been approved by Independent Counsel, the Expenses related to work conducted by Indemnitee’s counsel shall be subject to indemnification and/or advancement pursuant to the terms of this Agreement. Indemnitee agrees that any such separate counsel retained by Indemnitee will be a member of any approved list of panel counsel under the Company’s applicable insurance policies, should the applicable policies provide for a panel of approved counsel. Nothing herein shall prevent Indemnitee from employing counsel for any Proceeding at Indemnitee’s own expense.
(d) Settlement. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent; provided, however, that if a Change in Control has occurred subsequent to the date of this Agreement, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if Independent Counsel has approved the settlement. Neither the Company nor any Subsidiary or Affiliate shall enter into a settlement of any Proceeding that might result in the imposition of any Expense, Other Liability, penalty, limitation or detriment on Indemnitee, whether indemnifiable under this Agreement or otherwise, without Indemnitee’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold, delay or condition consent from any settlement of any Proceeding. The Company shall promptly notify Indemnitee upon the Company’s receipt of an offer to settle, or if the Company makes an offer to settle, any Proceeding, and provide Indemnitee with a reasonable amount of time to consider such settlement, in the case of any such settlement for which the consent of Indemnitee would be required hereunder. The Company shall not settle any part of any Proceeding to which Indemnitee is a party with respect to other parties (including the Company) without the written consent of Indemnitee if any portion of the settlement is to be funded from insurance proceeds paid from an insurance policy or policies providing coverage to Indemnitee unless approved by a majority of the Independent Directors, provided that this sentence shall cease to be of any force and effect if it has been determined in accordance with this Agreement that Indemnitee is not entitled to indemnification hereunder with respect to such Proceeding or if the Company’s obligations hereunder to Indemnitee with respect to such Proceeding have been fully discharged.
8. Determination of Right to Indemnification.
(a) Success on the Merits or Otherwise. To the extent that Indemnitee has been successful on the merits or otherwise in the defense of any Proceeding referred to in Section 3(a) above or in the defense of any claim, issue or matter described therein, the Company shall indemnify Indemnitee against Expenses actually and reasonably incurred in connection therewith.
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(b) Indemnification in Other Situations. In the event that Section 8(a) is inapplicable, the Company shall also indemnify Indemnitee if Indemnitee has met the applicable standard of conduct for indemnification to the fullest extent permitted by law.
(c) Determination of Entitlement to Indemnification. Indemnitee shall be entitled to select the manner in which the determination of whether or not Indemnitee has met the applicable standard of conduct shall be decided, and such election will be made from among the following:
i. A majority of the Independent Directors even though less than a quorum;
ii. A committee of Independent Directors designated by a majority vote of Independent Directors, even though less than a quorum; or
iii. Independent Counsel, who shall make such determination in a written opinion.
If Indemnitee is an officer or a director of the Company at the time that Indemnitee is selecting the manner in which the determination of whether Indemnitee has met the applicable standard of conduct shall be decided, then Indemnitee shall not select Independent Counsel as the manner for the determination to be made unless (i) there are no Independent Directors, or (ii) a majority of the Independent Directors (even though less than a quorum) approve of the selection of Independent Counsel, which approval may not be unreasonably withheld, delayed or conditioned.
The party or parties selected in accordance with this Section 8(c) shall be referred to herein as the “Reviewing Party.” Notwithstanding the foregoing, following any Change in Control subsequent to the date of this Agreement, the Reviewing Party shall be Independent Counsel.
(d) Decision Timing. As soon as practicable, and in no event later than thirty (30) days after receipt by the Company of written notice of Indemnitee’s choice of the Reviewing Party pursuant to Section 8(c) above, the Company and Indemnitee shall each submit to the Reviewing Party such information as they believe is appropriate for the Reviewing Party to consider. The Reviewing Party shall arrive at its decision within a reasonable period of time following the receipt of all such information from the Company and Indemnitee, but in no event later than thirty (30) days following the receipt of all such information, provided that the time by which the Reviewing Party must reach a decision may be extended by mutual agreement of the Company and Indemnitee. All Expenses associated with the process set forth in this Section 8(d), including but not limited to the Expenses of the Reviewing Party, shall be paid by the Company.
(e) Delaware Court of Chancery. Notwithstanding a final determination by any Reviewing Party that Indemnitee is not entitled to indemnification with respect to a specific Proceeding, Indemnitee shall have the right to apply to the Delaware Court of Chancery, for the purpose of enforcing Indemnitee’s right to indemnification pursuant to this Agreement.
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(f) Expenses. The Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with any process, hearing or Proceeding under this Section 8 involving Indemnitee and against all Expenses incurred by Indemnitee in connection with any other Proceeding between the Company and Indemnitee involving the interpretation or enforcement of the rights of Indemnitee under this Agreement unless a court of competent jurisdiction finds that each of the material claims of Indemnitee in any such Proceeding was frivolous or made in bad faith.
(g) Determination of “Good Faith”. For purposes of any determination of whether Indemnitee acted in “good faith” or acted in “bad faith,” Indemnitee shall be deemed to have acted in good faith or not acted in bad faith if, in taking or failing to take the action in question, Indemnitee relied on the records or books of account of the Company or a Subsidiary or Affiliate, including financial statements, or on information, opinions, reports or statements provided to Indemnitee by the officers or other employees of the Company or a Subsidiary or Affiliate in the course of their duties, or on the advice of legal counsel for the Company or a Subsidiary or Affiliate, or on information or records given or reports made to the Company or a Subsidiary or Affiliate by an independent certified public accountant or by an appraiser or other expert selected by the Company or a Subsidiary or Affiliate, or by any other person (including legal counsel, accountants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has or have been selected with reasonable care by or on behalf of the Company or a Subsidiary or Affiliate. In connection with any determination as to whether Indemnitee is entitled to be indemnified hereunder, or to advancement of Expenses and Other Liabilities, the Reviewing Party or court shall presume that Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification or advancement of Expenses and Other Liabilities, as the case may be, and the burden of proof shall be on the Company to establish, by clear and convincing evidence, that Indemnitee is not so entitled. The provisions of this Section 8(g) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or failures to act, of any other person serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person shall not be imputed to Indemnitee for purposes of determining the right to indemnification hereunder.
9. Exceptions. Any other provision herein to the contrary notwithstanding, Indemnitee’s rights to indemnification and/or advancement are subject to the following exceptions.
(a) Claims Initiated by Indemnitee. The Company shall not be obligated pursuant to the terms of this Agreement to indemnify or advance Expenses to Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement, any other statute or law, as permitted under Section 145, or otherwise, (ii) where the Board has consented to the initiation of such Proceeding, or (iii) with respect to Proceedings brought to discharge Indemnitee’s fiduciary responsibilities, whether under ERISA or otherwise, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board finds it to be appropriate.
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(b) Actions Based on Federal Statutes Regarding Profit Recovery and Return of Bonus Payments. The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of (i) any suit in which judgment is rendered against Indemnitee by a court of competent jurisdiction in a final adjudication not subject to further appeal for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act and amendments thereto or similar provisions of any federal, state or local statutory law, (ii) any reimbursement paid to the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act, including but not limited to any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act; or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act.
(c) Unlawful Indemnification. The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee for Other Liabilities if such indemnification is prohibited by law as determined by a court of competent jurisdiction in a final adjudication not subject to further appeal.
(d) Exception for Amounts Covered by Insurance and Other Sources. The Company shall not be obligated to advance or indemnify Indemnitee for Expenses or Other Liabilities of any type whatsoever, including, but not limited to judgments, fines, penalties, taxes (including excise taxes or penalties related to ERISA or other benefit plans) and amounts paid in settlement, to the extent such have been paid directly to Indemnitee (or paid directly to a third party on Indemnitee’s behalf) by any directors and officers liability insurance or other type of insurance maintained by the Company; provided, however, that payment made to Indemnitee pursuant to an insurance policy purchased and maintained by Indemnitee at his or her own expense of any amounts otherwise indemnifiable or obligated to be made pursuant to this Agreement shall not reduce the Company’s obligations to Indemnitee pursuant to this Agreement.
10. Non-exclusivity. The provisions for advancement and/or indemnification for Expenses and Other Liabilities set forth in this Agreement shall not be deemed exclusive of any other rights that Indemnitee may have under any provision of law, the Certificate of Incorporation or the Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as to acts or omissions in his or her official capacity and to acts or omissions in another capacity while serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person.
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11. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of the Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
12. Entire Agreement; Supersession, Modification and Waiver. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any prior indemnification agreement between Indemnitee and the Company, its Subsidiaries or its Affiliates, provided, however, that this Agreement is a supplement to and in furtherance of Section 145, the Certificate of Incorporation, the Bylaws, any directors and officers liability insurance or other insurance policy providing coverage to Indemnitee maintained by the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder. If the Company and Indemnitee have previously entered into an indemnification agreement providing for the indemnification of Indemnitee by the Company, the entry into this Agreement by both parties hereto shall be deemed to amend and restate such prior agreement to read in its entirety as, and be superseded by, this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) and except as expressly provided herein, no such waiver shall constitute a continuing waiver.
13. Successors and Assigns; Survival of Rights. The terms of this Agreement shall bind, and shall inure to the benefit of, and be enforceable by the parties hereto and, as applicable, their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, executors, administrators and personal and legal representatives (collectively, “Successors”). Indemnitee’s rights hereunder shall continue after Indemnitee has ceased serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person and shall inure to the benefit of Indemnitee’s Successors. In addition, the Company shall require and cause any Successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement and indemnify Indemnitee to the fullest extent permitted by law.
14. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and a receipt is provided by the party to whom such communication is delivered, (ii) if mailed by certified or registered mail with postage prepaid, return receipt requested, on the signing by the recipient of an acknowledgement of receipt form accompanying delivery through the U.S. mail,
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(iii) by personal service by a process server, (iv) by delivery to the recipient’s address by overnight delivery (e.g., FedEx, UPS or DHL) or other commercial delivery service, or (v) if via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. The address for notice to Indemnitee shall be Indemnitee’s most recent address on file with the Company. Delivery of communications to the Company with respect to this Agreement shall be sent to the attention of the Company’s Chief Executive Officer or Chief Financial Officer.
15. No Presumptions. For purposes of this Agreement, the termination of any Proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise. In addition, neither the failure of the Company or a Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Company or a Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of Proceedings by Indemnitee to secure a judicial determination by exercising Indemnitee’s rights under Section 8(e) of this Agreement shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has failed to meet any particular standard of conduct or did not have any particular belief or is not entitled to indemnification under applicable law or otherwise. Additionally, any admission of liability by the Company in connection with any settlement by the Company with a regulatory agency shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise.
16. Subrogation and Contribution.
(a) Except as otherwise expressly provided in this Agreement, in the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
(b) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by or on behalf of Indemnitee, whether for Expenses or Other Liabilities, in connection with any Proceeding relating to an Indemnifiable Event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
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17. Specific Performance, Etc. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute Proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.
18. Counterparts. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. Execution of a PDF copy shall have the same force and effect as execution of an original, and a copy of a signature will be admissible in any legal proceeding as if an original.
19. Headings. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
20. Governing Law. This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely with Delaware.
21. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any Proceeding which arises out of or relates to this Agreement.
[Signature Page Follows]
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Exhibit 10.1
The parties hereto have entered into this Agreement effective as of the date first above written.
| ATTOVIA THERAPEUTICS, INC. | ||
| By: |
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| Its: |
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| INDEMNITEE | ||
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| [INDEMNITEE’S NAME] | ||
Exhibit 10.2
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
As Adopted on June 1, 2023
As Amended on April 30, 2025
As Amended on March 28, 2025
1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through the grant of Awards covering Shares. Capitalized terms not defined in the text are defined in Section 14 hereof. Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o). Any requirement of this Plan that is required in law only because of Section 25102(o) need not apply if the Committee so provides.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 11 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 30,595,909 Shares. Subject to Sections 2.2 and 11 hereof, (A) in the event that Shares previously issued under the Plan are reacquired by the Company pursuant to a forfeiture provision, right of first refusal, or repurchase by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan; (B) in the event that Shares that otherwise would have been issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding obligations, such Shares shall remain available for issuance under the Plan; and (C) in the event that an outstanding Option, Restricted Stock Unit or SAR for any reason expires or is cancelled, forfeited or terminated, the Shares allocable to the unexercised or unsettled portion of such Option, Restricted Stock Unit or SAR, as applicable, shall remain available for issuance under the Plan. To the extent an Award is settled in cash, the cash settlement shall not reduce the number of Shares remaining available for issuance under the Plan. At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted and outstanding under this Plan. In no event shall the total number of Shares issued (counting each reissuance of a Share that was previously issued and then reacquired by the Company pursuant to a forfeiture provision, right of first refusal, or repurchase by the Company as a separate issuance) under the Plan upon exercise of ISOs (as defined in Section 4 hereof) exceed 61,191,818 Shares (adjusted in proportion to any adjustments under Section 2.2 hereof) over the term of the Plan.
2.2 Adjustment of Shares. In the event that the Company’s Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or other change in the capital structure of the Company affecting Shares without consideration, then in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan (a) the number and class of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number and class of Shares subject to outstanding Options and SARs, and (c) the Purchase Prices of and/or number and class of Shares subject to other outstanding Awards will (to the extent appropriate) be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities or other laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee.
3. PLAN FOR BENEFIT OF SERVICE PROVIDERS.
3.1 Eligibility. The Committee will have the authority to select persons to receive Awards. ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company. NQSOs (as defined in Section 4 hereof) and all other types of Awards may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company: provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction when Rule 701 is to apply to the Award granted for such services. A person may be granted more than one Award under this Plan.
3.2 No Obligation to Employ. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Subsidiary or Parent of the Company or limit in any way the right of the Company or any Subsidiary or Parent of the Company to terminate Participant’s employment or other relationship at any time, with or without Cause.
4. OPTIONS. The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following.
4.1 Form of Option Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.
4.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.
4.3 Exercise Period. Options may be exercisable within the time or upon the events determined by the Committee in the Award Agreement and may be awarded as immediately exercisable but subject to repurchase pursuant to Section 10 hereof or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that (a) no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and (b) no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary or Parent of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted; but in no event shall an Option granted to an employee who is a non-exempt employee for purposes of overtime pay under the U.S. Fair Labor Standards Act of 1938 be exercisable earlier than six (6) months after its date of grant. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
4.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per Share on the date of grant unless expressly determined in writing by the Committee; provided that the Exercise Price of an ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 8 hereof.
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4.5 Method of Exercise. Options may be exercised only by delivery to the Company of a stock option exercise agreement (accepted via written, electronic or other means) (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant). The Exercise Agreement will state (a) the number of Shares being purchased, (b) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (c) such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities or other laws. Each Participant’s Exercise Agreement may be modified by (i) agreement of Participant and the Company or (ii) substitution by the Company, upon becoming a public company, in order to add the payment terms set forth in Section 8.1 that apply to a public company and such other terms as shall be necessary or advisable in order to exercise a public company option. Upon exercise of an Option, Participant shall execute and deliver to the Company the Exercise Agreement then in effect, together with payment in full of the Exercise Price for the number of Shares being purchased and satisfaction of any applicable Tax-Related Obligations (as defined in Section 8.2 hereof). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.2 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
4.6 Termination. Subject to earlier termination pursuant to Sections 11 and 13 hereof and subject to any longer exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following terms and conditions.
4.6.1 Other than Death or Disability or for Cause. If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date, except as otherwise determined by the Committee or required by applicable law. Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period after the Termination Date as may be determined by the Committee or required by applicable law, with any exercise beyond three (3) months after the date Participant ceases to be an employee deemed to be an NQSO) but, in any event, no later than the expiration date of the Options.
4.6.2 Death or Disability. If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares on the Termination Date, except as otherwise determined by the Committee or required by applicable law. Such Options must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, after the Termination Date as may be determined by the Committee or required by applicable law, with any exercise beyond (a) three (3) months after the date Participant ceases to be an employee when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant ceases to be an employee when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no later than the expiration date of the Options.
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4.6.3 For Cause. If the Participant is Terminated for Cause, the Participant may exercise such Participant’s Options, but not to an extent greater than such Options are exercisable as to Vested Shares upon the Termination Date and Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.
4.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option. provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.
4.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars ($100,000). If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 13.1 hereof) to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
4.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted, unless for the purpose of complying with applicable laws and regulations. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 4.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 4.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price.
4.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code.
5. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following terms and conditions.
5.1 Form of Restricted Stock Award. All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted
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Stock Purchase Agreement (accepted via written, electronic or other means) and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.
5.2 Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 8 hereof.
5.3 Dividends and Other Distributions. Participants holding Restricted Stock Awards will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Committee provides otherwise at the time the Award is granted. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Restricted Stock Awards with respect to which they were paid.
5.4 Restrictions. Restricted Stock Awards may be subject to the restrictions set forth in Sections 9 and 10 hereof or, with respect to a Restricted Stock Award to which Section 25102(o) is to apply, such other restrictions not inconsistent with Section 25102(0).
6. RESTRICTED STOCK UNITS.
6.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an Award covering a number of Shares that may be settled in cash, by issuance of those Shares at a date in the future, or by a combination of cash and Shares. No Purchase Price shall apply to an RSU settled in Shares. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU, (b) the time or times during which the RSU may be settled, (c) the consideration to be distributed on settlement, and (d) the effect of the Participant’s Termination on each RSU. All grants of RSUs will be evidenced by an Award Agreement (the “RSU Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. No RSU will have a term longer than ten (10) years from the date the RSU is granted.
6.2 Form and Timing of Settlement. Payment of earned RSUs will be made as soon as practicable after the date(s) determined by the Committee and set forth in the RSU Agreement. To the extent permissible under applicable law, the Committee may permit a Participant to defer payment (including settlement) under an RSU to a date or dates after the RSU has vested, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code (or any successor) and any regulations or rulings promulgated thereunder, to the extent the Participant is subject to Section 409A of the Code.
6.3 Dividend Equivalent Payments. The Board may permit Participants holding RSUs to receive dividend equivalent payments on outstanding RSUs if and when dividends are paid to stockholders on Shares. In the discretion of the Board, such dividend equivalent payments may be paid in cash or Shares and they may either be paid at the same time as dividend payments are made to stockholders or delayed until Shares are issued pursuant to the RSU grants and may be subject to the same vesting or performance requirements as the RSUs. If the Board permits dividend equivalent payments to be made on RSUs, the terms and conditions for such dividend equivalent payments will be set forth in the RSU Agreement.
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7. STOCK APPRECIATION RIGHTS.
7.1 Awards of SARs. Stock Appreciation Rights (“SARs”) may be settled in cash or Shares (which may consist of Restricted Stock or RSUs) or a combination thereof, having a value equal to the value determined by multiplying the difference between the Fair Market Value on the date of exercise over the Exercise Price and the number of Shares with respect to which the SAR is being exercised. All grants of SARs made pursuant to this Plan will be evidenced by an Award Agreement (the “SAR Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.
7.2 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the SAR Agreement. The SAR Agreement shall set forth the expiration date: provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted.
7.3 Exercise Price. The Committee will determine the Exercise Price of the SAR when the SAR is granted, which may not be less than the Fair Market Value on the date of grant.
7.4 Termination. Subject to earlier termination pursuant to Sections 11 and 13 hereof and subject to any longer exercise periods set forth in the SAR Agreement, exercise of SARs will always be subject to the following terms and conditions.
7.4.1 Other than Death or Disability or for Cause. If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s SARs only to the extent that such SARs are exercisable as to Vested Shares upon the Termination Date or as otherwise determined by the Committee or as required by applicable law. SARs must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period after the Termination Date as may be determined by the Committee or as required by applicable law), but in any event no later than the expiration date of the SARs.
7.4.2 Death or Disability. If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s SARs may be exercised only to the extent that such SARs are exercisable as to Vested Shares on the Termination Date or as otherwise determined by the Committee or as required by applicable law. Such SARs must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period after the Termination Date as may be determined by the Committee or as required by applicable law), but in any event no later than the expiration date of the SARs.
7.4.3 For Cause. If the Participant is Terminated for Cause, the Participant may exercise such Participant’s SARs, but not to an extent greater than such SARs are exercisable as to Vested Shares upon the Termination Date and Participant’s SARs shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.
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8. PAYMENT FOR PURCHASES AND EXERCISES.
8.1 Payment in General. Payment for Shares acquired pursuant to this Plan may be made in cash equivalents (including by check or Automated Clearing House (“ACH”) transfer) or, where expressly approved for the Participant by the Committee and subject to compliance with applicable law:
(a) by cancellation of indebtedness of the Company owed to the Participant;
(b) by surrender of shares of the Company that are clear of all liens, claims, encumbrances or security interests and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid (i) imputation of income under Sections 483 and 1274 of the Code and (ii) unfavorable accounting treatment as determined by the Committee; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares: provided, further, that the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value (if any) of the Shares must be paid in cash or other legal consideration permitted by the laws under which the Company is then incorporated or organized;
(d) by waiver of compensation due or accrued to the Participant from the Company for services rendered;
(e) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(f) provided that a public market for the Company’s common stock exists, by exercising through a “same day sale” commitment from the Participant and a broker -dealer whereby the Participant irrevocably elects to exercise the Award and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price or Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company; or
(g) by any combination of the foregoing or any other method of payment approved by the Committee.
For avoidance of uncertainty: ACH transfers that have been received by the Company into its bank account designated for receipt of such transfers under this Section 8.1 shall be deemed to have been received for all purposes under this Plan as of the date on which such transfers were initiated from the transferor’s account and made irrevocable by the transferor.
8.2 Withholding Taxes.
8.2.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy the maximum tax withholding requirements as to income tax, social insurance, payroll tax, fringe benefits tax, payment on account and other tax -related obligations (collectively, “Tax-Related Obligations”) prior to the delivery of any written or electronic certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash by the Company, such payment will be net of an amount sufficient to satisfy applicable tax withholding requirements.
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8.2.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy up to the maximum Tax-Related Obligations in the employee’s applicable jurisdictions by electing to have the Company withhold from the Shares to be issued up to the number of Shares having a Fair Market Value on the date that the amount of tax to be withheld is to be determined that is not more than the maximum Tax-Related Obligations in the employee’s applicable jurisdictions; or to arrange a mandatory “sell to cover” on Participant’s behalf (without further authorization) but in no event will the Company withhold Shares or “sell to cover” if such withholding would result in adverse accounting or compliance consequences to the Company. The maximum Tax-Related Obligations are based on the applicable rates of the relevant tax authorities (for example, federal, state and local), including the employee’s share of payroll or similar taxes, as provided in the tax law, regulations or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction. Any elections to have Shares withheld or sold for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.
8.2.3 Elections Under Section 83(i) of the Code. A Participant will not make an election under Section 83(i) of the Code if the Company determines that the Participant is then ineligible to make such an election under applicable law or without the Company’s prior written consent (which will not be unreasonably withheld or delayed, but may be conditioned upon the Participant s entry into additional commitments as determined by the Company).
9. RESTRICTIONS ON AWARDS.
9.1 Transferability. Except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, other than by will or by the laws of descent and distribution, and, with respect to NQSOs for Participants in the U.S., by instrument to an inter vivos or testamentary trust in which the NQSOs are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “family member” as that term is defined in Rule 701, and may not be made subject to execution, attachment or similar process. For the avoidance of doubt, the prohibition against assignment and transfer applies to Awards and any Shares underlying the Awards prior to the issuance of the Shares, and pursuant to the foregoing sentence shall be understood to include, without limitation, a prohibition against any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” or any “call equivalent position” (in each case, as defined in Rule 16a-1 promulgated under the Exchange Act). Unless an Award is transferred pursuant to the terms of this Section, during the lifetime of the Participant an Award will be exercisable only by the Participant or Participant s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal representative. The terms of an Award shall be binding upon the executor, administrator, successors and assigns of the Participant who is a party thereto.
9.2 Securities Law and Other Regulatory Compliance. Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, Awards may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o). Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award to which Section 25102(o) will not apply. An Award will not be effective unless such Award is in compliance with all applicable U.S. and non-U.S.
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federal, state and local securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Company’s equity securities may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise, settlement or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue Shares or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any U.S. and non-U.S. federal, state or local law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
9.3 Exchange and Buyout of Awards. The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. Without prior stockholder approval the Committee may reprice Options or SARs (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them). The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree.
10. RESTRICTIONS ON SHARES.
10.1 Privileges of Stock Ownership. No Participant will have any of the rights of a stockholder with respect to any Shares until such Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock. The Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased as described in this Section 10.
10.2 Rights of First Refusal and Repurchase. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement (a) a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal terminates upon (i) subject to any applicable market standoff restrictions, the effective date of the first sale of common stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of common stock pursuant to a business combination or an employee incentive or benefit plan); (ii) any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect Parent thereof is registered under the Exchange Act; or (iii) any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or comparable equity security) of entity resulting from such conversion is registered under the Exchange Act; and (b) a right to repurchase Unvested Shares held by a Participant for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.
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10.3 Agreement to Vote Shares. At the discretion of the Committee, the Company may require that, as a condition to the receipt of the Shares upon issuance of an Award, exercise of an Option or SAR or settlement of an RSU, the Participant and any transferee of the Shares agree to vote such Shares pursuant to the terms of a Voting Agreement by and between the Company and certain of its stockholders.
10.4 Escrow; Pledge of Shares. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all written or electronic certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated. The Committee may cause a legend or legends referencing such restrictions to be placed on the written or electronic certificate. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note: provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
10.5 Securities Law Restrictions. All written or electronic certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. and non-U.S. federal, state or local securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Company’s equity securities may be listed or quoted.
11. CORPORATE TRANSACTIONS.
11.1 Acquisitions or Other Combinations. In the event that the Company is subject to an Acquisition or Other Combination, outstanding Awards acquired under the Plan shall be subject to the agreement evidencing the Acquisition or Other Combination, which need not treat all outstanding Awards in an identical manner. Such agreement, without the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Acquisition or Other Combination:
(a) The continuation of such outstanding Awards by the Company (if the Company is the successor entity).
(b) The assumption of outstanding Awards by the successor or acquiring entity (if any) in such Acquisition or Other Combination (or by any of its Parents, if any), which assumption, will be binding on all Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or upon the settlement of any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) and Section 409A of the Code. For the purposes of this Section 11, an Award will be considered assumed if, following the Acquisition or Other Combination, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Acquisition or Other Combination, the consideration (whether stock, cash, or other securities or property) received in the Acquisition or Other Combination by holders of Shares for each Share held on the effective date of the transaction (and if holders
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were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Acquisition or Other Combination is not solely common stock of the successor corporation or its Parent, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the settlement of an RSU, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Acquisition or Other Combination.
(c) The substitution by the successor or acquiring entity in such Acquisition or Other Combination (or by any of its Parents, if any) of equivalent awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) and Section 409A of the Code).
(d) The full or partial exercisability or vesting and accelerated expiration of outstanding Awards.
(e) The settlement of the Fair Market Value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its Parent, if any), followed by the cancellation of such Awards; provided however, that such Award may be cancelled without consideration if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates when the Award would have become exercisable or vested. Such payment may be subject to vesting based on the Participant’s continued service, provided that without the Participant’s consent, the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become vested or exercisable. For purposes of this Section 11.l(e), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.
(f) The termination in its entirety of any outstanding Award, without payment of any consideration, that is not exercised in accordance with its terms upon or prior to consummation of the transactions contemplated by the Acquisition or Other Combination within a time specified by the Committee, in its discretion, for such exercise, whether or not such Award is then fully exercisable.
Immediately following an Acquisition or Other Combination, outstanding Awards shall terminate and cease to be outstanding, except to the extent such Awards, have been continued, assumed or substituted, as described in Sections 11.1(a), (b) and/or (c).
11.2 Substitution or Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another entity, whether in connection with an acquisition of such other entity or otherwise, by either (a) granting an Award under this Plan in substitution of such other entity’s award or (b) assuming and/or converting such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other entity had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another entity, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) and Section 409A of the Code). In the event the Company elects to grant a new Option or SAR in substitution for and rather than assuming an existing option or stock appreciation right, such new Option or SAR may be granted with a similarly adjusted Exercise Price and number of underlying Shares and such other changes approved by the Committee, subject to the consent of the Participant.
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12. ADMINISTRATION.
12.1 Committee Authority. This Plan will be administered by the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan. Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend, expand, modify and rescind or terminate rules and regulations relating to this Plan;
(c) approve persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to Awards granted under this Plan;
(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;
(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or awards under any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;
(h) grant waivers of any conditions of this Plan or any Award;
(i) determine the terms of vesting, exercisability, settlement and payment of Awards to be granted pursuant to this Plan;
(j) correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement or any Exercise Agreement;
(k) determine whether an Award has vested or become exercisable;
(l) extend the vesting period beyond a Participant’s Termination Date;
(m) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate or facilitate requirements of local law and procedures outside of the United States;
(n) delegate any of the foregoing to a subcommittee consisting of one or more directors or executive officers pursuant to a specific delegation as may otherwise be permitted by applicable law;
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(o) change the vesting schedule of Awards under the Plan prospectively in the event that the Participant’s service status changes between full and part time status in accordance with Company policies relating to work schedules and vesting of Awards; and
(p) make all other determinations necessary or advisable in connection with the administration of this Plan.
12.2 Standalone, Tandem and Substitute Awards. Awards granted under the Plan may, in the sole discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.
12.3 Committee Composition and Discretion. The Board may delegate full administrative authority over the Plan and Awards to a Committee consisting of at least one member of the Board (or such greater number as may then be required by applicable law). Unless in contravention of any express terms of this Plan or Award, any determination made by the Committee with respect to any Award will be made in its sole discretion either (a) at the time of grant of the Award, or (b) subject to Section 4.9 hereof, at any later time. Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. To the extent permitted by applicable law, the Committee may delegate to one or more directors or officers of the Company the authority to grant an Award under this Plan.
12.4 Nonexclusivity of the Plan. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
12.5 Governing Law. This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California, without giving effect to that body of laws pertaining to conflict of laws.
13. EFFECTIVENESS, AMENDMENT AND TERMINATION OF THE PLAN.
13.1 Adoption and Stockholder Approval. This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”). This Plan will be approved by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective Date. Upon the Effective Date, the Committee may grant Awards pursuant to this Plan; provided, however, that: (a) if stockholder approval is not obtained consistent with this paragraph, at such time as timely stockholder approval is no longer possible, no Option or SAR may thereafter be exercised and any purchased shares will revert to the Company and be refunded in full; (b) no Option or SAR granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time such increase has been approved by the stockholders of the Company; (c) in the event that initial stockholder approval is not obtained within the time period provided herein, all Awards for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (d) Awards (to which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board which increase is not approved by stockholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall be canceled, and any purchase of Shares subject to any such Award shall be rescinded.
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13.2 Term of Plan. Unless earlier terminated as provided herein, this Plan will automatically terminate ten (10) years after the Effective Date.
13.3 Amendment or Termination of Plan. Subject to Section 4.9 hereof, the Board may at any time (a) terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan and (b) terminate any and all outstanding Options, SARs or RSUs upon a dissolution or liquidation of the Company, followed by the payment of creditors and the distribution of any remaining funds to the Company’s stockholders: provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to Section 25102(o) or pursuant to the Code or the regulations promulgated under the Code as such provisions apply to ISO plans. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Award previously granted under the Plan.
14. DEFINITIONS. For all purposes of this Plan, the following terms will have the following meanings.
“Acquisition,” for purposes of Section 11, means:
(a) any consolidation or merger in which the Company is a constituent entity or is a party in which the voting stock and other voting securities of the Company that are outstanding immediately prior to the consummation of such consolidation or merger represent, or are converted into, securities of the surviving entity of such consolidation or merger (or of any Parent of such surviving entity) that, immediately after the consummation of such consolidation or merger, together possess less than fifty percent (50%) of the total voting power of all voting securities of such surviving entity (or of any of its Parents, if any) that are outstanding immediately after the consummation of such consolidation or merger;
(b) a sale or other transfer by the holders thereof of outstanding voting stock and/or other voting securities of the Company possessing more than fifty percent (50%) of the total voting power of all outstanding voting securities of the Company, whether in one transaction or in a series of related transactions, pursuant to an agreement or agreements to which the Company is a party and that has been approved by the Board, and pursuant to which such outstanding voting securities are sold or transferred to a single person or entity, to one or more persons or entities who are Affiliates of each other, or to one or more persons or entities acting in concert; or
(c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company and/or any Subsidiary or Subsidiaries of the Company, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole (or, if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by one or more Subsidiaries, the sale or disposition (whether by consolidation, merger, conversion or otherwise) of such Subsidiaries of the Company), except where such sale, lease, transfer or other disposition is made to the Company or one or more wholly owned Subsidiaries of the Company.
Notwithstanding the foregoing, the following transactions shall not constitute an “Acquisition”: (1) the closing of the Company’s first public offering pursuant to an effective registration statement filed under the Securities Act or (2) any transaction the sole purpose of which is to change the state of incorporation of the Company or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
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“Affiliate” of a specified person means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified (where, for purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
“Award” means any award pursuant to the terms and conditions of this Plan, including any Option, Restricted Stock Unit, Stock Appreciation Right or Restricted Stock Award.
“Award Agreement” means, with respect to each Award, the executed written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award as approved by the Committee. For purposes of the Plan, the Award Agreement may be accepted by a Participant via written, electronic or other means, subject to requirements under applicable law.
“Board” means the Board of Directors of the Company.
“Cause” means Termination because of (a) Participant’s unauthorized misuse of the Company or a Parent or Subsidiary of the Company’s trade secrets or proprietary information, (b) Participant’s conviction of or plea of nolo contendere to a felony or a crime involving moral turpitude, (c) Participant’s committing an act of fraud against the Company or a Parent or Subsidiary of the Company or (d) Participant’s gross negligence or willful misconduct in the performance of his or her duties that has had or will have a material adverse effect on the Company or Parent or Subsidiary of the Company’ reputation or business.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Committee” means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.
“Company” means Attovia Therapeutics, Inc., or any successor corporation.
“Disability” means a Participant is unable to perform the duties of his or her customary position of employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of not less than twelve (12) months. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exercise Price” means the price per Share at which a holder of an Option or a SAR may purchase Shares issuable upon exercise of the Option or the SAR.
“Fair Market Value” means, as of any date, the value of a Share determined as follows:
(a) if such Share is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Share is listed or admitted to trading as reported in The Wall Street Journal;
(b) if such Share is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and ask prices on the date of determination as reported by The Wall Street Journal (or as otherwise reported by any newspaper or other source as the Committee may determine); or
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(c) if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.
“Option” means an award of an option to purchase Shares pursuant to Section 4 of this Plan.
“Other Combination” for purposes of Section 11 means any (a) consolidation or merger in which the Company is a constituent entity and is not the surviving entity of such consolidation or merger or (b) any conversion of the Company into another form of entity; provided that such consolidation, merger or conversion does not constitute an Acquisition.
“Parent” of a specified entity means, any entity that, either directly or indirectly, owns or controls such specified entity, where for this purpose, “control” means the ownership of stock, securities or other interests that possess at least a majority of the voting power of such specified entity (including indirect ownership or control of such stock, securities or other interests).
“Participant” means a person who receives an Award under this Plan.
“Plan” means this 2023 Equity Incentive Plan, as amended from time to time.
“Purchase Price” means the price at which a Participant may purchase Restricted Stock pursuant to this Plan.
“Restricted Stock” means Shares purchased pursuant to a Restricted Stock Award under this Plan.
“Restricted Stock Award” means an award of Shares pursuant to Section 5 hereof.
“Restricted Stock Unit” or “RSU” means an award made pursuant to Section 6 hereof. Act.
“Rule 701” means Rule 701 et seq. promulgated by the SEC under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Section 25102(o)” means Section 25102(o) of the California Corporations Code.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Shares” means shares of the Company’s Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 2.2 and 11 hereof, and any successor security.
“Stock Appreciation Right” or “SAR” means an award granted pursuant to Section 7 hereof.
“Subsidiary” means any entity (other than the Company) in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain owns stock or other equity securities representing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity securities in one of the other entities in such chain.
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“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company. A Participant will not be deemed to have ceased to provide services while the Participant is on a bona fide leave of absence, if such leave was approved by the Company in writing. In the case of an approved leave of absence, the Committee may make such provisions respecting crediting of service, including suspension of vesting of the Award (including pursuant to a formal policy adopted from time to time by the Company) it may deem appropriate. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).
“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement for an Award.
“Vested Shares” means “Vested Shares” as defined in the Award Agreement for an Award.
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EARLY EXERCISE FORM
OPTION GRANT NO. See Carta
NOTICE OF STOCK OPTION GRANT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
The Optionee named below (“Optionee”) has been granted an option (this “Option”) to purchase shares of Common Stock, $0.0001 par value per share (the “Common Stock”), of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to the Company’s 2023 Equity Incentive Plan (the “Plan”) on the terms, and subject to the conditions, described below and in the Stock Option Agreement attached hereto as Exhibit A, including its annexes (the “Stock Option Agreement”).
| Optionee: | See Carta1 | |
| Maximum Number of Shares Subject to this Option (the “Shares”): | See Carta | |
| Exercise Price Per Share: | See Carta | |
| Date of Grant: | See Carta | |
| Vesting Start Date: | See Carta | |
| Exercise Schedule: | This Option is immediately exercisable for all of the Shares, subject to the terms of the Stock Option Agreement | |
| Expiration Date: | The date ten (10) years after the Date of Grant set forth above, subject to earlier expiration in the event of Termination as provided in Section 3 of the Stock Option Agreement. | |
| Tax Status of Option: | See Carta | |
| Vesting Schedule: | See Carta | |
General; Agreement: By mutual acceptance of this Option, Optionee and the Company agree that this Option is granted under and governed by this Notice of Stock Option Grant (this “Grant Notice”) and by the provisions of the Plan and the Stock Option Agreement. The Plan and the Stock Option Agreement are incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or in the Stock Option Agreement, as applicable. By acceptance of this Option, Optionee acknowledges receipt, via welcome@carta.com, of a copy of this Grant Notice, the Plan and the Stock Option Agreement, represents that Optionee has carefully read and is familiar with their provisions, and hereby accepts the Option subject to all of their respective terms and conditions. Optionee acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition. Optionee agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Optionee’s service status changes between full and part time status in accordance with Company policies relating to work schedules and vesting of equity awards.
Execution and Delivery: This Grant Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic delivery specified by the Company. By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee agrees, to the fullest extent permitted by law, that in lieu of receiving documents in paper format, Optionee accepts the electronic delivery of any documents that the Company (or any third party the Company may designate), may deliver in connection with this grant (including the Plan, this Grant Notice, the Stock Option Agreement, the information described in Rules 701(e)(2), (3), (4) and (5) under the Securities Act (the “701 Disclosures”), account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third party or via email or such other means of electronic delivery specified by the Company.
ATTACHMENT: Exhibit A – Stock Option Agreement
| 1 | All references to Carta shall be interpreted as the Equity Management Software currently in use by the Company. |
Exhibit A
Stock Option Agreement
EXHIBIT A
EARLY EXERCISE FORM
STOCK OPTION AGREEMENT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
This Stock Option Agreement (this “Agreement”) is made and entered into as of the date of grant (the “Date of Grant”) set forth on the Notice of Stock Option Grant attached as the facing page to this Agreement (the “Grant Notice”) by and between Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), and the optionee named on the Grant Notice (“Optionee”). Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Company’s 2023 Equity Incentive Plan (the “Plan”) or in the Grant Notice, as applicable.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this “Option”) to purchase up to the total number of shares of Common Stock of the Company, $0.0001 par value per share (the “Common Stock”), set forth in the Grant Notice as the Shares (the “Shares”) at the Exercise Price Per Share set forth in the Grant Notice (the “Exercise Price”), subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan. If designated as an Incentive Stock Option in the Grant Notice, this Option is intended to qualify as an incentive stock option (the “ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
2. EXERCISE PERIOD.
2.1. Exercise Period of Option. Subject to the conditions set forth in this Agreement, all or part of this Option may be exercised at any time after the Date of Grant. Shares purchased by exercising this Option may be subject to the Repurchase Option as set forth in Section 7 below. This Option will become vested during its term as to portions of the Shares in accordance with the Vesting Schedule set forth in the Grant Notice. Notwithstanding any provision in the Plan or this Agreement to the contrary, on or after Optionee’s Termination Date, this Option may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date.
2.2. Vesting of Option Shares. Shares with respect to which this Option is vested at a given time pursuant to the Vesting Schedule set forth in the Grant Notice are “Vested Shares.” Shares with respect to which this Option is not vested at a given time pursuant to the Vesting Schedule set forth in the Grant Notice are “Unvested Shares.”
2.3. Expiration. The Option shall expire on the Expiration Date set forth in the Grant Notice or earlier as provided in Section 3 below.
3. TERMINATION.
3.1. Termination for Any Reason Except Death, Disability or Cause. Except as provided in subsection 3.2 in a case in which Optionee dies within three (3) months after Optionee is Terminated other than for Cause, if Optionee is Terminated for any reason (other than Optionee’s death or Disability or for Cause), then (a) on and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date and (b) this Option to the extent (and only to the extent) that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee no later than three (3) months after Optionee’s Termination Date (but in no event may this Option be exercised after the Expiration Date).
3.2. Termination Because of Death or Disability. If Optionee is Terminated because of Optionee’s death or Disability (or if Optionee dies within three (3) months of the date of Optionee’s Termination for any reason other than for Cause), then (a) on and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date and (b) this Option, to the extent (and only to the extent) that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee (or Optionee’s legal representative) no later than twelve (12) months after Optionee’s Termination Date, but in no event later than the Expiration Date. Any exercise of this Option beyond (i) three (3) months after the date Optionee ceases to be an employee when Optionee’s Termination is for any reason other than Optionee’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (ii) twelve (12) months after the date Optionee ceases to be an employee when the termination is for Optionee’s disability, within the meaning of Section 22(e)(3) of the Code, is deemed to be an NQSO.
3.3. Termination for Cause. If Optionee is Terminated for Cause, then Optionee may exercise this Option, but only with respect to any Shares that are Vested Shares on Optionee’s Termination Date, and this Option shall expire on Optionee’s Termination Date, or at such later time and on such conditions as may be affirmatively determined by the Committee. On and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date.
3.4. No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Optionee’s employment or other relationship at any time, with or without Cause.
4. MANNER OF EXERCISE.
4.1. Stock Option Exercise Notice and Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s death or incapacity, Optionee’s executor, administrator, heir or legatee, as the case may be) must provide an electronic notice (via welcome@carta.com) or deliver to the Company an executed Stock Option Exercise Notice and Agreement in the form attached hereto as Annex A, or in such other form as may be approved by the Committee from time to time (the “Exercise Agreement”) and payment for the shares being purchased in accordance with this Agreement. The Exercise Agreement shall set forth, among other things, (i) Optionee’s election to exercise this Option, (ii) the number of Shares being purchased, (iii) any representations, warranties and agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable securities laws in connection with any exercise of this Option and (iv) any other agreements required by the Company. If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise this Option and such person shall be subject to all of the restrictions contained herein as if such person were Optionee.
4.2. Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise.
4.3. Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the shares being purchased in cash (by check, Automated Clearing House (“ACH”) or wire transfer), or where permitted by law:
(a) by cancellation of indebtedness of the Company owed to Optionee;
(b) by surrender of shares of the Company that are free and clear of all security interests, pledges, liens, claims or encumbrances and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Optionee in the public market;
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(c) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(d) provided that a public market for the Common Stock exists, subject to compliance with applicable law, by exercising as set forth below, through a “same day sale” commitment from Optionee and a broker-dealer whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or
(e) by any combination of the foregoing or any other method of payment approved by the Committee that constitutes legal consideration for the issuance of Shares.
For avoidance of uncertainty: ACH transfers that have been received by the Company into its bank account designated via welcome@carta.com for receipt of such transfers shall be deemed to have been received for all purposes of this Option as of the date on which such transfers were initiated from the Optionee’s account and made irrevocable by Optionee.
4.4. Tax Withholding. Prior to the issuance of the Shares upon exercise of the Option, Optionee must pay or provide for foreign, federal, state and local income tax, social insurance, payroll tax, fringe benefits tax, payment on account withholding and other tax-related items related to Optionee’s participation in the Plan and legally applicable to Optionee, including, as applicable, obligations of the Company (all the foregoing tax-related items, “Tax-Related Items”). If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain the number of Shares with a Fair Market Value equal to the amount of taxes required to be withheld; or to arrange a mandatory “sell to cover” on Optionee’s behalf (without further authorization); but in no event will the Company withhold Shares or “sell to cover” if such withholding would result in adverse accounting consequences to the Company. In case of stock withholding or a sell to cover, the Company shall issue the net number of Shares to Optionee by deducting the Shares retained from the Shares issuable upon exercise. The Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable statutory rates in Optionee’s country, including maximum applicable rates.
4.5. Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares issuable upon a valid exercise of this Option registered in the name of Optionee, Optionee’s authorized assignee, or Optionee’s legal representative, and shall deliver electronic certificates via welcome@carta.com representing the Shares with the appropriate legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are intended to comply with Section 25102(o) and Rule 701. Any provision of this Agreement that is inconsistent with Section 25102(o) or Rule 701 shall, without further act or amendment by the Company or the Committee, be reformed to comply with the requirements of Section 25102(o) and/or Rule 701. The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Common Stock may be listed at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.
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6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to a testamentary trust in which the options are to be passed to beneficiaries upon the death of the trustor (settlor) or a revocable trust, or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e), and may be exercised during the lifetime of Optionee only by Optionee or in the event of Optionee’s incapacity, by Optionee’s legal representative. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee.
7. COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES. If Optionee is Terminated for any reason, or no reason, including without limitation, Optionee’s death, Disability, voluntary resignation or termination by the Company with or without Cause and Optionee has acquired Unvested Shares by exercising this Option, then the Company and/or its assignee(s) shall have the option to repurchase all or a portion of Optionee’s Unvested Shares (as defined in Section 2.2 of this Agreement) as of the Termination Date on the terms and conditions set forth in this Section 7 (the “Repurchase Option”).
7.1. Termination and Termination Date. In case of any dispute as to whether Optionee is Terminated, the Committee shall have discretion to determine whether Optionee has been Terminated and the effective date of such Termination (the “Termination Date”).
7.2. Exercise of Repurchase Option. Subject to the foregoing provisions of this Section, at any time within ninety (90) days after Optionee’s Termination Date, the Company and/or its assignee(s), may elect to repurchase any or all of Optionee’s Unvested Shares by giving Optionee written notice of exercise of the Repurchase Option.
7.3. Calculation of Repurchase Price for Unvested Shares. The Company or its assignee shall have the option to repurchase from Optionee (or from Optionee’s personal representative as the case may be) the Unvested Shares at Optionee’s Exercise Price, as such may be proportionately adjusted for any stock split or similar change in the capital structure of the Company as set forth in Section 2.2 of the Plan (the “Repurchase Price”).
7.4. Payment of Repurchase Price. The Repurchase Price shall be payable, at the option of the Company or its assignee, by check or by cancellation of all or a portion of any outstanding indebtedness owed by Optionee to the Company and/or such assignee, or by any combination thereof. The Repurchase Price shall be paid without interest within the term of the Repurchase Option as described in Section 7.2.
7.5. Right of Termination Unaffected. Nothing in this Agreement shall be construed to limit or otherwise affect in any manner whatsoever the right or power of the Company (or any Parent or Subsidiary of the Company) to terminate Optionee’s employment or other relationship with Company (or any Parent or Subsidiary of the Company) at any time, for any reason or no reason, with or without Cause.
8. RESTRICTIONS ON TRANSFER.
8.1. Disposition of Shares. Optionee hereby agrees that Optionee shall make no disposition of any of the Shares (other than as permitted by this Agreement and the Company’s Bylaws (the “Bylaws”)) unless and until:
(a) Optionee shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;
(b) Optionee shall have complied with all requirements of this Agreement and the Bylaws applicable to the disposition of the Shares;
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(c) Optionee shall have provided the Company with written assurances, in form and substance satisfactory to counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any applicable state securities laws or (ii) all appropriate actions necessary for compliance with the registration requirements of the Securities Act or of any exemption from registration available under the Securities Act (including Rule 144) or applicable state securities laws have been taken; and
(d) Optionee shall have provided the Company with written assurances, in form and substance satisfactory to the Company, that the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares pursuant to the provisions of the regulations promulgated under Section 25102(o), Rule 701 or under any other applicable securities laws or adversely affect the Company’s ability to rely on the exemption(s) from registration under the Securities Act or under any other applicable securities laws for the grant of the Option, the issuance of Shares thereunder or any other issuance of securities under the Plan.
8.2. Restriction on Transfer. Optionee shall not transfer, assign, grant a lien or security interest in, pledge, hypothecate, encumber or otherwise dispose of any of the Shares which are subject to restrictions on transfer set forth in the Bylaws and the Company’s Repurchase Option or the Right of First Refusal described below, except as permitted by this Agreement.
8.3. Transferee Obligations. Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement and that the transferred Shares are subject to (i) any restrictions on transfer set forth in the Bylaws, (ii) both the Company’s Repurchase Option and the Company’s Right of First Refusal granted hereunder and (iii) the market stand-off provisions of Section 9 below, to the same extent such Shares would be so subject if retained by Optionee.
9. MARKET STANDOFF AGREEMENT. Optionee agrees that, subject to any early release provisions that apply pro rata to stockholders of the Company according to their holdings of Common Stock (determined on an as-converted into Common Stock basis), Optionee will not, for a period of up to one hundred eighty (180) days (plus up to an additional thirty five (35) days to the extent reasonably requested by the Company or such underwriter(s) to accommodate regulatory restrictions on the publication or other distribution of research reports or earnings releases by the Company, including NASD and NYSE rules) following the effective date of the registration statement filed with the SEC relating to the initial underwritten sale of Common Stock of the Company to the public under the Securities Act (the “IPO”), directly or indirectly sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into Common Stock, except for: (i) transfers of Shares permitted under Section 10.6 hereof so long as such transferee furnishes to the Company and the managing underwriter their written consent to be bound by this Section 9 as a condition precedent to such transfer; and (ii) sales of any securities to be included in the registration statement for the IPO. For the avoidance of doubt, the provisions of this Section shall only apply to the IPO. The restricted period shall in any event terminate two (2) years after the closing date of the IPO. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period. Optionee further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing restrictions on transfer. For the avoidance of doubt, the foregoing provisions of this Section shall not apply to any registration of securities of the Company (a) under an employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
10. COMPANY’S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or otherwise transferred, or pledged by Optionee or made subject to a security interest, pledge or other lien without the Company’s prior written consent, which may be withheld in the Company’s sole and absolute discretion. Subject to any restrictions on transfer set forth in the Bylaws, before any Vested Shares held by
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Optionee or any transferee of such Vested Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Vested Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Right of First Refusal”).
10.1. Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (iii) the number of Offered Shares to be transferred to each Proposed Transferee; (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (v) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Right of First Refusal at the Offered Price as provided for in this Agreement.
10.2. Exercise of Right of First Refusal. At any time within thirty (30) days after the date of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as specified below.
10.3. Purchase Price. The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift) then the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Committee. If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Committee, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.
10.4. Payment. Payment of the purchase price for the Offered Shares will be payable, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
10.5. Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the Offered Price or at a higher price, provided that (i) such sale or other transfer is consummated within ninety (90) days after the date of the Notice, (ii) any such sale or other transfer is effected in compliance with all applicable securities laws, and (iii) each Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to each Proposed Transferee within such ninety (90) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.
10.6. Exempt Transfers. Notwithstanding anything to the contrary in this Section, the following transfers of Vested Shares will be exempt from the Right of First Refusal: (i) the transfer of any or all of the Vested Shares during Optionee’s lifetime by gift or on Optionee’s death by will or intestacy to any member(s) of Optionee’s “Immediate Family” (as defined below) or to a trust for the benefit of Optionee and/or member(s) of Optionee’s Immediate Family, provided that each transferee or other recipient agrees in a writing satisfactory to the Company that the provisions of this Section will continue to
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apply to the transferred Vested Shares in the hands of such transferee or other recipient; (ii) any transfer of Vested Shares made pursuant to a statutory merger, statutory consolidation of the Company with or into another corporation or corporations or a conversion of the Company into another form of legal entity (except that the Right of First Refusal will continue to apply thereafter to such Vested Shares, in which case the surviving corporation of such merger or consolidation or the resulting entity of such conversion shall succeed to the rights of the Company under this Section unless the agreement of merger or consolidation or conversion expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant to the winding up and dissolution of the Company. As used herein, the term “Immediate Family” will mean Optionee’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of Optionee or Optionee’s spouse, or the spouse of any of the above or Spousal Equivalent, as defined herein. As used herein, a person is deemed to be a “Spousal Equivalent” provided the following circumstances are true: (i) irrespective of whether or not Optionee and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and mentally competent to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.
10.7. Termination of Right of First Refusal. The Right of First Refusal will terminate as to all Shares: (i) on the effective date of the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan); (ii) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange Act; or (iii) on any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or comparable equity security) of entity resulting from such conversion is registered under the Exchange Act.
10.8. Encumbrances on Vested Shares. Optionee may grant a lien or security interest in, or pledge, hypothecate or encumber Vested Shares only if each party to whom such lien or security interest is granted, or to whom such pledge, hypothecation or other encumbrance is made, agrees in a writing satisfactory to the Company that: (i) such lien, security interest, pledge, hypothecation or encumbrance will not adversely affect or impair the Right of First Refusal or the rights of the Company and/or its assignee(s) with respect thereto and will not apply to such Vested Shares after they are acquired by the Company and/or its assignees under this Section; and (ii) the provisions of this Agreement will continue to apply to such Vested Shares in the hands of such party and any transferee of such party. Optionee may not grant a lien or security interest in, or pledge, hypothecate or encumber, any Unvested Shares.
11. RIGHTS AS A STOCKHOLDER. Optionee shall not have any of the rights of a stockholder with respect to any Shares unless and until such Shares are issued to Optionee. Subject to the terms and conditions of this Agreement, Optionee will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Optionee pursuant to, and in accordance with, the terms of the Exercise Agreement until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Repurchase Option or the Right of First Refusal. Upon an exercise of the Repurchase Option or the Right of First Refusal, Optionee will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.
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12. ESCROW. As security for Optionee’s faithful performance of this Agreement, Optionee agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares via welcome@carta.com to surrender such certificate(s) to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Agreement. Optionee and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other party) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Agreement and will not be liable for any act or omission taken by Escrow Holder in good faith reliance on such documents, the advice of counsel or a court order. The Shares will be released from escrow upon termination of both the Repurchase Option and the Right of First Refusal.
13. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
13.1. Legends. Optionee understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by state or U.S. Federal securities laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between Optionee and the Company, or any agreement between Optionee and any third party (and any other legend(s) that the Company may become obligated to place on the stock certificate(s) evidencing the Shares under the terms of any agreement to which the Company is or may become bound or obligated):
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON RESALE AND TRANSFER, INCLUDING THE REPURCHASE OPTION AND RIGHT OF FIRST REFUSAL HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH SALE AND TRANSFER RESTRICTIONS, INCLUDING THE REPURCHASE OPTION AND RIGHT OF FIRST REFUSAL, ARE BINDING ON TRANSFEREES OF THESE SHARES.
(c) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MARKET STANDOFF RESTRICTION AS SET FORTH IN A CERTAIN STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF CERTAIN PUBLIC OFFERINGS OF THE COMMON STOCK OF THE ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.
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13.2. Stop-Transfer Instructions. Optionee agrees that, to ensure compliance with the restrictions imposed by this Agreement and the Bylaws, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
13.3. Refusal to Transfer. The Company will not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of the Bylaws or this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.
14. CERTAIN TAX CONSEQUENCES. Set forth below is a brief summary as of the Effective Date of the Plan of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
14.1. Exercise of ISO. If the Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for federal alternative minimum tax purposes and may subject Optionee to the alternative minimum tax in the year of exercise.
14.2. Exercise of Nonqualified Stock Option. If the Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is a current or former employee of the Company, the Company may be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.
14.3. Disposition of Shares. The following tax consequences may apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held for more than twelve (12) months after the date of purchase of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal income tax purposes. If Vested Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates in the year of the disposition) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. To the extent the Shares were exercised prior to vesting coincident with the filing of an 83(b) Election, the amount taxed because of a disqualifying disposition will be based upon the excess, if any, of the fair market value on the date of vesting over the exercise price.
(b) Nonqualified Stock Options. If the Shares are held for more than twelve (12) months after the date of purchase of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long term capital gain.
14.4. Section 83(b) Election for Unvested Shares. With respect to Unvested Shares, which are subject to the Repurchase Option, unless an election is filed by Optionee with the Internal Revenue Service (and, if necessary, the proper state taxing authorities), within thirty (30) days of the purchase of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions, if applicable) to be taxed currently on any difference between the Exercise Price of the Unvested Shares and their Fair Market Value on the date of purchase, there may be a recognition of taxable income (including, where applicable, alternative minimum taxable income) to Optionee, measured by the excess, if any, of the Fair Market Value of the Unvested Shares at the time they cease to be Unvested Shares, over the Exercise Price of the Unvested Shares.
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15. GENERAL PROVISIONS.
15.1. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.
15.2. Entire Agreement. The Plan, the Grant Notice and the Exercise Agreement are each incorporated herein by reference. This Agreement, the Grant Notice, the Plan and the Exercise Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior undertakings and agreements with respect to such subject matter.
16. NOTICES. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) at the time an electronic confirmation of receipt is received, if delivery is by email; (iii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iv) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (v) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery outside the United States will be sent by email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges prepaid and properly addressed to Optionee at the last known address or facsimile number on the books of the Company, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the Company, to it at its principal place of business. Notices to the Company will be marked “Attention: Chief Financial Officer.” Notices by facsimile shall be machine verified as received.
17. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this Agreement including its rights to purchase Shares under both the Right of First Refusal and Repurchase Option. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and assigns.
18. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.
19. FURTHER ASSURANCES. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.
20. TITLES AND HEADINGS. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.
22. SEVERABILITY. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
* * * * *
Attachments:
Annex A: Form of Stock Option Exercise Notice and Agreement
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ANNEX A
FORM OF STOCK OPTION EXERCISE NOTICE AND AGREEMENT
EARLY EXERCISE FORM
STOCK OPTION EXERCISE NOTICE AND AGREEMENT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
*NOTE: You must sign this Notice before submitting it to Attovia Therapeutics, Inc. (the “Company”).
OPTIONEE INFORMATION: Please provide the following information about yourself (“Optionee”):
| Name: |
See Carta1 |
Social Security Number: |
See Carta | |||
| Address: |
See Carta |
Employee Number: |
See Carta | |||
| Email Address: |
See Carta | |||||
OPTION INFORMATION: Please provide this information on the option being exercised (the “Option”):
| Grant No. See Carta |
||
| Date of Grant: See Carta |
Type of Stock Option: | |
| Option Price per Share: See Carta |
See Carta | |
| Total number of shares of Common Stock of the Company subject to the Option: See Carta |
||
EXERCISE INFORMATION:
| Number of shares of Common Stock of the Company for which the Option is now being exercised See Carta. (These shares are referred to below as the “Purchased Shares.”) |
| Total Exercise Price Being Paid for the Purchased Shares: See Carta |
| Form of payment enclosed [check all that apply]: |
| ☐ Check for $____________, payable to “Attovia Therapeutics, Inc.” |
| ☐ Certificate(s) for ________________ shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]
☐ Automated Clearing House (“ACH”) transfer in the amount of $___________. |
AGREEMENTS, REPRESENTATIONS AND ACKNOWLEDGMENTS OF OPTIONEE: By execution of this Stock Option Exercise Notice and Agreement (whether written, electronic or otherwise, including via welcome@carta.com), Optionee hereby agrees with, and represents to, the Company as follows:
| 1. | Terms Governing. I acknowledge and agree with the Company that I am acquiring the Purchased Shares by exercise of this Option subject to all other terms and conditions of the Notice of Stock Option Grant and the Stock Option Agreement that govern the Option, including without limitation the terms of the Company’s 2023 Equity Incentive Plan (the “Plan”). |
| 1 | All references to Carta shall be interpreted as the Equity Management Software currently in use by the Company. |
EARLY EXERCISE FORM
| 2. | Investment Intent; Securities Law Restrictions. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for my account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption from such registration requirement and that the Purchased Shares must be held by me indefinitely, unless they are subsequently registered under the Securities Act or I obtain an opinion of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required. I acknowledge that the Company is under no obligation to register the Purchased Shares under the Securities Act or under any other securities law. |
| 3. | Restrictions on Transfer: Rule 144. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder (including Rule 144 under the Securities Act described below (“Rule 144”)) or of any other applicable securities laws. I am aware of Rule 144, which permits limited public resales of securities acquired in a non-public offering, subject to satisfaction of certain conditions, which include (without limitation) that: (a) certain current public information about the Company is available; (b) the resale occurs only after the holding period required by Rule 144 has been met; (c) the sale occurs through an unsolicited “broker’s transaction;” and (d) the amount of securities being sold during any three-month period does not exceed specified limitations. I understand that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future. |
| 4. | Access to Information; Understanding of Risk in Investment. I acknowledge that I have received and had access to such information as I consider necessary or appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Purchased Shares. I am aware that my investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of my investment in the Purchased Shares. |
| 5. | Rights of First Refusal; Repurchase Options; Market Stand-off. I acknowledge that the Purchased Shares remain subject to the Company’s Right of First Refusal, the Company’s Repurchase Option (with respect to unvested Purchased Shares) and the market stand-off covenants (sometimes referred to as the “lock-up”), all in accordance with the applicable Notice of Stock Option Grant and the Stock Option Agreement that govern the Option |
| 6. | Restrictions on Transfer: Bylaws. I acknowledge that the Purchased Shares will be subject to any restrictions on transferability and resale set forth in the Company’s Bylaws as currently in effect. |
| 7. | Form of Ownership. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership of the Purchased Shares that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement. In the event that I choose to transfer my Purchased Shares to a trust that is not an eligible revocable trust, I also acknowledge that the transfer will be treated as a “disposition” for tax purposes. As a result, the favorable ISO tax treatment will be unavailable and other unfavorable tax consequences may occur. |
| 8. | Investigation of Tax Consequences. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time. |
| 9. | Other Tax Matters. I agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes my tax liabilities. I will not make any claim against the Company or its Board, officers or employees related to tax liabilities arising from my options or my other compensation. In particular, I acknowledge that my options (including the Option) are exempt from Section 409A of the Internal Revenue Code only if the exercise price per share is at least equal to the fair market value per share of the Common Stock at the time the option was granted |
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EARLY EXERCISE FORM
| by the Board. Since shares of the Common Stock are not traded on an established securities market, the determination of their fair market value was made by the Board and/or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and I will not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. |
| 10. | Spouse Consent. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing. |
| 11. | Tax Withholding. As a condition of exercising this Option, I agree to make adequate provision for foreign, federal, state or other tax withholding obligations, if any, which arise upon the grant, vesting or exercise of this Option, or disposition of the Purchased Shares, whether by withholding, direct payment to the Company, or otherwise. |
IMPORTANT NOTE: UNVESTED PURCHASED SHARES ARE SUBJECT TO REPURCHASE BY THE COMPANY. PLEASE CONSULT WITH YOUR TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE INTERNAL REVENUE SERVICE WHICH MUST BE FILED WITHIN THIRTY (30) DAYS AFTER THE PURCHASE OF SHARES TO BE EFFECTIVE.
A form of Election under Section 83(b) is attached hereto as Exhibit 1 for reference. Unless an 83(b) election is timely filed with the Internal Revenue Service (and, if necessary, the proper state taxing authorities), electing pursuant to Section 83(b) of the Internal Revenue Code (and similar state tax provisions, if applicable) to be taxed currently on any difference between the purchase price of the Unvested Purchased Shares and their fair market value on the date of purchase, there may be a recognition of taxable income (including, where applicable, alternative minimum taxable income) to you, measured by the excess, if any, of the Fair Market Value of the Unvested Purchased Shares at the time they cease to be Unvested Purchased Shares, over the purchase price of the Unvested Purchased Shares.
The undersigned hereby executes and delivers this Stock Option Exercise Notice and Agreement and agrees to be bound by its terms.
This Stock Option Exercise Notice and Agreement may be completed, executed and delivered electronically, whether via the Company’s intranet or the Internet site of Carta or another equity management software, or via any other means specified by the Company.
| SIGNATURE: | DATE: | |||||
|
|
||||||
| Optionee’s Name: |
Attachments:
Exhibit 1 – Section 83(b) Election Form
[Signature Page to Stock Option Exercise Notice and Agreement]
3
EARLY EXERCISE FORM
EXHIBIT 1
SECTION 83(b) ELECTION
ELECTION UNDER SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property, as compensation for services in the calculation of: (1) regular gross income; (2) alternative minimum taxable income; or (3) disqualifying disposition gross income, as the case may be.
| 1. |
TAXPAYER’S NAME: |
| ||
| TAXPAYER’S ADDRESS: |
| |||
|
| ||||
| SOCIAL SECURITY NUMBER: |
| |||
| 2. |
The property with respect to which the election is made is described as follows: _______ shares of Common Stock, par value $0.0001 per share, of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), which were transferred upon exercise of an option by the Company, which is Taxpayer’s employer or the corporation for whom Taxpayer performs services. | |||
| 3. |
The date on which the shares were transferred was pursuant to the exercise of the option was ____________________, _____ and this election is made for calendar year ____. | |||
| 4. |
The shares received upon exercise of the option are subject to the following restrictions: The Company may repurchase all or a portion of the shares at Taxpayer’s original purchase price per share under certain conditions at the time of Taxpayer’s termination of employment or services. | |||
| 5. |
The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $_____ per share x _______ shares = $_______ at the time of exercise of the option. | |||
| 6. |
The amount paid for such shares upon exercise of the option was $____ per share x ________ shares = $________. | |||
| 7. |
Taxpayer has submitted a copy of this statement to the Company. | |||
| 8. |
The amount to include in gross income is $______________. [The result of the amount reported in Item 5 minus the amount reported in Item 6.] | |||
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE (“IRS”), AT THE OFFICE WHERE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH TAXPAYER’S INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS.
|
Dated: |
|
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| Taxpayer’s Signature |
OPTION GRANT NO. See Carta
NOTICE OF STOCK OPTION GRANT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
The Optionee named below (“Optionee”) has been granted an option (this “Option”) to purchase shares of Common Stock, $0.0001 par value per share (the “Common Stock”), of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to the Company’s 2023 Equity Incentive Plan (the “Plan”) on the terms, and subject to the conditions, described below and in the Stock Option Agreement attached hereto as Exhibit A, including its annexes (the “Stock Option Agreement”).
| Optionee: | See Carta1 | |
| Maximum Number of Shares Subject to this Option (the “Shares”): | See Carta | |
| Exercise Price Per Share: | See Carta | |
| Date of Grant: | See Carta | |
| Vesting Start Date: | See Carta | |
| Exercise Schedule: | This Option will become exercisable during its term with respect to portions of the Shares in accordance with the Vesting Schedule set forth below. | |
| Expiration Date: | The date ten (10) years after the Date of Grant set forth above, subject to earlier expiration in the event of Termination as provided in Section 3 of the Stock Option Agreement. | |
| Tax Status of Option: | See Carta | |
Vesting Schedule: See Carta
General; Agreement: By their mutual acceptance of this Option, Optionee and the Company agree that this Option is granted under and governed by this Notice of Stock Option Grant (this “Grant Notice”) and by the provisions of the Plan and the Stock Option Agreement. The Plan and the Stock Option Agreement are incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or in the Stock Option Agreement, as applicable. By acceptance of this Option, Optionee acknowledges receipt, via welcome@carta.com, of a copy of this Grant Notice, the Plan and the Stock Option Agreement, represents that Optionee has carefully read and is familiar with their provisions, and hereby accepts the Option subject to all of their respective terms and conditions. Optionee acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition. Optionee agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Optionee’s service status changes between full and part time status in accordance with Company policies relating to work schedules and vesting of equity awards.
Execution and Delivery: This Grant Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic delivery specified by the Company. By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee agrees, to the fullest extent permitted by law, that in lieu of receiving documents in paper format, Optionee accepts the electronic delivery of any documents that the Company (or any third party the Company may designate), may deliver in connection with this grant (including the Plan, this Grant Notice, the Stock Option Agreement, the information described in Rules 701(e)(2), (3), (4) and (5) under the Securities Act (the “701 Disclosures”), account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third party or via email or such other means of electronic delivery specified by the Company.
ATTACHMENT: Exhibit A – Stock Option Agreement
| 1 | All references to Carta shall be interpreted as the Equity Management Software currently in use by the Company. |
Exhibit A
Stock Option Agreement
EXHIBIT A
STOCK OPTION AGREEMENT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
This Stock Option Agreement (this “Agreement”) is made and entered into as of the date of grant (the “Date of Grant”) set forth on the Notice of Stock Option Grant attached as the facing page to this Agreement (the “Grant Notice”) by and between Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), and the optionee named on the Grant Notice (“Optionee”). Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Company’s 2023 Equity Incentive Plan (the “Plan”) or in the Grant Notice, as applicable.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this “Option”) to purchase up to the total number of shares of Common Stock of the Company, $0.0001 par value per share (the “Common Stock”), set forth in the Grant Notice as the Shares (the “Shares”) at the Exercise Price Per Share set forth in the Grant Notice (the “Exercise Price”), subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan. If designated as an Incentive Stock Option in the Grant Notice, this Option is intended to qualify as an incentive stock option (the “ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. This Option is considered to be “vested” with respect to any particular Shares when this Option is exercisable with respect to such Shares. This Option will become vested during its term as to portions of the Shares in accordance with the Vesting Schedule set forth in the Grant Notice. Notwithstanding any provision in the Plan or this Agreement to the contrary, on or after Optionee’s Termination Date, this Option may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date.
2.2 Vesting of Option Shares. Shares with respect to which this Option is vested and exercisable at a given time pursuant to the Vesting Schedule set forth in the Grant Notice are “Vested Shares.” Shares with respect to which this Option is not vested and exercisable at a given time pursuant to the Vesting Schedule set forth in the Grant Notice are “Unvested Shares.”
2.3 Expiration. The Option shall expire on the Expiration Date set forth in the Grant Notice or earlier as provided in Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. Except as provided in subsection 3.2 in a case in which Optionee dies within three (3) months after Optionee is Terminated other than for Cause, if Optionee is Terminated for any reason (other than Optionee’s death or Disability or for Cause), then (a) on and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date and (b) this Option to the extent (and only to the extent) that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee no later than three (3) months after Optionee’s Termination Date (but in no event may this Option be exercised after the Expiration Date).
3.2 Termination Because of Death or Disability. If Optionee is Terminated because of Optionee’s death or Disability (or if Optionee dies within three (3) months of the date of Optionee’s Termination for any reason other than for Cause), then (a) on and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be
exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date and (b) this Option, to the extent (and only to the extent) that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee (or Optionee’s legal representative) no later than twelve (12) months after Optionee’s Termination Date, but in no event later than the Expiration Date. Any exercise of this Option beyond (i) three (3) months after the date Optionee ceases to be an employee when Optionee’s Termination is for any reason other than Optionee’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (ii) twelve (12) months after the date Optionee ceases to be an employee when the termination is for Optionee’s disability, within the meaning of Section 22(e)(3) of the Code, is deemed to be an NQSO.
3.3 Termination for Cause. If Optionee is Terminated for Cause, then Optionee may exercise this Option, but only with respect to any Shares that are Vested Shares on Optionee’s Termination Date, and this Option shall expire on Optionee’s Termination Date, or at such later time and on such conditions as may be affirmatively determined by the Committee. On and after Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares and may not be exercised with respect to any Shares that are Unvested Shares on Optionee’s Termination Date.
3.4 No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Optionee’s employment or other relationship at any time, with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Notice and Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s death or incapacity, Optionee’s executor, administrator, heir or legatee, as the case may be) must provide an electronic notice (via welcome@carta.com) or deliver to the Company an executed Stock Option Exercise Notice and Agreement in the form attached hereto as Annex A, or in such other form as may be approved by the Committee from time to time (the “Exercise Agreement”) and payment for the shares being purchased in accordance with this Agreement. The Exercise Agreement shall set forth, among other things, (i) Optionee’s election to exercise this Option, (ii) the number of Shares being purchased, (iii) any representations, warranties and agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable securities laws in connection with any exercise of this Option and (iv) any other agreements required by the Company. If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise this Option and such person shall be subject to all of the restrictions contained herein as if such person were Optionee.
4.2 Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise.
4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the shares being purchased in cash (by check, Automated Clearing House (“ACH”) or wire transfer), or where permitted by law:
(a) by cancellation of indebtedness of the Company owed to Optionee;
(b) by surrender of shares of the Company that are free and clear of all security interests, pledges, liens, claims or encumbrances and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Optionee in the public market;
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(c) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(d) provided that a public market for the Common Stock exists and subject to compliance with applicable law, by exercising as set forth below, through a “same day sale” commitment from Optionee and a broker-dealer whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or
(e) by any combination of the foregoing or any other method of payment approved by the Committee that constitutes legal consideration for the issuance of Shares.
For avoidance of uncertainty: ACH transfers that have been received by the Company into its bank account designated via welcome@carta.com for receipt of such transfers shall be deemed to have been received for all purposes of this Option as of the date on which such transfers were initiated from the Optionee’s account and made irrevocable by Optionee.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of the Option, Optionee must pay or provide for foreign, federal, state and local income tax, social insurance, payroll tax, fringe benefits tax, payment on account withholding and other tax-related items related to Optionee’s participation in the Plan and legally applicable to Optionee, including, as applicable, obligations of the Company (all the foregoing tax-related items, “Tax-Related Items”). If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain the number of Shares with a Fair Market Value equal to the amount of taxes required to be withheld; or to arrange a mandatory “sell to cover” on Optionee’s behalf (without further authorization); but in no event will the Company withhold Shares or “sell to cover” if such withholding would result in adverse accounting consequences to the Company. In case of stock withholding or a sell to cover, the Company shall issue the net number of Shares to Optionee by deducting the Shares retained from the Shares issuable upon exercise. The Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable statutory rates in Optionee’s country, including maximum applicable rates.
4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares issuable upon a valid exercise of this Option registered in the name of Optionee, Optionee’s authorized assignee, or Optionee’s legal representative, and shall deliver electronic certificates via welcome@carta.com representing the Shares with the appropriate legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are intended to comply with Section 25102(o) and Rule 701. Any provision of this Agreement that is inconsistent with Section 25102(o) or Rule 701 shall, without further act or amendment by the Company or the Committee, be reformed to comply with the requirements of Section 25102(o) and/or Rule 701. The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Common Stock may be listed at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.
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6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to a testamentary trust in which the options are to be passed to beneficiaries upon the death of the trustor (settlor) or a revocable trust, or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e), and may be exercised during the lifetime of Optionee only by Optionee or in the event of Optionee’s incapacity, by Optionee’s legal representative. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee.
7. RESTRICTIONS ON TRANSFER.
7.1 Disposition of Shares. Optionee hereby agrees that Optionee shall make no disposition of any of the Shares (other than as permitted by this Agreement and the Company’s Bylaws (the “Bylaws”)) unless and until:
(a) Optionee shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;
(b) Optionee shall have complied with all requirements of this Agreement and the Bylaws applicable to the disposition of the Shares;
(c) Optionee shall have provided the Company with written assurances, in form and substance satisfactory to counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any applicable state securities laws or (ii) all appropriate actions necessary for compliance with the registration requirements of the Securities Act or of any exemption from registration available under the Securities Act (including Rule 144) or applicable state securities laws have been taken; and
(d) Optionee shall have provided the Company with written assurances, in form and substance satisfactory to the Company, that the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares pursuant to the provisions of the regulations promulgated under Section 25102(o), Rule 701 or under any other applicable securities laws or adversely affect the Company’s ability to rely on the exemption(s) from registration under the Securities Act or under any other applicable securities laws for the grant of the Option, the issuance of Shares thereunder or any other issuance of securities under the Plan.
7.2 Restriction on Transfer. Optionee shall not transfer, assign, grant a lien or security interest in, pledge, hypothecate, encumber or otherwise dispose of any of the Shares which are subject to restrictions on transfer set forth in the Bylaws and the Company’s Right of First Refusal described below, except as permitted by this Agreement.
7.3 Transferee Obligations. Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement and that the transferred Shares are subject to (i) any restrictions on transfer set forth in the Bylaws, (ii) the Company’s Right of First Refusal granted hereunder and (iii) the market stand-off provisions of Section 8 below, to the same extent such Shares would be so subject if retained by Optionee.
8. MARKET STANDOFF AGREEMENT. Optionee agrees that, subject to any early release provisions that apply pro rata to stockholders of the Company according to their holdings of Common Stock (determined on an as-converted into Common Stock basis), Optionee will not, for a period of up to one hundred eighty (180) days (plus up to an additional thirty five (35) days to the extent reasonably requested by the Company or such underwriter(s) to accommodate regulatory restrictions on the publication or other distribution of research reports or earnings releases by the Company, including NASD and NYSE rules) following the effective date of the registration statement filed with the SEC relating to the initial underwritten sale of Common Stock of the Company to the public under the Securities Act (the “IPO”), directly or indirectly sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common
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Stock or securities convertible into Common Stock, except for: (i) transfers of Shares permitted under Section 9.6 hereof so long as such transferee furnishes to the Company and the managing underwriter their written consent to be bound by this Section 8 as a condition precedent to such transfer; and (ii) sales of any securities to be included in the registration statement for the IPO. For the avoidance of doubt, the provisions of this Section shall only apply to the IPO. The restricted period shall in any event terminate two (2) years after the closing date of the IPO. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period. Optionee further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing restrictions on transfer. For the avoidance of doubt, the foregoing provisions of this Section shall not apply to any registration of securities of the Company (a) under an employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
9. COMPANY’S RIGHT OF FIRST REFUSAL. Subject to any restrictions on transfer set forth in the Bylaws, before any Shares held by Optionee or any transferee of such Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Right of First Refusal”).
9.1 Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (iii) the number of Offered Shares to be transferred to each Proposed Transferee; (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (v) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Right of First Refusal at the Offered Price as provided for in this Agreement.
9.2 Exercise of Right of First Refusal. At any time within thirty (30) days after the date of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as specified below.
9.3 Purchase Price. The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift) then the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Committee. If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Committee, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.
9.4 Payment. Payment of the purchase price for the Offered Shares will be payable, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
9.5 Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the Offered Price or at a higher price, provided that (i) such sale or other transfer is
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consummated within ninety (90) days after the date of the Notice, (ii) any such sale or other transfer is effected in compliance with all applicable securities laws, and (iii) each Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to each Proposed Transferee within such ninety (90) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.
9.6 Exempt Transfers. Notwithstanding anything to the contrary in this Section, the following transfers of Shares will be exempt from the Right of First Refusal: (i) the transfer of any or all of the Shares during Optionee’s lifetime by gift or on Optionee’s death by will or intestacy to any member(s) of Optionee’s “Immediate Family” (as defined below) or to a trust for the benefit of Optionee and/or member(s) of Optionee’s Immediate Family, provided that each transferee or other recipient agrees in a writing satisfactory to the Company that the provisions of this Section will continue to apply to the transferred Shares in the hands of such transferee or other recipient; (ii) any transfer of Shares made pursuant to a statutory merger, statutory consolidation of the Company with or into another corporation or corporations or a conversion of the Company into another form of legal entity (except that the Right of First Refusal will continue to apply thereafter to such Shares, in which case the surviving corporation of such merger or consolidation or the resulting entity of such conversion shall succeed to the rights of the Company under this Section unless the agreement of merger or consolidation or conversion expressly otherwise provides); or (iii) any transfer of Shares pursuant to the winding up and dissolution of the Company. As used herein, the term “Immediate Family” will mean Optionee’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of Optionee or Optionee’s spouse, or the spouse of any of the above or Spousal Equivalent, as defined herein. As used herein, a person is deemed to be a “Spousal Equivalent” provided the following circumstances are true: (i) irrespective of whether or not Optionee and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and mentally competent to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.
9.7 Termination of Right of First Refusal. The Right of First Refusal will terminate as to all Shares: (i) on the effective date of the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan); (ii) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange Act; or (iii) on any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or comparable equity security) of entity resulting from such conversion is registered under the Exchange Act.
9.8 Encumbrances on Shares. Optionee may grant a lien or security interest in, or pledge, hypothecate or encumber Shares only if each party to whom such lien or security interest is granted, or to whom such pledge, hypothecation or other encumbrance is made, agrees in a writing satisfactory to the Company that: (i) such lien, security interest, pledge, hypothecation or encumbrance will not adversely affect or impair the Right of First Refusal or the rights of the Company and/or its assignee(s) with respect thereto and will not apply to such Shares after they are acquired by the Company and/or its assignees under this Section; and (ii) the provisions of this Agreement will continue to apply to such Shares in the hands of such party and any transferee of such party.
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10. RIGHTS AS A STOCKHOLDER. Optionee shall not have any of the rights of a stockholder with respect to any Shares unless and until such Shares are issued to Optionee. Subject to the terms and conditions of this Agreement, Optionee will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Optionee pursuant to, and in accordance with, the terms of the Exercise Agreement until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Right of First Refusal. Upon an exercise of the Right of First Refusal, Optionee will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.
11. ESCROW. As security for Optionee’s faithful performance of this Agreement, Optionee agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares via welcome@carta.com to surrender such certificate(s) to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Agreement. Optionee and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other party) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Agreement and will not be liable for any act or omission taken by Escrow Holder in good faith reliance on such documents, the advice of counsel or a court order. The Shares will be released from escrow upon termination of the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
12.1 Legends. Optionee understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by state or U.S. Federal securities laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between Optionee and the Company, or any agreement between Optionee and any third party (and any other legend(s) that the Company may become obligated to place on the stock certificate(s) evidencing the Shares under the terms of any agreement to which the Company is or may become bound or obligated):
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON RESALE AND TRANSFER, INCLUDING THE RIGHT OF FIRST REFUSAL HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH SALE AND TRANSFER RESTRICTIONS, INCLUDING THE RIGHT OF FIRST REFUSAL, ARE BINDING ON TRANSFEREES OF THESE SHARES.
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(c) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MARKET STANDOFF RESTRICTION AS SET FORTH IN A CERTAIN STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF CERTAIN PUBLIC OFFERINGS OF THE COMMON STOCK OF THE ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.
12.2 Stop-Transfer Instructions. Optionee agrees that, to ensure compliance with the restrictions imposed by this Agreement and the Bylaws, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
12.3 Refusal to Transfer. The Company will not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of the Bylaws or this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.
13. CERTAIN TAX CONSEQUENCES. Set forth below is a brief summary as of the Effective Date of the Plan of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
13.1 Exercise of ISO. If the Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for federal alternative minimum tax purposes and may subject Optionee to the alternative minimum tax in the year of exercise.
13.2 Exercise of Nonqualified Stock Option. If the Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is a current or former employee of the Company, the Company may be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.
13.3 Disposition of Shares. The following tax consequences may apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held for more than twelve (12) months after the date of purchase of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal income tax purposes. If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates in the year of the disposition) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.
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(b) Nonqualified Stock Options. If the Shares are held for more than twelve (12) months after the date of purchase of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long term capital gain.
14. GENERAL PROVISIONS.
14.1 Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.
14.2 Entire Agreement. The Plan, the Grant Notice and the Exercise Agreement are each incorporated herein by reference. This Agreement, the Grant Notice, the Plan and the Exercise Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior undertakings and agreements with respect to such subject matter.
15. NOTICES. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) at the time an electronic confirmation of receipt is received, if delivery is by email; (iii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iv) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (v) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery outside the United States will be sent by email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges prepaid and properly addressed to Optionee at the last known address or facsimile number on the books of the Company, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the Company, to it at its principal place of business. Notices to the Company will be marked “Attention: Chief Financial Officer.” Notices by facsimile shall be machine verified as received.
16. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this Agreement including its rights to purchase Shares under the Right of First Refusal. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and assigns.
17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.
18. FURTHER ASSURANCES. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.
19. TITLES AND HEADINGS. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this Agreement.
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20. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.
21. SEVERABILITY. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
* * * * *
Attachment: Annex A: Form of Stock Option Exercise Notice and Agreement
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ANNEX A
FORM OF STOCK OPTION EXERCISE NOTICE AND AGREEMENT
STOCK OPTION EXERCISE NOTICE AND AGREEMENT
ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
*NOTE: You must sign this Notice before submitting it to Attovia Therapeutics, Inc. (the “Company”).
OPTIONEE INFORMATION: Please provide the following information about yourself (“Optionee”):
| Name: See Carta1 | Social Security Number: See Carta | |
| Address: See Carta | Employee Number: See Carta
Email Address: See Carta | |
OPTION INFORMATION: Please provide this information on the option being exercised (the “Option”):
| Grant No. See Carta | ||
| Date of Grant: See Carta | Type of Stock Option: See Carta | |
| Option Price per Share: See Carta | ||
| Total number of shares of Common Stock of the Company subject to the Option: See Carta | ||
EXERCISE INFORMATION:
| Number of shares of Common Stock of the Company for which the Option is now being exercised See Carta. (These shares are referred to below as the “Purchased Shares.”) |
| Total Exercise Price Being Paid for the Purchased Shares: See Carta |
| Form of payment enclosed [check all that apply]: |
| ☐ Check for $____________, payable to “Attovia Therapeutics, Inc.” |
| ☐ Certificate(s) for ________________ shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]
☐ Automated Clearing House (“ACH”) transfer in the amount of $___________. |
AGREEMENTS, REPRESENTATIONS AND ACKNOWLEDGMENTS OF OPTIONEE: By execution of this Stock Option Exercise Notice and Agreement (whether written, electronic or otherwise, including via welcome@carta.com), Optionee hereby agrees with, and represents to, the Company as follows:
| 1. | Terms Governing. I acknowledge and agree with the Company that I am acquiring the Purchased Shares by exercise of this Option subject to all other terms and conditions of the Notice of Stock Option Grant and the Stock Option Agreement that govern the Option, including without limitation the terms of the Company’s 2023 Equity Incentive Plan (the “Plan”). |
| 1 | All references to Carta shall be interpreted as the Equity Management Software currently in use by the Company. |
| 2. | Investment Intent; Securities Law Restrictions. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for my account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption from such registration requirement and that the Purchased Shares must be held by me indefinitely, unless they are subsequently registered under the Securities Act or I obtain an opinion of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required. I acknowledge that the Company is under no obligation to register the Purchased Shares under the Securities Act or under any other securities law. |
| 3. | Restrictions on Transfer: Rule 144. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder (including Rule 144 under the Securities Act described below (“Rule 144”)) or of any other applicable securities laws. I am aware of Rule 144, which permits limited public resales of securities acquired in a non-public offering, subject to satisfaction of certain conditions, which include (without limitation) that: (a) certain current public information about the Company is available; (b) the resale occurs only after the holding period required by Rule 144 has been met; (c) the sale occurs through an unsolicited “broker’s transaction”; and (d) the amount of securities being sold during any three-month period does not exceed specified limitations. I understand that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future. |
| 4. | Access to Information; Understanding of Risk in Investment. I acknowledge that I have received and had access to such information as I consider necessary or appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Purchased Shares. I am aware that my investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of my investment in the Purchased Shares. |
| 5. | Rights of First Refusal; Market Stand-off. I acknowledge that the Purchased Shares remain subject to the Company’s Right of First Refusal and the market stand-off covenants (sometimes referred to as the “lock-up”), all in accordance with the applicable Notice of Stock Option Grant and the Stock Option Agreement that govern the Option. |
| 6. | Restrictions on Transfer: Bylaws. I acknowledge that the Purchased Shares will be subject to any restrictions on transferability and resale set forth in the Company’s Bylaws as currently in effect. |
| 7. | Form of Ownership. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership of the Purchased Shares that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement. In the event that I choose to transfer my Purchased Shares to a trust that is not an eligible revocable trust, I also acknowledge that the transfer will be treated as a “disposition” for tax purposes. As a result, the favorable ISO tax treatment will be unavailable and other unfavorable tax consequences may occur. |
| 8. | Investigation of Tax Consequences. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time. |
| 9. | Other Tax Matters. I agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes my tax liabilities. I will not make any claim against the Company or its Board, officers or employees related to tax liabilities arising from my options or my other compensation. In particular, I acknowledge that my options (including the Option) are exempt from section 409A of the Internal Revenue Code only if the exercise price per share is at least equal to the fair market value per share of the Common Stock at the time the option was granted by the Board. Since shares of the Common Stock are not traded on an established securities market, the determination of their fair market value was made by the Board and/or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and I will not make any claim against the Company or its Board, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. |
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| 10. | Spouse Consent. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing. |
| 11. | Tax Withholding. As a condition of exercising this Option, I agree to make adequate provision for foreign, federal, state or other tax withholding obligations, if any, which arise upon the grant, vesting or exercise of this Option, or disposition of the Purchased Shares, whether by withholding, direct payment to the Company, or otherwise. |
The undersigned hereby executes and delivers this Stock Option Exercise Notice and Agreement and agrees to be bound by its terms.
This Stock Option Exercise Notice and Agreement may be completed, executed and delivered electronically, whether via the Company’s intranet or the Internet site of Carta or another equity management software, or via any other means specified by the Company.
| SIGNATURE: | DATE: | |||||
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| Optionee’s Name: | ||||||
[Signature Page to Stock Option Exercise Notice and Agreement]
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ATTOVIA THERAPEUTICS, INC.
2023 EQUITY INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (the “Agreement”) is made and entered into as specified on Carta1 (the “Effective Date”) by and between Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), and the Purchaser indicated on Carta (“Purchaser”). Capitalized terms not defined herein shall have the meanings ascribed to them in the Company’s 2023 Equity Incentive Plan (the “Plan”).
1. PURCHASE OF SHARES.
1.1 Agreement to Purchase and Sell Shares. On the Effective Date and subject to the terms and conditions of this Agreement and the Plan, Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the number of shares of the Company’s Common Stock provided in Purchaser’s statement specified on Carta (the “Shares”), at the purchase price per share (the “Purchase Price Per Share”) and Total Purchase Price as specified on Carta (the “Purchase Price”). As used in this Agreement, the term “Shares” includes the Shares purchased under this Agreement and all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.
1.2 Payment. Purchaser hereby delivers payment of the Purchase Price as follows (check and complete as appropriate):
| [ ] | in cash (by check) in the amount of $_________________, receipt of which is acknowledged by the Company. |
| [ ] | by Automated Clearing House (“ACH”) transfer in the amount of $__________________________________, receipt of which is acknowledged by the Company. |
For avoidance of uncertainty: ACH transfers that have been successfully received by the Company into its bank account designated via Carta for receipt of such transfers shall be deemed to have been received for all purposes of this Agreement as of the date on which such transfers were initiated from the Purchaser’s account and made irrevocable by Purchaser.
| [ ] | by cancellation of indebtedness of the Company owed to Purchaser in the amount of $__________________________________. |
| [ ] | by the waiver hereby of compensation due or accrued for services rendered in the amount of $_______________________________. |
| [ ] | by delivery of _________ fully-paid, nonassessable and vested shares of the Common Stock of the Company owned by Purchaser free and clear of all liens, claims, encumbrances or security interests, valued at the current Fair Market Value of $___________ per share (a) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144, (if purchased by use of a promissory note, such note has been fully paid with respect to such vested shares), or (b) that were obtained by Purchaser in the open public market. |
| 1 | All references to Carta shall be interpreted as the Equity Management Software currently in use by the Company. |
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2. DELIVERIES.
2.1 Deliveries by the Purchaser. Purchaser hereby delivers (via Carta, if applicable) to the Company at its principal executive offices: (a) this completed and signed Agreement, and (b) the Purchase Price, paid by delivery of the form of payment specified in Section 1.2.
2.2 Deliveries by the Company. Upon its receipt of the Purchase Price, payment or other provision for any applicable tax obligations, if any, and all the documents to be executed and delivered by Purchaser to the Company as provided herein, the Company will issue an electronic certificate via Carta evidencing the Shares in the name of Purchaser with the appropriate legends affixed thereto, to be placed in escrow as provided in Section 7.2 to secure performance of Purchaser’s obligations under Sections 5 and 6 until expiration or termination of the Company’s Repurchase Option and Refusal Right (as such terms are defined in Sections 5 and 6, respectively).
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Company as follows.
3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions.
3.2 Acknowledgment of Tax Risks. Purchaser acknowledges that there may be adverse tax consequences upon the purchase and the disposition of the Shares, and that Purchaser has been advised by the Company to consult a tax adviser prior to such purchase or disposition. Purchaser further acknowledges that Purchaser is not relying on the Company or its counsel for tax advice regarding Purchaser’s purchaser or disposition of the Shares or the tax consequences to Purchaser of this Agreement.
3.3 Shares Not Registered or Qualified. Purchaser understands and acknowledges that the Shares have not been registered with the SEC under the Securities Act, or with any securities regulatory agency administering any state securities laws, and that, notwithstanding any other provision of this Agreement to the contrary, the purchase of any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. Purchaser agrees to cooperate with the Company to ensure compliance with such laws.
3.4 No Transfer Unless Registered or Exempt; Contractual Restrictions on Transfers. Purchaser understands that Purchaser may not transfer any Shares unless such Shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions from such registration and qualification requirements are available. Purchaser understands that only the Company may file a registration statement with the SEC and that the Company is under no obligation to do so with respect to the Shares. Purchaser has also been advised that exemptions from registration and qualification may not be available or may not permit Purchaser to transfer all or any of the Shares in the amounts or at the times proposed by Purchaser. Purchaser further acknowledges that this Agreement imposes additional restrictions on transfer of the Shares.
3.5 SEC Rule 701. Shares that are issued pursuant to SEC Rule 701 promulgated under the Securities Act may become freely tradable by non-affiliates (under limited conditions regarding the method of sale) ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC, subject to the lengthier market standoff agreement contained in Section 4 of this Agreement or any other agreement entered into by Purchaser. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144 which permits certain limited sales of unregistered securities. Rule 144 is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a
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minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144). Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of Rule 144. Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.
3.6 Access to Information. Purchaser has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that Purchaser reasonably considers important in making the decision to purchase the Shares, and Purchaser has had ample opportunity to ask questions of the Company’s representatives concerning such matters and this investment.
3.7 Understanding of Risks. Purchaser is fully aware of: (a) the highly speculative nature of the investment in the Shares; (b) the financial hazards involved; (c) the lack of liquidity of the Shares and the restrictions on transferability of the Shares (e.g., that Purchaser may not be able to sell or dispose of the Shares or use them as collateral for loans); (d) the qualifications and backgrounds of the management of the Company; and (e) the tax consequences of investment in, and disposition of, the Shares.
3.8 Purchase for Own Account for Investment. Purchaser is purchasing the Shares for Purchaser’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act. Purchaser has no present intention of selling or otherwise disposing of all or any portion of the Shares and no one other than Purchaser has any beneficial ownership of any of the Shares.
3.9 No General Solicitation. At no time was Purchaser presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Shares.
3.10 SEC Rule 144. Purchaser has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144), subject to the lengthier market standoff agreement contained in Section 4 of this Agreement or any other agreement entered into by Purchaser. Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.
4. MARKET STANDOFF AGREEMENT. Subject to the provisions of this Section, Purchaser agrees in connection with any registration of the Company’s securities under the Securities Act or other registered public offering that, Purchaser will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such managing underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Company or the managing underwriters may specify for employee-stockholders generally; provided however, that if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news, or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, if required by the underwriters or the Company, for so long as, and to the extent that, Rule 2711 or any successor rule of the Financial Industry Regulatory Authority applies, the restrictions imposed by this Section 4 shall continue to apply until the expiration of the 18-day period beginning on the
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issuance of the earnings release or the occurrence of the material news or material event. The restricted period shall in any event terminate two (2) years after the closing date of the Company’s initial public offering. For purposes of this Section 4, the term “Company” shall include any wholly-owned subsidiary of the Company into which the Company merges or consolidates. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period. Purchaser further agrees that the underwriters of any such registered public offering shall be third party beneficiaries of this Section 4 and agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing. Notwithstanding anything in this Section to the contrary, for the avoidance of doubt, the foregoing provisions of this Section shall not apply to any registration of securities of the Company (a) under an employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
5. COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or (subject to Section 5.6) its assignee, shall have the option to repurchase all or a portion of the Purchaser’s Shares that are Unvested Shares (as defined below) on the Termination Date on the terms and conditions set forth in this Section (the “Repurchase Option”) if Purchaser is Terminated (as defined in the Plan) for any reason, or no reason, including without limitation, Purchaser’s death, Disability (as defined in the Plan), voluntary resignation or termination by the Company with or without Cause.
5.1 Termination and Termination Date. In case of any dispute as to whether Purchaser is Terminated, the Committee shall have discretion to determine in good faith whether Purchaser has been Terminated and the effective date of such Termination (the “Termination Date”).
5.2 Vested and Unvested Shares. Shares that are vested pursuant to the schedule set forth in this Section 5.2 are “Vested Shares.” Shares that are not vested pursuant to such schedule are “Unvested Shares.” On the Effective Date, the number of Shares reflected on Carta will be Unvested Shares (the “Initial Unvested Shares”). Provided Purchaser continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Effective Date until the date as reflected on Carta (the “First Vesting Date”), Unvested Shares shall vest in accordance with the vesting schedule set forth on Carta until the earliest to occur of (a) the date all of the Shares are Vested Shares, (b) the Termination Date or (c) the date vesting otherwise terminates pursuant to this Agreement or the Plan. No fractional Shares shall be issued. No Shares will become Vested Shares after the Termination Date. The number of the Shares that are Vested Shares or Unvested Shares will be proportionally adjusted to reflect any stock split, reverse stock split or similar change in the capital structure of the Company as set forth in Section 2.2 of the Plan occurring after the Effective Date.
5.3 Exercise of Repurchase Option. At any time within ninety (90) days after the Purchaser’s Termination Date, the Company, or its assignee, may, at its option, elect to repurchase any or all the Purchaser’s Shares that are Unvested Shares on the Termination Date by giving Purchaser written notice of exercise of the Repurchase Option, specifying the number of Unvested Shares to be repurchased. Such Unvested Shares shall be repurchased at the Purchase Price Per Share, proportionately adjusted for any stock split, reverse stock split or similar change in the capital structure of the Company as set forth in Section 2.2 of the Plan occurring after the Effective Date (the “Repurchase Price”). The Repurchase Price shall be payable, at the option of the Company or its assignee, by check or by cancellation of all or a portion of any outstanding indebtedness owed by Purchaser to the Company and/or such assignee, or by any combination thereof. The Repurchase Price shall be paid without interest within the term of the Repurchase Option as described in the first sentence of this Section 5.3. The Company may, at its option, decline to exercise its Repurchase Option or may exercise its Repurchase Option only with respect to a portion of the Unvested Shares.
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5.4 Right of Termination Unaffected. Nothing in this Agreement shall be construed to limit or otherwise affect in any manner whatsoever the right or power of the Company (or any Parent or Subsidiary of the Company) to terminate Purchaser’s employment or other relationship with Company (or the Parent or Subsidiary of the Company) at any time, for any reason or no reason, with or without Cause.
5.5 Additional or Exchanged Securities and Property. Subject to the provisions of Section 5.2 above, in the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed or issued with respect to, any Unvested Shares shall immediately be subject to the Repurchase Option. Appropriate adjustments shall be made to the price per share to be paid for Unvested Shares upon the exercise of the Repurchase Option (by allocating such price among the Unvested Shares and such other securities or property), provided that the aggregate purchase price payable for the Unvested Shares and all such other securities and property shall remain the same price that was original payable under the Repurchase Option to repurchase such Unvested Shares. Subject to the provisions of Section 5.2 above, in the event of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, the Repurchase Option may be exercised by the Company’s successor.
5.6 Assignment of Repurchase Right. The Company may freely assign the Company’s Repurchase Option, in whole or in part, provided that any person who accepts an assignment of the Repurchase Option from the Company shall assume all of the Company’s rights and obligations with respect to the Repurchase Option (to the extent so assigned) under this Agreement.
6. COMPANY’S REFUSAL RIGHT. Unvested Shares shall be subject to the restrictions on transfer and the granting of encumbrances thereon as provided in Section 7 hereof. Before any Vested Shares (as defined in Section 5 hereof) held by Purchaser or any transferee of such Vested Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Vested Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Refusal Right”).
6.1 Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (a) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (b) the name and address of each proposed purchaser or other transferee of Offered Shares (“Proposed Transferee”); (c) the number of Offered Shares to be transferred to each Proposed Transferee; (d) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares to each Proposed Transferee (the “Offered Price”); and (e) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Refusal Right at the Offered Price as provided for in this Agreement.
6.2 Exercise of Refusal Right. At any time within thirty (30) days after the date the Notice is effective pursuant to Section 9.2, the Company and/or its assignee(s) may, by giving written notice (or electronic via Carta) to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as provided in Section 6.3 below.
6.3 Purchase Price. The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift), then the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Company’s Board of Directors. If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Company’s Board of Directors, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.
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6.4 Payment. The purchase price for the Offered Shares will be paid, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
6.5 Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to such Proposed Transferee at the Offered Price or at a higher price, provided that (a) such sale or other transfer is consummated within one hundred twenty (120) days after the date the Notice is effective pursuant to Section 9.2, (b) any such sale or other transfer is effected in compliance with all applicable securities laws, and (c) such Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to such Proposed Transferee within such one hundred twenty (120) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the Refusal Right before any Shares held by the Holder may be sold or otherwise transferred.
6.6 Exempt Transfers. Notwithstanding the foregoing, the following transfers of Vested Shares will be exempt from the Refusal Right: (a) the transfer of any or all of the Vested Shares during Purchaser’s lifetime by gift or on Purchaser’s death by will or intestacy to Purchaser’s “Immediate Family” (as defined below) or to a trust for the benefit of Purchaser or Purchaser’s Immediate Family, provided that each transferee agrees in a writing satisfactory to the Company that the provisions of this Section will continue to apply to the transferred Vested Shares in the hands of such transferee; (b) any transfer of Vested Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities (except that, subject to Section 6.7, unless the agreement of merger or consolidation expressly otherwise provides, the Refusal Right will continue to apply thereafter to such Vested Shares, in which case the surviving entity of such merger or consolidation shall succeed to the rights of the Company under this Section); or (c) any transfer of Vested Shares pursuant to the winding up and dissolution of the Company. As used herein, the term “Immediate Family” will mean Purchaser’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of Purchaser or Purchaser’s spouse, or the spouse of any of the above or Spousal Equivalent, as defined herein. As used herein, a person is deemed to be a “Spousal Equivalent” provided the following circumstances are true: (i) irrespective of whether or not the Purchaser and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and mentally competent to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.
6.7 Termination of Refusal Right. The Refusal Right will terminate as to all Shares: (a) on the effective date of the first sale of Common Stock of the Company to the public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act or, if expressly approved by the Board as terminating the Refusal Right, under the laws of any other country having substantially the same effect (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (b) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities if the common stock of the surviving entity or any direct or indirect parent entity thereof is registered under the Securities Exchange Act of 1934, as amended.
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7. ADDITIONAL RESTRICTIONS UPON SHARE OWNERSHIP OR TRANSFER.
7.1 Rights as a Stockholder. Subject to the terms and conditions of this Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Refusal Right or the Repurchase Option. Upon an exercise of the Refusal Right or the Repurchase Option, Purchaser will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Purchaser will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.
7.2 Escrow. As security for Purchaser’s faithful performance of this Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares via Carta, to deliver such certificate(s) to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Agreement. Purchaser and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other person or entity) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Agreement. The Shares will be released from escrow upon termination of both the Refusal Right and the Repurchase Option.
7.3 Encumbrances on Shares. Without the Company’s prior written consent given with the approval of the Company’s Board of Directors, Purchaser may not grant a lien or security interest in, or pledge, hypothecate or encumber, any Unvested Shares.
7.4 Restrictions on Transfers. Unvested Shares may not be sold or otherwise transferred by Purchaser without the Company’s prior written consent. Purchaser hereby agrees that Purchaser shall make no disposition of the Shares (other than as permitted by this Agreement) unless and until:
(a) Purchaser shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;
(b) Purchaser shall have complied with all requirements of this Agreement applicable to the disposition of the Shares, including but not limited to the Refusal Right, the Market Standoff and the Repurchase Option; and
(c) Purchaser shall have provided the Company with written assurances, in form and substance satisfactory to counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any state securities laws, and (ii) all appropriate actions necessary for compliance with the registration and qualification requirements of the Securities Act and any state securities laws, or of any exemption from registration or qualification, available thereunder (including Rule 144) have been taken.
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Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement and that the transferred Shares are subject to the Company’s Refusal Right or the Repurchase Option granted hereunder and the market stand-off provisions of Section 4 hereof, to the same extent such Shares would be so subject if retained by the Purchaser. In addition, Purchaser acknowledges and agrees that the Shares shall be subject to any restrictions on transferability and resale set forth in the Company’s Bylaws.
7.5 Restrictive Legends and Stop-transfer Orders. Purchaser understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by applicable laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between Purchaser and the Company or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, INCLUDING THE RIGHT OF FIRST REFUSAL AND THE REPURCHASE OPTION HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AND A MARKET STANDOFF AGREEMENT, AS SET FORTH IN A RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS INCLUDING THE RIGHT OF FIRST REFUSAL, THE REPURCHASE OPTION AND THE MARKET STANDOFF ARE BINDING ON TRANSFEREES OF THESE SHARES.
Purchaser also agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. The Company will not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (b) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.
8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES. PURCHASER REPRESENTS (a) THAT PURCHASER HAS CONSULTED WITH ANY TAX ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. Purchaser hereby acknowledges that Purchaser has been informed that, with respect to Unvested Shares, unless an election is filed by Purchaser with the
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Internal Revenue Service (and, if necessary, the proper state taxing authorities) within 30 days after the purchase of the Shares electing, pursuant to Section 83(b) of the Internal Revenue Code (and similar state tax provisions, if applicable), to be taxed currently on any difference between the Purchase Price of the Unvested Shares and their Fair Market Value on the date of purchase, there will be a recognition of taxable income to Purchaser, measured by the excess, if any, of the Fair Market Value of the Unvested Shares, at the time they cease to be Unvested Shares, over the Purchase Price for such Shares. Purchaser represents that Purchaser has consulted any tax advisers Purchaser deems advisable in connection with Purchaser’s purchase of the Shares and the filing of the election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) is attached hereto as Exhibit 1 for reference. BY PROVIDING THE FORM OF ELECTION, NEITHER THE COMPANY NOR ITS LEGAL COUNSEL IS THEREBY UNDERTAKING TO FILE THE ELECTION FOR PURCHASER, WHICH OBLIGATION TO FILE SHALL REMAIN SOLELY WITH PURCHASER.
9. GENERAL PROVISIONS.
9.1 Successors and Assigns. The Company may assign any of its rights under this Agreement, including its rights to purchase Shares under the Refusal Right or the Repurchase Option. Neither Purchaser, nor any of Purchaser’s successors and assigns, may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement will be binding upon Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns.
9.2 Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) at the time an electronic confirmation of receipt is received, if delivery is by email; (iii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iv) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (v) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery outside the United States will be sent by email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges prepaid and properly addressed to Purchaser at the last known address or facsimile number on the books of the Company, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the Company, to it at its principal place of business. Notices to the Company will be marked “Attention: Chief Financial Officer.” Notices by facsimile shall be machine verified as received.
9.3 Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.
9.4 Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement, together with all Exhibits hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, between the parties hereto with respect to the specific subject matter hereof.
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9.5 Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
9.6 Execution. This Agreement may be entered into in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. This Agreement may be executed and delivered by facsimile (or electronic via Carta) and, upon such delivery, the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.
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IN WITNESS WHEREOF, the Company has caused this Restricted Stock Purchase Agreement to be executed by its duly authorized representative, and Purchaser has executed this Restricted Stock Purchase Agreement, as of the date first set forth above.
| ATTOVIA THERAPEUTICS, INC. | PURCHASER | |||||
| By: |
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| Address: Fax No.: (____) __________________ |
Address: __________________________ __________________________ Fax No.: (____) __________________ | |||||
Exhibit
Exhibit 1: Form of Election Pursuant to Section 83(b)
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EXHIBIT 1
FORM OF SECTION 83(B) ELECTION
ELECTION UNDER SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income for the Taxpayer’s current taxable year the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property, as compensation for services.
| 1. | TAXPAYER’S NAME: |
TAXPAYER’S ADDRESS:
SOCIAL SECURITY NUMBER:
TAXABLE YEAR: Calendar Year _____
| 2. | The property with respect to which the election is made is described as follows: _______ shares of Common Stock, par value $0.0001 per share, of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), which is Taxpayer’s employer or the corporation for whom the Taxpayer performs services. |
| 3. | The date on which the shares were transferred was ____________________, _____. |
| 4. | The shares are subject to the following restrictions: The Company may repurchase all or a portion of the shares at the Taxpayer’s original purchase price under certain conditions at the time of Taxpayer’s termination of employment or services. |
| 5. | The fair market value of the shares at the time of transfer (without regard to restrictions other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax Regulations) was $____ per share x __________ shares = $__________. |
| 6. | The amount paid for such shares was $____ per share x __________ shares = $__________. |
| 7. | The amount to include in the Taxpayer’s gross income for the Taxpayer’s current taxable year is $_________. |
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE (“IRS”), AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER’S INCOME TAX RETURNS FOR THE CALENDAR YEAR. A COPY OF THE ELECTION HAS ALSO BEEN FURNISHED TO THE COMPANY. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS.
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Dated: |
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| Taxpayer’s Signature |
Exhibit 10.5
ATTOVIA THERAPEUTICS, INC.
FORM OF STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of [●], (the “Effective Date”), by and between ATTOVIA THERAPEUTICS, INC., a Delaware corporation (the “Company”), [●] (“Purchaser”)[, and [●] (the “Service Provider”)].
WHEREAS, the Company desires to issue, and Purchaser desires to acquire, stock of the Company as herein described, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. PURCHASE AND SALE OF STOCK.
(a) Purchase of Shares. On the Effective Date and subject to the terms and conditions of this Agreement, Purchaser hereby purchases from the Company, and Company hereby sells to Purchaser, an aggregate of [●] shares of the Company’s Common Stock, $0.0001 par value per share (the “Shares”), at the purchase price per share of $0.0001 (the “Purchase Price Per Share”) for an aggregate purchase price of $[●] (the “Purchase Price”). As used in this Agreement, the term “Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in substitution of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.
(b) Deliveries by Purchaser. Purchaser hereby delivers to the Company: (a) a duly executed copy of this Agreement, (b) payment of the Purchase Price by $ [●] in cash with proof of purchase attached hereto as Exhibit 1, [and] (c) two (2) copies of a blank Stock Power and Assignment Separate from Stock Certificate in the form of Exhibit 2 attached hereto (the “Stock Powers”) both executed by Purchaser [, and (d) if Purchaser is married, a Spouse Consent in the form of Exhibit [3] attached hereto (the “Spouse Consent”) duly executed by Purchaser’s spouse].
(c) Deliveries by the Company. Upon its receipt of the entire Purchase Price and all the documents to be executed and delivered by Purchaser to the Company under Section [1][2.1](b), the Company will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser, registered in Purchaser’s name.
2. LIMITATIONS ON TRANSFER. Purchaser shall not assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Shares except in compliance with the provisions herein and applicable securities laws. Furthermore, the Shares shall be subject to the transfer restrictions under the Company’s Bylaws and the Rights of First Refusal in favor of the Company or its assignees under the Section 6 of this Agreement or that may be contained in stockholder agreements by and between the Company and its stockholders. Purchaser hereby further acknowledges that Purchaser may be required to hold the Common Stock purchased hereunder indefinitely. During the period of time during which the Purchaser holds the Common Stock, the value of the Common Stock may increase or decrease, and any risk associated with such Common Stock and such fluctuation in value shall be borne by the Purchaser.
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3. RESTRICTIVE LEGENDS. All certificates representing the Shares shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):
(a) “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”
(b) “THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE BYLAWS OF THE CORPORATION. COPIES OF THE BYLAWS OF THE CORPORATION MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.”
(c) Any legend required by appropriate blue sky officials.
4. REPRESENTATIONS OF PURCHASER [AND THE SERVICE PROVIDER]. In connection with the purchase of the Shares, Purchaser [and/or the Service Provider], as applicable, represents to the Company the following:
(a) Purchaser [and the Service Provider have] [has] read and understands the terms of this Agreement, and agrees to be bound by its terms and conditions.
(b) Purchaser [and the Service Provider are] [is] aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Act”).
(c) Purchaser understands that the Shares have not been registered under the Act or qualified under the California Corporate Securities Law of 1968, as amended, or any other U.S. state securities laws that impose certain restrictions on Purchaser’s ability to transfer the Shares (together the “Law”), but instead that the Shares are being issued under an exemption or exemptions from the registration and qualification requirements of the Act and the Law or other applicable state securities laws which impose certain restrictions on Purchaser’s ability to transfer the Shares. Purchaser has no present intention of selling or otherwise disposing of all or any portion of the Shares and no one other than Purchaser has any beneficial ownership of any of the Shares.
(d) Purchaser further acknowledges and understands that the Shares must be held indefinitely unless the Shares are subsequently registered under the Act and any applicable state securities laws, or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the Shares. Purchaser understands that the certificate evidencing the Shares will be imprinted with a legend that prohibits the transfer of the Shares unless the Shares are registered or such registration is not required in the opinion of counsel for the Company.
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(e) Purchaser is familiar with the provisions of Rule 144, under the Act, as in effect from time to time, that, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. The Shares may be resold by Purchaser in certain limited circumstances subject to the provisions of Rule 144, which may require, among other things, (i) the availability of certain public information about the Company and (ii) the resale occurring following the required holding period under Rule 144 after the Purchaser has purchased, and made full payment of (within the meaning of Rule 144), the securities to be sold.
(f) Purchaser further understands that at the time Purchaser wishes to sell the Shares there may be no public market upon which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the current public information requirements of Rule 144, and that, in such event, Purchaser may be precluded from selling the Shares under Rule 144 even if the minimum holding period requirement had been satisfied.
(g) Purchaser [and the Service Provider, respectively, each] [further] warrants and represents that Purchaser [and the Service Provider, respectively,] either (i) has a preexisting personal or business relationships, with the Company or any of its officers, directors or controlling persons of a nature and duration sufficient to make Purchaser [and the Service Provider, respectively,] aware of the character, business acumen and general business and financial circumstances of the Company and/or such officers and directors, and by reason of Purchaser’s [and/or the Service Provider’s] business or financial experience, Purchaser is capable of evaluating the merits and risks of this investment, has the ability to protect Purchaser’s own interests in this transaction and is financially capable of bearing a total loss of this investment, or (ii) is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Act.
(h) [The Service Provider] [Purchaser] is a founder of the Company and is fully aware of: (a) the highly speculative nature of the investment in the Shares; (b) the financial hazards involved; (c) the lack of liquidity of the Shares and the restrictions on transferability of the Shares (e.g., that Purchaser may not be able to sell or dispose of the Shares or use them as collateral for loans); (d) the qualifications and backgrounds of the management of the Company; and (e) the tax consequences of investment in, and disposition of, the Shares.
5. COMPANY’S REPURCHASE OPTION. The Company and its assignees shall have the option to repurchase all or a portion of the Unvested Shares (defined in Section 5(b) below) on the terms and conditions set forth in this Section 5 (the “Repurchase Option”) if [the Service Provider] [Purchaser] ceases to be employed by the Company (as defined herein) for any reason, or no reason, including without limitation [the Service Provider’s] [Purchaser’s] death, disability, voluntary resignation or termination by the Company with or without cause.
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(a) Definition of “Employed by the Company”; “Termination Date”. For purposes of this Agreement, [the Service Provider] [Purchaser] will be considered to be “employed by the Company” if the Board of Directors of the Company determines that [the Service Provider] [Purchaser] is rendering substantial services as an officer, employee, consultant or independent contractor to the Company or to any Affiliate of the Company. In case of any dispute as to whether [the Service Provider] [Purchaser] is employed by the Company, the Board of Directors of the Company shall have sole discretion to determine whether [the Service Provider] [Purchaser] has ceased to be employed by the Company or any Affiliate and the effective date on which [the Service Provider’s] [Purchaser’s] employment terminated (the “Termination Date”). An “Affiliate” means any entity that owns, directly or indirectly, stock representing more than 50% of the total combined voting power of all classes of stock of the Company or any entity in which the Company owns, directly or indirectly, equity interests representing more than 50% of the voting power of such entity.
(b) Unvested and Vested Shares. Shares that are vested pursuant to the schedule set forth herein are “Vested Shares”. Shares that are not vested pursuant to the schedule set forth herein are “Unvested Shares”. Unvested Shares may not be sold or otherwise transferred by Purchaser without the Company’s prior written consent. On the Effective Date [all] [●] of the Shares will be Unvested Shares. If [the Service Provider] [Purchaser] has continuously been employed by the Company or any Affiliate, at all times from the Effective Date until [●] (the “First Vesting Date”), then on the First Vesting Date, 1/4th of the initial Unvested Shares will become Vested Shares; and thereafter, for so long (and only for so long) as [the Service Provider] [Purchaser] remains continuously employed by the Company or any Affiliate at all times after the First Vesting Date, on the same day of each succeeding calendar month after the First Vesting Date (or if there is no such day in any month, then the last day of such calendar month) an additional 1/48th of the initial Unvested Shares will become Vested Shares. No Unvested Shares will become Vested Shares after the Termination Date. If the application of the vesting percentage results in a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month the balance of Unvested Shares shall become fully Vested Shares.
(c) Acceleration of Vesting Following Change of Control and Termination. In addition to any Shares that have become Vested Shares pursuant to Section 5(b) hereof, if there is a Change of Control and if, during the period of time commencing ninety (90) days prior to the execution of a definitive agreement providing for the consummation of such Change of Control and ending on the one-year anniversary of the consummation of such Change of Control, [the Service Provider’s] [Purchaser’s] employment by the Company is terminated by the Company, other than for Cause, or is terminated by [the Service Provider] [Purchaser] for Good Reason, then, effective as of such termination, 100% of the Shares that are Unvested Shares as of such termination will become Vested Shares at the time of such termination.
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As used in this Section 5(c), as applicable:
“Cause” means any of the following: (a) [the Service Provider] [Purchaser] willfully engages in conduct that is in bad faith and materially injurious to the Company, including but not limited to, misappropriation of trade secrets, fraud or embezzlement; (b) [the Service Provider] [Purchaser] commits a material breach of any written agreement between [the Service Provider] [Purchaser] and the Company that causes harm to the Company, which breach is not cured within thirty (30) days after receipt of written notice describing in detail such breach to [the Service Provider] [Purchaser] from the Company; (c) [the Service Provider] [Purchaser] willfully refuses to implement or follow a directive by [the Service Provider’s] [Purchaser’s] supervisor, directly related to [the Service Provider’s] [Purchaser’s] duties, which breach is not cured within thirty (30) days after receipt of written notice describing in detail such breach to [the Service Provider] [Purchaser] from the Company; or (d) [the Service Provider] [Purchaser] engages in material misfeasance or malfeasance demonstrated by a continued pattern of material failure to perform the essential job duties associated with [the Service Provider’s] [Purchaser’s] position, which breach is not cured within thirty (30) days after receipt of written notice describing in detail such breach to [the Service Provider] [Purchaser] from the Company.
“Change of Control” means (a) any transaction or series of related transactions resulting in a liquidation, dissolution or winding up of the Company, (b) a sale of all or substantially all of the assets of the Company that is followed by a liquidation, dissolution or winding up of the Company, (c) any sale or exchange of the capital stock of the Company by the stockholders of the Company in one transaction or a series of related transactions where more than fifty percent (50%) of the outstanding voting power of the Company is acquired by a person or entity or group of related persons or entities (other than pursuant to a recapitalization of the Company solely with its equity holders) or (d) any merger or consolidation (each, a “combination transaction”), in which the Company is a constituent entity or is a party with another entity if, as a result of such combination transaction, in one transaction or series of related transactions, the voting securities of the Company that are outstanding immediately prior to the consummation of such combination transaction (other than any such securities that are held by an “Acquiring Stockholder,” as defined below) do not represent, or are not converted into, securities of the surviving entity in such combination transaction (or such surviving entity’s parent entity if the surviving entity is owned by the parent) that, immediately after the consummation of such combination transaction, together possess at least a majority of the total voting power of all voting securities of such surviving entity (or its parent, if applicable) that are outstanding immediately after the consummation of such combination transaction, including securities of such surviving entity (or its parent, if applicable) that are held by the Acquiring Stockholder. For purposes of this paragraph, an “Acquiring Stockholder” means a stockholder or stockholders of the Company that (i) merges or combines with the Company in such combination transaction or (ii) directly or indirectly owns or controls a majority of the voting power of another entity that merges or combines with the Company in such combination transaction.
“Good Reason” means any of the following actions by the Company without [the Service Provider’s] [Purchaser’s] written consent: (a) a material reduction in [the Service Provider’s] [Purchaser’s] duties or responsibilities that is inconsistent with [the Service Provider’s] [Purchaser’s] position, provided that a mere change of title alone shall not constitute such a material reduction; (b) the requirement that [the Service Provider] [Purchaser] change his or her principal office to a facility that increases [the Service Provider’s] [Purchaser’s] commute by more than forty (40) miles from [the Service Provider’s] [Purchaser’s] commute to the location at which [the Service Provider] [Purchaser] is employed prior to such change, or (c) a material reduction in [the Service Provider’s] [Purchaser’s] annual base salary or a material reduction in [the Service Provider’s] [Purchaser’s] employee benefits (e.g., medical, dental, insurance, short-and long-term disability insurance and 401(k) retirement plan benefits, collectively, the “Employee
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Benefits”) to which [the Service Provider] [Purchaser] is entitled immediately prior to such reduction (other than (i) in connection with a general decrease in the salary or Employee Benefits of all similarly situated employees and (ii) following such Change of Control, to the extent necessary to make [the Service Provider’s] [Purchaser’s] salary or Employee Benefits commensurate with those other employees of the Company or its successor entity or parent entity who are similarly situated with [the Service Provider] [Purchaser] following such Change of Control).
(d) Adjustments. The number of Shares that are Vested Shares or Unvested Shares will be proportionally adjusted to reflect any stock dividend, stock split, reverse stock split or recapitalization of the common stock of the Company occurring after the Effective Date.
(e) Exercise of Repurchase Option at Original Price. At any time within ninety (90) days after the Termination Date, the Company may elect to repurchase any or all of the Unvested Shares by giving Purchaser written notice of exercise of the Repurchase Option. The Company and/or its assignee(s) will then have the option to repurchase from Purchaser (or from Purchaser’s [personal] representative as the case may be) any or all of the Unvested Shares at the Purchase Price Per Share specified in Section 1 above, as adjusted to reflect any stock dividend, stock split, reverse stock split or recapitalization of the common stock of the Company occurring after the Effective Date (the “Repurchase Price”).
(f) Payment of Repurchase Price. The Repurchase Price will be payable, at the option of the Company and/or its assignee(s), as the case may be, by check or by cancellation of all or a portion of any outstanding indebtedness owed by Purchaser [and/or the Service Provider] to the Company (or to such assignee) or by any combination thereof. The Repurchase Price will be paid without interest within ninety (90) days after the Company gives the Purchaser written notice of the exercise of its Repurchase Option.
(g) Right of Termination Unaffected. Nothing in this Agreement will be construed to limit or otherwise affect in any manner whatsoever the right or power of the Company (or any Affiliate) to terminate [the Service Provider’s] [Purchaser’s] employment with the Company (or any Affiliate) at any time for any reason or no reason, with or without cause.
6. RIGHT OF FIRST REFUSAL. Before any Shares held by Purchaser or any transferee of such Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including without limitation a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Right of First Refusal”).
(a) Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (a) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (b) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (c) the number of Offered Shares to be transferred to each Proposed Transferee; (d) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (e) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Right of First Refusal at the Offered Price as provided for in this Agreement.
6
(b) Exercise of Right of First Refusal. At any time within thirty (30) days after the date the Notice was effective in accordance with Section 10(a) hereof, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price determined in accordance with Section 6(c) below.
(c) Purchase Price. The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Company’s Board of Directors. If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Company’s Board of Directors, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.
(d) Payment. Payment of the purchase price for the Offered Shares will be payable, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
(e) Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the Offered Price or at a higher price, provided that (a) such sale or other transfer is consummated within one hundred twenty (120) days after the date of the Notice, (b) any such sale or other transfer is effected in compliance with all applicable securities laws, and (c) each Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to each Proposed Transferee within such one hundred twenty (120) day period, then a new Notice must be given to the Company, pursuant to which the Company will again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.
(f) Exempt Transfers. Notwithstanding anything to the contrary in this Section, the following transfers of Shares will be exempt from the Right of First Refusal: (a) the transfer of any or all of the Shares during [the Service Provider’s] [Purchaser’s] lifetime by gift or on [the Service Provider’s] [Purchaser’s] death by will or intestacy to [the Service Provider’s] [Purchaser’s] “Immediate Family” (as defined below) or to a trust for the benefit of [the Service Provider] [Purchaser] or [the Service Provider’s] [Purchaser’s] Immediate Family, provided that each transferee or other recipient agrees in a writing satisfactory to the Company that the provisions of this Section will continue to apply to the transferred Shares in the hands of such
7
transferee or other recipient; (b) except as provided in Section 6(g) clause (b) below, any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations; (c) any transfer of Shares pursuant to the winding up and dissolution of the Company, or (d) any Permitted Transfer (as defined under the Company’s Bylaws, as may be amended and/or restated from time to time). As used herein, the term “Immediate Family” will mean [the Service Provider’s] [Purchaser’s] spouse or Spousal Equivalent, the lineal descendant or antecedent, brother or sister, of [the Service Provider] [Purchaser] or [the Service Provider’s] [Purchaser’s] spouse or Spousal Equivalent, or the spouse or Spousal Equivalent, of any lineal descendant or antecedent, brother or sister of [the Service Provider], [Purchaser,] or [the Service Provider’s] [Purchaser’s] spouse or Spousal Equivalent, whether or not any of the above are adopted. As used herein, a person is deemed to be a “Spousal Equivalent” if the relevant person and the related party are registered as “domestic partners” under the laws of the State of California or any other law having similar effect or provided the following circumstances are true: (a) irrespective of whether or not the relevant person and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (b) they intend to remain so indefinitely, (c) neither are married to anyone else, (d) both are at least eighteen (18) years of age and mentally competent to consent to contract, (e) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (f) they are jointly responsible for each other’s common welfare and financial obligations, and (g) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.
(g) Termination of Right of First Refusal. The Right of First Refusal will terminate as to all Shares (a) on the effective date of the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC under the Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (b) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Securities Exchange Act of 1934, as amended.
7. ESCROW. As security for Purchaser’s faithful performance of this Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Purchaser and by Purchaser’s spouse, if any (with the date, transferee, stock certificate number and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Agreement. Escrow Holder will act solely for the Company as its agent and not as a fiduciary. Purchaser and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other party) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Agreement. The Shares will be released from escrow upon termination of the Right of First Refusal and the Repurchase Option.
8
8. TAX CONSEQUENCES. PURCHASER [AND THE SERVICE PROVIDER UNDERSTAND] [UNDERSTANDS] THAT PURCHASER [AND/OR THE SERVICE PROVIDER] MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES. PURCHASER [AND THE SERVICE PROVIDER REPRESENT] [REPRESENTS] (a) THAT PURCHASER [AND THE SERVICE PROVIDER HAVE] [HAS] CONSULTED WITH A TAX ADVISER THAT PURCHASER [AND/OR THE SERVICE PROVIDER] DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) THAT PURCHASER [NOR THE SERVICE PROVIDER] IS [NOT] RELYING ON THE COMPANY FOR ANY TAX ADVICE. Purchaser [and the Service Provider] hereby [acknowledge] [acknowledges] that Purchaser [and the Service Provider have] [has] been informed that, in addition to receiving taxable income upon the receipt of any Shares paid for by the cancellation of compensation for services rendered, unless an election is filed by the Purchaser with the Internal Revenue Service (and, if necessary, the proper state taxing authorities) within 30 days after the purchase of the Shares to be effective, electing pursuant to Section 83(b) of the Internal Revenue Code (and similar state tax provisions, if applicable) to be taxed currently on any difference between the purchase price of the Shares and their fair market value on the date of purchase, there will be a recognition of taxable income to the Purchaser [and/or the Service Provider], measured by the excess, if any, of the fair market value of the Shares, at the time they cease to be Unvested Shares, over the purchase price for such Shares. Purchaser [and the Service Provider represent] [represents] that Purchaser [and the Service Provider have] [has] consulted any tax advisors they deem [Purchaser deems] advisable in connection with Purchaser’s purchase of the Shares and the filing of the election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) is attached hereto as Exhibit [3] [4] for reference. PURCHASER [AND THE SERVICE PROVIDER HEREBY ASSUME] [HEREBY ASSUMES] ALL RESPONSIBILITY FOR PROPERLY COMPLETING AND TIMELY FILING SUCH ELECTION AND PAYING ANY TAXES RESULTING FROM SUCH ELECTION OR FROM FAILURE TO FILE THE ELECTION AND PAYING TAXES RESULTING FROM THE LAPSE OF THE REPURCHASE RESTRICTIONS ON THE UNVESTED SHARES.
9. MARKET STAND-OFF AGREEMENT. Purchaser shall not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock or other securities of the Company held by Purchaser (other than those included in the registration), including the Shares (the “Restricted Securities”), during the 180-day period following the effective date of the Company’s first firm commitment underwritten public offering of its Common Stock (or such longer period) as the underwriters or the Company shall request. Purchaser agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the managing underwriters which are consistent with the foregoing or which are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to Purchaser’s Restricted Securities until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. For purposes of this Section 5, the term “Company” shall include any wholly-owned subsidiary of the Company into which the Company merges or consolidates.
9
10. MISCELLANEOUS.
(a) NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent, if sent by electronic mail or facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (iii) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries, or (iv) one (1) day after deposit with an express overnight courier for United States deliveries, or two (2) days after such deposit for deliveries outside of the United States. All communications shall be sent to the other party hereto at such party’s address hereinafter set forth on the signature page hereof, or at such other address as such party may designate by ten (10) days advance written notice to the other party hereto.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser, Purchaser’s successors, and assigns.
(c) ATTORNEYS’ FEES; SPECIFIC PERFORMANCE. Purchaser shall reimburse the Company for all costs incurred by the Company in enforcing the performance of, or protecting its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys’ fees.
(d) GOVERNING LAW; VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. The parties agree that any action brought by either party to interpret or enforce any provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the district encompassing the Company’s principal place of business.
(e) FURTHER EXECUTION. The parties agree to take all such further action(s) as may reasonably be necessary to carry out and consummate this Agreement as soon as practicable, and to take whatever steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the securities that are the subject of this Agreement.
(f) INDEPENDENT COUNSEL. Purchaser has been provided with an opportunity to consult with Purchaser’s own counsel with respect to this Agreement.
(g) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and merges all prior agreements or understandings, whether written or oral. This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each of the parties hereto.
(h) SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
10
(i) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[Signature Page Follows]
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| ATTOVIA THERAPEUTICS, INC. | ||
| By: |
| |
| Tao Fu, Chief Executive Officer | ||
| Address: | ||
PURCHASER [AND THE SERVICE PROVIDER ACKNOWLEDGE AND AGREE] [ACKNOWLEDGES AND AGREES] THAT PURCHASER MUST HOLD THE COMMON STOCK PURCHASED HEREUNDER INDEFINITELY. PURCHASER [AND THE SERVICE PROVIDER FURTHER ACKNOWLEDGE] [FURTHER ACKNOWLEDGES] THAT ANY RISK RELATED TO THE FLUCTUATION IN THE VALUE OF THE STOCK FROM AND AFTER THE DATE HEREOF SHALL BE BORNE BY PURCHASER [AND/OR THE SERVICE PROVIDER].
PURCHASER [AND THE SERVICE PROVIDER ACKNOWLEDGE] [ACKNOWLEDGES] THAT PURCHASER [AND THE SERVICE PROVIDER HAVE] [HAS] HAD AN OPPORTUNITY TO CONSULT THEIR [PURCHASER’S] OWN TAX, LEGAL AND FINANCIAL ADVISORS REGARDING THE PURCHASE OF COMMON STOCK UNDER THIS AGREEMENT.
PURCHASER [AND THE SERVICE PROVIDER ACKNOWLEDGE AND AGREE] [ACKNOWLEDGES AND AGREES] THAT IN MAKING THE DECISION TO PURCHASE THE COMMON STOCK HEREUNDER NEITHER PURCHASER [NOR THE SERVICE PROVIDER HAVE] [HAS NOT] RELIED ON ANY STATEMENT, WHETHER WRITTEN OR ORAL, REGARDING THE SUBJECT MATTER HEREOF, EXCEPT AS EXPRESSLY PROVIDED HEREIN AND IN THE ATTACHMENTS AND EXHIBITS HERETO.
| PURCHASER: | ||||||
| [●] | ||||||
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| Trustee: [●] | ||||||
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| Trustee: [●] | ||||||
| Address: |
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| SERVICE PROVIDER: | ||||||
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| [●] | ||||||
| Address: |
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EXHIBIT 1
PROOF OF PURCHASE
[SIGNATURE PAGE TO ASSIGNMENT OF TECHNOLOGY AGREEMENT]
EXHIBIT 2
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Purchase Agreement dated as of [●] (the “Agreement”), the undersigned hereby sells, assigns and transfers unto ______________________________, __________ shares of the Common Stock $0.0001 par value per share, of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), standing in the undersigned’s name on the books of the Company represented by Certificate No(s). ____ delivered herewith, and does hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.
Dated:
| PURCHASER |
| [●] |
|
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| (Signature) |
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| (Please Print Name) |
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| (Spouse’s Signature, if any) |
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| (Please Print Spouse’s Name) |
Instructions to Purchaser: Please do not fill in any blanks other than the signature line. The purpose of this Stock Power and Assignment is to enable the Company and/or its assignee(s) to acquire the shares upon exercise of its “Repurchase Option” set forth in the Agreement without requiring additional signatures on the part of the Purchaser or Purchaser’s Spouse, if any.
[EXHIBIT 3]
SPOUSE CONSENT
SPOUSE CONSENT
[The undersigned spouse of [●] (the “Purchaser”) has read, understands and hereby approves all the terms and conditions of the Stock Purchase Agreement dated [●], (the “Agreement”), by and between Purchaser and Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to which Purchaser has purchased [●]shares of the Company’s common stock (the “Shares”).
In consideration of the Company granting my spouse the right to purchase the Shares under the Agreement, I hereby agree to be irrevocably bound by all the terms and conditions of the Agreement (including but not limited to the Company’s Repurchase Option and the market standoff agreements contained therein) and further agree that any community property interest I may have in the Shares will be similarly bound by the Agreement.
I hereby appoint Purchaser as my attorney-in-fact, to act in my name, place and stead with respect to any amendment of the Agreement and with respect to the making and filing of an election under Internal Revenue Code Section 83(b) in connection with the purchase of the Shares.
Dated:
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| Signature of Spouse [Sign Here] |
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| Name of Spouse [Please Print] |
| ☐ Check this box if Purchaser is not married.] |
[EXHIBIT 4]
ELECTION UNDER SECTION 83(b) OF THE
INTERNAL REVENUE CODE
ELECTION UNDER SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, as amended, to include in gross income for the Taxpayer’s current taxable year the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property, as compensation for services.
| 1. | TAXPAYER’S NAME: | [●] | ||
| TAXPAYER’S ADDRESS: |
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| SOCIAL SECURITY NUMBER: |
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| 2. | The property with respect to which the election is made is described as follows: [●]shares of Common Stock, par value $0.0001 per share of Attovia Therapeutics, Inc., a Delaware corporation (the “Company”), which is Taxpayer’s employer or the corporation for whom the Taxpayer performs services. | |||
| 3. | The date on which the shares were transferred was ___________, [●]and this election is made for calendar year [●]. | |||
| 4. | The shares are subject to the following restrictions: The Company may repurchase all or a portion of the shares at the Taxpayer’s original purchase price under certain conditions at the time of Taxpayer’s termination of employment or services. | |||
| 5. | The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $[●]per share at the time of transfer. | |||
| 6. | The amount paid for such shares was $ [●]per share. | |||
| 7. | The Taxpayer has submitted a copy of this statement to the Company. | |||
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE (“IRS”), AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER’S INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS.
| Dated: |
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| Taxpayer’s Signature | ||||||
| Dated: |
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| Taxpayer’s Signature | ||||||
Exhibit 10.9
LEASE AGREEMENT
between
BRITTAN WEST OWNER, LLC,
a Delaware limited liability company,
as “Landlord”
and
ATTOVIA THERAPEUTICS, INC.,
a Delaware corporation,
as “Tenant”
TABLE OF CONTENTS
| Page | ||||||
| 1. | PREMISES |
5 | ||||
| 2. | TERM; POSSESSION |
7 | ||||
| 3. | RENT |
8 | ||||
| 4. | SECURITY DEPOSIT; LETTER OF CREDIT |
14 | ||||
| 5. | USE AND COMPLIANCE WITH LAWS |
20 | ||||
| 6. | ALTERATIONS |
32 | ||||
| 7. | MAINTENANCE AND REPAIRS |
34 | ||||
| 8. | TENANT’S TAXES |
35 | ||||
| 9. | UTILITIES AND SERVICES |
36 | ||||
| 10. | EXCULPATION AND INDEMNIFICATION |
39 | ||||
| 11. | INSURANCE |
40 | ||||
| 12. | DAMAGE OR DESTRUCTION |
43 | ||||
| 13. | CONDEMNATION |
44 | ||||
| 14. | ASSIGNMENT AND SUBLETTING |
46 | ||||
| 15. | DEFAULT AND REMEDIES |
49 | ||||
| 16. | LATE CHARGE AND INTEREST |
52 | ||||
| 17. | WAIYER |
53 | ||||
| 18. | ENTRY, INSPECTION AND CLOSURE |
53 | ||||
| 19. | SURRENDER AND HOLDING OVER |
54 | ||||
| 20. | ENCUMBRANCES |
55 | ||||
| 21. | ESTOPPEL CERTIFICATES |
56 | ||||
| 22. | NOTICES |
57 | ||||
| 23. | ATTORNEYS’ FEES |
57 | ||||
i
| 24. | QUIET POSSESSION |
57 | ||||
| 25. | FINANCIAL STATEMENTS |
57 | ||||
| 26. | FORCE MAJEURE |
58 | ||||
| 27. | LANDLORD’S LIABILITY |
58 | ||||
| 28. | CONSENTS AND APPROVALS |
58 | ||||
| 29. | WAIVERS |
59 | ||||
| 30. | BROKERS |
59 | ||||
| 31. | ENTIRE AGREEMENT; CONFIDENTIALITY |
59 | ||||
| 32. | MISCELLANEOUS, SIGNATURES |
60 | ||||
| 33. | AUTHORITY |
61 | ||||
| 34. | OFAC |
61 | ||||
| 35. | PARKING |
61 | ||||
| 36. | SIGNAGE |
62 | ||||
| 37. | EXTENSION OPTION |
63 | ||||
| 38. | RIGHT OF FIRST REFUSAL |
65 | ||||
| 39. | SUSTAINABILITY PROVISIONS |
66 | ||||
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ii
INDEX OF DEFINED TERMS
| Abated Base Rent |
8 | |||
| Abatement Period |
43 | |||
| Access Improvements |
21 | |||
| Actual Statement |
12 | |||
| ADA |
32 | |||
| Additional Rent |
12 | |||
| Advice |
65 | |||
| Alterations |
32 | |||
| Approved Plans |
62 | |||
| Approved Space Plan |
Ex. B, p. 2 | |||
| Audit Election Period |
13 | |||
| Award |
44 | |||
| Bank |
15 | |||
| Bank Credit Threat |
17 | |||
| Bankruptcy Code |
17 | |||
| Base Rent |
8 | |||
| Base Rent Abatement Period |
8 | |||
| Biohazardous Materials |
22 | |||
| Broker |
59 | |||
| Building |
5 | |||
| Building Signage |
62 | |||
| Building Systems |
20 | |||
| CASp |
21 | |||
| Casualty |
43 | |||
| Casualty Notice |
43 | |||
| Changes |
Ex. B, p. 3 | |||
| CHWCL |
23 | |||
| Claims |
39 | |||
| Closure Documents |
30 | |||
| Commencement Date |
7 | |||
| Common Areas |
5 | |||
| Condemnation |
44 | |||
| Condemnor |
44 | |||
| Construction Documents |
Ex. B, p. 2 | |||
| Construction Rider |
34 | |||
| Control |
48 | |||
| Credit Rating Threshold |
15 | |||
| Date of Condemnation |
45 | |||
| Early Access |
8 | |||
| Effective Date |
5 | |||
| Environmental Condition |
22 | |||
| Environmental Damages |
22 | |||
| Event of Default |
49 | |||
| Existing L-C |
15 |
| Expiration Date |
7 | |||
| Extension Option |
63 | |||
| Extension Period |
63 | |||
| Fair Market Base Rental |
63 | |||
| FDIC |
19 | |||
| Fee Cap |
47 | |||
| Fees |
57 | |||
| Final Construction Documents |
Ex. B, p. 2 | |||
| Final Space Plan |
Ex. B, p. 1 | |||
| Force Majeure |
58 | |||
| Generator |
37 | |||
| Generator Effective Date |
37 | |||
| Generator Tie-In Work |
37 | |||
| Handles |
22 | |||
| Handling |
22 | |||
| Hazardous Materials |
22 | |||
| Hazardous Materials Laws |
23 | |||
| Hazardous Wastes |
23 | |||
| HVAC |
21 | |||
| Inspection |
21 | |||
| Interest Rate |
52 | |||
| Interruption |
37 | |||
| Laboratory Rules and Regulations |
31 | |||
| Land |
6 | |||
| Landlord |
5, 58 | |||
| Landlord Work |
Ex. B, p. 1 | |||
| Landlord’s Additional Insureds |
40 | |||
| Landlord’s Contamination |
23 | |||
| Landlord’s Representatives |
59 | |||
| Late Delivery Rent Abatement Period |
7 | |||
| Laws |
9 | |||
| L-C |
15 | |||
| L-C Amount |
15 | |||
| LC Expiration Date |
16 | |||
| LC Replacement Notice |
19 | |||
| Lease |
5 | |||
| LEED |
10 | |||
| Letter of Credit Reduction |
19 | |||
| Letter of Credit Reduction Notice |
19 | |||
| Life Science Compliance Standard |
20 | |||
| Main Premises |
1 | |||
| Mortgagee |
56 | |||
| MSDSs |
25 | |||
| Neutral Appraiser |
64 |
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| Non-Office Space |
6 | |||
| Notice of Exercise |
65 | |||
| OFAC |
61 | |||
| Office Space |
6 | |||
| Operating Costs |
9 | |||
| Outside Delivery Date |
7 | |||
| Parking Garage |
6 | |||
| Permitted Hazardous Materials |
24 | |||
| Permitted Transferee |
48 | |||
| Permitted Transferee Assignee |
48 | |||
| Potential Refusal Space |
64 | |||
| Preliminary Space Plan |
Ex. B, p. 1 | |||
| Premises |
5 | |||
| Project |
6 | |||
| Proposed Transfer Second Request |
47 | |||
| Proposed Transferee |
46 | |||
| Prospect |
64 | |||
| Radioactive Materials |
23 | |||
| RCRA |
23 | |||
| Receivership |
19 | |||
| Reduction Condition |
19 | |||
| Refusal Space |
65 | |||
| Refusal Space Amendment |
66 | |||
| Reimbursement Amount |
52 | |||
| Reimbursement Condition |
52 | |||
| Release |
24 | |||
| Renovations |
35 | |||
| Rent |
14 | |||
| Rentable Area of the Building |
5 | |||
| Rentable Area of the Premises |
5 | |||
| Rental Tax |
35 | |||
| Replacement L-C |
15 | |||
| Report |
21 |
| Representatives |
60 | |||
| Required Delivery Date |
7 | |||
| Retail Space |
6 | |||
| Right of First Refusal |
64 | |||
| Secured Area |
28 | |||
| Security Deposit |
14 | |||
| Security Deposit Laws |
18 | |||
| Service Failure |
37 | |||
| SNDA |
55 | |||
| Space Planner |
Ex. B, p. 1 | |||
| Storage Space |
1, 6 | |||
| Substantial Completion |
Ex. B, p. 3 | |||
| Substantially Complete |
Ex. B, p. 3 | |||
| Substantially Completed |
Ex. B, p. 3 | |||
| Taxes |
11 | |||
| Tenant |
5 | |||
| Tenant Delays |
Ex. B, p. 4 | |||
| Tenant lndemnitees |
39 | |||
| Tenant Party |
20 | |||
| Tenant’s Contamination |
24 | |||
| Tenant’s Financial Information |
19 | |||
| Tenant’s Parties |
20 | |||
| Tenant’s Plans Changes |
Ex. B, p. 2 | |||
| Tenant’s Representatives |
59 | |||
| Tenant’s Share |
12 | |||
| Tenant’s Taxes |
35 | |||
| Term |
7, 64 | |||
| Trade Fixtures |
34 | |||
| Transfer |
46 | |||
| Transfer Consideration |
49 | |||
| Transferee |
46 | |||
| Unused L-C Proceeds |
18 |
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iv
BASIC LEASE INFORMATION
| Effective Date: | July 12, 2024 | |||||
| Landlord: | BRITTAN WEST OWNER, LLC, a Delaware limited liability company | |||||
| Tenant: | ATTOVIA THERAPEUTICS, INC. a Delaware corporation | |||||
| Building Address: | 1091 Industrial Road, San Carlos, California 94070 | |||||
| Premises: | The portions of the Building comprising approximately 26,062 rentable square feet, comprised of (a) approximately 25,662 rentable square feet of space on the third (3rd) floor of the Building and known as Suite No. 310 (the “Main Premises”), and (b) approximately 400 rentable square feet of storage space in the basement of the Building and known as #1 (the “Storage Space”). Unless expressly stated otherwise, all references in this Lease to “Premises” shall be deemed to refer to the Main Premises. The Main Premises and the Storage Space are depicted in the site plan attached as Exhibit A. | |||||
| Delivery Date: | The date on which Landlord delivers the Premises to Tenant with the Landlord Work Substantially Complete (as defined in the Construction Rider attached to this Lease as Exhibit B) and the Storage Space separately demised in accordance with Section 1.4 below. | |||||
| Estimated Delivery Date: | February 15, 2025 | |||||
| Term: | The period from the Commencement Date through the Expiration Date. | |||||
| Commencement Date: | Subject to the effect of any Tenant Delays, the later of: (i) the date that is fifteen (15) days following the Delivery Date, (ii) the date the Generator (as defined in Section 9.3 below) is installed and operational and serving the Premises as emergency back-up power pursuant to this Lease, and (iii) December 1, 2024. | |||||
| Expiration Date: | The last day of the fortieth (40th) full calendar month following the Commencement Date. | |||||
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| Base Rent (for the Main Premises and Storage Space, collectively): | Months of Term | Monthly Rate per Rentable Square Foot |
Monthly Base Rent | |||
| 1-12 | $7.00 | $182,434.00* | ||||
| 13-24 | $7.25 | $188,949.50 | ||||
| 25-36 | $7.50 | $195,465.00 | ||||
| 37-40 | $7.76 | $202,241.12 | ||||
| * Fifty percent (50%) of the monthly Base Rent applicable to the first ten (10) months of the Term is subject to abatement pursuant to Section 3.1 below. | ||||||
| Use: | Research and development, laboratory use, and related office use and other legally permitted uses in connection with biotechnology or otherwise approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. | |||||
| Letter of Credit: | $606,723.36, subject to Article 4 of this Lease. | |||||
| Tenant’s Share: | 15.09% | |||||
| Parking: | valet service (the total number of parking spaces allocated for Tenant’s use shall not exceed 2.45 per 1,000 rentable square feet of the Main Premises and the Storage Space), at no charge by Landlord during the Term and any renewals or extensions thereto. | |||||
| Landlord’s Address for Payment of Rent: | Brittan West Owner, LLC c/o Premia Capital [***] | |||||
| Landlord’s Address for Notices: | Brittan West Owner, LLC c/o Premia Capital [***]
with copies to:
Brittan West Owner, LLC [***]
and
SSL Law Firm [***] | |||||
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| Tenant’s Address for Notices: | Attovia Therapeutics 1091 Industrial Road, Suite No. 310 San Carlos, CA 94070
Courtesy email copy to:
[***]
and
Valence LLP [***] | |
| Building Business Hours: | 6:00 a.m. - 8:00 p.m. (provided that property management staff shall not be available (other than for emergencies) prior to 8:00 a.m. and after 6:00 p.m.), Monday through Friday, excluding holidays | |
| Brokers: | Jones Lang LaSalle representing both Tenant and Landlord | |
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Exhibits:
| Exhibit A: | The Main Premises and Storage Space | |
| Exhibit B: | Construction Rider | |
| Exhibit B-1: | Preliminary Space Plan | |
| Exhibit B-2: | Equipment List | |
| Exhibit C-1: | Rules and Regulations | |
| Exhibit C-2: | Laboratory Rules and Regulations | |
| Exhibit D: | Form of Subordination, Non-Disturbance and Attornment Agreement | |
| Exhibit E: | Hazardous Materials Questionnaire | |
| Exhibit F: | Form of Letter of Credit |
The Basic Lease Information set forth above is part of the Lease. In the event of any conflict between any provision in the Basic Lease Information and the Lease, the Lease shall control.
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THIS LEASE AGREEMENT (this “Lease”) is made as of July 12, 2024 (the “Effective Date”), by and between the Landlord identified in the Basic Lease Information (“Landlord”), and the Tenant identified in the Basic Lease Information (“Tenant”). Landlord and Tenant hereby agree as follows:
1. PREMISES.
1.1. Premises Description. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon the terms and subject to the conditions of this Lease, the Premises as described in the Basic Lease Information (the “Premises”) and the Storage Space, which are located in the Building as described in the Basic Lease Information (the “Building”). The anticipated floor plans and area of the Premises and Storage Space are shown on Exhibit A. In addition to exclusive access to the Premises and Storage Space, Tenant shall have the non-exclusive right to use the common areas of the Building and the Project, which common areas shall be reasonably determined by Landlord from time to time (the “Common Areas”). During the Term, subject to compliance with applicable Laws (defined below) and Landlord’s repairs and operations obligations set forth in this Lease, Tenant shall have access to the Main Premises, and Storage Space, the Parking Garage and the Common Areas of the Building twenty-four (24) hours per day, seven (7) days per week. The Common Areas shall at all times be subject to the control and management of Landlord in a manner that does not materially adversely affect the use thereof by Tenant, and Landlord may, at any time, temporarily close portions of the Common Areas to make repairs or changes permitted hereunder, to prevent the acquisition of public rights in the Common Areas, and to perform such other acts in or to the Common Areas as permitted or required to be performed by Landlord under this Lease; provided, however, that Landlord shall use commercially reasonable efforts to administer such closures in a manner to minimize interference with the use and enjoyment of the Common Areas by Tenant. The Premises is not subject to any rights of first refusal, rights of first offer, options or other preferential rights to lease or occupy superior to Tenant.
1.2. Measurement of the Premises and Building. “Rentable Area of the Premises” shall mean approximately 25,662 rentable square feet attributable to the Main Premises, and approximately 400 rentable square feet attributable to the Storage Space, and “Rentable Area of the Building” shall mean 172,716 rentable square feet, which amounts Landlord may change from time to time due to Landlord’s remeasurement of the Premises or Building as set forth herein. Tenant hereby accepts and agrees to be bound by the figures for the Rentable Area of the Premises and the Rentable Area of the Building; however, Landlord may adjust the Rentable Area of the Building and the Rentable Area of the Premises if there is an addition or subtraction of actual space or a later remeasurement; provided, however, that Landlord shall not adjust the Rentable Area of the Premises for a remeasurement during the initial Term of this Lease. The Rentable Area of the Premises has been measured by Stevenson Systems in accordance with Stevenson System’s Life Science Measurement Method. As used herein, “Life Science Measurement Method” shall mean the Rentable Area of the Building is established by determining the area enclosed by the measuring line. Such measure line shall follow the outermost structural or architectural element of the Building. Any remeasurement of the Building shall be accomplished using the same measurement method.
1.3. Building and Project. The Building, together with the parking garage beneath the Building (the “Parking Garage”), ground floor cafe, outdoor terraces and balconies, and the parcel(s) of land on which the Building and the Parking Garage are to be situated (the “Land”) are referred to collectively herein as the “Project”. “Office Space” means the office portions of the Project. “Non-Office Space” means the laboratory portions of the Building. “Retail Space” means the ground floor cafe and any other retail businesses within the Building.
1.4. Storage Space. Tenant shall lease from Landlord, the space containing approximately 400 rentable square feet described as Space No. #1 in the basement of the Building, as shown on Exhibit A attached hereto (the “Storage Space”), commencing on the Commencement Date and ending on the Expiration Date, as the same may be extended. The Storage Space shall be separately demised (either by construction of demising walls or as separate storage cages) at Landlord’s sole cost and expense prior to the Commencement Date. Notwithstanding any contrary provision hereof, upon the termination of the Lease, or Tenant’s right to possession of the Main Premises, Tenant’s rights to the Storage Space shall simultaneously terminate.
(a) Landlord represents that as of the date the Storage Space is Substantially Complete, the Storage Space will comply with all applicable Laws then in effect (and as interpreted and enforced) and shall be free of Hazardous Materials in violation of applicable Laws. The Storage Space shall be used by Tenant, in its current as is condition, for the storage of documents, furniture, equipment, inventory, chemicals, Hazardous Materials, and other items normally used in Tenant’s business, and for no other purpose whatsoever. Tenant agrees to keep the Storage Space in a neat and orderly fashion. All items stored in the Storage Space shall be elevated at least 6 inches above the floor on wooden pallets, and shall be at least 18 inches below the bottom of all sprinklers located in the ceiling of the Storage Space, if any. Tenant shall not store anything in the Storage Space which is unsafe or which otherwise may create a hazardous condition, or which may increase Landlord’s insurance rates, or cause a cancellation or modification of Landlord’s insurance coverage, provided the foregoing shall not prevent Tenant from storing Hazardous Materials in compliance with all applicable Laws and the terms and conditions of this Lease so long as such insurance is not canceled and if the cost thereof increases in connection with Tenant’s handling of Hazardous Materials at the Project, Tenant shall be liable for all such costs and expenses. Tenant’s insurance and indemnity obligations as applicable to the Main Premises shall apply to the Storage Space. Landlord reserves the right to adopt and enforce reasonable and non-discriminatory rules and regulations governing the use of the Storage Space from time to time. Upon expiration or earlier termination of Tenant’s rights to the Storage Space, Tenant shall completely vacate and surrender the Storage Space to Landlord in good condition and repair, ordinary wear and tear excepted, broom-clean and empty of all personalty and other items placed therein by or on behalf of Tenant.
(b) All terms and provisions (including Article 10 and Section 11.1) of this Lease shall apply to the Storage Space; provided, however, that notwithstanding any contrary provision hereof, Landlord shall provide basic core Building HVAC and lighting service to the area in which the Storage Space is located, and the costs shall be included in Operating Costs unless expressly excluded elsewhere in this Lease. Landlord shall not be obligated to provide any other services and utilities to the Storage Space, Tenant may bolt shelving or other similar storage equipment to the walls and floors in accordance with Article 6 of this Lease. Tenant shall not make
6
any other alterations or improvements to the Storage Space. Landlord shall not be liable for any theft or damage to any items or materials stored in the Storage Space, it being understood that Tenant is using the Storage Space at its own risk. The rights provided in this Section 1.4 shall only be transferable in connection with a Transfer (or Permitted Transfer) of the Main Premises unless otherwise agreed by Landlord in writing in its sole discretion.
1.5. Rules and Regulations. Tenant agrees for itself and for its subtenant, employees, agents and invitees to comply with the rules and regulations listed on Exhibit C-1 and C-2 attached hereto and with all reasonable and non-discriminatory modification and additions thereto which Landlord may make from time to time, provided, that no such modifications and/or additions shall adversely and materially increase Tenant’s obligations or decrease Tenant’s rights as set forth in this Lease. Landlord shall make commercially reasonable good faith efforts to uniformly enforce the rules and regulations against all tenants of the Building. In the event of any inconsistency between the rules and regulations and this Lease, the terms of this Lease shall prevail.
2. TERM; POSSESSION.
2.1. The term of this Lease (the “Term”) shall commence on the Commencement Date set forth in the Basic Lease Information (the “Commencement Date”) and, further subject to the terms of this Section 2.1, shall expire on the Expiration Date set forth in the Basic Lease Information (the “Expiration Date”). When the Delivery Date and/or Commencement Date has been established, Landlord and Tenant shall at the request of either party confirm the Delivery Date, Commencement Date and Expiration Date in writing. So long as this Lease is properly executed and delivered by Tenant, all prepaid rental, evidence of insurance coverages, and the Letter of Credit required under this Lease are delivered to Landlord, and, if applicable, all contingencies, if any, specified in this Lease have been satisfied or waived in writing by Landlord, if Landlord has failed to tender possession of the Main Premises and the Storage Space to Tenant on or before March 1, 2025 (the “Required Delivery Date”), as Tenant’s sole remedy (subject only to the remaining terms and conditions of this paragraph), Tenant shall be entitled to abatement of Base Rent and Additional Rent applicable to the Main Premises and the Storage Space on a day for day basis for every day in the period (the “Late Delivery Rent Abatement Period” ) beginning on the Required Delivery Date and ending on the date Landlord so tenders possession of the Main Premises and the Storage Space to Tenant as set forth above; provided, however, in such an event, for purposes of determining the Expiration Date, the Expiration Date shall be automatically extended on a day for day basis for each day in the Late Delivery Rent Abatement Period. In addition to the foregoing, so long as this Lease is properly executed and delivered by Tenant, all prepaid rental, evidence of insurance coverages, and the Letter of Credit required under this Lease are delivered to Landlord, and, if applicable, all contingencies, if any, specified in this Lease have been satisfied or waived in writing by Landlord, if Landlord has failed to tender possession of the Main Premises and the Storage Space to Tenant on or before July 15, 2025 (the “Outside Delivery Date”), Tenant, in addition to the foregoing, shall be entitled to terminate this Lease on the entire Main Premises and Storage Space only by providing written notice of such termination to Landlord in accordance with the terms and conditions of this Lease prior to (X) 5:00 PM on the date that is five (5) business days following the Outside Delivery Date, and (Z) when Landlord so tenders possession of the Main Premises and Storage Space to Tenant. Landlord and Tenant acknowledge and agree that: (A) the determination of each of the Required Delivery Date and Outside Delivery Date shall take into consideration the effect of (and such dates shall be delayed) for any Tenant Delays; and (B) the each of the Required Delivery Date and Outside Delivery Date shall be postponed by the number of days such delay is due to events of Force Majeure.
7
2.2. Subject to the provisions of Exhibit B (Construction Rider), and provided that Tenant has delivered all required prepaid rents, the Letter of Credit, the insurance certificates called for in Section 11.1(e) (Certificates of Insurance), and given Landlord written notice prior to entry, Tenant shall have access to the Main Premises and the Storage Space during the fifteen (15) day period following the Delivery Date (“Early Access”) to install Tenant’s furniture, fixtures and equipment, data information systems, security systems, computer and telephone cabling, computers and related office equipment in the Main Premises and otherwise prepare the Main Premises for Tenant’s occupancy, subject to the terms and conditions of this Lease, and to move Tenant’s personal property and installation of shelving (in accordance with the terms and conditions of this Lease) intended for the Storage Space into the Storage Space. During such Early Access, Tenant shall not be obligated to pay Base Rent or Additional Rent prior to the Commencement Date. However, Tenant shall be liable for all above customary types and amounts of utilities and special services actually provided to Tenant during such period (provided Tenant shall not be charged for Taxes nor for Operating Costs during such period). At Tenant’s request, Landlord shall use good faith efforts to keep Tenant reasonably informed of the progress of the Landlord Work and when the Delivery Date is estimated to occur.
3. RENT.
3.1. Base Rent. Tenant shall pay to Landlord the Base Rent set forth in the Basic Lease Information (the “Base Rent”), without prior notice or demand, and without offset or deduction except as expressly provided in this Lease, on the first day of each and every calendar month during the Term. Base Rent for any partial month at the beginning or end of the Term shall be prorated based on the actual number of days in the month, and Base Rent for the first month payable hereunder (subject to Tenant’s right to receive Abated Base Rent as set forth below) shall be paid to Landlord within ten (10) days of Landlord’s and Tenant’s delivery of their signed counterparts to this Lease and Tenant’s receipt of Landlord’s wiring instructions. Notwithstanding anything in this Lease to the contrary, subject to the terms of this Section 3.1, Tenant shall be entitled to an abatement of fifty percent (50%) of Base Rent due with respect to the Premises in the amount of $91,217.00 per month, for the first ten (10) full calendar months of the initial Term (the “Base Rent Abatement Period”). The maximum total amount of monthly Base Rent abated with respect to the Main Premises and Storage Space in accordance with the foregoing shall equal $912,170.00 (the “Abated Base Rent”). If Tenant defaults under this Lease beyond applicable notice and cure periods at any time during the Base Rent Abatement Period and fails to cure such default within any applicable cure period under the Lease, then Tenant’s right to receive the Abated Base Rent shall toll (and Tenant shall be required to pay Base Rent during such period of any Tenant default) until Tenant has cured, to Landlord’s reasonable satisfaction, such default and at such time Tenant shall be entitled to receive any unapplied Abated Base Rent until fully applied. The payment by Tenant of any portion of the Abated Base Rent in the event of a default shall not limit or affect any of Landlord’s other rights, pursuant to this Lease or at law or in equity. Only Base Rent shall be abated pursuant to this Section, as more particularly described herein, and all other Rent and other costs and charges specified in this Lease shall remain as due and payable pursuant to the provisions of this Lease.
8
3.2. Additional Rent: Operating Costs and Taxes.
(a) Definitions.
(i) “Operating Costs” means all costs of managing, operating, maintaining and repairing the Project, including all costs, expenditures, fees and charges for: (A) operation, maintenance and repair of the Project (including maintenance, repair and replacement of glass, as well as maintenance, repair and replacement of the roof coverage or membrane and landscaping); (B) utilities and services (including Building telecommunications facilities, equipment recycling programs, trash removal, emergency generator(s)), and associated supplies and materials; (C) compensation (including employment taxes and fringe benefits) for persons engaged in the operation, management, maintenance and repair of the Building, such compensation to be appropriately allocated for persons who also perform duties unrelated to the Building; (D) property (including coverage for earthquake, terrorism and flood if carried by Landlord), liability, rental income and other insurance relating to the Project and expenditures for deductible amounts payable under such insurance, provided earthquake insurance deductibles payable by Tenant shall not exceed Thirty-Three Thousand Dollars ($33,000) per earthquake event; (E) licenses, permits and inspections pertaining to the Project; (F) complying with the requirements of any law, statute, ordinance or governmental rule or regulation or any orders pursuant thereto (collectively “Laws”) to the extent first interpreted and enforced or first enacted or made applicable to the Project from and after the Effective Date; (G) amortization over the reasonable useful life (determined in accordance with Landlord’s reasonable accounting practices that are consistent with the commercial real estate leasing industry) of capital improvements which are intended to reduce Operating Costs or improve the efficiency or capacity of any Building System, with interest on the unamortized balance at the rate that is the lesser of the rate paid by Landlord on funds borrowed to finance such capital improvements, or, if Landlord finances such improvements out of Landlord’s funds without borrowing, the rate equal to the lesser of ten percent (10%) per annum and the maximum rate permitted by Laws; (H) property management fees, not to exceed three percent (3%) of the applicable annual Base Rent payable by Tenant hereunder (calculated without regard to any abated or free rent or other rent concessions or abatements); Tenant hereby acknowledges and agrees that Landlord or an affiliate of Landlord may provide property management services to the Project, provided that the costs included in Operating Costs shall not exceed the competitive cost for such services rendered by persons or entities of similar skill, competence and experience; (I) accounting, legal and other professional services incurred in connection with the Project and the calculation of Operating Costs and Taxes; (J) Landlord contesting in good faith the validity or applicability of any Laws that may affect the Project; (K) operating, managing, owning and maintaining the Parking Garage (including valet costs and expenses) and cafe located at the Project, unless the Parking Garage or access to the cafe is not offered to Tenant free of charge or on a subsidized basis; (L) a reasonable allowance for depreciation on machinery and equipment used to maintain the Project and on other personal property owned by Landlord in the Project, provided the cost to purchase and replace the machinery, equipment, and personal property, to the extent capital in nature, shall be amortized in the same manner set forth in clause (G) above; and (M) the cost of capital improvements or capital expenditures (subject to amortization as set forth herein regarding capital improvements) incurred
9
in connection with the Project that are required in order for the Project, or any portion thereof, to maintain a certification under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (“LEED”), or other applicable certification agency in connection with Landlord’s sustainability practices for the Project (as such sustainability practices are to be determined by Landlord, in its commercially reasonable discretion, from time to time). Notwithstanding the foregoing, any expenses which any tenant of the Project either pays directly to third parties or actually reimburses to Landlord, other than through the payment of its pro-rata share of Operating Costs, then each such expense which is actually paid or reimbursed shall not be included in Operating Costs for purposes of this Section 3.2. Notwithstanding anything to the contrary contained herein, in the event Tenant has received any free or abated rent during the Term of this Lease, or other such concession, the amount of such free or abated rent or of any such concession shall be included in the calculation to determine the amount of any property management fee or other such fee. Landlord shall act in a reasonable manner in incurring Operating Costs, taking into consideration the class and the quality of the Building and the Project and the permitted Use hereunder. Operating Costs for any calendar year during which occupancy of the Building is less than one hundred percent (100%) shall be calculated based upon the Operating Costs that would have been incurred if the Building had an occupancy of one hundred percent (100%) during the entire calendar year, however, except with respect to the management fee and any amortized costs for Operating Costs and/or the payment of any taxes or assessments in installments in any prior calendar year, in no event shall any adjustments to Operating Costs in any calendar year result in Landlord receiving from Tenant and other tenants more than one hundred percent (100%) of the cost of the actual Operating Costs paid by Landlord in any such calendar year. Operating Costs that are not, in Landlord’s reasonable discretion, allocable solely to either the Office Space, Non-Office Space, or Retail Space portion of the Building shall be equitably allocated by Landlord between/amongst such uses.
Notwithstanding any contrary provision in the Lease, Operating Costs shall not include (i) costs, including permit, license and inspection costs, and any allowances or other tenant improvement concessions, incurred or provided with respect to the design, construction and/or installation of tenant improvements made for other tenants in the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating speculative vacant space for tenants or other occupants of the Project or other specific costs incurred for the account of, separately billed to and paid by specific tenants of the Building or Project, (ii) the initial construction cost of the Project, (iii) debt service, origination or prepayment fees or other costs associated with any mortgage or deed of trust or any ground lease rent recorded with respect to the Project, (iv) costs of complying with any Laws in effect (and as interpreted and enforced) on the date of this Lease, provided that if any portion of the Common Areas of the Building that was in compliance with all applicable Laws on the date of this Lease becomes out of compliance due to normal wear and tear, the cost of bringing such portion of the Project into compliance shall be included in Operating Costs unless otherwise excluded pursuant to the terms hereof; (v) attorneys’ fees, leasing commissions and other expenses incurred in connection with lease negotiations or disputes with Project tenants or prospective Project tenants; (vi) real estate broker’s or other leasing commissions; (vii) repairs or work paid from insurance, condemnation or warranty proceeds, or other costs for which Landlord is reimbursed by a third party or a tenant of the Project (other than by means of an Operating Cost reimbursement provision); (viii) costs, penalties or fines arising from Landlord’s violation of any Law, except to the extent such costs reflect costs that would have been incurred by Landlord absent such violation; (ix) penalties or other costs incurred due to a violation by Landlord, as determined
10
by written admission, stipulation, final judgment or arbitration award, of any of the terms and conditions of this Lease or any other lease relating to the Project except to the extent such costs reflect costs that would have been incurred by Landlord absent such violation; (x) overhead and profit paid to Landlord or its affiliated, subsidiaries or parent entities for goods and/or services in the Project, to the extent the same exceeds the costs which would be incurred for the same if provided by unaffiliated third parties on a competitive basis; (xi) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Project unless such wages and benefits are prorated to reasonably reflect time spent on operating and managing the Project vis-a-vis time spent on matters unrelated to operating and managing the Project; provided that in no event shall Operating Costs include wages and/or benefits attributable to personnel above the level of portfolio property manager or chief engineer; (xii) costs reasonably attributable to any commercial concession in the Project (including the cafe) which access is not available to Tenant free of charge or on a subsidized basis; (xiii) marketing, advertising and promotional expenditures; (xiv) debt service, origination or prepayment fees and other costs associated with mortgages, or any ground lease rent; (xv) bad debt reserves, rent reserves, capital replacement or improvement reserves or reserves for future Operating Costs; (xvi) principal payments, late charges, penalties, liquidated damages, bad-debt expenses, interest and amortization on mortgages, or ground lease payments, if any; (xvii) costs to correct design or construction defects in the original construction of the Project; (xviii) costs arising from Landlord’s charitable or political contributions; (xix) costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of the operation, management, repair, replacement and/or maintenance of the Premises, Building or Project, including costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Building or Project and costs incurred in disputes between Landlord and its employees, managers, or other tenants or occupants; (xx) costs incurred to comply with applicable Law with respect to Hazardous Materials, other than routine and industry standard costs (but excluding inspections, investigations, or remediations due to a release, contamination, or other event caused by another Building tenant); (xxi) rentals and other related expenses incurred in leasing HVAC systems, elevators or other equipment, the cost of which would constitute a capital expenditure if the equipment were purchased, in which event, such costs shall be included in Operating Costs, amortized in the manner described in clause (G) above; (xxii) reserves, and (xxiii) capital improvements made to the Building or Project, other than as permitted under Section 3.2(a)(i)(F) and/or (G).
(ii) “Taxes” means: all real property taxes and general, special or district assessments or other governmental impositions, of whatever kind, nature or origin, levied against the Project; governmental charges, fees or assessments for transit or traffic mitigation (including area-wide traffic improvement assessments and transportation system management fees), housing, police, fire or other governmental service or purported benefits to the Project; personal property taxes assessed on the personal property of Landlord used in the operation of the Project; service payments in lieu of taxes and taxes and assessments of every kind and nature whatsoever levied or assessed in addition to, in lieu of or in substitution for existing or additional real or personal property taxes on the Project or the personal property described above; any increases in the foregoing caused by changes in assessed valuation, tax rate or other factors or circumstances; and the reasonable cost of contesting in good faith by appropriate proceedings the amount or validity of any taxes, assessments or charges described above. To the extent paid by
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Tenant as Tenant’s Taxes (as defined in Section 8), Tenant’s Taxes shall be excluded from Taxes. Notwithstanding anything to the contrary contained herein, “Taxes” shall not include: (i) any net income taxes, franchise taxes, or any succession, estate or inheritance taxes of Landlord, (ii) any federal or state income taxes or gift or capital stock taxes, or (iii) penalties incurred as a result of Landlord’s negligence, inability or unwillingness to make payments of, and/or to file any tax or informational returns with respect to any Taxes, when due.
Landlord shall reasonably and in good faith consider Tenant’s written request to commence a tax appeal pursuant to Proposition 8 for the immediately prior calendar year. Any such written request shall be tendered to Landlord no later than sixty (60) days following the end of the applicable tax year (or such earlier time so as to timely prepare and submit the necessary paperwork). Landlord and Tenant acknowledge that this paragraph is not intended to in any way affect the inclusion in Taxes of the total amount which Landlord would have paid in Taxes in any year of the Term absent any Proposition 8 reduction, including the amount of the annual percentage increase which would have been imposed by the Assessor’s Office (subject to the statutory 2% annual increase in Taxes, as such statutory increase may be modified by subsequent legislation). After such consideration, Landlord’s may, in its sole discretion, determine not to commence any such appeal and the same shall in no event be deemed a breach or default by Landlord.
(iii) “Tenant’s Share” means the Rentable Area of the Main Premises and Storage Space divided by the total Rentable Area of the Building, as set forth in the Basic Lease Information. If the Rentable Area of the Premises is changed by Tenant’s leasing of additional space hereunder or for any other reason, Tenant’s Share shall be adjusted accordingly.
(b) Additional Rent.
(i) Commencing on the Commencement Date, Tenant shall pay Landlord as “Additional Rent” for each calendar year or portion thereof during the Term Tenant’s Share of Operating Costs and Taxes for such calendar year or portion thereof.
(ii) Prior to the end of each calendar year, Landlord shall notify Tenant of Landlord’s estimate of Tenant’s Additional Rent for the following calendar year. Commencing on the first day of January of each calendar year and continuing on the first day of every month thereafter in such year, Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent. If Landlord thereafter estimates that Operating Costs or Taxes for such year will vary from Landlord’s prior estimate, Landlord may, by notice to Tenant and not more often than one time in any calendar year, revise the estimate for such year (and Additional Rent shall thereafter be payable based on the revised estimate).
(iii) As soon as reasonably practicable after the end of each calendar year, Landlord shall furnish Tenant a statement (the “Actual Statement”) with respect to such year, showing Operating Costs and Taxes for the year, and the total payments made by Tenant with respect thereto. Unless Tenant raises any objections to Landlord’s statement within ninety (90) days after receipt of the same, such statement shall conclusively be deemed correct and Tenant shall have no right thereafter to dispute such statement or any item therein or the computation of Additional Rent based thereon. Landlord shall use commercially reasonable efforts to tender to Tenant the Actual Statement no later than one hundred eighty (180) days following
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the end of the applicable calendar year. If Tenant does object to such statement, then Landlord shall provide Tenant with reasonable verification of the figures shown on the statement and the parties shall negotiate in good faith to resolve any disputes. Any objection of Tenant to Landlord’s statement and resolution of any dispute shall not postpone the time for payment of any amounts due Tenant or Landlord based on Landlord’s statement, nor shall any failure of Landlord to deliver Landlord’s statement in a timely manner relieve Tenant of Tenant’s obligation to pay any amounts due Landlord based on Landlord’s statement. Notwithstanding anything to the contrary herein, Tenant shall not be responsible for Tenant’s Share of any Operating Costs or Taxes attributable to any calendar year which are first billed to Tenant more than eighteen (18) months following the expiration of the calendar year in which the Operating Cost and/or Taxes is first incurred and Landlord receives the bill therefor. Further, in no event shall the foregoing provision describing the time period during which Landlord is to deliver the Actual Statement in any manner limit or otherwise prejudice Landlord’s right to modify such Actual Statement after such time period if any new or additional bills or invoices relating to such Actual Statement are received by Landlord following such eighteen (18) month period.
Within ninety (90) days (the “Audit Election Period”) after Landlord furnishes to Tenant the Actual Statement for any calendar year, Tenant may, at its expense during Landlord’s normal business hours, elect to audit Landlord’s Operating Costs for such calendar year only, subject to the following conditions: (1) there is no uncured Event of Default under this Lease; (2) the audit shall be prepared by an independent certified public accounting firm of recognized regional or national standing and reasonably approved by Landlord; (3) in no event shall any audit be performed by a firm retained on a “contingency fee- basis; (4) the audit shall commence within thirty (30) days after Landlord makes Landlord’s books and records available to Tenant’s auditor and shall conclude within sixty (60) days after commencement; (5) the audit shall be conducted in San Mateo County where Landlord maintains its books and records and shall not unreasonably interfere with the conduct of Landlord’s business; and (6) Tenant and its accounting firm shall treat any audit in a confidential manner and shall each execute Landlord’s standard reasonable confidentiality agreement for Landlord’s benefit prior to commencing the audit. Tenant shall deliver a copy of such audit to Landlord within five (5) business days of receipt by Tenant. This paragraph shall not be construed to limit, suspend, or abate Tenant’s obligation to pay Rent when due, including estimated Operating Costs. After verification, Landlord shall credit any overpayment determined by the audit report against the next Rent due and owing by Tenant or, if no further Rent is due, refund such overpayment directly to Tenant within thirty (30) days of determination. Likewise, Tenant shall pay Landlord any underpayment determined by the audit report within thirty (30) days of determination. The foregoing obligations shall survive the expiration or earlier termination of the Lease. If Tenant does not give written notice of its election to audit during the Audit Election Period, Landlord’s Operating Costs for the applicable calendar year shall be deemed approved for all purposes, and Tenant shall have no further right to review or contest the same. If there is a variance of five percent (5%) or more between said audit and Landlord’s determination of Landlord’s Operating Costs, Landlord shall pay the costs of the audit.
(iv) If Tenant’s Additional Rent for any calendar year exceeds the total payments made by Tenant on account thereof, Tenant shall pay Landlord the deficiency within thirty (30) days of Tenant’s receipt of Landlord’s Actual Statement. If the total payments made by Tenant on account thereof exceed Tenant’s Additional Rent for such year, Tenant’s excess payment shall be credited toward the Additional Rent next due from Tenant under this
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Lease. For any partial calendar year at the beginning or end of the Term, Additional Rent shall be prorated on the basis of a 365-day year by computing Operating Costs and Taxes for the entire year and then prorating such amount for the number of days during such year included in the Term. Notwithstanding the termination of this Lease, Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the case may be, within thirty (30) days after Tenant’s receipt of Landlord’s final Actual Statement for the calendar year in which this Lease terminates, the difference between Tenant’s Additional Rent for that year, as finally determined by Landlord, and the total amount previously paid by Tenant on account thereof. The obligations of Landlord to refund any overpayment of Additional Rent and of Tenant to pay any Additional Rent not previously paid shall survive the expiration of the Term.
If for any reason Taxes for any year during the Term are reduced, refunded or otherwise changed, Tenant’s Additional Rent shall be adjusted accordingly. If Taxes are temporarily reduced as a result of space in the Building being leased to a tenant that is entitled to an exemption from property taxes or other taxes, then for purposes of determining Additional Rent for each year in which Taxes are reduced by any such exemption, Taxes for such year shall be calculated on the basis of the amount the Taxes for the year would have been in the absence of the exemption, provided that, except with respect to any installment payments, in no event shall Landlord collect more than 100% of the Taxes owed for the Project in any calendar year.
3.3. Payment of Rent. All amounts payable or reimbursable by Tenant under this Lease, including late charges and interest (collectively, “Rent”), shall constitute rent and shall be payable and recoverable as rent in the manner provided in this Lease. All sums payable to Landlord on demand under the terms of this Lease shall be payable within thirty (30) days after written notice from Landlord of the amounts due. All rent shall be paid without offset, recoupment or deduction (except as expressly provided in this Lease) in lawful money of the United States of America to Landlord at Landlord’s Address for Payment of Rent as set forth in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate.
4. SECURITY DEPOSIT; LETTER OF CREDIT.
4.1. Security Deposit. Within ten (10) business days of the mutual execution of this Lease, Tenant shall deposit with Landlord the amount specified in the Basic Lease Information as the Security Deposit, if any (the “Security Deposit”), as security for the performance of Tenant’s obligations under this Lease. Landlord may (but shall have no obligation to) use the Security Deposit or any portion thereof to cure any breach or default by Tenant under this Lease, to fulfill any of Tenant’s obligations under this Lease, or to compensate Landlord for any damage Landlord incurs as a result of Tenant’s failure to perform any of Tenant’s obligations hereunder, all following applicable notice and cure periods (except in the event Landlord cannot freely tender to Tenant a default notice, such as after a bankruptcy petition filing, in which event, no notice period and cure shall apply). ln such event Tenant shall pay to Landlord on demand an amount sufficient to replenish the Security Deposit. Within forty-five (45) days of the later of: (i) the expiration or termination of this Lease, and (ii) Tenant’s surrender of the Main Premises and Storage Space in accordance with the terms and conditions of this Lease and so long as all breaches or defaults by Tenant are cured, then Landlord shall return to Tenant the Security Deposit or the balance thereof then held by Landlord and not applied as provided above. Landlord may
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commingle the Security Deposit with Landlord’s general and other funds. Landlord shall not be required to pay interest on the Security Deposit to Tenant. Tenant waives the provisions of Section 1950.7 of the California Civil Code (except subsection (b) is not waived), and all other provisions of Law now in force or that become in force after the date of this Lease, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant, or to clean the Premises. Landlord and Tenant agree that Landlord may, in addition, claim and use those sums necessary to compensate Landlord for any foreseeable or unforeseeable loss or damage caused by the act or omission by Tenant, including, without limitation, any post default damages and such remedies to which Landlord is entitled under the provisions of Section 15.2 of this Lease.
4.2. Letter of Credit. In lieu of providing to Landlord a cash Security Deposit (either at the time the Security Deposit is required to be tendered to Landlord in accordance with Section 4.1 above or otherwise one time during the Term), Tenant shall deliver to Landlord, as protection for the full and faithful performance by Tenant of all of its obligations under this Lease and for all losses and damages Landlord may suffer (or which Landlord reasonably estimates that it may suffer) as a result of any breach or default by Tenant under this Lease, an unconditional, clean, irrevocable negotiable standby letter of credit (the “L-C”) in the amount of the security Deposit (the “L-C Amount”), in the form attached hereto as Exhibit F, payable in the Bay Area proximate to San Francisco, California, running in favor of Landlord, drawn on a bank (the “Bank”) reasonably approved by Landlord and at a minimum having a long term issuer credit rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service (the “Credit Rating Threshold”), and otherwise conforming in all respects to the requirements of this Section 4.2, below, all as set forth more particularly hereinbelow. If Landlord was holding the Security Deposit in the form of cash, Landlord shall return the cash Security Deposit to Tenant in accordance with Section 4.1 above. Subject to the terms and conditions of this Article 4, Landlord hereby consents to First-Citizen’s Bank and Trust Company as the issuing Bank. Tenant shall pay all expenses, points and/or fees incurred by Tenant in obtaining and maintaining the L-C. In the event of an assignment by Tenant of its interest in the Lease (and irrespective of whether Landlord’s consent is required for such assignment), the acceptance of any replacement or substitute letter of credit by Landlord from the assignee shall be subject to Landlord’s prior written approval, in Landlord’s reasonable discretion, and the attorney’s fees incurred by Landlord in connection with such determination shall be payable by Tenant to Landlord within thirty (30) days of billing. Tenant shall have no right to voluntarily replace the L-C without Landlord’s prior written approval, in Landlord’s sole and absolute discretion. Tenant shall be responsible for the payment of any and all costs incurred by Landlord relating to the review of any replacement L-C (including, without limitation, Landlord’s reasonable attorneys’ fees), which replacement is required pursuant to this Section or is otherwise requested by Tenant, and such attorneys’ fees shall be payable by Tenant to Landlord within thirty (30) days of billing. If Landlord approves any replacement or substitute letter of credit (the “Replacement L-C”), Landlord shall return the L-C then held by Landlord (the “Existing L-C”) within thirty (30) days following Landlord receipt of the Replacement L-C tendered by Tenant.
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4.2.1 In General. The L-C shall be “callable” at sight, permit partial draws and multiple presentations and drawings, and be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. The L-C must provide that presentation of a drawing under the L-C may be made by hand delivery, courier service, overnight mail, or facsimile. Tenant further covenants and warrants as follows:
4.2.1.1 Landlord Right to Transfer. The L-C shall provide that Landlord, its successors and assigns, may, at any time and without notice to Tenant and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the L-C to another party, person or entity, regardless of whether or not such transfer is separate from or as a part of the assignment by Landlord of its rights and interests in and to this Lease. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the L-C, in whole or in part, to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said L-C to a new landlord. In connection with any such transfer of the L-C by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Tenant shall be responsible for paying the Bank’s transfer and processing fees in connection therewith. Tenant shall not be responsible for reimbursing Landlord of any successor Landlord for their legal fees incurred in connection with transferring the L-C to the new Landlord, provided that Tenant shall be liable for all other costs arising in connection with any such transfer.
4.2.1.2 No Assignment by Tenant. Tenant shall neither assign nor encumber the L-C or any part thereof. Neither Landlord nor its successors or assigns will be bound by any assignment, encumbrance, attempted assignment or attempted encumbrance by Tenant in violation of this Section.
4.2.1.3 Replenishment. If, as a result of any drawing by Landlord on the L-C pursuant to its rights set forth in Section 4.2.2 below, the amount of the L-C shall be less than the L-C Amount, Tenant shall, within ten (10) days thereafter, provide Landlord with (i) an amendment to the L-C restoring such L-C to the L-C Amount, (ii) additional L-Cs in an amount equal to the deficiency, which additional L-Cs shall comply with all of the provisions of this Section 4.2, or (iii) provide Landlord with a cash Security Deposit pursuant to the terms and conditions of this Lease in the amount of the deficiency, and if Tenant fails to comply with the foregoing, notwithstanding anything to the contrary contained in this Lease, the same shall constitute an incurable default by Tenant under this Lease (without the need for any additional notice and/or cure period).
4.2.1.4 Renewal; Replacement. The L-C shall have a final expiration date that is at least ninety (90) days after the expiration of the Lease Term (the “LC Expiration Date”), provided that the L-C may contain a so-called “evergreen provision” whereby the L-C will automatically be renewed on an annual basis unless at least sixty (60) days’ prior written notice of non-renewal is provided by the issuer to Landlord. If the L-C expires earlier than the LC Expiration Date then Tenant shall deliver a new L-C or certificate of renewal or extension to Landlord at least sixty (60) days prior to the expiration of the L-C then held by Landlord, without any action whatsoever on the part of Landlord, which new L-C shall be irrevocable and automatically renewable through the LC Expiration Date upon the same terms as the expiring L-C or such other terms as may be acceptable to Landlord in its reasonable discretion.
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4.2.1.5 Bank’s Financial Condition. If, at any time during the Lease Term, the Bank’s long term credit rating is reduced below the Credit Rating Threshold, or if the financial condition of the Bank changes in any other materially adverse way (either, a “Bank Credit Threat”), then Landlord shall have the right to require that Tenant obtain from a different issuer a substitute L-C that complies in all respects with the requirements of this Section 4.2, and Tenant’s failure to either obtain such substitute L-C within ten (10) days following Landlord’s written demand therefor or to provide a cash Security Deposit pursuant to the terms and conditions of this Lease in the L-C amount (with no other notice or cure or grace period being applicable thereto, notwithstanding anything in this Lease to the contrary) shall entitle Landlord, or Landlord’s then managing agent, to immediately draw upon the then existing L-C in whole or in part, without notice to Tenant, as more specifically described in Section 4.2.2, below. Tenant shall be responsible for the payment of any and all costs incurred with the review of any replacement L-C (including without limitation Landlord’s reasonable attorneys’ fees), which replacement is required pursuant to this Section or is otherwise requested by Tenant.
4.2.2 Application of Letter of Credit. Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the L-C as protection for the full and faithful performance by Tenant of all of its obligations under this Lease and for all losses and damages Landlord may suffer (or which Landlord reasonably estimates that it may suffer) as a result of any breach or default by Tenant under this Lease. Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the L-C if any of the following shall have occurred or be applicable: (A) such amount is due to Landlord under the terms and conditions of this Lease and all applicable notice and cure periods have expired (provided, however, if Landlord is limited or prohibited in tendering a notice to Tenant (for example, due to a bankruptcy related automatic stay), such notice and cure period shall not apply), or (B) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), or (C) an involuntary petition has been filed against Tenant under the Bankruptcy Code, or (D) the Bank has notified Landlord that the L-C will not be renewed or extended through the LC Expiration Date, or (E) a Bank Credit Threat or Receivership (as such term is defined below) has occurred and Tenant has failed to comply with the requirements of either Section 4.2.1.5, above, or Section 4.2.5, below, as applicable. If Tenant shall breach any provision of this Lease or otherwise be in default hereunder beyond applicable notice and cure periods (provided, however, if Landlord is limited or prohibited in tendering a notice to Tenant (for example, due to a bankruptcy related automatic stay), such notice and cure period shall not apply) or if any of the foregoing events identified in Sections 4.2.2(A) through (E) shall have occurred, Landlord may, but without obligation to do so, and without notice to Tenant, draw upon the L-C, in part or in whole, and the proceeds may be applied by Landlord (i) to cure any breach or default of Tenant that is beyond applicable notice and cure periods (provided, however, if Landlord is limited or prohibited in tendering a notice to Tenant (for example, due to a bankruptcy related automatic stay), such notice and cure period shall not apply) and/or to compensate Landlord for any and all damages of any kind or nature sustained or which Landlord reasonably estimates that it will sustain resulting from Tenant’s breach or default, (ii) against any Rent payable by Tenant under this Lease that is not paid when due and all applicable notice and cure periods have expired (provided, however, if Landlord is limited or prohibited in tendering a notice to Tenant (for example, due to a bankruptcy related automatic stay), such notice and cure period shall not apply), and/or (iii) to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates
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that it will suffer as a result of any breach or default by Tenant beyond applicable notice and cure periods (provided, however, if Landlord is limited or prohibited in tendering a notice to Tenant (for example, due to a bankruptcy related automatic stay), such notice and cure period shall not apply) under this Lease. The use, application or retention of the L-C, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable law, it being intended that Landlord shall not first be required to proceed against the L-C, and shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the L-C, either prior to or following a “draw” by Landlord of any portion of the L-C, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw upon the L-C. No condition or term of this Lease shall be deemed to render the L-C conditional to justify the issuer of the L-C in failing to honor a drawing upon such L-C in a timely manner. Tenant agrees and acknowledges that (a) the L-C constitutes a separate and independent contract between Landlord and the Bank, (b) Tenant is not a third party beneficiary of such contract, (c) Tenant has no property interest whatsoever in the L-C or the proceeds thereof, and (d) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the L-C and/or the proceeds thereof by application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise.
4.2.3 Letter of Credit not a Security Deposit. Landlord and Tenant acknowledge and agree that in no event or circumstance shall the L-C or any renewal thereof or any proceeds thereof be (i) deemed to be or treated as a “security deposit” within the meaning of California Civil Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as a “security deposit” within the meaning of such Section 1950.7. The parties hereto (A) recite that the L-C is not intended to serve as a security deposit and such Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”) shall have no applicability or relevancy thereto and (B) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws as to the L-C.
4.2.4 Proceeds of Draw. In the event Landlord draws down on the L-C pursuant to Sections 4.2.2, above, the proceeds of the L-C may be held by Landlord and applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any breach or default by Tenant under this Lease. Any unused proceeds shall constitute the property of Landlord and need not be segregated from Landlord’s other assets. Tenant hereby (i) agrees that (A) Tenant has no property interest whatsoever in the proceeds from any such draw, and (B) such proceeds shall not be deemed to be or treated as a “security deposit” under the Security Deposit Law, and (ii) waives all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws. Landlord agrees that the amount of any proceeds of the L-C received by Landlord, and not (a) applied against any Rent payable by Tenant under this Lease that was not paid when due, or (b) used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease (the “Unused L-C Proceeds”), shall be paid by Landlord to Tenant (x) upon receipt by Landlord of a replacement L-C in the full L-C Amount, which replacement L-C shall comply in all respects with
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the requirements of this Section 4.2, or (y) within thirty (30) days after the LC Expiration Date; provided, however, that if prior to the LC Expiration Date a voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such payment in the amount of the Unused L-C Proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.
4.2.5 Bank Placed Into Receivership. In the event the Bank is placed into receivership or conservatorship (any such event, a “Receivership”) by the Federal Deposit Insurance Corporation or any successor or similar entity (the “FDIC”), then, effective as of the date such Receivership occurs, the L-C shall be deemed to not meet the requirements of this Section 4.2, and, within ten (10) days following Landlord’s notice to Tenant of such Receivership (the “LC Replacement Notice”), Tenant shall either replace the L-C with a substitute L-C from a different issuer reasonably acceptable to Landlord and that complies in all respects with the requirements of this Section 4.2.2 or provide a cash Security Deposit in accordance with the terms and conditions of this Lease in the amount of the L-C to Landlord. If Tenant fails to replace such L-C with a substitute L-C from a different issuer pursuant to the terms and conditions of this Section 21.6.1 or a cash Security Deposit, then, notwithstanding anything in this Lease to the contrary, Landlord shall have the right, at Landlord’s option, to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto other than the aforesaid ten (10) day period, in which event, Landlord shall have the right to pursue any and all remedies available to it under this Lease and at law, including, without limitation, treating any Receivership as a Bank Credit Threat and exercising Landlord’s remedies under Section 21.2.5, above, to the extent possible pursuant to then-existing FDIC policy. Tenant shall be responsible for the payment of any and all costs incurred with the review of any replacement L-C (including without limitation Landlord’s reasonable attorneys’ fees), which replacement is required pursuant to this Section or is otherwise requested by Tenant.
4.2.6 Reduction of Letter of Credit. Provided Tenant’s Financial Information (as defined below) reflects that Tenant has secured and obtained no less than $52,500,000.00 in additional Series B Funding as determined by Landlord (collectively, the “Reduction Condition”), then Tenant may reduce the amount of Letter of Credit by the sum of $202,241.12 below the then-current face value of the Letter of Credit (the “Letter of Credit Reduction”). If Tenant believes that it is entitled to a Letter of Credit Reduction, Tenant shall provide Landlord with written notice requesting that the required amount of the Letter of Credit be reduced as provided above (the “Letter of Credit Reduction Notice”). Concurrent with Tenant’s delivery of the Letter of Credit Reduction Notice, Tenant shall deliver to Landlord for its review Tenant’s financial statements prepared in accordance with generally accepted accounting principles and audited by a public accounting firm reasonably acceptable to Landlord, and any other financial information reasonably requested by Landlord evidencing Tenant’s full satisfaction of the Reduction Condition (“Tenant’s Financial Information”). If Tenant provides Landlord with a Letter of Credit Reduction Notice, and Landlord determines that Tenant is entitled to the Letter of Credit Reduction as provided herein, then such reduction in the Letter of Credit amount shall be accomplished as described below. Any reduction in the Letter of Credit amount shall be accomplished by Tenant providing Landlord with a substitute Letter of Credit or an amendment to the Letter of Credit reflecting the reduced amount, which substitute or amended Letter of Credit
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shall comply with the requirements of this Section 4.2. In no event shall the Letter of Credit be reduced below the amount of $404,482.24. Notwithstanding anything to the contrary contained herein, if Tenant has been in default under this Lease at any time prior to the effective date of any reduction of the amount of the Letter of Credit, and Tenant has failed to cure such default within any applicable cure period, then Tenant shall have no right to reduce the amount of the Letter of Credit as described herein.
5. USE AND COMPLIANCE WITH LAWS.
5.1. Use.
(a) The Premises shall be used and occupied for the Use expressly permitted in the Basic Lease Information, consistent with the standards for comparable buildings in the general vicinity of the Project.
(b) Tenant shall comply with all present and future Laws applicable to Tenant’s use or occupancy of the Premises (and make any repairs, alterations or improvements to the Premises as required to comply with all such Laws subject to Landlord’s obligations under Section 7.1), provided, however, Tenant shall not be required to perform any structural alterations or structural improvements to the Premises to comply with any Laws except to the extent triggered by Tenant’s use of the Premises for other than typical general office use and general life science laboratory use for research and testing in conformance with II-B Construction for B-Occupancy Laboratories (the “Life Science Compliance Standard”) with respect to Laws applicable generally to office buildings and laboratory buildings only and/or otherwise arising in connection with any alterations, improvements, additions, and/or equipment made to or brought into the Main Premises and/or the Storage Space by Tenant. Tenant as part of its obligations hereunder shall at all times keep and maintain the Premises in a clean, safe and sanitary condition and shall at its sole cost and expense. Tenant shall not do, bring, keep or sell anything in or about the Premises that is prohibited by, or that will cause a cancellation of or an increase in the existing premium for, any insurance policy covering the Property or any part thereof (it being agreed by Landlord that general office and life science laboratory use in compliance with the Life Science Compliance Standard shall not in and of itself increase the insurance premiums). Without limiting the generality of the foregoing, Tenant shall not bring upon the Premises or any portion of the Property or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same. Tenant shall not permit vaping at the Premises.
(c) Tenant, nor any agents, employees, contractors, vendors, suppliers, licensees, subtenants, and invitees of Tenant (individually, a “Tenant Party” and collectively, “Tenant’s Parties”), shall not permit the Premises to be occupied or used in any manner that will constitute waste or a nuisance.
(d) Tenant shall not bring into the Building or the Premises anything that may overload the floors in the Premises or the Building or any of the Building Systems or jeopardize the structural integrity of the Building or any part thereof. “Building Systems” means the base Building HVAC and the elevator, plumbing, electrical, fire protection, life safety, security and other systems at the Building. “HVAC” means the base Building heating, ventilating and air-conditioning systems at the Building.
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(e) Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Lease, the Premises has not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), (ii) keep the information contained in the Report confidential, except to the extent required by applicable Laws, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal applicable Laws, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by applicable Laws, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand. For purposes of this Section 5.1(e), Access Improvements shall include any improvements or repairs to the Building or Project required in connection with anything done by or for Tenant in its use or occupancy of the Premises.
(f) As of the date hereof, to Landlord’s actual knowledge, Landlord has no actual knowledge that the Premises is in violation of applicable Law. For purposes of this Section, “Landlord’s actual knowledge” and “knowledge” shall be deemed to mean and limited to the current actual knowledge of the Property Manager at the time of execution of this Lease and not any implied, imputed, or constructive knowledge of said individual or of Landlord or any Landlord of Landlord’s agents, employees or related entities and without any independent investigation or inquiry having been made or any implied duty to investigate or make any inquiries; it being understood and agreed that such individual shall have no personal liability in any manner whatsoever hereunder or otherwise related to the transactions contemplated hereby.
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5.2. Hazardous Materials.
(a) Definitions. The following terms shall have the following meanings for purposes of this Lease:
(1) “Biohazardous Materials” means any and all substances and materials defined or referred to as “medical waste,” “biological waste,” “biohazardous waste,” “biohazardous material” or any other term of similar import under any Hazardous Materials Laws, including (but not limited to) California Health & Safety Code Sections 25105 et seq., and any regulations promulgated thereunder, as amended from time to time.
(2) [Intentionally Omitted].
(3) “Environmental Condition” means the Release of any Hazardous Materials in, over, on, under, through, from or about the Project (including, but not limited to, the Premises).
(4) “Environmental Damages” means all claims, suits, judgments, damages, losses, penalties, fines, liabilities, encumbrances, liens, costs and expenses of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, arising out of or in connection with any Environmental Condition, including, to the extent arising out of an Environmental Condition, without limitation: (A) damages for personal injury, or for injury or damage to the Project or natural resources occurring on or off the Project, including without limitation (1) any claims brought by or on behalf of any person, (2) any loss of, lost use of, damage to or diminution in value of any Project or natural resource, and (3) costs of any investigation, remediation, removal, abatement, containment, closure, restoration or monitoring work required by any federal, state or local governmental agency or political subdivision, or otherwise reasonably necessary to protect the public health or safety, whether on or off the Project; (B) reasonable fees incurred for the services of attorneys, consultants, contractors, experts and laboratories in connection with the preparation of any feasibility studies, investigations or reports or the performance of any work described above; (C) any liability to any third person or governmental agency to indemnify such person or agency for costs expended or liabilities incurred in connection with any items described in clause (A) or (B) above; (D) any fair market or fair market rental value of the Project; and (E) the amount of any penalties, damages or costs a party is required to pay or incur in excess of that which the party otherwise would reasonably have expected to pay or incur absent the existence of the applicable Environmental Condition.
(5) “Handling” or “Handles”, when used with reference to any substance or material, includes (but is not limited to) any receipt, storage, use, generation, Release, transportation, treatment or disposal of such substance or material.
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(6) “Hazardous Materials” means any and all chemical, explosive, biohazardous, radioactive or otherwise toxic or hazardous materials or hazardous wastes, including without limitation any asbestos-containing materials, PCB’s, CFCs, petroleum and derivatives thereof, Radioactive Materials, Biohazardous Materials, Hazardous Wastes, any other substances defined or listed as or meeting the characteristics of a hazardous substance, hazardous material, Hazardous Waste, toxic substance, toxic waste, biohazardous material, biohazardous waste, biological waste, medical waste, radiation, radioactive substance, radioactive waste, or other similar term, as applicable, under any law, statute, ordinance, code, rule, regulation, directive, order, condition or other written requirement enacted, promulgated or issued by any public officer or governmental or quasi-governmental authority, whether now in force or hereafter in force at any time or from time to time to protect the environment or human health, and/or any mixed materials, substances or wastes containing more than one of the foregoing categories of materials, substances or wastes.
(7) “Hazardous Materials Laws” means, collectively, (A) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9657, (B) the Hazardous Materials Transportation Act of 1975, 49 U.S.C. Sections 1801-1812, (C) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6987 (together with any amendments thereto, any regulations thereunder and any amendments to any such regulations as in effect from time to time, “RCRA”), (D) the California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code Sections 25300 et seq., (E) the Hazardous Materials Release Response Plans and Inventory Act, California Health & Safety Code Sections 25500 et seq., (F) the California Hazardous Waste Control Law, California Health & Safety Code Sections 25100 et seq. (together with any amendments thereto, any regulations thereunder and any amendments to any such regulations as in effect from time to time, the “CHWCL”), (G) California Health & Safety Code Sections 25015-25027.8, (H) any amendments to or successor statutes to any of the foregoing, as adopted or enacted from time to time, (I) any regulations or amendments thereto promulgated pursuant to any of the foregoing from time to time, (J) any Laws relating to Biohazardous Materials, including (but not limited to) any regulations or requirements with respect to the shipping, use, decontamination and disposal thereof, and (K) any other Law now or at any time hereafter in effect regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Materials, including (but not limited to) any requirements or conditions imposed pursuant to the terms of any orders, permits, licenses, registrations or operating plans issued or approved by any governmental or quasi-governmental authority from time to time either on a Project-wide basis or in connection with any Handling of Hazardous Materials in, on or about the Premises or the Project.
(8) “Hazardous Wastes” means (A) any waste listed as or meeting the identified characteristics of a “hazardous waste” or terms of similar import under RCRA, (B) any waste meeting the identified characteristics of a “hazardous waste”, “extremely hazardous waste” or “restricted hazardous waste” under the CHWCL, and/or (C) any and all other substances and materials defined or referred to as a “hazardous waste” or other term of similar import under any Hazardous Materials Laws.
(9) “Landlord’s Contamination” means any Hazardous Materials which exist in, on, under or in the vicinity of the Project as of the date of this Lease or which migrate onto or beneath the Project after the Effective Date. Tenant shall not be required to pay any costs with respect to the investigation, remediation or abatement of Landlord’s Contamination.
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(10) “Radioactive Materials” means (A) any and all substances and materials the Handling of which requires an approval, consent, permit or license from the Nuclear Regulatory Commission, (B) any and all substances and materials the Handling of which requires a Radioactive Material License or other similar approval, consent, permit or license from the State of California, and (C) any and all other substances and materials defined or referred to as “radiation,” a “radioactive material” or “radioactive waste,” or any other term of similar import under any Hazardous Materials Laws, including (but not limited to) Title 26, California Code of Regulations Section 17-30100, and any statutes, regulations or other laws administered, enforced or promulgated by the Nuclear Regulatory Commission.
(11) “Release” means any accidental or intentional spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, migrating, dumping or disposing into the air, land, surface water, groundwater or the environment (including without limitation the abandonment or discarding of receptacles containing any Hazardous Materials).
(12) “Tenant’s Contamination” means any Hazardous Material Release on or about the Property by Tenant and/or any Tenant Party.
(b) Handling of Hazardous Materials. Tenant’s normal business operations customarily include the Handling of Hazardous Materials, and that Tenant shall therefore be permitted to engage in the Handling in the Premises of necessary and reasonable quantities of Hazardous Materials customarily used in typical life science research and development in conformance with the business operations of Tenant in the manner conducted or proposed to be conducted by Tenant hereunder (“Permitted Hazardous Materials”), provided that the Handling of such Permitted Hazardous Materials by all Tenant Parties shall at all times comply with and be subject to all provisions of this Lease and all Laws, including all Hazardous Materials Laws for the Building. Without limiting the generality of the foregoing, Tenant shall comply at all times with all Hazardous Materials Laws applicable to any aspect of Tenant’s use of the Premises and the Project and of Tenant’s operations and activities in, on and about the Premises and the Project, and shall ensure at all times that Tenant’s Handling of Hazardous Materials in, on and about the Premises does not violate (x) the terms of any governmental licenses or permits applicable to the Building (including, but not limited to, the Building Discharge Permit as defined below) or Premises or to Tenant’s Handling of any Hazardous Materials therein, or (y) any applicable requirements or restrictions relating to the occupancy classification of the Building and the Premises.
(c) Disposition or Emission of Hazardous Materials. Tenant shall not Release or dispose of any Hazardous Materials, except to the extent authorized by permit and this Lease, at the Premises or on the Project, but instead shall arrange for off-site disposal, under Tenant’s own name and EPA waste generator number (or other similar identifying information issued or prescribed by any other governmental authority with respect to Radioactive Materials, Biohazardous Materials or any other Hazardous Materials) and at Tenant’s sole expense, in compliance with all applicable Hazardous Materials Laws, with the Laboratory Rules and Regulations (defined below) and with all other applicable Laws and regulatory requirements.
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(d) Information Regarding Hazardous Materials. Tenant shall maintain and make available to Landlord the following information and/or documentation within ten (10) business days of demand, but not more often than one (1) time per year (except to the extent required by Law or requested by a governmental or quasi-governmental entity with jurisdiction at the Property):
(1) An inventory of all Hazardous Materials that Tenant receives, uses, handles, generates, transports, stores, treats or disposes of from time to time, or at the time of preparation of such inventory proposes or expects to use, handle, generate, transport, store, treat or dispose of from time to time, in connection with its operations at the Premises. Such inventory shall include, but shall separately identify, any Hazardous Wastes, Biohazardous Materials and Radioactive Materials covered by the foregoing description. If such inventory includes any Biohazardous Materials, Tenant shall also disclose in writing to Landlord the Biosafety Level designation associated with the use of such materials. In addition to the foregoing, within ten (10) business days of Landlord’s request, Tenant shall complete and deliver to Landlord a “Hazardous Materials Questionnaire”, in the form attached hereto as Exhibit E (as updated and reasonably modified by Landlord, from time to time). To the extent any information contained in a Hazardous Materials Questionnaire previously delivered by Tenant shall become inaccurate in any material respect, Tenant shall immediately deliver to Landlord a new updated Hazardous Materials Questionnaire.
(2) Copies of all then existing permits, licenses, registrations and other similar documents issued by any governmental or quasi-governmental authority that authorize any Handling of Hazardous Materials in, on or about the Premises or the Project by any Tenant Party.
(3) All Material Safety Data Sheets (“MSDSs”), if any, required to be completed with respect to operations of Tenant at the Premises from time to time in accordance with Title 26, California Code of Regulations Section 8-5194 or 42 U.S.C. Section 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets that detail the MSDSs.
(4) All hazardous waste manifests (as defined in Title 26, California Code of Regulations Section 22-66481), if any, that Tenant is required to complete from time to time in connection with its operations at the Premises.
(5) A copy of any “Hazardous Materials Business Plan” required from time to time with respect to Tenant’s operations at the Premises pursuant to California Health & Safety Code Sections 25500 et seq., and any regulations promulgated thereunder, as amended from time to time, or in connection with Tenant’s application for a business license from the City of San Carlos. If applicable law does not require Tenant to prepare a Hazardous Materials Business Plan, Tenant shall furnish to Landlord at the times and in the manner set forth above the information that would customarily be contained in a Hazardous Materials Business Plan, including (but not limited to) information regarding Tenant’s Hazardous Materials inventories. The parties acknowledge that a Hazardous Materials Business Plan would ordinarily include an emergency response plan, and that regardless of whether applicable Law requires Tenant or other tenants in the Building to prepare Hazardous Materials Business Plans, Landlord in its discretion may elect to prepare a coordinated emergency response plan for the entire Building and/or for multiple Buildings on the Project (if and to the extent applicable).
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(6) Any “Contingency Plans and Emergency Procedures” required of Tenant from time to time, in connection with its operations at the Premises, pursuant to applicable Law, Title 26, California Code of Regulations Sections 22-67140 et seq., and any amendments thereto, and any “Training Programs and Records” required under Title 26, California Code of Regulations Section 22-66493, and any amendments thereto from time to time. Landlord in its discretion may elect to prepare a Contingency Plan and Emergency Procedures for the entire Building and/or for multiple buildings on the Project, in which event, if applicable law does not require Tenant to prepare a Contingency Plan and Emergency Procedures for its operations at the Premises, Tenant shall furnish to Landlord at the times and in the manner set forth above the information that would customarily be contained in a Contingency Plan and Emergency Procedures.
(7) Copies of any biennial or other periodic reports furnished or required to be furnished to the California Department of Health Services from time to time, under applicable law, pursuant to Title 26, California Code of Regulations Section 22-66493 and any amendments thereto, relating to any Hazardous Materials.
(8) Copies of any industrial wastewater discharge permits issued to or held by Tenant from time to time in connection with its operations at the Premises (the parties presently anticipate, however, that because of the existence of the Building Discharge Permit in Landlord’s name as described above. Tenant will not be required to maintain a separate, individual discharge permit).
(9) Copies of any other lists, reports, studies, or inventories of Hazardous Materials or of any subcategories of materials included in Hazardous Materials that Tenant is otherwise required to prepare and file from time to time with any governmental or quasi-governmental authority in connection with Tenant’s operations at the Premises, including (but not limited to) reports filed by Tenant with the federal Food & Drug Administration or any other regulatory authorities primarily in connection with the presence (or lack thereof) of any “select agents” or other Biohazardous Materials on the Premises, together with proof of filing thereof.
(10) Any other information reasonably requested by Landlord in writing from time to time in connection with (A) Landlord’s monitoring (in Landlord’s reasonable discretion) and enforcement of Tenant’s obligations under this Section and of compliance with applicable Laws in connection with any Handling or Release of Hazardous Materials in the Premises or Building or on or about the Project by any Tenant Party, (B) any inspections or enforcement actions by any governmental authority pursuant to any Hazardous Materials Laws or any other Laws relating to the presence or Handling of Hazardous Materials in the Premises or Building or on or about the Project by any Tenant Party, and/or (C) Landlord’s preparation (in Landlord’s discretion) and enforcement of any reasonable rules and procedures relating to the presence or Handling by Tenant or any Tenant Party of Hazardous Materials in the Premises or Building or on or about the Project, including (but not limited to) any contingency plans or emergency response plans as described above. Except as otherwise required by Law, Landlord shall keep confidential any information supplied to Landlord by Tenant pursuant to the foregoing, provided, however, that the foregoing shall not apply to any information filed with any governmental authority or available to the public at large. Landlord may provide such information to its lenders, consultants or investors provided such entities agree to keep such information confidential.
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(e) Indemnification; Notice of Release. Tenant shall be responsible for and shall indemnify, defend and hold Landlord harmless from and against all Environmental Damages to the extent arising out of or otherwise relating to, (i) any Handling of Hazardous Materials by any Tenant Party in, on or about the Premises or the Project, (ii) any breach of Tenant’s obligations under this Section or of any Hazardous Materials Laws by any Tenant Party, or (iii) the existence of any contamination in, on or about the Premises or any Tenant’s Contamination outside the Premises but at the Project, including without limitation any removal, cleanup or restoration work and materials necessary to return the Project or any improvements of whatever nature located on the Project to a condition that complies with Law and is reasonably similar to the condition existing prior to the Handling of Hazardous Materials in or on the Premises or the Project by any Tenant Party. In the event of any contamination in or on the Premises or any Tenant’s Contamination outside the Premises but at any other portion of the Project or any adjacent lands, Tenant shall promptly remedy the problem in accordance with all applicable Hazardous Materials Laws and Laws, shall give Landlord oral notice of any such non-standard or non-customary Release promptly after Tenant becomes aware of such Release, followed by written notice to Landlord within five (5) business days after Tenant becomes aware of such Release, and shall furnish Landlord with concurrent copies of any and all notices, reports and other written materials filed by any Tenant Party with any governmental authority in connection with such Release. Tenant shall have no obligation to indemnify, defend, hold Landlord harmless from, investigate, remedy, or be responsible for any costs associated with any Hazardous Materials contamination which was preexisting in the Premises as set forth below in this Section 5.1(e) or to the extent caused by Landlord. Landlord shall remediate any Hazardous Material to the extent that: (a) such Hazardous Material was preexisting in the Premises as of the date of this Lease; and (b) Landlord’s failure to remediate would be in violation of Laws and would prevent Tenant from installing its furniture, fixtures and equipment in the Premises as part of Tenant’s move-in and/obtaining any required certification of occupancy on the Premises pursuant to this Lease.
Tenant shall not be liable for any cost or expense related to removal, cleaning, abatement or remediation of Hazardous Materials existing in the Premises prior to the date Landlord tenders possession of the Premises to Tenant, including, without limitation, Hazardous Materials in the ground water or soil, except to the extent that any of the foregoing results directly or indirectly from any act or omission by Tenant or any Tenant Party or any Hazardous Materials disturbed, distributed or exacerbated by Tenant or any Tenant Party.
If, following the Commencement Date, (i) Hazardous Materials generated by a third party tenant in the Building contaminates the Premises, and (ii) such contamination materially and adversely affects Tenant’s occupancy or use of the Premises for the permitted Use, and (iii) the presence of such Hazardous Materials is not the result of Tenant’s use of the Premises or any act or omission of Tenant or its agents, employees, contractors, subtenants or invitees, and (iv) such contamination is caused by a defect or malfunction of the base Building HVAC system due to Landlord’s failure to repair and maintain the Building HVAC system in a commercially reasonable manner, Landlord shall promptly take all actions as are necessary to remediate such Hazardous Materials as may be
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required by Hazardous Materials Laws. In the event any Hazardous Materials for which Landlord is responsible pursuant to this paragraph require remediation, Landlord and Tenant shall promptly meet and confer to attempt to mitigate any contamination or damages to the Premises. Within thirty (30) days after notification from Tenant supported by reasonable documentation setting forth such presence or release of Hazardous Materials, and after Landlord has been given a reasonable period of time after such thirty (30)-day period to conduct its own investigation to confirm such presence or release of Hazardous Materials on the Premises, Landlord shall commence to remediate such Hazardous Materials and thereafter diligently prosecute such remediation to completion. If Landlord commences remediation pursuant to this paragraph, Base Rent and Operating Costs and Taxes shall be equitably adjusted if and to the extent and during the period the Hazardous Materials materially and adversely affect Tenant’s occupancy or use of the Premises for the permitted Use.
(f) Governmental Notices. Tenant shall promptly provide Landlord with copies of all notices received by Tenant relating to any actual or alleged presence or Handling by any Tenant Party of Hazardous Materials in, on or about the Premises or any other portion of the Project, including, without limitation, any notice of violation, notice of responsibility or demand for action from any federal, state or local governmental authority or official in connection with any actual or alleged presence or Handling by any Tenant Party of Hazardous Materials in or about the Premises or any other portion of the Project.
(g) Inspection by Landlord. In addition to, and not in limitation of, Landlord’s rights under this Lease, upon at least five (5) days’ prior request by Landlord (or less notice, if any, in the event of an emergency), Tenant shall grant Landlord and its consultants, as well as any governmental authorities having jurisdiction over the Premises or over any aspect of Tenant’s use thereof, reasonable access to the Premises during Building Business Hours to inspect Tenant’s Handling of Hazardous Materials in, on and about the Premises, and Landlord shall not thereby incur any liability to Tenant or be deemed guilty of any disturbance of Tenant’s use or possession of the Premises by reason of such entry; provided, however, that Landlord shall use reasonable efforts to minimize interference with Tenant’s use of the Premises caused by such entry. Except in the event of an emergency, Landlord shall coordinate the entry in advance so as not to disturb any ongoing experiments, the entry shall occur during Building Business Hours, and Tenant shall have a right to have a representative of Tenant accompany Landlord during all such entries, provided Tenant makes such representative available at the time Landlord or such other party desires to enter the Premises. Landlord shall comply with any security precaution reasonably imposed by Tenant during any entry onto the Premises and shall minimize to the extent reasonably possible any interference with Tenant’s use of the Premises caused by such entry. Tenant, at its own expense, may provide (subject to the terms and conditions of this Lease, including regarding legal compliance and Alterations) secure cleanrooms and other similar areas within the Premises (“Secured Area”). Except in the event of an emergency, Landlord and its consultants shall not enter the Secured Areas. If Landlord determines in its reasonable discretion that an emergency in the Building or the Premises, including, without limitation, a suspected fire or flood, reasonably requires Landlord to gain access to the Secured Area, Tenant hereby authorizes Landlord to forcibly enter the Secured Area. In such event, Landlord shall have no liability whatsoever to Tenant, and Tenant shall pay all reasonable expenses incurred by Landlord in repairing or reconstructing any entrance, corridor, door or other portions of the Premises damaged as a result of a forcible entry by Landlord. Landlord shall have no obligation to repair or maintain any Secured Area. Notwithstanding Landlord’s rights of inspection and review of documents, materials and
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physical conditions under this Section with respect to Tenant’s Handling of Hazardous Materials, Landlord shall have no duty or obligation to perform any such inspection or review or to monitor in any way any documents, materials, physical conditions or compliance with Laws in connection with Tenant’s Handling of Hazardous Materials, and no third Party shall be entitled to rely on Landlord to conduct any such inspection, review or monitoring by reason of the provisions of this Section.
(h) Monitoring by Landlord. Landlord reserves the right to monitor, in Landlord’s reasonable discretion and at Landlord’s cost, the reasonable cost of which shall be recoverable as an Operating Cost (except in the case of a breach of any of Tenant’s obligations under this Section, in which event such monitoring costs may be charged back entirely to Tenant and shall be reimbursed by Tenant to Landlord within thirty (30) days after written demand by Landlord from time to time, accompanied by supporting documentation reasonably evidencing the costs for which such reimbursement is claimed), at such times and from time to time as Landlord in its reasonable discretion may determine, through consultants engaged by Landlord or otherwise as Landlord in its reasonable discretion may determine: (x) all aqueous and atmospheric discharges and emissions from the Premises during the Term by a Tenant Party, (y) Tenant’s compliance and the collective compliance of all tenants in the Building with requirements and restrictions relating to the occupancy classification of the Building (including, but not limited to, Hazardous Materials inventory levels of Tenant and all other tenants in the Building), and (z) Tenant’s compliance with all other requirements of this Section.
(i) Discovery of Discharge. If Landlord, Tenant or any governmental or quasi-governmental authority discovers any Release from the Premises during the Term by a Tenant Party in violation of this Section that, in Landlord’s reasonable determination, jeopardizes the ability of the Building or the Project to meet applicable Laws or otherwise adversely affects the Building’s or the Project’s compliance with applicable discharge or emission standards, or if Landlord discovers any other breach of Tenant’s obligations under this Section, then upon receipt of written notice from Landlord or at such earlier time as Tenant obtains actual knowledge of the applicable discharge, emission or breach, Tenant at its sole expense shall within a reasonable time (x) in the case of a Release in violation of this Lease, cease the applicable discharge or emission and remediate any continuing effects of the discharge or emission until such time, if any, as Tenant demonstrates to Landlord’s reasonable satisfaction that the applicable discharge or emission is in compliance with all applicable Laws and any other applicable regulatory commitments and obligations to the satisfaction of the appropriate governmental agency with jurisdiction over the Release, and (y) in the case of any other breach of Tenant’s obligations under this Section, take such corrective measures as Landlord may reasonably request in writing in order to cure or eliminate the breach as promptly as practicable and to remediate any continuing effects of the breach.
(j) Post-Occupancy Study. No later than fifteen (15) days following the Expiration Date or earlier termination date of this Lease, Tenant at its sole cost and expense, shall deliver to Landlord a reasonably detailed narrative description of the actions taken (or required to be taken by any applicable government authority) by Tenant to return the Premises to Landlord free from any residual impact of Hazardous Materials, as well as any documents requested pursuant to Section 5.2(d) of this Lease. In addition to the foregoing, on or before the expiration or earlier termination of the Lease, Tenant shall obtain, at its sole cost and expense, and have
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signed off on and/or closed (and shall provide copies thereof to Landlord) all necessary and/or required unconditional approvals, permits and environmental permits and closure letters (including, without limitation, any such governmental approvals and/or closure letters) from the appropriate fire departments, state, city or local departments or agencies with proper jurisdiction, and any other permits necessary for Landlord to, freely and without restriction, lease the Project (all of the foregoing, collectively, the “Closure Documents”). Liability for any remedial actions required shall be allocated in accordance with the applicable provisions of this Lease. To the extent any such remedial actions are the responsibility of Tenant, Tenant at its sole expense shall promptly commence and diligently pursue to completion the required remedial actions.
(k) Emergency Response Plans. If Landlord in its reasonable discretion adopts any emergency response plan and/or any Contingency Plan and Emergency Procedures for the Building (or for multiple buildings on the Project if and to the extent applicable) as contemplated above, Landlord shall provide copies of any such plans and procedures to Tenant and, so long as such plans and procedures are reasonable and non-discriminatory, Tenant shall comply with all of the requirements of such plans and procedures to the extent applicable to Tenant and/or the Premises. If Landlord elects to adopt or materially modify any such plans or procedures that apply to the Building during the Term, Landlord shall consult with Tenant and Tenant shall cooperate, in the preparation of such plans, procedures or modifications in efforts to accurately reflect and maintain consistency with Tenant’s operations in the Premises, but Landlord alone shall determine, in its good faith reasonable discretion, the appropriate scope of such consultation and nothing in this Section shall be construed to give Tenant any right of approval or disapproval over Landlord’s adoption or modification of any such plans or procedures.
(l) Radioactive Materials. Without limiting any other applicable provisions of this Section, if Tenant Handles or proposes to Handle any Radioactive Materials in or about the Premises, Tenant shall provide Landlord with copies of Tenant’s licenses or permits for such Radioactive Materials and with copies of all radiation protection programs and procedures required under applicable Laws or otherwise adopted by Tenant from time to time in connection with Tenant’s Handling of such Radioactive Materials. In addition, Tenant shall comply with any and all rules and procedures issued by Landlord in its good faith discretion from time to time with respect to the Handling of Radioactive Materials on the Project (such as, by way of example but not limitation, rules implementing a label defacement program for decayed waste destined for common trash and/or rules relating to transportation and storage of Radioactive Materials on the Project), provided that such rules and procedures shall be reasonable and not in conflict with any applicable Laws.
(m) Deemed Holdover Occupancy. Notwithstanding any other provisions of this Lease, Tenant expressly agrees as follows:
(1) If Tenant Handles any Radioactive Materials in or about the Premises or the Project during the Term, then for so long as any license or permit relating to such Radioactive Materials remains open or valid following the Expiration Date, and another entity handling Radioactive Materials which is a prospective tenant of Landlord is legally prohibited from occupying a portion of the Premises for a use similar to Tenant’s use, then Tenant shall be deemed to be occupying that portion of the Premises on a holdover basis without Landlord’s consent (notwithstanding such otherwise applicable termination or expiration of the Term) and
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shall be required to continue to pay Rent and other charges in accordance with Article 13 solely for that portion of the Premises effected by the radioactive materials license, until such time as all such Radioactive Materials licenses and permits have been fully closed out in accordance with the requirements of this Lease and with all applicable Hazardous Materials Laws and other Laws.
(2) If Tenant Handles any Hazardous Materials in or about the Premises or the Project during the Term and, on or before the Expiration Date, has failed to remove from the Premises or the Project all known Hazardous Materials Handled by a Tenant Party or has failed to complete any remediation or removal of Tenant’s Contamination at the Property and/or to have fully remediated or other Hazardous Materials at the Premises (other than preexisting Hazardous Materials as set forth above in subsection (e) or Hazardous Materials brought into the Premises by Landlord or its employees or agents or migrated to the Premises by act or fault of Tenant or any Tenant Party), all in compliance with the requirements of this Lease and with all applicable Hazardous Materials Laws and any other applicable Laws, or tender to Landlord the Closure Documents, then for so long as such circumstances continue to exist, Tenant shall be deemed to be occupying the Premises on a holdover basis without Landlord’s consent (notwithstanding such otherwise applicable termination or expiration of the Term) and shall be required to continue to pay Rent and other charges in accordance with Article 13 until such time as all such circumstances have been fully resolved in accordance with the requirements of this Lease and with all applicable Hazardous Materials Laws and other Laws.
(n) Survival of Obligations. Each party’s obligations under this Section shall survive the Expiration Date and shall survive any conveyance by Landlord of its interest in the Premises. The provisions of this Section and any exercise by either party of any of the rights and remedies contained herein shall be without prejudice to any other rights and remedies that such party may have under this Lease or under applicable Law with respect to any Environmental Conditions and/or any Hazardous Materials. Either party’s exercise or failure to exercise, at any time or from time to time, any or all of the rights granted in this Section shall not in any way impose any liability on such party or shift from the other party to such party any responsibility or obligation imposed upon the other party under this Lease or under Hazardous Materials Laws, Environmental Conditions and/or compliance with Laws.
(o) Laboratory Rules and Regulations. Tenant agrees for itself and for its subtenants, employees, agents, and invitees to comply with the laboratory rules and regulations (“Laboratory Rules and Regulations”) attached to this Lease as Exhibit C-2 and with all reasonable and non-discriminatory modifications and additions thereto which Landlord may make from time to time provided,. that no such other rules and regulations shall adversely affect Tenant’s permitted use of, or access to and from, the Premises, or materially increase any of Tenant’s obligations, or materially decrease any of Tenant’s rights, under this Lease. Landlord shall promulgate and enforce its Laboratory Rules and Regulations in a reasonable and non-discriminatory manner and make good faith efforts to uniformly enforce its Laboratory Rules and Regulations against similarly situated tenants of the Building. In the event of any inconsistency between the Laboratory Rules and Regulations and this Lease, the terms of this Lease shall prevail.
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(p) Landlord’s Representations. To Landlord’s actual knowledge, there are no Hazardous Materials at the Buildings in violation of Hazardous Materials Laws. For purposes of this Section, “Landlord’s actual knowledge” shall be deemed to mean and limited to the current actual knowledge of the property manager for the Buildings, at the time of execution of this Lease and not any implied, imputed, or constructive knowledge of said individual or of Landlord or any parties related to or comprising Landlord and without any independent investigation or inquiry having been made or any implied duty to investigate or make any inquiries; it being understood and agreed that such individual shall have no personal liability in any manner whatsoever hereunder or otherwise related to the transactions contemplated hereby.
6. ALTERATIONS.
6.1. Tenant shall not make any alterations, improvements or changes to the Premises, including installation of any security system or telephone or data communication wiring (“Alterations”), without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed, provided Landlord’s consent shall not be required for Cosmetic Alterations. As used herein, “Cosmetic Alterations” shall mean an Alteration that (i) is limited to the interior of the Premises, and (ii) does not affect the exterior (including the appearance) of the Building, and (iii) is non-structural and does not affect the structural integrity of the Building, and (iv) does not require a building permit, and (v) does either (a) not exceed Fifty Thousand and 00/100 Dollars ($50,000.00) in each instance (and Two Hundred Thousand and 00/100 Dollars ($200,000.00) in the aggregate in any twelve (12) month period), or (b) is for painting and building standard flooring, or seismic bracing. Tenant shall not be required to remove paint and carpeting that comprise Cosmetic Alterations upon expiration or termination of the Lease. Any Alterations shall be completed by Tenant at Tenant’s sole cost and expense: (i) with due diligence, in a good and workmanlike manner, using new materials; (ii) in compliance with plans and specifications reasonably approved by Landlord; (iii) in compliance with the construction rules and regulations promulgated by Landlord from time to time; (iv) in accordance with all applicable Laws (including all work, whether structural or non-structural, inside or outside the Premises, required to comply fully with all applicable Laws, including the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), and any amendment thereto or regulations promulgated thereunder and any state or local law of similar purpose (collectively, “ADA”), and necessitated by Tenant’s work); and (v) subject to all reasonable conditions which Landlord may in Landlord’s reasonable discretion impose, including requirements for Tenant to (a) provide payment or performance bonds or additional insurance (from Tenant or Tenant’s contractors, subcontractors or design professionals); provided, however, that Landlord shall only be entitled to require Tenant to provide to Landlord a payment or performance bond in connection with any Alterations in the event that following Landlord’s evaluation of Tenant’s then-current financial condition and performance history, Landlord determines in its good faith, prudent business judgment that the same is reasonably and prudently required; (b) use properly licensed, bonded, and insured contractors or subcontractors reasonably acceptable to Landlord; and (c) subject to the express terms and conditions of this Lease, remove all or part of the Alterations prior to or upon expiration or termination of the Term, as designated by Landlord. Notwithstanding anything to the contrary contained herein, so long as Tenant’s written request for consent for a proposed Alteration contains the following statement in large, bold and capped font “PURSUANT TO SECTION 6 OF THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT ALTERATION, LANDLORD SHALL NOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL REQUIRE SUCH ALTERATION TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE LEASE.”, at the time Landlord gives its consent for any Alterations, if it so does, Tenant shall also be notified whether or not
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Landlord will require that such Alterations be removed upon the expiration or earlier termination of this Lease. Notwithstanding anything to the contrary contained in this Lease, at the expiration or earlier termination of this Lease and otherwise in accordance with Section 19.1 hereof, Tenant shall, subject to the following provisions of this Section 6.1, be required to remove all Alterations made to the Premises except for any such Alterations which Landlord expressly indicates or is deemed to have indicated shall not be required to be removed from the Premises by Tenant. If Tenant’s written notice strictly complies with the foregoing and if Landlord fails to notify Tenant within ten (10) business days of Landlord’s receipt of such notice whether Tenant shall be required to remove the subject Alterations at the expiration or earlier termination of this Lease, it shall be assumed that Landlord shall require the removal of the subject Alteration at the expiration or earlier termination of this Lease. Notwithstanding anything to the contrary contained in this Lease, it is agreed that, other than data and telecommunications wiring and cabling (which shall in all events be a required removable), Tenant shall have no obligation to remove from the Premises any office improvements standard in office/R&D buildings substantially similar to, and in the vicinity of, the Buildings in the Project as of the date of this Lease, such as gypsum board, partitions, ceiling grids and tiles, fluorescent lighting panels, Building standard doors and carpeting. If any work outside the Premises, or any work on or adjacent to any of the Building Systems, is required in connection with or as a result of Tenant’s work, such work shall be performed at Tenant’s expense by contractors selected by Tenant and reasonably approved by Landlord. Landlord’s right to review and approve (or withhold approval of) Tenant’s plans, drawings, specifications, contractor(s) and other aspects of construction work proposed by Tenant is intended solely to protect Landlord, the Premises and Landlord’s interests. No approval or consent by Landlord shall be deemed or construed to be a representation or warranty by Landlord as to the adequacy, sufficiency, fitness or suitability thereof or compliance thereof with applicable Laws or other requirements. Except as otherwise provided in Landlord’s consent, all Alterations (other than Trade Fixtures) shall upon installation become part of the realty and be the property of Landlord (subject to Tenant’s obligation to remove from the Project at the expiration or earlier termination of this Lease, if applicable).
6.2. Before making any Alterations (other than Cosmetic Alterations when plans and specifications are not prepared pursuant to industry standard practices), Tenant shall submit to Landlord for Landlord’s prior approval reasonably detailed final plans and specifications prepared by a licensed architect or engineer, a copy of the construction contract, including the name of the contractor proposed by Tenant to make the Alterations and a copy of the contractor’s license. Tenant shall reimburse Landlord upon demand for reasonable out-of-pocket costs incurred by Landlord in connection with any Alterations made by Tenant, including reasonable fees charged by Landlord’s contractors or consultants to review plans and specifications prepared by Tenant and to update the existing as-built plans and specifications of the Building to reflect the Alterations, and, except for Cosmetic Alterations, shall pay Landlord an administration fee of four percent (4%) of the cost of the Alterations as Additional Rent hereunder. Tenant shall obtain all applicable permits, authorizations and governmental approvals and deliver copies of the same to Landlord before commencement of any Alterations. Within thirty (30) days following the completion of any Alterations Tenant shall deliver to Landlord “as built” plans showing the completed Alterations.
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6.3. Tenant shall keep the Project free and clear of all liens arising out of any work performed, materials furnished or obligations incurred by Tenant. If any such lien attaches to the Project, and Tenant does not cause the same to be released by payment, bonding or otherwise within ten (10) business days after Tenant’s knowledge of the attachment thereof (but in any event prior to the filing of any foreclosure proceeding), Landlord shall have the right but not the obligation to cause the same to be released, and any sums expended by Landlord in connection therewith shall be payable by Tenant on demand. Tenant shall give Landlord at least ten (10) business days’ notice prior to the commencement of any Alterations, whether or not such Alterations require Landlord’s consent, and cooperate with Landlord in posting and maintaining notices of non-responsibility in connection therewith.
6.4. Subject to the provisions of Section 5 - Use and Compliance with Laws and the foregoing provisions of this Section, Tenant may install and maintain furnishings, equipment, movable partitions, business equipment and other trade fixtures, including IT and audio-visual equipment, and lab benches and equipment, if any (“Trade Fixtures”) in the Premises, provided that the Trade Fixtures do not become an integral part of the Premises or the Building. Tenant shall promptly repair any damage to the Premises or the Building or the Project caused by any installation or removal of such Trade Fixtures and restore the Premises, Building and Project, as applicable, to the condition existing prior to such installation, subject to normal wear and tear.
7. MAINTENANCE AND REPAIRS
7.1. Landlord shall deliver the Premises to Tenant in the condition required under the Construction Rider. However, notwithstanding the foregoing, Landlord hereby represents that the base Building electrical, heating, ventilation and air conditioning, mechanical, sprinklers and plumbing systems servicing the Premises shall be in working order and repair as of the date Landlord delivers possession of the Premises to Tenant. Except to the extent caused by the acts or omissions of Tenant or any of Tenant’s Representatives or visitors or by any alterations or improvements performed by or on behalf of Tenant, if such systems are not in working order or the roof as described above is not in water tight condition as of the date possession of the Premises is delivered to Tenant and Tenant provides Landlord with notice of the same within nine (9) months following the date Landlord delivers possession of the Premises to Tenant, Landlord shall be responsible for repairing or restoring the same at Landlord’s sole cost.
7.2. During the Term, Tenant at Tenant’s expense, shall repair and maintain the entire Premises (other than the portions expressly required to be maintained by Landlord pursuant to Section 7.3 below), including the interior walls, floor coverings, ceiling (ceiling tiles and grid), the Landlord Work (as such term is defined in the Construction Rider attached hereto as Exhibit B (the “Construction Rider”)), Alterations, fire extinguishers, outlets and fixtures, and any appliances (including dishwashers, hot water heaters and garbage disposers) in the Premises, in reasonably good order, condition and repair, and keep the Premises in a clean, safe and orderly condition.
7.3. Landlord shall maintain or cause to be maintained in reasonably good order, condition and repair as part of Operating Costs (subject to the limitations expressly set forth in this Lease), the Common Areas described below and the structural components of the Building (including the foundations, roof (including the roof membrane), floors, structural walls and beams, and exterior walls of the Building), the Building Systems, the Generator, the Parking Garage, cafe, outdoor terraces, balconies and the landscaping, hardscape and lighting around the exterior of the Building; provided, however, that subject to payment to Landlord pursuant to applicable waivers
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of subrogation, Tenant shall pay the cost of repairs for any damage (as opposed to normal and reasonable use) occasioned by Tenant’s access, use and/or occupancy of the Project, any Alterations, or any act or omission of Tenant or a Tenant Party. Landlord shall be under no obligation to inspect the Premises. Tenant shall promptly report in writing to Landlord any defective condition known to Tenant which Landlord is required to repair. As a material part of the consideration for this Lease, Tenant hereby waives any benefits of any applicable existing or future Law, including the provisions of California Civil Code Sections 1932(1), 1941 and 1942, that allows a tenant to make repairs at its landlord’s expense other than as expressly set forth in this Lease.
7.4. Landlord hereby reserves the right, at any time and from time to time, without liability to Tenant, and without constituting an eviction, constructive or otherwise, or entitling Tenant to any abatement of rent (except as set forth in Section 9.2 below) or to terminate this Lease or otherwise releasing Tenant from any of Tenant’s obligations under this Lease, but subject to the terms and conditions of this Lease, to make alterations, additions, repairs, improvements to or in all or any part of the Building, the fixtures and equipment therein, and the Building Systems and the Common Areas (“Renovations”). In exercising its rights under this Section 7.4 to perform Renovations, Landlord agrees to use commercially reasonable efforts to minimize any interruption to or disruption of Tenant’s use of the Premises. In the event Landlord shall prohibit Tenant’s access to all or part of the Premises while performing Renovations so that Tenant is unable to reasonably conduct its normal and typical business operations in the Premises for more than two (2) business days, Tenant shall be entitled to an abatement of Base Rent and Operating Costs and Taxes for each day thereafter until access to the Premises (or a part of the Premises) is restored; provided that such abatement shall be provided on a pro rata basis to the extent Tenant’s access and use of the Premises is prohibited and unused by Tenant.
8. TENANT’S TAXES . Tenant shall pay all Tenant’s Taxes. “Tenant’s Taxes” shall mean (a) all taxes, assessments, license fees and other governmental charges or impositions levied or assessed against or with respect to Tenant’s personal property or Trade Fixtures in the Premises, whether any such imposition is levied directly against Tenant or levied against Landlord or the Project, (b) all rental, excise, sales or transaction privilege taxes arising out of this Lease (excluding, however, state and federal personal or corporate income taxes measured by the income of Landlord from all sources) imposed by any taxing authority upon Landlord or upon Landlord’s receipt of any rent payable by Tenant pursuant to the terms of this Lease (“Rental Tax”), and (c) any increase in Taxes attributable to inclusion of a value placed on Tenant’s personal property, Trade Fixtures or Alterations. Tenant shall pay any Rental Tax to Landlord in addition to and at the same time as Base Rent is payable under this Lease, and shall pay all other Tenant’s Taxes before delinquency (and, at Landlord’s request, shall furnish Landlord reasonable satisfactory evidence thereof). If Landlord pays Tenant’s Taxes or any portion thereof, Tenant shall reimburse Landlord upon demand for the amount of such payment.
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9. UTILITIES AND SERVICES.
9.1. Services.
(a) Provided Tenant shall not be in default hereunder, and subject to the provisions elsewhere herein contained and to the rules and regulations of the Building, Landlord shall furnish to the Premises, water for lavatory and drinking purposes, elevator service, electricity, and HVAC as usually furnished or supplied by the core Building systems (and such HVAC shall be capable to cycle through up to twelve (12) air changes per hour), for use of the Premises for reasonable and normal use as of the date Tenant takes possession of the Premises as determined by Landlord (but not including above-standard or supplemental cooling for excessive heat-generating machines, excess lighting or equipment or laboratory specific use). Tenant acknowledges that except as otherwise expressly stated in this Lease, the Premises shall be tendered to and accepted by Tenant, in their present condition, “as is”. Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler system charges and other utilities and services used on or from the Premises, together with any taxes, penalties, and surcharges or the like pertaining thereto and any maintenance charges for utilities either as a direct charge or as part of Operating Costs, as applicable. Tenant shall furnish all electric light bulbs, tubes and ballasts, battery packs for emergency lighting and fire extinguishers (provided the Premises shall be initially outfitted with fire extinguishers as part of the Landlord Work). If any such services are not separately metered to Tenant, Tenant shall pay such proportion of all charges jointly metered with other premises as determined by Landlord, in its sole discretion, to be reasonable. Any such charges paid by Landlord and assessed against Tenant shall be payable to Landlord within thirty (30) days of demand and shall be Additional Rent hereunder. The Premises are submetered for electricity and Tenant shall pay for all electrical usage: (i) for the office portion of the Premises, as measured by such submeter, and (ii) for the laboratory portion of the Premises, pursuant to a sharing calculation applicable to the Building, in each instance as Additional Rent under the Lease. In addition, if applicable, Landlord may install and shall have access to the Premises to monitor a separate meter (or submeter) to determine the actual use of any utility in the Premises or any shared Common Area and may make available and share actual whole-project energy and water usage data as necessary to maintain the Building’s “green building” certification, if any.
(b) Landlord shall have no obligation to provide additional HVAC, water, or other utilities or services, but if Landlord elects to provide such services at Tenant’s request, Tenant shall pay to Landlord, upon demand as Additional Rent, a reasonable charge for such services as determined by Landlord, in addition to a reasonable administrative fee (equal to five percent (5%)). Wherever the Premises are used in a manner which affect the temperature otherwise maintained by the HVAC system, Landlord may require Tenant to install supplementary HVAC units in the Premises and the cost thereof, including the cost of installation and the cost of operation, repair and maintenance thereof, shall be paid by Tenant. At all times during the Term, Tenant shall ensure that its use of the utility systems of the Building are consistent with typical and customary use and shall not overload, abuse or over use the foregoing systems in a manner that will accelerate their useful life or contribute to their early deterioration and Tenant shall at all times use such systems in a safe manner consistent with the design capacity for all such systems. Tenant shall be responsible for providing trash removal and janitorial service for the Premises at its sole cost and expense, and Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide trash removal or janitorial service to the Premises.
9.2. Except as otherwise expressly provided in this Lease, Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by breakage, repairs, replacements, or improvements, by any
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strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after reasonable effort to do so, by any riot or other dangerous condition, emergency, accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or, except as expressly set forth below, relieve Tenant from paying Rent, or performing any of its obligations under this Lease. Furthermore, notwithstanding anything to the contrary contained in this Lease, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 9. Notwithstanding anything to the contrary contained in this Article 9, if Tenant’s use of the Premises, or a material portion of the Premises, is materially impaired for a period in excess of five (5) consecutive business days solely as a result of an interruption, diminishment or termination of any essential services that Landlord is obligated to provide pursuant to the terms of this Lease (an “Interruption”) due to Landlord’s gross negligence or willful misconduct, and such interruption, diminishment or termination of services is otherwise reasonably within the control of Landlord to correct (a “Service Failure”), then Tenant, as its sole remedy and waiving any other or additional remedies, shall be entitled to receive an abatement of the Base Rent and Operating Costs and Taxes payable hereunder during the period beginning on the sixth (6th) consecutive business day of the Service Failure and ending on the day the interrupted service has been restored. If Tenant’s use of only a portion of the Premises has been materially impaired by the Service Failure, the amount of abatement shall be equitably prorated. Landlord’s failure to perform a repair or maintenance obligation expressly required of Landlord pursuant to this Lease, and Landlord fails to promptly commence a cure within ten (10) days of receipt of written notice from Tenant describing such failure and the failure then causes an Interruption, such Interruption shall be deemed a Service Failure hereunder and Base Rent and Operating Costs and Taxes abatement shall commence following the expiration of such ten (10) day period.
9.3. Building Generator.
(a) As of the Commencement Date (the “Generator Effective Date”) and throughout the remainder of the Term, as extended from time to time (subject to the terms and conditions of this Section), Landlord shall maintain in good condition and repair and replace when necessary, a 1.25MW back-up generator serving the Building, with no less than 200 amperes capacity, 480 voltage, and 3-phase alternating power current (“Generator”). Landlord shall conduct regular inspections and testing of the Generator in a manner that is consistent with the manufacturer’s standard maintenance guidelines and shall cause to be performed any recommended repair and maintenance work (the cost thereof shall be included in Operating Costs). Tenant shall have the non-exclusive right to use the Generator solely for the purpose of providing Tenant’s proportionate share of emergency electrical capacity to the Premises. All work required to install the cables and tie the Premises into the Generator shall be performed by Landlord, at Landlord’s sole cost and expense, as part of the Landlord Work (the “Generator Tie-In Work”). The manner in which any cables are run to and from the Generator to the Premises and the manner in which such cables are connected to the Generator shall be determined by Landlord. If the Generator Tie-In Work causes an actual delay in the construction schedule for the Landlord Work beyond what such schedule would be without the Generator Tie-In Work, such delay shall be deemed to be a Tenant Delay the purposes of determining the Required Delivery Date and Outside Delivery Date.
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(b) Tenant’s physical access to the Generator (as opposed to the service of emergency back-up power from the Generator to the Premises) shall be limited to such times, rules and regulations as Landlord may reasonably impose.
(c) Tenant shall be solely liable for all fees or other costs arising in connection with Tenant’s use of the Generator (provided Landlord shall not charge Tenant a use or other such fee).
(d) Tenant shall be responsible for the cost of repairing any damage to the Generator caused by Tenant’s use thereof or as a result of Tenant connecting to the Generator. All such costs shall be deemed Rent under the Lease and shall be payable within thirty (30) days of written demand, which demand shall include reasonable documented evidence of the damage and related repair costs.
(e) Tenant hereby agrees that Tenant’s connection to the Generator and its use of the Generator is at Tenant’s sole risk, and Tenant hereby agrees that Landlord and the Landlord Representatives shall not be liable for, and Tenant hereby waives, all claims for loss or damage to Tenant’s business or damage to person or property sustained by Tenant or any person claiming by, through or under Tenant resulting from Tenant’s use of the Generator or connection to same, the failure of the Generator to operate properly, or the interruption or cessation of electrical service from the Generator. Tenant acknowledges that other tenants in the Building may connect to the Generator and that Landlord does not represent or warrant that such other connections will not interfere with Tenant’s use thereof.
(f) Except to the extent caused by the Generator Tie-In Work, Tenant hereby agrees to indemnify and hold Landlord and all Landlord Representatives harmless from all liability, losses, claims, penalties, and expenses, including, without limitation, reasonable attorney’s fees, resulting from or arising out of Tenant’s use or operation of, the Generator (for example, if Tenant uses more than its proportionate share of emergency back-up power to the detriment of other tenants and occupants of the Project).
(g) Landlord may revoke Tenant’s right to connect to and use the Generator as granted herein if Landlord determines, in its reasonable discretion, that Tenant’s use of the Generator is in excess of Tenant’s proportionate share thereof so that other tenants, occupants and/or the Building is not sufficiently served by the Generator. Such revocation shall be by written notice and, upon receipt of such notice, if Tenant shall not promptly cure such excess usage (in any event no later than ten (10) business days following delivery of such notice) Tenant shall have thirty (30) days in which to disconnect and remove any cables servicing the Premises from the Generator. If Tenant fails to timely disconnect such cables, Landlord may do so and charge Tenant for the cost thereof, which sum shall be paid as additional Rent under the Lease.
(h) Tenant’s connection to and use of the Generator shall be for Tenant’s use at the Premises only. Tenant shall have no right to sublet or assign Tenant’s rights with respect to the Generator (other than in connection with a Permitted Transfer under this Lease or any sublease of the Premises or assignment of this Lease approved by Landlord, but in any event, no more than Tenant’s proportionate share of back-up power shall be available to any party using the Premises pursuant to this Lease).
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9.4. Direct Billing. Within thirty (30) days of request if required for Landlord to comply with any applicable Law (or such shorter period if required by Law), Tenant shall provide monthly electrical utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord’s option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant’s electricity usage with respect to the Premises directly from the applicable utility company.
10. EXCULPATION AND INDEMNIFICATION.
10.1. Landlord’s Indemnification of Tenant. Except to the extent caused by the acts or negligent omissions of Tenant and/or any Tenant Party, Landlord shall indemnify, protect, defend and hold Tenant, its partners, members, shareholders, managers, directors, officers and employees (“Tenant Indemnitees”) harmless from and against any claims, actions, liabilities, damages, costs or expenses, including reasonable consultants’, expert witnesses’ and attorneys’ fees and costs incurred in defending against the same (“Claims”) asserted by any third party (i.e., any party other than any Tenant Indemnitees) against a Tenant Indemnitee for loss, injury or damage, to the extent such loss, injury or damage arises from the willful misconduct or grossly negligent acts or omissions of Landlord or its Representatives in or about the Project or arises from Landlord’s default of Landlord’s obligations set forth in this Lease.
10.2. Tenant’s Indemnification of Landlord. Tenant shall indemnify, protect, defend and hold Landlord and the Landlord’s Representative harmless from and against Claims asserted by any third party (i.e., any party other than any Landlord’s Representatives) against a Landlord’s Representative arising from (a) the acts or omissions of Tenant or any Tenant Party in or about the Project, (b) any construction or other work or maintenance undertaken by Tenant in the Main Premises and/or the Storage Space or elsewhere on or about the Project, (c) any breach or default under this Lease by Tenant, or (d) any loss, injury or damage, howsoever and by whomsoever caused, to any person or property, arising out of or relating to Tenant’s occupancy or operation and occurring in or about the Premises or elsewhere in the Project, excepting only Claims described in this clause (d) to the extent they are caused by the willful misconduct or grossly negligent acts or omissions of Landlord or its authorized representatives. In addition, Tenant shall indemnify, protect, defend and hold Landlord and the Landlord’s Representative harmless from and against (i) any Claims asserted against Landlord by any other Landlord’s Representative for any loss, injury or damage suffered by such Landlord’s Representative arising from the willful misconduct or grossly negligent acts of Tenant or any Tenant Party, and (ii) for Claims arising from the death of, or physical injury suffered by, a Landlord’s Representative to the extent such death or physical injury arises from (1) the willful misconduct or grossly negligent acts or omissions of Tenant or any Tenant Party in or about the Project, (2) any construction or other work undertaken by Tenant in or about the Project, or (3) any breach or default under this Lease by Tenant.
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10.3. Damage to Tenant and Tenant’s Property. Except to the extent of Landlord’s or any Landlord’s Representatives’ willful misconduct or grossly negligent acts or omissions, Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord, for any loss, injury or other damage (and the cost and expense of defending against claims related thereto) to Tenant. In addition, Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord on any loss, injury or other damages (and the cost and expense of defending against claims related thereto) to Tenant’s property in or about the Main Premises, the Storage Space and/or the Project from any cause (including defects in the Project or in any equipment in the Project; fire, explosion or other casualty; or bursting, rupture, leakage or overflow of any plumbing or other pipes or lines, sprinklers, tanks, drains, drinking fountains or washstands in, above, or about the Main Premises, the Storage Space and/or the Building; or acts of other tenants in the Project).
10.4. Consequential Damage Waiver. Notwithstanding any other provision of this Lease to the contrary, in no event shall Landlord be liable to Tenant for any punitive or consequential damages or damages for loss of business by Tenant. Notwithstanding any other provisions of this Lease to the contrary, Tenant shall not be liable to Landlord for any special, indirect or consequential damages except for any damages recoverable pursuant to Section 19.2 (Holding Over) and Section 5.2 regarding Hazardous Materials and provided that Tenant hereby acknowledges and agrees that the foregoing shall not prevent Landlord from recovering any and all damages to which Landlord is entitled in Section 15.3 of this Lease following an Event of Default by Tenant hereunder.
10.5. Survival. The obligations of the parties under this Section 10 shall survive the expiration or termination of this Lease.
11. INSURANCE.
11.1. Tenant’s Insurance.
(a) Liability Insurance. Tenant shall maintain in full force throughout the Term, commercial general liability insurance providing coverage on an occurrence form basis with limits of not less than Ten Million and 0/100 Dollars ($10,000,000.00) each occurrence for bodily injury and property damage combined, Ten Million and 0/100 Dollars ($10,000,000.00) annual general aggregate, and Five Million and 0/100 Dollars ($5,000,000.00) products and completed operations annual aggregate. The above required limits may be satisfied through any combination of primary or umbrella/excess liability policies. Tenant’s liability insurance policy or policies shall: (i) include premises and operations liability coverage, products and completed operations liability coverage, broad form property damage coverage including completed operations, blanket contractual liability coverage including, to the maximum extent possible, coverage for the indemnification obligations of Tenant under this Lease, and personal and advertising injury coverage; (ii) provide that the insurance company has the duty to defend all insureds under the policy; (iii) provide that defense costs are paid in addition to and do not deplete any of the policy limits; and (iv) cover liabilities arising out of or incurred in connection with Tenant’s use or occupancy of the Main Premises and the Storage Space. Each policy of liability insurance required by this Section shall: (1) contain a cross liability endorsement or separation of insureds clause; (2) provide that any waiver of subrogation rights or release prior to a loss does not void coverage; (3) provide that it is primary to and not contributing with, any policy of insurance carried by Landlord covering the same loss; and (4) name Landlord, its partners, officers, directors,
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related entities, agents, the property manager, Landlord’s lenders and such other parties in interest as Landlord may from time to time reasonably designate to Tenant in writing, as additional insureds (“Landlord’s Additional Insureds”). Such additional insureds shall be provided at least the same extent of coverage as is provided to Tenant under such policies with respect to liability arising out of the ownership, maintenance or use of the Premises. All endorsements effecting such additional insured status shall be at least as broad as additional insured endorsement form number CG 20 11 11 85 or CG 20 11 11 01 96 promulgated by the Insurance Services Office, or its equivalent.
(b) Property Insurance. Tenant shall at all times maintain in effect with respect to improvements, additions, Alterations and Tenant’s Trade Fixtures and personal property including business personal property (but excluding the Landlord Work and initial construction of the Building), commercial property insurance providing coverage, on an “all risk” or “special form” basis (including, but not limited to, sprinkler leakage, ordinance and law, sewer back-up, pipe burst, wind-driven rain, water leakage, flood, earthquake, windstorm and collapse coverage), in an amount equal to the full replacement cost of the covered property. Tenant may carry such insurance under a blanket policy, provided that such policy provides coverage equivalent to a separate policy. During the Term, the proceeds from any such policies of insurance shall be used only for the repair or replacement of the improvements (including the Landlord Work), additions, Alterations, Trade Fixtures and personal property so insured. Landlord shall be provided coverage under such insurance to the extent of its insurable interest and, if requested by Landlord, both Landlord and Tenant shall sign all documents reasonably necessary or proper in connection with the settlement of any claim or loss under such insurance. Landlord will have no obligation to carry insurance on any improvements (including the Landlord Work), additions, Alterations or on Tenant’s Trade Fixtures or personal property.
(c) Workers’ Compensation and Employers’ Liability Insurance. Workers’ Compensation Insurance as required by any Regulation, and Employers’ Liability Insurance in amounts not less than One Million Dollars ($1,000,000) each accident for bodily injury by accident; One Million Dollars ($1,000,000) policy limit for bodily injury by disease; and One Million Dollars ($1,000,000) each employee for bodily injury by disease.
(d) Commercial Auto Liability Insurance. Commercial auto liability insurance with a combined limit of not less than One Million Dollars ($1,000,000) for bodily injury and property damage for each accident. Such insurance shall cover liability relating to any auto (including owned, hired and non-owned autos).
(e) Alterations Requirements. In the event Tenant shall desire to perform any Alterations, Tenant shall deliver to Landlord, prior to commencing such Alterations (i) evidence satisfactory to Landlord that Tenant carries “Builder’s Risk” insurance covering construction of such Alterations in an amount and form approved by Landlord, (ii) such other insurance as Landlord shall nondiscriminatorily require, and (iii) a lien and completion bond or other security in form and amount satisfactory to Landlord if Landlord may require pursuant to Article 6 of this Lease.
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(f) Pollution Liability Insurance. Pollution liability insurance with limits not less than $1,000,000.00 per event, and $1,000,000.00 aggregate, insuring bodily injury, property damage, cleanup costs, and defense, including costs and expenses incurred in the investigation, defense, settlement of claims and Tenant’s indemnification obligations pursuant to Section 5.2 above.
(g) Business Interruption Insurance. Business interruption insurance with limit of liability representing loss of at least approximately twelve (12) months of income.
(h) Requirements For All Policies. Each policy of insurance required under this Section 11.1 shall: (i) be in a form, and written by an insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant’s sole cost and expense, (iii) other than workers’ compensation coverage, name Landlord and the Landlord Additional Insureds as additional insureds, and (iv) be primary and non-contributary. Tenant shall make commercially reasonable efforts to require its Insurers provide at least ten (10) days prior written notice to Landlord before any cancellation or adverse change in Tenant’s insurance coverages required in this Lease (and in any event, Tenant shall provide such notice to Landlord). Insurance companies issuing such policies shall have rating classifications of “A” or better and financial size category ratings of “VII” or better according to the latest edition of the A.M. Best Key Rating Guide. Any deductible amount under such insurance shall not exceed Twenty-Five Thousand and 0/100 Dollars ($25,000.00). Tenant shall provide to Landlord within ten (10) business days of request, certificates of insurance.
(i) Updating Coverage. Following the third (3rd) anniversary of the Commencement Date, and not more frequently than once every three (3) years thereafter, at Landlord’s written request, Tenant shall increase the amounts and/or types of insurance as recommended by any Mortgagee or Landlord’s insurance broker, if, the amount or type of insurance then required under this Lease is materially less than the coverage then being required of other similar building occupants under similar leases of projects comparable to the Project and located in the same geographic region as the Building. Any limits set forth in this Lease on the amount or type of coverage required by Tenant’s insurance shall not limit the liability of Tenant under this Lease.
(j) Certificates of Insurance. Prior to occupancy of the Premises by Tenant, and not less than thirty (30) days prior to expiration of any policy thereafter, Tenant shall furnish to Landlord a certificate of insurance reflecting that the insurance required by this Section is in force, accompanied by an endorsement showing the required additional insureds satisfactory to Landlord in substance and form. Notwithstanding the requirements of this paragraph, Tenant shall at Landlord’s request provide to Landlord those portions of a copy of any Tenant insurance policy required to be in force at any time pursuant to the requirements of this Lease or its Exhibits which copy is necessary in connection with Landlord’s prosecution of claim thereunder or in connection with the terms and conditions of Section 11.3 below.
11.2. Landlord’s Insurance. During the Term, Landlord shall carry commercial general liability insurance with respect to non-leasable areas of the Project (i.e., Common Areas and non-public areas such as mechanical rooms) and shall further maintain in effect insurance on the Building on an “all risk” or “special form” basis, insuring the core Building in an amount equal the replacement cost thereof, excluding land. Landlord may, but shall not be obligated to, carry insurance against additional perils and/or in greater amounts.
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11.3. Mutual Waiver of Right of Recovery & Waiver of Subrogation. Landlord and Tenant each hereby waive any right of recovery against each other and the partners, managers, members, shareholders, officers, and directors of each other for any loss or damage that is covered by any policy of property insurance maintained by either party (or required by this Lease to be maintained) with respect to the Premises and the Project or any operation therein, regardless of cause, including negligence (active or passive) of the party benefiting from the waiver and for workers’ compensation coverage. If any such policy of insurance relating to this Lease or to the Premises and the Project does not permit the foregoing waiver or if the coverage under any such policy would be invalidated as a result of such waiver, the party maintaining such policy shall obtain from the insurer under such policy a waiver of all right of recovery by way of subrogation against either party in connection with any claim, loss or damage covered by such policy.
12. DAMAGE OR DESTRUCTION.
12.1. Landlord’s Duty to Repair.
(a) If all or any portion of the Project is damaged from fire or other casualty (a “Casualty”) then, unless either party is entitled to and elects to terminate this Lease pursuant to Sections 12.2 and 12.3, Landlord shall repair and restore the core and shell of the Main Premises, the Landlord Work, the Storage Space, and repair and restore the Common Areas to substantially their former condition to the extent permitted by then applicable Laws; provided, however, that in no event shall Landlord have any obligation for repair or restoration of any of Tenant’s personal property, Trade Fixtures, or Alterations or other alterations or improvements performed in the Premises following the Commencement Date. Landlord shall, within ninety (90) days after the date of the Casualty, provide written notice to Tenant indicating the anticipated period for repairing the damage from such Casualty (“Casualty Notice”). Such period and cost shall be based on information provided to Landlord by a reputable, licensed contractor or architect, which such information shall be delivered to Tenant with the Casualty Notice. The Casualty Notice shall also state, if applicable, Landlord’s election either to repair or to terminate the Lease under this Section 12.
(b) If Landlord is required or elects to repair damage to the Project following a Casualty, this Lease shall continue in effect. If any portion of the Main Premises or Storage Space is rendered untenantable or inaccessible due to any Casualty, Landlord and Tenant agree that Tenant’s Base Rent and Additional Rent and Taxes shall be fully abated during the period beginning on the date of the Casualty and ending on the date that Landlord Substantially Completes its restoration obligations (“Abatement Period”). If, however, Tenant is able to occupy a portion of the Main Premises or Storage Space, Base Rent and Additional Rent shall be abated during the Abatement Period only for the portion of the Main Premises and Storage Space not suitable for occupancy and not used by Tenant, provided that if the Casualty damage or destruction affecting use of or access to only a portion of the Main Premises is such that Tenant is prevented from effectively conducting its business from the remaining portion of the Main Premises, then such abatement shall pertain to the entire Main Premises and Storage Space. In no event shall Landlord be liable to Tenant by reason of any injury to or interference with Tenant’s business or property arising from a Casualty or by reason of any repairs to any part of the Premises necessitated by such Casualty.
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12.2. Landlord’s Right to Terminate. Landlord may elect to terminate this Lease following a Casualty that under the following circumstances:
(a) If the Casualty renders all or a substantial part of the Premises untenantable or inaccessible and the Casualty Notice estimates that the period for repairing the damage from such Casualty (i) during the initial Term, exceeds two hundred seventy (270) days from the date of the Casualty, or (ii) after the initial Term, greater than one (1) year from the date of the Casualty; or
(b) If the Casualty Notice estimates that the cost to repair and restore the Building would exceed twenty percent (20%) of the full replacement cost of the Building; or
(c) If the fire or other casualty occurs during the last year of the Term and Tenant has not previously elected to extend the Term, or if upon completion of repair and restoration there would be less than six (6) months of the Term remaining.; or
(d) If, Landlord maintained the insurance required under this Lease, and in the reasonable judgment of Landlord, adequate proceeds are not, for any reason, made available to Landlord from Landlord’s insurance policies (and/or from Landlord’s funds made available for such purpose, at Landlord’s sole option) to make the required repairs;
12.3. Tenant’s Right to Terminate. If all or a substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Buildings from fire or other casualty, and Landlord does not elect to terminate as provided above, then Tenant may elect to terminate this Lease if Landlord’s estimate of the time required to complete Landlord’s repair obligations under this Lease is (i) during the initial Term, greater than two hundred seventy (270) days from the date of the Casualty event, and (ii) after the initial Term, greater than one (1) year from the date of the Casualty event, in which event Tenant may elect to terminate this Lease by giving Landlord notice of such election to terminate within thirty (30) days after Landlord’s notice to Tenant pursuant to Section 12.2 -Landlord’s Right to Terminate. In addition, Tenant may elect to terminate this Lease if the fire or other casualty occurs during the last year of the Term and (a) upon completion of repair and restoration there would be less than six (6) months of the Term remaining or (b) if Landlord’s estimate of the time required to complete Landlord’s repair obligations under this Lease is greater than one hundred eighty (180) days.
12.4. Waiver. Landlord and Tenant each hereby waive the provisions of California Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future Law permitting the termination of a lease agreement in the event of damage or destruction under any circumstances other than as provided in Sections 12.2 and 12.3.
13. CONDEMNATION.
13.1. Definitions.
(a) “Award” shall mean all compensation, sums, or anything of value awarded, paid or received on a total or partial Condemnation.
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(b) “Condemnation” shall mean (i) a permanent taking (or a temporary taking for a period extending beyond the end of the Term) pursuant to the exercise of the power of condemnation or eminent domain by any public or quasi-public authority, private corporation or individual having such power (“Condemnor”), whether by legal proceedings or otherwise, or (ii) a voluntary sale or transfer by Landlord to any such authority, either under threat of condemnation or while legal proceedings for condemnation are pending.
(c) “Date of Condemnation” shall mean the earlier of the date that title to the property taken is vested in the Condemnor or the date the Condemnor has the right to possession of the property being condemned.
13.2. Effect on Lease.
(a) If the Premises are totally taken by Condemnation, this Lease shall terminate as of the Date of Condemnation. If a portion but not all of the Main Premises or Storage Space is taken by Condemnation, this Lease shall remain in effect; provided, however, that if the portion of the Main Premises remaining after the Condemnation will be unsuitable for Tenant’s continued use as determined by Tenant and Landlord in their reasonable and mutual discretion, then upon notice to Landlord within fifteen (15) days after Landlord notifies Tenant of the Condemnation, Tenant may terminate this Lease effective as of the Date of Condemnation.
(b) If twenty-five percent (25%) or more of the parcel(s) of land on which the Premises is situated or of the usable area in the Premises is taken by Condemnation, or if as a result of any Condemnation the Building is no longer reasonably suitable for a reasonable and economical use, whether or not any portion of the Premises is taken or if all or a portion of the Premises is temporarily taken by a Condemnor for a period of one (1) year or more, Landlord may elect to terminate this Lease, effective as of the Date of Condemnation, by notice to Tenant within thirty (30) days after the Date of Condemnation.
(c) If twenty percent (20%) or more of the Premises is permanently taken by Condemnation or temporarily taken by Condemnation for a period in excess of one (1) year, then Tenant and Landlord each may terminate the Lease effective as of the Date of Condemnation by notice to the other party within thirty (30) days after the Date of Condemnation.
(d) If all or a portion of the Premises is temporarily taken by a Condemnor for a period not extending beyond one (1) year, this Lease shall remain in full force and effect, provided that the Base Rent and Additional Rent and Taxes shall be abated as to the Main Premises and the Storage Space to the extent the Award received by Tenant attributable to the rent (as opposed to attributed to loss of goodwill, costs of relocating, costs of alterations, etc.) pursuant to Section 13.5 is less than the amount of the Base Rent, Taxes and Additional Rent that accrued during such period.
13.3. Restoration. If this Lease is not terminated as provided in Section 13.2, Landlord shall diligently proceed to repair and restore the Project to substantially its former condition (to the extent permitted by then applicable Laws) or repair and restore the Building to an architecturally complete building to the extent of Award proceeds received by Landlord. In no event shall Landlord have any obligation to repair or replace any of Tenant’s personal property, Trade Fixtures, Landlord Work, improvements, additions, or Alterations.
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13.4. Abatement and Reduction of Rent. If any portion of the Main Premises or Storage Space is taken in a Condemnation or is rendered permanently untenantable or inaccessible by repairs necessitated by the Condemnation, and this Lease is not terminated, the Base Rent, Taxes and Additional Rent payable under this Lease shall be proportionally reduced as of the Date of Condemnation based upon the percentage of rentable square feet in the Main Premises and Storage Space so taken or rendered permanently untenantable.
13.5. Awards. Any Award made shall be paid to Landlord, and Tenant hereby assigns to Landlord, and waives all interest in or claim to, any such Award, including any claim for the value of the unexpired Term; provided, however, that Tenant shall be entitled to receive, or to prosecute a separate claim for, an Award for relocation expenses of Tenant’s business, loss of goodwill, and as compensation for Tenant’s personal property, Trade Fixtures or Alterations Tenant is required to remove at the expiration or earlier termination of this Lease, provided that in no event will any Award to Tenant reduce any Award to which Landlord would otherwise be entitled.
13.6. Waiver. Landlord and Tenant each hereby waive the provisions of California Code of Civil Procedure Section 1265.130 and any other applicable existing or future Law allowing either party to petition for a termination of this Lease upon a partial taking of the Premises.
14. ASSIGNMENT AND SUBLETTING.
14.1. Landlord’s Consent Required. Tenant shall not assign this Lease or any interest therein or sublet or license or permit to use or occupy the Premises or any part thereof by or for the benefit of anyone other than Tenant or in any other manner transfer all or any part of Tenant’s interest under this Lease (each and all a “Transfer”), without the prior written consent of Landlord, which consent (subject to the other provisions of this Section 14) shall not be unreasonably withheld, conditioned or delayed. Notwithstanding any provision in this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or otherwise encumber this Lease or all or any part of Tenant’s interest under this Lease. Any assignee, subtenant, user or other transferee under any proposed Transfer is herein called a “Proposed Transferee”. Any assignee, subtenant, user or other transferee is herein called a “Transferee”.
14.2. Reasonable Consent.
(a) At least thirty (30) days prior to any proposed Transfer, Tenant shall submit in writing to Landlord (i) the name and legal composition of the proposed assignee or other transferee (each a “Proposed Transferee”); (ii) the nature of the business proposed to be carried on in the Premises; (iii) a current balance sheet, income statements for the last two (2) years and such other reasonable financial and other information concerning the Proposed Transferee as Landlord may request, provided Landlord shall execute Landlord’s commercially reasonable form of confidentiality agreement if required by the Proposed Transferee prior to receipt of such financial information; and (iv) a copy of the proposed assignment, sublease or other agreement
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governing the proposed Transfer. Within fifteen (15) business days after Landlord receives all such information it shall notify Tenant whether it approves or disapproves such Transfer (and if it disapproves it shall provide the reasons for disapproval) or if it elects to proceed under Section 14.6 below. If Landlord fails to notify Tenant of Landlord’s reasonable approval, disapproval or exercise of its rights under Section 14.6 below within the fifteen (15) business day period, then Tenant shall have the right to provide Landlord with a second written request for approval (a “Proposed Transfer Second Request”) that contains the following statement in bold and capital letters: “THIS IS A SECOND REQUEST FOR APPROVAL OF A PROPOSED TRANSFEREE PURSUANT TO THE PROVISIONS OF SECTION 14.2 OF THE LEASE. IF LANDLORD FAILS TO RESPOND WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF THIS NOTICE, THEN LANDLORD SHALL BE DEEMED TO HAVE APPROVED THE PROPOSED TRANSFEREE.” If Landlord fails to respond to such Proposed Transfer Second Notice within five (5) business days after receipt by Landlord, the Proposed Transferee and Transfer in question shall be deemed approved by Landlord.
(b) Tenant acknowledges and agrees that, among other circumstances for which Landlord could reasonably withhold consent to a proposed Transfer, it shall be reasonable for Landlord to withhold consent where (i) the Proposed Transferee does not intend itself to occupy the entirety of the Premises subject to the Transfer, (ii) Landlord reasonably disapproves of the Proposed Transferee’s business operating ability or history or creditworthiness, (iii) the Proposed Transferee is a governmental agency or unit, (iv) Landlord otherwise determines that the proposed Transfer would have the effect of decreasing the value of the Building or increasing the expenses associated with operating, maintaining and repairing the Project (unless Tenant agrees to be responsible for such increased costs), or (v) any mortgagee has objection rights and objects to the Proposed Transfer.
14.3. No Release of Tenant. No consent by Landlord to any Transfer shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether occurring before or after such Transfer. Each assignee shall be jointly and severally liable with Tenant (and Tenant shall be jointly and severally liable with each assignee) for the payment of rent and the performance of all other terms and provisions of this Lease. Each subtenant shall agree to be subject and subordinate to this Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any such Transferee from the obligation to obtain Landlord’s express prior written consent to any subsequent Transfer by Tenant or any Transferee. The acceptance of rent by Landlord from any other person (whether or not such person is an occupant of the Premises) shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer.
14.4. Expenses and Attorneys’ Fees. Tenant shall pay to Landlord on demand all documented, reasonable costs and expenses (including reasonable attorneys’ fees not to exceed Five Thousand and 00/100 Dollars ($5,000.00) per Transfer request (the “Fee Cap”)) incurred by Landlord in connection with reviewing or consenting to any proposed Transfer (including any request for consent to, or any waiver of Landlord’s rights in connection with, any security interest in any of Tenant’s personal property at the Premises). Notwithstanding the foregoing, if Tenant or the transferee request, and Landlord agrees to, material changes to Landlord’s standard form of consent or if there are material negotiations related thereto or if this Lease needs to be amended as a result thereof, and if Landlord’s reasonable costs and expenses (including reasonable attorney’s fees and costs attributable to time expended by in house counsel, accountants or other personnel of Landlord) exceeds the Fee Cap, Tenant shall reimburse Landlord for all such reasonable costs and expenses incurred in connection with its review of the requested assignment or sublet and the aforementioned Fee Cap shall be inapplicable.
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14.5. Effectiveness of Transfer. Prior to the date on which any permitted Transfer (whether or not requiring Landlord’s consent) becomes effective, Tenant shall deliver to Landlord a counterpart of the fully executed Transfer document (including Landlord’s consent to such Transfer executed by Tenant and the Proposed Transferee). Failure or refusal of a Transferee to execute any such instrument shall not release or discharge the Transferee from liability as provided herein. The voluntary, involuntary or other surrender of this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not work a merger, and any such surrender or cancellation shall, at the option of Landlord, either terminate all or any existing subleases or operate as an assignment to Landlord of any or all of such subleases.
14.6. Landlord’s Right to Space. Notwithstanding any of the above provisions of this Section to the contrary, if Tenant notifies Landlord that it desires to enter into a Transfer, Landlord, in lieu of consenting to such Transfer, may elect by written notice to Tenant within thirty (30) days following submission to Landlord by Tenant of the information specified in Section 14.2, in the case of an assignment of this Lease other than to a Permitted Transferee or a sublease of the entire Premises other than to a Permitted Transferee for the remainder of the then-current Term, to terminate this Lease. In such event, this Lease will terminate as of the termination date specified in such, and Landlord may lease such space to any party, including the prospective Transferee identified by Tenant.
14.7. Deemed Consent Transfers. Notwithstanding anything to the contrary contained in this Lease, (A) an assignment or subletting of all or a portion of the Premises to an affiliate of Tenant (an entity which is controlled by, controls, or is under common control with, Tenant as of the date of this Lease), (B) a sale of corporate shares of capital stock in Tenant in connection with an initial public offering of Tenant’s stock on a nationally-recognized stock exchange, (C) an assignment of the Lease to an entity which acquires all or substantially all of the stock or assets of Tenant, or (D) an assignment of the Lease to an entity which is the resulting entity of a merger, consolidation or reorganization of Tenant during the Lease Term, shall not be deemed a Transfer requiring Landlord’s consent under this Article 14 (any such assignee or sublessee described in items (A) through (D) of this Section 14.7 hereinafter referred to as a “Permitted Transferee”), provided that (i) Tenant notifies Landlord at least thirty (30) days prior to the effective date of any such assignment or sublease and promptly supplies Landlord with any documents or information reasonably requested by Landlord regarding such Transfer or Permitted Transferee as set forth above (provided that, if prohibited by confidentiality in connection with a proposed purchase, merger, consolidation or reorganization, then Tenant shall give Landlord written notice within ten (10) days after the effective date of the proposed purchase, merger, consolidation or reorganization), (ii) Tenant is not in default, beyond the applicable notice and cure period, and such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under this Lease, (iii) such Permitted Transferee shall be of a character and reputation consistent with the quality of the Building, (iv) such Permitted Transferee shall have a market capitalization at least sufficient to satisfy all Tenant obligations under this Lease as determined by Landlord and, with respect to an assignment to a Permitted Transferee, a market capitalization of no less than One Hundred Million Dollars ($100,000,000) (as determined by evidence reasonably acceptable
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to Landlord), and (v) no assignment relating to this Lease, whether with or without Landlord’s consent, shall relieve Tenant from any liability under this Lease, and the liability of Tenant and such assignee shall be joint and several, and all subtenants shall be subject and subordinate to this Lease. An assignee of Tenant’s entire interest in this Lease who qualifies as a Permitted Transferee may also be referred to herein as a “Permitted Transferee Assignee.” “Control,” as used in this Section 14.7, shall mean the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of at least fifty-one percent (51%) of the voting interest in, any person or entity.
14.8. Assignment of Sublease Rents. Tenant hereby absolutely and irrevocably assigns to Landlord any and all rights to receive rent and other consideration from any sublease and agrees that Landlord, as assignee or as attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant appointed on Landlord’s application may (but shall not be obligated to) collect such rents and other consideration and apply the same toward Tenant’s obligations to Landlord under this Lease; provided, however, that Landlord grants to Tenant at all times prior to occurrence of any breach or default beyond applicable notice and cure periods by Tenant a revocable license to collect such rents (which license shall automatically and without notice be and be deemed to have been revoked and terminated immediately upon any Event of Default).
14.9. Excess Consideration. If Landlord consents to a Transfer, Tenant shall pay to Landlord, as Additional Rent, within ten (10) business days after receipt by Tenant, fifty percent (50%) of all “Transfer Consideration”, which shall mean excess of the rent payable by the subtenant over the amount of Base Rent and Additional Rent payable hereunder applicable to the subleased space, less the direct, out-of-pocket expenses and costs for necessary Alterations, reasonable legal fees, reasonable brokerage commission costs and the actual cost of improvements made to effect the subject Transfer. Transfer Consideration shall not include the sale cost of Tenant’s Trade Fixtures, personal property or business, except to the extent such costs exceed fair market value. In the case of an assignment (including any Transfer resulting from a change in ownership, merger or consolidation), Transfer Consideration includes the value of the Lease (whether or not expressly allocated or otherwise provided for in such transaction) and any other consideration paid or payable by the Transferee for the assignment of the Lease (excluding the value of Tenant’s business, personal property, or Trade Fixtures). The terms of this Section 14.9 shall not apply to transfers outlined in Section 14.7 above.
15. DEFAULT AND REMEDIES.
15.1. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” by Tenant:
(a) Tenant fails to make any payment of Rent when due and continues to fail to pay the Rent following five (5) business days written notice from Landlord.
(b) Tenant abandons the Premises as provided in Sections 1951.2 and 1951.3 of the California Civil Code or other similar provisions or successor statutes.
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(c) Tenant fails timely to deliver any subordination document, estoppel certificate or financial statement requested by Landlord within the applicable time period specified in Sections 20 and 21 below.
(d) Tenant violates the restrictions on Transfer set forth in Section 14.
(e) Tenant makes an assignment for the benefit of creditors; is adjudicated an insolvent, files a petition (or files an answer admitting the material allegations of a petition) seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors’ rights; all or substantially all of Tenant’s assets are subject to judicial seizure or attachment and are not released within ninety (90) days, or Tenant consents to or acquiesces in the appointment of a trustee, receiver or liquidator for Tenant or for all or any substantial part of Tenant’s assets.
(f) Tenant fails, within ninety (90) days after the commencement of any proceedings against Tenant seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors’ rights, to have such proceedings dismissed, or Tenant fails, within ninety (90) days after an appointment, without Tenant’s consent or acquiescence, of any trustee, receiver or liquidator for Tenant or for all or any substantial part of Tenant’s assets, to have such appointment vacated.
(g) Tenant fails to perform or comply with any provision of this Lease other than those described in (a) through (f) above, and does not fully cure such failure within thirty (30) days after notice to Tenant or, if such failure cannot be cured within such thirty (30)-day period, Tenant fails within such thirty (30)-day period to commence, and thereafter diligently proceed with, all actions necessary to cure such failure as soon as reasonably possible.
15.2. Replacement of Statutory Notice Requirements. When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notices required by Code of Civil Procedure section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by Section 22 shall replace and satisfy the statutory service-of-notice procedures, including those required by Code of Civil Procedure section 1162 or any similar or successor statute.
15.3. Remedies. Upon the occurrence of an Event of Default, Landlord shall have the following remedies, which shall not be exclusive but shall be cumulative and shall be in addition to any other remedies now or hereafter allowed by law:
(a) Landlord may terminate Tenant’s right to possession of the Premises at any time by written notice to Tenant. Tenant expressly acknowledges that in the absence of such written notice from Landlord, no other act of Landlord, including re-entry into the Premises, efforts to relet the Premises, reletting of the Premises for Tenant’s account, storage of Tenant’s personal property and Trade Fixtures, acceptance of keys to the Premises from Tenant or exercise of any other rights and remedies under this Section, shall constitute an acceptance of Tenant’s surrender of the Premises or constitute a termination of this Lease or of Tenant’s right to possession of the Premises. Upon such termination in writing of Tenant’s right to possession of the Premises, as
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herein provided, this Lease shall terminate and Landlord shall be entitled to recover damages from Tenant as provided in California Civil Code Section 1951.2 and any other applicable existing or future Law providing for recovery of damages for such breach, including the worth at the time of award of the amount by which the rent which would be payable by Tenant hereunder for the remainder of the Term after the date of the award of damages, including Additional Rent as reasonably estimated by Landlord, exceeds the amount of such rental loss as Tenant proves could have been reasonably avoided, discounted at the discount rate published by the Federal Reserve Bank of San Francisco for member banks at the time of the award plus one percent (1%).
(b) Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations).
(c) Landlord may cure the Event of Default at Tenant’s expense; provided that in the event of an emergency where there is an imminent threat to life or property, Landlord may cure any breach or default by the Tenant without regard to any notice and cure periods. If Landlord pays any sum or incurs any expense in curing the Event of Default, Tenant shall reimburse Landlord upon demand for the amount of such payment or expense with interest at the Interest Rate from the date the sum is paid or the expense is incurred until the date Landlord is reimbursed by Tenant.
(d) Subject to Landlord’s compliance with all applicable Laws relating thereto, Landlord may remove all Tenant’s property from the Premises, and such property may be stored by Landlord in a public warehouse or elsewhere at the sole cost and for the account of Tenant. If Landlord does not elect to store any or all of Tenant’s property left in the Premises, Landlord may consider such property to be abandoned by Tenant, and Landlord may thereupon dispose of such property in any manner deemed appropriate by Landlord. Any proceeds realized by Landlord on the disposal of any such property shall be applied first to offset all expenses of storage and sale, then credited against Tenant’s outstanding obligations to Landlord under this Lease, and any balance remaining after satisfaction of all obligations of Tenant under this Lease shall be delivered to Tenant.
15.4. Acceptance of Rent Without Waiving Rights. Under Article 17, Landlord may accept Tenant’s payments without waiving any rights under this Lease, including rights under a previously served notice of default. If Landlord accepts payments after serving a notice of default, Landlord may nevertheless commence and pursue an action to enforce rights and remedies under the previously served notice of default without giving Tenant any further notice or demand.
15.5. Landlord Default. If Landlord defaults in performing any of its non-structural repair and maintenance obligations to the interior of the Premises as expressly stated in this Lease and such default creates a risk of imminent injury to person or substantial property damage or unreasonably and materially interferes with Tenant’s ability to conduct its business at the Premises, and such default is not remedied by Landlord within thirty (30) days after Tenant shall have given Landlord written notice specifying such default (or a lesser reasonable period of time in an emergency threatening life or property damage), and in the case of any such default which cannot with due diligence and in good faith be cured within thirty (30) days (or lesser
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reasonable time period in the event of an emergency), within such additional period, if any, as may be reasonably required to cure such default with due diligence and in good faith (it being intended that, in connection with any such default which is not susceptible of being cured with due diligence and in good faith within thirty (30) days, the time within which Landlord is required to cure such default shall be extended for such additional period as may be necessary for the curing thereof with due diligence and in good faith), then Tenant may tender a second written notice to Landlord of the default and if Landlord fails to commence to cure the default within five (5) days of receipt of such second written notice from Tenant, Tenant, without being obligated to do so, shall have the right, but not the obligation, to perform the nonstructural repair or maintenance obligation to the Premises which Landlord failed to perform. The full amount of the reasonable out-of-pocket cost and expense so incurred by Tenant (the “Reimbursement Amount”) shall be paid by Landlord to Tenant, within thirty (30) days after demand therefore together with reasonably supporting documentation. Tenant shall give advance notice by telephone to the individual from time to time designated by Landlord to receive such notice of Tenant’s intention to exercise its rights under this Section in the case of an emergency. Notwithstanding anything to the contrary set forth herein, provided that Tenant has complied with the foregoing terms and conditions of this Section 15.5 (the “Reimbursement Condition”), if Landlord fails to so reimburse Tenant the Reimbursement Amount pursuant to this Section 15.5, Tenant may tender to Landlord a second written notice requesting such reimbursement. If Landlord fails to tender the Reimbursement Amount to Tenant prior to the expiration of five (5) business days following Landlord’s receipt of such second written notice from Tenant, Tenant shall be entitled to deduct (up to fifty percent (50%) of Base Rent per month until fully reimbursed) the Reimbursement Amount. Notwithstanding the foregoing, if prior to the expiration of such five (5) business day period Landlord reasonably disputes Tenant’s claim of a Landlord default and provides a reasonably detailed written notice to Tenant, or disputes the amount of the Reimbursement Amount, then Tenant shall not be entitled to deduct such amounts in dispute from Base Rent in accordance with this Section and the parties shall work together reasonably and in good faith to resolve any such dispute.
16. LATE CHARGE AND INTEREST.
16.1. Late Charge. If any payment of rent is not received by Landlord when due, Tenant shall pay to Landlord on demand as a late charge an additional amount equal to four percent (4%) of the overdue payment, provided, however, that Landlord shall waive the first late charge in any consecutive twelve (12) month period if Tenant pays the amount of Rent due within five (5) business days after Landlord sends written notice of such failure to Tenant. A late charge shall not be imposed more than once on any particular installment not paid when due, but imposition of a late charge on any payment not made when due does not eliminate or supersede late charges imposed on other (prior) payments not made when due or preclude imposition of a late charge on other installments or payments not made when due.
16.2. Interest. In addition to the late charges referred to above, which are intended to defray Landlord’s costs resulting from late payments, any payment from Tenant to Landlord not paid when due shall at Landlord’s option bear interest from the date due until paid to Landlord by Tenant at the rate of ten percent (10%) per annum or the maximum lawful rate that Landlord may charge to Tenant under applicable Laws, whichever is less (the “Interest Rate”); provided, however, interest shall not apply to the first late payment during any twelve (12) month period unless such payments remain unpaid for five (5) days following Landlord’s written notice of delinquency. Acceptance of any late charge or interest shall not constitute a waiver of Tenant’s default with respect to the overdue sum or prevent Landlord from exercising any of its other rights and remedies under this Lease.
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17. WAIVER. No provisions of this Lease shall be deemed waived by Landlord or Tenant unless such waiver is in a writing signed by the party charged. The waiver by Landlord or Tenant of any breach of any provision of this Lease shall not be deemed a waiver of such provision or of any subsequent breach of the same or any other provision of this Lease. No delay or omission in the exercise of any right or remedy of Landlord or Tenant upon any default by the other party shall impair such right or remedy or be construed as a waiver. Landlord’s acceptance of any payments of rent due under this Lease shall not be deemed a waiver of any default by Tenant under this Lease (including Tenant’s recurrent failure to timely pay rent) other than Tenant’s nonpayment of the accepted sums, and no endorsement or statement on any check or payment or in any letter or document accompanying any check or payment shall be deemed an accord and satisfaction. Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant. Landlord’s receipt of monies from Tenant after giving notice to Tenant terminating this Lease shall in no way reinstate, continue, or extend the Term or affect the termination notice given by Landlord before the receipt of those monies. After serving notice terminating this Lease, filing an action, or obtaining final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of that Rent shall not waive or affect such prior notice, action, or judgment.
18. ENTRY, INSPECTION AND CLOSURE. Except (i) to the extent requested by Tenant, (ii) in connection with scheduled maintenance programs to be performed by Landlord pursuant to this Lease, and/or (iii) in the event of an emergency, where Landlord is not required to give any notice, then upon one (1) business day prior written notice to Tenant, Landlord and its authorized representatives, accompanied by a Tenant’s Representative (so long as Tenant makes the same available at the time of such entry) and subject to Tenant’s reasonable and industry standard safety and security regulations and protocols, may enter the Premises during Tenant’s business hours to: (a) determine whether the Premises are in good condition, (b) determine whether Tenant is complying with its obligations under this Lease, (c) perform any maintenance or repair of the Premises or the Building that Landlord has the right or obligation to perform, (d) serve, post or keep posted any notices required or allowed under the provisions of this Lease, (e) show the Premises to prospective agents, buyers, transferees, Mortgagees or, in the last twelve (12) months of the Term, to tenants and brokers, or (f) do any other act or thing necessary for the safety or preservation of the Premises or the Project. Landlord shall conduct its activities under this Section in a commercially reasonable manner designed to minimize inconvenience to Tenant, and shall use reasonable efforts to coordinate entries with Tenant so as to minimize any disturbance to Tenant’s business operations at the Premises. Landlord shall make commercially reasonable efforts to promptly finish any work for which it entered and promptly repair damage caused to the Premises by Landlord or anyone accessing the Premises under this Article 18. Except as expressly provided in this Lease, in no event shall Tenant be entitled to an abatement of rent on account of any entry by Landlord, and in any event, Landlord shall not be liable in any manner for any inconvenience, loss of business or other damage to Tenant or other persons arising out of Landlord’s entry on the Premises in accordance with this Section. No action by Landlord pursuant to this Section shall constitute an eviction of Tenant, constructive or otherwise, or otherwise release Tenant from any of Tenant’s obligations under this Lease or entitle Tenant to any rent abatement or concessions.
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19. SURRENDER AND HOLDING OVER.
19.1. Surrender. Upon the expiration or termination of this Lease, Tenant shall surrender the Main Premises and all Alterations to Landlord broom-clean and in good condition, except for reasonable wear and tear, damage from casualty or condemnation and any changes resulting from permitted Alterations and shall surrender the Storage Space vacant and in good condition; provided, however, that prior to the expiration or termination of this Lease, Tenant shall remove from the Main Premises and the Storage Space all Tenant’s personal property and Trade Fixtures and all voice and data wiring and cable installed at and/or servicing the Main Premises and/or the Storage Space, and any Alterations (provided that Tenant shall not be obligated to remove the Landlord Work as shown on the Approved Space Plan (as defined in Exhibit B), provided all of Tenant’s equipment and trade fixtures shall be removed and any damage repaired and all lab space fully decommissioned. Prior to the expiration or earlier termination of this Lease, Tenant shall cease all laboratory operations and clean and fully decommission such laboratory spaces in compliance with Landlord’s reasonable requirements and applicable Laws and this Lease. Landlord shall also have the right to retain, store and/or dispose of all or any portion of Tenant’s personal property and/or Trade Fixtures left in the Main Premises and/or the Storage Space following the expiration or earlier termination of this Lease, if Tenant does not pay all storage costs and retrieve the property within ten (10) business days after notice from Landlord (in which event title to all such property described in Landlord’s notice shall be transferred to and vest in Landlord). Tenant waives all Claims against Landlord for any damage or loss to Tenant resulting from Landlord’s removal, storage, retention, or disposition of any such property. Upon expiration or termination of this Lease or of Tenant’s possession, whichever is earliest, Tenant shall surrender all keys to the Premises or any other part of the Building and shall deliver to Landlord all keys for or make known to Landlord the combination of locks on all safes, cabinets and vaults that may be located in the Premises. Tenant’s obligations under this Section shall survive the expiration or termination of this Lease.
19.2. Holding Over. If Tenant (directly or through any Transferee or other successor-in-interest of Tenant) remains in possession of the Main Premises or the Storage Space after the expiration or termination of this Lease, Tenant’s continued possession shall be on the basis of a tenancy at the sufferance of Landlord. No act or omission by Landlord, other than its specific written consent, shall constitute permission for Tenant to continue in possession of the Main Premises or the Storage Space, and if such consent is given or declared to have been given by a court judgment, Landlord may terminate Tenant’s holdover tenancy at any time upon seven (7) days written notice. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease, except that the monthly Base Rent during Tenant’s holding over shall be one hundred fifty percent (150%) of the Base Rent payable in the last full month prior to the termination hereof on a per diem basis for each day Tenant remains in possession for the first sixty (60) days of any such holdover period. Commencing as of the sixty-first (61st) day of any such holding over, such rate shall be increased to two hundred percent (200%) of the Base Rent payable in the last full month prior to the termination hereof. Acceptance by Landlord of rent after such termination shall not constitute a renewal or extension of this Lease;
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and nothing contained in this provision shall be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law. If the holdover continues beyond thirty (30) days, Tenant shall indemnify, defend and hold Landlord harmless from and against all Claims arising or resulting directly or indirectly from Tenant’s failure to timely surrender the Main Premises and/or the Storage Space, including (i) any rent payable by or any loss, cost, or damages claimed by any prospective tenant of the Main Premises and/or the Storage Space, and (ii) Landlord’s damages as a result of such prospective tenant rescinding or refusing to enter into the prospective lease of the Main Premises and/or the Storage Space by reason of such failure to timely surrender the same. Notwithstanding anything in this Section 19 to the contrary, failure by Tenant to strictly comply with the provisions of this Section 19 with respect to any Alterations that are required to be removed from the Premises by Tenant hereunder and the timely decommissioning of any laboratory spaces as set forth above, shall constitute a failure of Tenant to validly and timely surrender the Main Premises and/or the Storage Space, as applicable.
20. ENCUMBRANCES.
20.1. Subordination. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and except as otherwise provide below, this Lease shall be and is hereby declared to be subject and subordinate at all times to: (a) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Premises and/or the land upon which the Premises and Project are situated, or both; and (b) the lien of any mortgage or deed of trust which may now exist or be placed upon the Building, the Project and/or the land upon which the Premises or the Project are situated, or said ground leases or underlying leases, or Landlord’s interest or estate in any of said items which is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord provided that Tenant shall not be disturbed in its possession under this Lease by such successor in interest so long as Tenant is not in default under this Lease beyond applicable notice and cure periods. Within ten (10) business days after request by Landlord, Tenant shall execute and deliver any additional documents evidencing Tenant’s attornment or the subordination of this Lease with respect to any such ground leases or underlying leases or any such mortgage or deed of trust, in the form reasonably acceptable to Tenant and requested by Landlord or by any ground landlord, mortgagee, or beneficiary under a deed of trust, subject to such nondisturbance requirement. Notwithstanding the foregoing, concurrent with Tenant’s execution and delivery to Landlord of this Lease, Tenant shall execute and deliver to Landlord a Subordination, Nondisturbance and Attornment Agreement on the form attached here to as Exhibit D (the “SNDA”). If Tenant fails to deliver such SNDA within five (5) business days after Landlord’s second written request therefor, an Event of Default shall have immediately occurred. Following Landlord’s receipt of the SNDA properly executed by Tenant, Landlord shall cause the same to be fully executed and tender the same to Tenant within forty-five (45) days thereafter. Landlord shall be liable for all costs and expenses arising in connection with obtaining the first SNDA and Tenant shall be liable for all costs and expenses for any future Subordination, Nondisturbance and Attornment Agreements provided hereunder. Landlord represents Banc of California is the only mortgagee of Landlord at the Project, and that as of the Effective Date there are no ground leases or underlying leases to which this Lease or the Project is subject.
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Notwithstanding the foregoing in this Section 20.1 to the contrary, as a condition precedent to the future subordination of this Lease to a future Mortgage, Landlord shall be required to provide Tenant with a non-disturbance, subordination, and attornment agreement in favor of Tenant from any Mortgagee who comes into existence after the date of this Lease. Such non-disturbance, subordination, and attornment agreement in favor of Tenant shall be commercially reasonable and shall provide that, so long as Tenant is paying the Rent due under the Lease and is not otherwise in default under the Lease beyond any applicable cure period, its right to possession and the other terms of the Lease shall remain in full force and effect and shall further include an exception to any general waiver of defenses for actual payment or performance by Tenant under this Lease, and in any event shall not include a waiver of any express Tenant termination rights (as set forth in this Lease) or a requirement that Tenant enter into a new lease or amend the terms and conditions of this Lease. Such non-disturbance, subordination, and attornment agreement may include other commercially reasonable and market provisions in favor of the holder and in favor of Tenant. In any event, Landlord shall use good faith, commercially reasonable efforts to coordinate timely and reasonable discussion and negotiation between Tenant and the holder with respect to any reasonable and market comments Tenant may make to a future non-disturbance, subordination, and attornment agreement.
20.2. Mortgagee Protection. Tenant agrees to give any holder of any Encumbrance covering any part of the Project (“Mortgagee”), by certified mail, a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of notice of assignment of rents and leases, or otherwise) of the address of such Mortgagee. If Landlord shall have failed to commence to cure such default within thirty (30) days from the effective date of such notice of default, then the Mortgagee shall have an additional thirty (30) days within which to commence to cure such default, and this Lease shall not be terminated so long as the cure of such default is being diligently pursued.
21. ESTOPPEL CERTIFICATES. Within ten (10) business days after written request therefor, Tenant shall execute and deliver to Landlord, in a form provided by or satisfactory to Landlord, a certificate stating that this Lease is in full force and effect, describing this Lease and any amendments or modifications hereto, acknowledging that this Lease is subordinate or prior, as the case may be, to any Encumbrance and stating any other information Landlord may reasonably request, including the commencement and expiration dates of the Term, the monthly Base Rent, the date to which Rent has been paid, the amount of any security deposit or prepaid rent, whether to Tenant’s actual knowledge either party hereto is in default beyond notice and cure periods under the terms of the Lease, whether Landlord has completed its construction obligations hereunder (if any), and whether Tenant has accepted the Premises. If Tenant fails to deliver such certificate within five (5) business days after Landlord’s second written request therefor, an Event of Default shall have immediately occurred. Any person or entity purchasing, acquiring an interest in or extending financing with respect to the Project shall be entitled to rely upon any such certificate.
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22. NOTICES. Notice, demand, request, consent or approval that either party desires or is required to give to the other party under this Lease shall be in writing and shall be served personally, delivered by messenger or delivered by nationally recognized overnight courier service, addressed to the other party at the party’s address for notices set forth in the Basic Lease Information. Landlord and Tenant shall make reasonable efforts to tender courtesy copies of all notices sent under this Lease by email if an email address is provided; provided, however, failure to provide such courtesy notices shall in no event be a breach or default hereunder. Any notice required pursuant to any Laws may be incorporated into, given concurrently with or given separately from, any notice required under this Lease. Notices shall be deemed to have been given and be effective on the earlier of (a) receipt (or refusal of delivery or receipt); or (b) one (1) day after acceptance by the independent service for delivery, if sent by independent messenger for same-day or next-day delivery or by nationally recognized overnight courier service for next-day delivery. Either party may change its address for notices hereunder, effective fifteen (15) days after notice to the other party complying with this Section. If Tenant sublets the Premises, notices from Landlord shall be effective on the subtenant when given to Tenant pursuant to this Section.
23. ATTORNEYS’ FEES. In the event of any dispute between Landlord and Tenant in any way related to this Lease, and whether involving contract or tort claims, the non-prevailing party shall pay to the prevailing party all reasonable attorneys’ fees and costs and expenses of any type, without restriction by statute, court rule or otherwise, incurred by the prevailing party in connection with any action or proceeding (including any appeal and the enforcement of any judgment or award), whether or not the dispute is litigated or prosecuted to final judgment (collectively, “Fees”). The “prevailing party” shall be determined based upon an assessment of which party’s major arguments or positions taken in the action or proceeding could fairly be said to have prevailed (whether by compromise, settlement, abandonment by the other party of its claim or defense, final decision, after any appeals, or otherwise) over the other party’s major arguments or positions on major disputed issues. Any Fees incurred in enforcing a judgment shall be recoverable separately from any other amount included in the judgment and shall survive and not be merged in the judgment. The Fees shall be deemed an “actual pecuniary loss” within the meaning of Bankruptcy Code Section 365(b)(1)(B), and notwithstanding the foregoing, all Fees incurred by either party in any bankruptcy case filed by or against the other party, from and after the order for relief until this Lease is rejected or assumed in such bankruptcy case, will be “obligations of the debtor” as that phrase is used in Bankruptcy Code Section 365(d)(3).
24. QUIET POSSESSION. Subject to Tenant’s full and timely performance of all of Tenant’s obligations under this Lease and subject to the terms of this Lease, including Section 20 - Encumbrances, Tenant shall have the quiet possession of the Premises throughout the Term as against any persons or entities lawfully claiming by, through or under Landlord.
25. FINANCIAL STATEMENTS. Within ten (10) business days after written request therefor, but not more than once a year, Tenant shall deliver to Landlord a copy of the financial statements (including at least a year end balance sheet, a statement of profit and loss, and a statement of cash flows) of Tenant for each of the three most recently completed years, prepared in accordance with generally accepted accounting principles (and, if such is Tenant’s normal practice, audited by an independent certified public accountant), all then available subsequent interim statements, and such other financial information as may reasonably be requested by Landlord or required by any Mortgagee, except Tenant shall not be obligated to provide forecasts or business plans. Prior to receiving any financial statements, Landlord shall execute and deliver to Tenant Landlord’s then-standard commercially reasonable confidentiality agreement in a form reasonably acceptable to Tenant. Notwithstanding the foregoing, if Tenant is a publicly-traded company and Tenant’s financial statements are available in the public domain, Tenant shall not be required to provide Landlord with such financial statements.
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26. FORCE MAJEURE. If either party is delayed, interrupted or prevented from performing any of its obligations under this Lease (other than, monetary obligations including the payment of Base Rent, Additional Rent, and/or any other charge payable under this Lease), including Landlord’s obligations under the Construction Rider (if any), and such delay, interruption or prevention is due to fire, act of God, governmental act or failure to act, pandemic, public health emergency, terrorist act, labor dispute, unavailability of labor or materials or any other cause outside the reasonable control of the party charged (“Force Majeure”), then the time for performance of the affected obligations shall be extended for a period equivalent to the period of such delay, interruption or prevention.
27. LANDLORD’S LIABILITY. The term “Landlord,” as used in this Lease, shall mean only the owner of the fee interest in the Project at the time in question. In the event of any conveyance of the fee interest in the Project, then from and after the date of such conveyance, the transferor Landlord shall be relieved of all liability with respect to Landlord’s obligations to be performed under this Lease after the date of such conveyance to the extent such obligations are assumed by the successor Landlord. Notwithstanding any other term or provision of this Lease, the liability of Landlord for its obligations under this Lease is limited solely to Landlord’s fee interest in the Project, and no personal liability shall at any time be asserted or enforceable against any other assets of Landlord or against Landlord’s partners or members or its or their respective partners, shareholders, members, directors, officers or managers on account of any of Landlord’s obligations or actions under this Lease. For purposes hereof, “Landlord’s fee interest in the Project” shall include rental income at the Building, insurance proceeds paid on policies carried by Landlord covering the Building pursuant to this Lease (provided, however, that in no event shall Tenant, or anyone claiming on behalf or through Tenant, be deemed or otherwise considered a loss payee under any such insurance policies), and proceeds from Condemnation proceedings (prior to the distribution of same to any partner or shareholder of Landlord or any other third party) and proceeds from the sale of the Building; provided, however, that with respect to proceeds from the sale of the Building, Landlord’s liability shall extend only to adjudicated claims for which Landlord’s liability arises during Landlord’s period of ownership and during the term of the Lease and only after Landlord first applies any such sale proceeds to any outstanding mortgages and/or any other encumbrances existing upon or otherwise affecting the Building (including any ground lease payments) and any tax liability respecting the Building.
28. CONSENTS AND APPROVALS.
28.1. Determination in Good Faith and Reasonable Discretion. Wherever the consent, approval, judgment or determination of Landlord or Tenant is required or permitted under this Lease without reference to any extrinsic standard of reasonableness, Landlord or Tenant shall exercise its good faith, reasonable business judgment in granting or withholding such consent or approval or in making such judgment or determination unless the specific provision contained in this Lease providing for such consent, approval, judgment or determination specifies that Landlord’s or Tenant’s, as applicable, consent or approval is in Landlord’s or Tenant’s, as applicable, sole and absolute discretion, or otherwise specifies another standard under which Landlord or Tenant, as applicable, may withhold its consent.
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28.2. No Liability Imposed on Landlord. The review or approval by Landlord of any item or matter to be reviewed or approved by Landlord under the terms of this Lease or any Exhibits or Addenda hereto shall not impose upon Landlord any liability for the accuracy or sufficiency of any such item or matter or the quality or suitability of such item for its intended use. Any such review or approval is for the sole purpose of protecting Landlord’s interest in the Project, and no third parties, including Tenant or any Tenant’s Representatives or any person or entity claiming by, through or under Tenant, shall have any rights as a consequence thereof.
29. WAIVERS.
29.1. To the maximum extent permitted by law, Landlord and Tenant waive their respective rights to trial by jury of any contract or tort claim, counterclaim, cross-complaint, or cause of action in any action, proceeding, or hearing brought by either party against the other on any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, or Tenant’s use or occupancy of the Premises, including any claim of injury or damage or the enforcement of any remedy under any current or future law, statute, regulation, code, or ordinance.
29.2. Tenant hereby waives and agrees not to pursue or claim any excuse or offset to Tenant’s obligations under this Lease based on the doctrines of impossibility, impracticality, frustration of contract, frustration of purpose, or other similar legal principals or other similar common law claims or defenses in connection with COVID-19 and/or other similar pandemic, epidemic, or public health crisis events.
30. BROKERS . Landlord shall pay the fee or commission of the broker or brokers identified in the Basic Lease Information (collectively, the “Broker”) in accordance with Landlord’s separate written agreement with the Broker, if any. Tenant and Landlord each warrants and represents to the other that in the negotiating or making of this Lease neither such party nor anyone acting on such party’s behalf has dealt with any broker or finder who might be entitled to a fee or commission for this Lease other than the Broker. Tenant and Landlord each agrees to indemnify and hold the other party harmless from any claim or claims, including costs, expenses and attorney’s fees, incurred by the other party asserted by any other broker or finder for a fee or commission based upon any dealings with or statements made by such indemnifying party or such indemnifying party’s Representatives.
31. ENTIRE AGREEMENT; CONFIDENTIALITY.
31.1. Entire Agreement. This Lease, including the Exhibits and any Addenda attached hereto, and the documents referred to herein, if any, constitute the entire agreement between Landlord and Tenant with respect to the leasing of space by Tenant in the Building, and supersede all prior or contemporaneous discussions, promises, agreements, understandings, proposals and other representations by or between Landlord and Tenant, whether written or oral, all of which are merged herein. Neither Landlord nor Landlord’s agents have made any representations or warranties with respect to the Premises, the Building, the Project or this Lease except as expressly set forth herein, and no rights, easements or licenses shall be acquired by Tenant by implication or otherwise unless expressly set forth herein. The submission of this Lease for examination does not constitute an option for the Premises and this Lease shall become effective as a binding agreement only upon execution and delivery thereof by Landlord to Tenant.
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31.2. Representatives. The term “Tenant’s Representatives” shall mean Tenant and its affiliates and their respective directors, board members, managers, trustees, officers, employees, members, agents, partners, lenders, donors, funders, prospective funders and donors and each of their attorneys and representatives, fellows, attorneys, accountants, financial advisors, and representatives. The term “Landlord’s Representatives” shall mean Landlord or its directors, board members, officers, employees, agents, lenders, prospective lenders, investors, prospective investors, members, partners, shareholders, managers, attorneys, accountants, financial advisors, and representatives. Tenant’s Representatives or Landlord’s Representatives are sometimes herein referred to as “Representatives”, in which case such reference shall mean either Tenant’s Representatives or Landlord’s Representatives, as applicable to Tenant or Landlord, and as defined in this paragraph for either Tenant or Landlord.
32. MISCELLANEOUS, SIGNATURES. This Lease may not be amended or modified except by a writing signed by Landlord and Tenant. Subject to Sections 14 and 27, this Lease shall be binding on and shall inure to the benefit of the parties and their respective successors, assigns and legal representatives. The determination that any provisions hereof may be void, invalid, illegal or unenforceable shall not impair any other provisions hereof and all such other provisions of this Lease shall remain in full force and effect. The unenforceability, invalidity or illegality of any provision of this Lease under particular circumstances shall not render unenforceable, invalid or illegal other provisions of this Lease, or the same provisions under other circumstances. This Lease shall be construed and interpreted in accordance with the Laws (excluding conflict of laws principles) of the State in which the Building is located. The provisions of this Lease shall be construed in accordance with the fair meaning of the language used and shall not be strictly construed against either party, even if such party drafted the provision in question. When required by the context of this Lease, the singular includes the plural. Wherever the term “including” is used in this Lease, it shall be interpreted as meaning “including, but not limited to” the matter or matters thereafter enumerated. The captions contained in this Lease are for purposes of convenience only and are not to be used to interpret or construe this Lease. If more than one person or entity is identified as Tenant hereunder, the obligations of each and all of them under this Lease shall be joint and several. Time is of the essence with respect to this Lease, except as to the conditions relating to the delivery of possession of the Premises to Tenant. Neither Landlord nor Tenant shall record this Lease unless and only to the extent required by applicable Law.
(a) This Lease may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Execution copies of this Lease may be delivered by email, and the parties hereto agree to accept and be bound by scanned signatures transmitted via email hereto, which signatures shall be considered as original signatures with the transmitted Lease having the same binding effect as an original signature on an original Lease. At the request of either party, any scanned document transmitted via email is to be re-executed in original form by the party who executed the original scanned document, or any party with execution authority if that same individual no longer has execution authority. Neither party may raise the use of a scanned document or the fact that any
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signature was transmitted through the use of email as a defense to the enforcement of this Lease. In addition, the parties agree that this Lease may be signed using electronic signature technology (e.g., via DocuSign or similar electronic signature technology), and that such signed electronic record shall be valid and as effective to bind the party so signing as a paper copy bearing such party’s hand-written signature. The parties further consent and agree that (1) to the extent a party signs this document using electronic signature technology, by clicking “sign”, such party is signing this Lease electronically, and (2) the electronic signatures appearing on this Lease shall be treated, for purposes of validity, enforceability and admissibility, the same as hand written signatures.
33. AUTHORITY. Each party hereto warrants and represents that such party has full right and authority to enter into this Lease and that the persons signing on behalf of such party are authorized to do so and have the power to bind such party to this Lease.
34. OFAC. Tenant hereby represents and warrants that, other than through the passive ownership of interest traded on a recognized securities exchange (but in any event, not in violation of applicable Laws), neither Tenant, nor any persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the target of any sanctions program that is established by Executive Order of the President or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President issued pursuant to such statutes; or (iii) named on the following list that is published by OFAC: “List of Specially Designated Nationals and Blocked Persons.” If the foregoing representation is untrue at any time during the Term, an Event of Default will be deemed to have occurred, without the necessity of notice to Tenant.
35. PARKING. During the Term, Tenant may use the number of spaces (which may be accomplished by valet service) specified in the Basic Lease Information for parking at no charge by Landlord or Landlord’s third party operator, if any, during the Term and any Extension Period. The Parking Garage shall include parking ability for a minimum of four hundred twenty-five (425) standard size automobile (which may be accomplished by valet service), including twenty-eight (28) electric vehicle charging stations. Tenant acknowledges and agrees that the parking spaces in the Parking Garage may include tandem or valet parking and a mixture of spaces for compact vehicles as well as full-size passenger automobiles, and that Tenant shall not use parking spaces for vehicles larger than the striped size of the parking spaces. Recreational vehicles and other vehicles intended to be used as sleeping accommodations shall not be permitted in the Parking Garage. Tenant shall comply with any and all parking rules and regulations from time to time reasonably established by Landlord or Landlord’s parking operator (if any), including a requirement that Tenant pay to Landlord or Landlord’s parking operator a commercially reasonable charge for loss and replacement of passes, keycards, identification stickers or markers, and for any and all loss or other damage caused by persons or vehicles related to Tenant’s right to use the Parking Garage. Tenant shall not allow any vehicles using Tenant’s parking spaces to be parked, loaded or unloaded except in accordance with this Section or applicable rules and regulations, including in the areas and in the manner designated by Landlord or its parking operator for such activities. If any vehicle is using the parking or loading areas contrary to any provision of this Section or applicable rules and regulations, Landlord or its parking operator shall have the right, in addition to all other rights and remedies of Landlord under this Lease, to remove or tow away the vehicle without prior notice to Tenant, and so long as Landlord provides to Tenant reasonable prior notice (which may be by email or oral notices), the cost thereof shall be paid to Landlord within thirty (30) days after notice from Landlord.
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36. SIGNAGE.
36.1. General. Initial Building standard signage for Tenant will be installed by Landlord in the directory in the main lobby of the Building and at Tenant’s main entry door to the Main Premises, all at Landlord’s sole cost and expense. Any change in such initial signage shall be only with Landlord’s prior written consent (not to be unreasonably withheld), shall conform to Building standard signage and shall be at Tenant’s sole cost and expense.
36.2. Building Signage.
(a) So long as Tenant is not in default beyond applicable notice and cure periods under the terms of this Lease and subject to the limitations set forth herein, at Tenant’s sole cost and expense, Tenant shall be entitled to one tenant identification sign to be located on the Building at a location to be mutually and reasonable determined by both Landlord and Tenant (the “Building Signage”). The exact location of the Building Signage shall be subject to all applicable Laws and Landlord’s prior written approval, which approval shall not be unreasonably withheld, provided that the location does not detract from the first-class quality of the Building. The Building Signage shall not be illuminated. Such right to the Building Signage is personal to Tenant and its Permitted Transferees and approved Transferees following an assignment of this Lease or sublease approved by Landlord all of at least the entire original Premises as described in this Lease and is subject to the following terms and conditions: (a) Tenant shall prepare at its sole cost and expense and submit plans and drawings for the Building Signage to Landlord for approval and, upon such approval by Landlord, to the City of San Carlos and to any other public authorities having jurisdiction and shall obtain written approval from each such jurisdiction prior to installation; (b) provided that Landlord and such other parties have approved the plans for Tenant’s signage (the “Approved Plans”), Tenant shall, at Tenant’s sole cost and expense, obtain all permits and construct and install the Building Signage in compliance with all Laws and in accordance with the Approved Plans; (c) the size, color and design of the Building Signage shall be subject to Landlord’s prior written approval which Landlord shall have the right to withhold in its reasonable discretion; and (d) Tenant shall maintain the Building Signage in good condition and repair, and all costs of maintenance and repair shall be borne by Tenant. Maintenance shall include, without limitation, cleaning of Building Signage. Tenant shall be responsible for any electrical energy used in connection with the Building Signage, if applicable. At Landlord’s option, Tenant’s right to the Building Signage may be revoked and terminated upon occurrence of any of the following events: (i) Tenant shall be in default under this Lease beyond any applicable cure period; (ii) assigns this Lease or sublets more than fifty percent (50%) of the Premises, unless it is to a Permitted Transferee; (iii) this Lease shall terminate or otherwise no longer be in effect; or (iv) Tenant does not install the Building Signage within twelve (12) months after the Commencement Date.
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(b) Upon the expiration or earlier termination of this Lease or at such other time that Tenant’s signage rights are terminated pursuant to the terms hereof, if Tenant fails to remove the Building Signage and repair the Building in accordance with the terms of this Lease, Landlord shall cause the Building Signage to be removed from the Building and the Building to be repaired and restored to the condition which existed prior to the installation of the Building Signage (including, if necessary, the replacement of any precast concrete panels), all at the sole cost and expense of Tenant and otherwise in accordance with this Lease, without further notice from Landlord. Notwithstanding anything to the contrary contained in this Lease, Tenant shall pay all costs and expenses for such removal and restoration within five (5) business days following delivery of an invoice therefor. The rights provided in this Section 36.2 shall be non-transferable unless otherwise agreed by Landlord in writing in its sole discretion.
37. EXTENSION OPTION. Provided (i) this Lease is in full force and effect, (ii) Tenant is not in default beyond applicable notice and cure periods under any of the other terms and conditions of this Lease at the time of notification or commencement, (iii) Tenant shall not have assigned this Lease (other than to a Permitted Transferee) and Tenant and/or any Permitted Transferee, at the time of exercise and at the time the term is extended, is conducting regular, active, ongoing business in, and is in occupancy (and occupancy by a subtenant, licensee or other party permitted or suffered by Tenant shall not satisfy such condition), and (iv) Landlord reasonably determines that Tenant’s financial condition and tangible net worth is reasonably sufficient so that Tenant may satisfy all of the obligations of Tenant under this Lease including during the Extension Period, Tenant shall have the option (the “Extension Option”) to extend the Term for one (1) period of sixty (60) months (the “Extension Period”) commencing on the expiration of the then current Term of this Lease, by giving written notice to Landlord of the exercise of the Extension Option at least nine (9) months prior, but not more than twelve (12) months prior, to the expiration of the initial Term. The exercise of the Extension Option by Tenant shall be irrevocable and shall cover the entire Main Premises and Storage Space leased by Tenant pursuant to this Lease. Upon such exercise, the term of the Lease shall automatically be extended for the applicable Extension Period without the execution of any further instrument by the parties; provided that Landlord and Tenant shall, if requested by either party, execute and acknowledge an instrument confirming the exercise of the Extension Option. The Extension Option shall terminate if not exercised precisely in the manner provided herein. The extension of the Term shall be upon all the terms and conditions set forth in this Lease and all Exhibits thereto, except that: (i) Landlord shall not be obligated to contribute funds toward the cost of any remodeling, renovation, alteration or improvement work in the Premises; and (ii) Base Rent for the Extension Period shall be one hundred percent (100%) of the then Fair Market Base Rental (as defined below) for the Main Premises for the term involved, which shall be determined as set forth below.
37.1. “Fair Market Base Rental” shall mean the “fair market” Base Rent at the time or times in question for the Main Premises and Storage Space, based on the prevailing rentals then being charged to tenants in other office/laboratory buildings in the general vicinity of the Building and of comparable size, location, quality and age as the Building for leases with terms comparable to the Extension Period, taking into account all relevant factors bearing on the determination of Fair Market Base Rental including, but not limited to, the creditworthiness and financial strength of the tenant, the financial guaranties provided by the tenant (if any), the value of market concessions (including the value of construction, renovation, moving and other allowances or rent credits), the desirability, location in the building, size and quality of the space, tenant finish allowance, tenant improvements, included services, amenities, operating expenses, tax and expense stops, escalation clauses, whether storage space is included, and brokerage commissions, for the space in the Building for which Fair Market Base Rental is being determined
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and for comparable space in the buildings which are being used for comparison. Fair Market Base Rental shall also reflect the then prevailing rental structure for comparable buildings in the area located on the west side of Highway 101 from San Carlos to Palo Alto, so that if, for example, at the time Fair Market Base Rental is being determined the prevailing rental structure for comparable space and for comparable lease terms includes periodic rental adjustments or escalations, Fair Market Base Rental shall reflect such rental structure.
37.2. Landlord and Tenant shall endeavor to agree upon the Fair Market Base Rental. If, as of the date six (6) months prior to the commencement of the Extension Period, Landlord and Tenant have not agreed upon Fair Market Base Rental, Landlord and Tenant shall each select an MAI appraiser who has at least ten (10) years of experience of appraising lease values of office properties in the general vicinity of the Project. The two appraisers shall meet and confer regarding the Fair Market Base Rent, and if the two appraisers are unable to agree within thirty (30) days after their selection, they shall select a similarly qualified third appraiser, provided the third appraiser shall not have worked with either Tenant, Landlord, or any of their affiliates in the previous ten (10)-year period (the “Neutral Appraiser”). Within thirty (30) days after selection of the Neutral Appraiser, the three appraisers shall simultaneously exchange determinations of the Fair Market Base Rental. If the lowest appraisal is not less than ninety-five percent (95%) of the highest appraisal, then the three appraisals shall be averaged and the result shall be the Fair Market Base Rental. If the lowest appraisal is less than ninety-five percent (95%) of the highest appraisal, then the Base Rental shall be deemed the rate set forth in the appraisal submitted by an appraiser appointed by a party that is closest in dollar amount to the appraisal submitted by the Neutral Appraiser. Each party shall pay the cost of its own appraiser and the parties shall share the cost of the Neutral Appraiser equally.
37.3. In the event the Fair Market Base Rental for the Extension Period has not been determined at such time as Tenant is obligated to pay Base Rent for the Extension Period, Tenant shall pay as Base Rent pending such determination, the Base Rent in effect for such space immediately prior to the Extension Period; provided, that upon the determination of the applicable Fair Market Base Rental, any shortage of Base Rent shall be paid to Landlord by Tenant and any overpayment of Base Rent shall be paid to Tenant by Landlord.
37.4. In any event, the Financial Statements tendered to Landlord as set forth above shall be Tenant’s most recent statements (and in any event applicable to Tenant immediately preceding fiscal year) certified by Tenant’s Chief Financial Officer or Controller or other officer of Tenant with appropriate financial responsibility as being true complete and correct. In the event there is a Financial Condition Adverse Change and accordingly Tenant is not qualified to exercise the Extension Option, Landlord, in its sole discretion, may elect to permit Tenant to provide an additional security enhancement (as determined by Landlord in its sole discretion) and, in such event, if Tenant so provides such additional security enhancement to Landlord, Landlord shall then waive such Financial Condition Adverse Change and Tenant shall be entitled to exercise the Extension Option.
37.5. The term of this Lease, whether consisting of the initial Term alone or the initial Term as extended by any Extension Periods (if any Extension Option is exercised), is referred to in this Lease as the “Term.”
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38. RIGHT OF FIRST REFUSAL.
38.1. Tenant shall have an ongoing right of first refusal during the initial Term of this Lease (the “Right of First Refusal”) with respect to each of the following suites adjoining the Main Premises (each such suite, a “Potential Refusal Space”): (i) the approximately 15,838 rentable square feet of space known as Suite No. 320 on the third (3nd) floor of the Building, and (ii) the approximately 18,701 rentable square feet of space known as Suite No. 330 on the third (3rd) floor of the Building. Tenant’s Right of First Refusal shall be exercised as follows: when Landlord has a prospective tenant, other than the existing occupant of such space, (the “Prospect”) interested in leasing any Potential Refusal Space, Landlord shall advise Tenant (the “Advice”) of the terms under which Landlord is prepared to lease such Potential Refusal Space (a “Refusal Space”) to such Prospect and Tenant may lease the Refusal Space, under such terms, by delivery of written notice of exercise to Landlord (the “Notice of Exercise”) within ten (10) calendar days after the date of the Advice, except that Tenant shall have no such Right of First Refusal, and Landlord need not provide Tenant with an Advice with respect to any Potential Refusal Space, if:
(a) Tenant is in default beyond applicable notice and cure period under this Lease at the time that Landlord would otherwise deliver the Advice; (b) [intentionally omitted]; (c) this Lease has been assigned other than to a Permitted Transferee prior to the date Landlord would otherwise deliver the Advice; (d) Tenant or a Permitted Transferee is neither subleasing nor occupying at least fifty percent (50%) of the Premises on the date Landlord would otherwise deliver the Advice; or (e) such Potential Refusal Space is not intended for the exclusive use of Tenant or a Permitted Transferee during the Term.
38.2. The Term for the Refusal Space shall commence upon the commencement date stated in the Advice, and thereupon such Refusal Space shall be considered a part of the Premises, provided that all of the terms stated in the Advice, including the expiration date set forth in the Advice, shall govern Tenant’s leasing of the Refusal Space and only to the extent that they do not conflict with the Advice, the terms and conditions of the Lease shall apply to the Refusal Space. Notwithstanding the foregoing, if the remaining Term under this Lease would expire prior to the expiration of the term set forth in the subject Advice for the subject Potential Refusal Space, Tenant may elect to make the Term for the Potential Refusal Space coterminous with the Term for the original Premises hereunder if concurrent with Tenant’s exercise of its Right of First Refusal, Tenant exercises its Extension Option provided that in such event the Extension Option shall be a period that is the greater of (i) sixty (60) months, and (ii) the term for the Potential Refusal Space as set forth in the Advice and in such event Tenant’s Extension Option shall be deemed exercised and of no further force or effect. In the event Tenant fails to concurrently exercise the Extension Option but does exercise the subject Right of First Refusal, the term applicable to the subject Potential Refusal Space shall not be coterminous with the Term of the Lease as applicable to the Premises but shall be the length of term set forth in the Advice. Tenant shall pay Base Rent and Tenant’s Share of Operating Costs for the Refusal Space in accordance with the terms and conditions of the Advice.
38.3. The Refusal Space (including improvements and personalty, if any) shall be accepted by Tenant in its condition and as-built configuration existing on the earlier of the date Tenant takes possession of the Refusal Space or the date the term for such Refusal Space commences, unless the Advice specifies work to be performed by Landlord in the Refusal Space,
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in which case Landlord shall perform such work in the Refusal Space prior to commencement (if such condition if stated in the Advice). If Landlord is delayed delivering possession of the Refusal Space due to the holdover or unlawful possession of such space by any party, Landlord shall use reasonable efforts to obtain possession of the space, and the commencement of the term for the Refusal Space shall be postponed until the date Landlord delivers possession of the Refusal Space to Tenant free from occupancy by any party.
38.4. The rights of Tenant hereunder with respect to any Potential Refusal Space shall terminate on the earlier to occur of (i) twelve (12) months prior to the Expiration Date (as the same may be extended pursuant to Section 38.2 above); (ii) Tenant’s failure to exercise its Right of First Refusal with respect to such Potential Refusal Space within the ten (10) day period provided in Section 38.1 above; (iii) simultaneously with Tenant’s providing Landlord with a Notice of Exercise; and (iv) the date Landlord would have provided Tenant an Advice for such Potential Refusal Space if Tenant had not been in violation of one or more of the conditions set forth in Section 38.1 above. Notwithstanding anything to the contrary, if Landlord tenders to Tenant an Advise and Tenant waives its Right of First Refusal in writing, and thereafter in the event that final agreement between Landlord and the Prospect third party result in a change in the economic value of the transaction as set forth in the Advice that exceeds twenty percent (20%), Landlord must provide Tenant with a revised Advice, and Tenant’s Right of First Refusal shall be automatically reinstated upon the same terms and conditions as set forth in the revised Advice, provided that the foregoing ten (10) day response period shall be reduced to five (5) business days.
38.5. If Tenant exercises its Right of First Refusal, Landlord shall prepare an amendment (the “Refusal Space Amendment”) adding the Refusal Space to the Premises on the terms set forth in the Advice and reflecting the changes in the Base Rent, rentable square footage of the Premises, Tenant’s Share and other appropriate terms. A copy of the Refusal Space Amendment shall be sent to Tenant within a reasonable time after Landlord’s receipt of the Notice of Exercise executed by Tenant, and Tenant and Landlord shall promptly negotiate and finalize the same, but an otherwise valid exercise of the Right of First Refusal shall be fully effective whether or not the Refusal Space Amendment is executed. The form and substance of the Refusal Space Amendment shall be reasonably satisfactory to both Landlord and Tenant.
38.6. Notwithstanding anything herein to the contrary, Tenant’s Right of First Refusal is subject and subordinate to the renewal or extension rights of any tenant leasing all or any portion of the Refusal Space.
39. SUSTAINABILITY PROVISIONS.
39.1. Sustainability. Tenant shall conduct its operations in the Building and within the Premises in accordance with Landlord’s intention to operate the Building to promote a healthy environment, to reduce energy and water use, to promote recycling and the facilitation of transportation options, and to comply with any governmental authority that may impose resource reduction requirements on Landlord or the Building. Tenant shall take reasonable steps to comply with Landlord’s reasonable and customary sustainability programs as required by this Lease and the Rules and Regulations as Landlord may adopt from time to time.
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39.2. LEED Certification. Landlord may, in Landlord’s sole and absolute discretion, elect to apply to obtain or maintain a LEED certification for the Project (or portion thereof), or other applicable certification in connection with Landlord’s sustainability practices for the Project (as such sustainability practices are to be determined by Landlord, in its sole and absolute discretion, from time to time). In the event that Landlord elects to pursue such an aforementioned certification, Tenant shall promptly and reasonably cooperate (at no material additional out-of-pocket cost to Tenant) with the Landlord’s efforts in connection therewith and provide Landlord with any documentation it may need in order to obtain or maintain the aforementioned certification (which cooperation may include, but shall not be limited to, Tenant complying with certain standards pertaining to the purchase of materials used in connection with any Alterations or improvements undertaken by the Tenant in the Project, the sharing of documentation pertaining to any Alterations or improvements undertaken by Tenant in the Project with Landlord, and the sharing of Tenant’s billing information pertaining to trash removal and recycling related to Tenant’s operations in the Project).
39.3. Green Cleaning/Recycling. To the extent a “green cleaning program” and/or a recycling program is implemented by Landlord in the Building and/or Project (each in Landlord’s sole and absolute discretion), Tenant shall, at Tenant’s sole cost and expense, comply with the provisions of each of the foregoing programs to the extent Tenant is not required to incur a material expense (e.g., Tenant shall separate waste appropriately so that it can be efficiently processed by Landlord’s particular recycling contractors).
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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the date first above written.
| TENANT: | LANDLORD: | |||||||
| ATTOVIA THERAPEUTICS, INC., a Delaware corporation | BRITTAN WEST OWNER, LLC, a Delaware limited liability company | |||||||
| By: | /s/ Zaneta Odrowaz | By: | /s/ Michael Halow | |||||
| Name: Zaneta Odrowaz | Name: Michael Halow | |||||||
| Title: Chief Business Officer | Title: Authorized Signatory | |||||||
EXHIBIT A
THE MAIN PREMISES AND STORAGE SPACE
Main Premises
A-1
Storage Space
A-2
EXHIBIT B
CONSTRUCTION RIDER
1. Landlord Work. Landlord shall with reasonable diligence through a licensed contractor designated by Landlord construct and install in the Main Premises the improvements and fixtures provided for in this Construction Rider (“Landlord Work”) in a good and workmanlike manner using new materials. The intent of the parties is that Landlord Work shall include all tum-key and move-in ready improvements as reflected and/or described in the Preliminary Space Plan and Approved Space Plan (as such terms are defined in Section 1.1 below), including (a) purchase and install of fire suppression systems, (b) purchase and install of seismic bracing to support the Approved Space Plan, (c) distribution of utilities (gas room to benches or lab rooms, workstation distribution in the office), (d) lab benches and casework installed per the Approved Space Plan, (e) installation of Tenant-provided wall mounted IIVAC unit in the server room, (t) installation of Tenant-provided autoclave; (g) emergency power distribution to the server room, (h) if Tenant provides an Uninterrupted Power Supply system, installation of the same, (i) antistatic flooring for the server room, (j) eliminate one lower cabinet and appliance garage in the breakroom and add one appliance opening for Tenant provided second refrigerator, (k) eliminate wall shelving, reduce backsplash and add wall mounted cabinetry with room for Tenant provided microwave(s) in the breakroom, and (1) add second water line in breakroom to accommodate a large coffee machine. If any of items (a) thought (1) in this paragraph above cause an actual delay in the construction schedule for the Landlord Work beyond what such schedule would be without such additional work, such delay shall be deemed to be a Tenant Delay to the extent of such actual delay for the purposes of determining the Required Delivery Date and Outside Delivery Date.
The Landlord Work expressly excludes any Tenant’s equipment, fixtures and personal property such as any security system and also expressly excludes any reinforcement of building structure to support Tenant supplied and installed aquarium. References to “Premises” in this Exhibit B shall mean the Main Premises. Upon request by Landlord, Tenant shall designate an individual authorized to act as Tenant’s Representative with respect to all approvals, directions and authorizations pursuant to this Construction Rider.
1.1 Preliminary Space Plan and Approved Space Plan. Landlord and Tenant hereby approve the preliminary space plan attached hereto as Exhibit B-1 (the “Preliminary Space Plan”) prepared by Hammel, Green and Abrahamson, Inc. (the “Space Planner”), who has been retained by Landlord as the space planner for the Premises. The Space Planner shall prepare the final space plan for the Landlord Work (the “Final Space Plan”), which Final Space Plan shall be a natural and logical extension of the Preliminary Space Plan. Also attached as Exhibit B-2, for reference only, is Tenant’s list of equipment that Tenant intends to install into the lab portion of the Premises. Tenant shall reasonably approve or disapprove the Final Space Plan within three (3) business days after Landlord’s delivery thereof to Tenant. If Tenant fails to approve or disapprove of the Final Space Plan within such three (3) business day period, then Tenant shall be deemed to have approved the Final Space Plan. If Tenant disapproves the Final Space Plan, Tenant’s notice of disapproval shall specify any revisions Tenant desires in the Final Space Plan. After receiving such notice of disapproval, Landlord shall cause the Space Planner to revise the Final Space Plan, taking into account the reasons for Tenant’s disapproval (provided, however, that Landlord shall not be required to cause the Space Planner to make any revision to the Final Space Plan that, in
B-1
Landlord’s reasonable judgment, would cause the Final Space Plan to fail to comply with Applicable Laws, would cause an increase in the cost of the Landlord Work or that Landlord otherwise reasonably disapproves), and resubmit the Final Space Plan to Tenant for its approval. Such procedure shall be repeated as necessary until Tenant has approved the Final Space Plan; provided, however, that, so long as Landlord provides a reasonable Final Space Plan (or, if applicable, reasonable revisions thereto), (i) any delay resulting from Tenant requested revision(s) to the Final Space Plan after Landlord’s initial revision thereto shall be chargeable against Tenant as a Tenant Delay; and (ii) Tenant shall not be entitled to raise objections that were not raised in Tenant’s initial notice of disapproval (unless such objections relate to a portion of revised Final Space Plan that were not shown on previously reviewed Final Space Plan). The Final Space Plan, once approved, shall be referred to as the “Approved Space Plan”. Using Building Standard materials and finishes the Landlord Work shall be constructed substantially as shown on the Approved Space Plan.
1.2 Construction Documents. As soon as may be reasonably practicable after execution and delivery of the Lease, the Space Planner will prepare and deliver to Tenant detailed plans and specifications consistent with the Approved Space Plan and sufficient to permit the construction of the Landlord Work by the Contractor (“Construction Documents”). Tenant shall respond to the Construction Documents within five (5) business days after receipt thereof, specifying any changes or modifications Tenant desires in the Construction Documents which are required because the Construction Documents are inconsistent with the Approved Space Plan, or consist of minor modifications (e.g. changing outlet locations which shall not increase construction timing unless the parties agree to a Tenant Delay and/or any costs other than a de minimis amount), and so long as such changes do not increase the costs of the Landlord Work by more than a de minimis amount. Tenant shall make no changes to the Final Construction Documents (defined below) without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed, provided, however, if any such change or modification would directly or indirectly delay “Substantial Completion” (as hereinafter defined) of the Landlord Work, then the same shall be considered a Tenant Delay (defined below), and/or if the change or modification increases the cost of designing or constructing the Landlord Work, then Tenant shall be responsible for the increased cost (which increased amount Tenant shall tender to Landlord within ten (10) business days from the date of Landlord’s approval of the revised Final Construction Documents). Any disapproval by Tenant shall also specify in detail the reasons for Tenant’s disapproval, together with a detailed listing of those changes or modifications to the Construction Documents which would cause Tenant to approve the Construction Documents (“Tenant’s Plans Changes”). The Space Planner will then revise the Construction Documents, as such may be reasonably approved by Landlord, and resubmit the Construction Documents to Tenant for its approval. So long as the revised Construction Documents incorporate Tenant’s list of changes contained in Tenant’s Plans Changes, then any subsequent changes requested by Tenant to the Construction Documents shall be deemed to be a Tenant Delay (defined below), unless those changes are requested because Landlord unreasonably made other modifications to the Construction Documents that were not in the previous draft provided to Tenant. Tenant shall approve or disapprove the same within five (5) business days after receipt. The revised Construction Documents, as approved by Tenant and Landlord, are hereinafter referred to as the “Final Construction Documents”. In no event shall changes requested to the Construction Documents increase the costs of the Landlord Work by more than a de minimis amount.
B-2
a. Construction. Landlord shall proceed with reasonable diligence to cause the Landlord Work to be Substantially Completed on or prior to the scheduled Commencement Date. The Landlord Work shall be deemed to be “Substantially Completed” when: (i) they have been completed in accordance with the Final Construction Documents except for finishing details, minor omissions, decorations and mechanical adjustments of the type normally found on an architectural “punch list”, the noncompletion of which does not materially interfere with Tenant’s access to the Premises and use of the Premises for the Use expressly permitted in this Lease, and (ii) the date Landlord receives from the appropriate governmental authorities, with respect to the Landlord Work performed by Landlord or its contractors in the Premises, all approvals necessary for the occupancy of the Premises. The definition of Substantially Completed shall also define the terms “Substantial Completion” and “Substantially Complete.”
Following Substantial Completion of the Landlord Work and before Tenant takes possession of the Premises (or as soon thereafter as may be reasonably practicable and in any event within thirty (30) days after Substantial Completion), Landlord and Tenant shall inspect the Premises and jointly prepare a “punch list” of agreed items of construction remaining to be completed. Landlord shall complete the items set forth in the punch list as soon as reasonably possible and shall make commercially reasonable efforts to complete the same within forty-five (45) days of completion of the punch list inspection and preparation. Tenant shall cooperate with and accommodate Landlord and Landlord’s workers in completing the items on the punch list. Landlord and Tenant shall work together reasonably and in good faith to complete the punch list items in a manner designed to minimize interference with Tenant’s business operations in the Premises.
b. Cost of Landlord Work. Except as otherwise provided in this Construction Rider, Landlord shall pay for all of the hard and soft costs of construction, including, without limitation, the cost of the design, engineering, permits, construction and installation of the Landlord Work in accordance with the Final Construction Documents.
c. Changes. If Tenant requests any change, addition or alteration in or to any Final Construction Documents (whether one or more, hereinafter called “Changes”) Landlord shall cause the Space Planner to prepare additional proposed Construction Documents containing such Changes. Tenant shall be responsible for the costs and fees charged by the Space Planner for the Space Planner making any proposed Changes to the Final Construction Documents (even if such Changes are not used in the construction of Landlord Work) and Tenant shall pay to Landlord such additional costs and fees of the Space Planner within ten (10) business days after Tenant receives the invoice from Landlord therefor. As soon as practicable after the completion of such additional proposed Construction Documents showing the Changes requested by Tenant, Landlord shall notify Tenant of the estimated cost of the Changes. Within three (3) business days after receipt of such cost estimate, Tenant shall notify Landlord in writing whether Tenant approves the Changes. If Tenant approves the Changes, such approved changes shall be incorporated into the Final Construction Documents, Landlord shall proceed with the Changes and Tenant shall pay to Landlord all costs resulting from the Changes within ten (10) business days after Tenant receives an invoice from Landlord for the costs of the Changes; provided, however, if any Changes (or more than one Changes in the aggregate) increases the cost of Landlord Work by more than two percent (2%), then Landlord shall not be obligated to proceed with the Changes
B-3
until Tenant has paid to Landlord the total cost of all Changes. If Tenant fails to approve the Changes within such three (3) business day period, construction of the Landlord Work shall proceed as provided in accordance with the Final Construction Documents (as such Final Construction Documents may have been previously amended through Changes approved pursuant to the procedures contained in this Paragraph) prior to the applicable requested Changes.
d. Delays. Without limiting the terms and conditions contained in this Construction Rider, Tenant shall be responsible for, and shall pay to Landlord, any and all costs and expenses incurred by Landlord in connection with any actual delay in the commencement or completion of any Landlord Work and any increase in the cost of Landlord Work caused by (i) Tenant’s failure to submit information to the Space Planner or approve any Space Plan, Construction Documents or cost estimates within the time periods required herein, (ii) the inclusion by Tenant in the Landlord Work of any materials, equipment, fixtures or other items in the nature of “long lead” items (including any items that are rare or not readily available, and any custom fabricated items), and Tenant refuses to promptly consent to comparable materials, equipment, fixtures or other items proposed by Landlord, (iii) any Changes, (iv) a delay in the construction schedule caused by the additional work described in Section 1 above, or (v) any other delay requested or caused by Tenant (collectively, “Tenant Delays”). Except in connection with a Tenant Delay caused by the additional work described in Section 1 above or caused by the Generator Tie-In Work, Landlord shall notify Tenant, orally or in writing, of any circumstances of which Landlord is aware that have caused or may cause a Tenant Delay within two (2) business days following Landlord’s actual knowledge of such Tenant Delay, and no Tenant Delay shall commence until Landlord notifies Tenant thereof.
2. Delivery of Premises. Upon Substantial Completion of the Landlord Work, Landlord shall deliver possession of the Premises to Tenant. Except as provided in Section 2.1 of the Lease, if Landlord has not Substantially Completed the Landlord Work and tendered possession of the Premises to Tenant on or before the estimated Delivery Date specified in the Basic Lease Information of the Lease, or if Landlord is unable for any other reason to deliver possession of the Premises to Tenant on or before such date, neither Landlord nor its representatives shall be liable to Tenant for any damage resulting from the delay in completing such construction obligations and/or delivering possession to Tenant and the Lease shall remain in full force and effect. If any delays in Substantially Completing the Landlord Work are attributable to Tenant Delays, then the Premises shall be deemed to have been Substantially Completed and delivered to Tenant on the date on which Landlord could have Substantially Completed the Premises and tendered the Premises to Tenant but for such Tenant Delays.
3. Access to Premises. Landlord shall allow Tenant and Tenant Parties to enter the Premises prior to the Commencement Date pursuant to Section 2.3 of the Lease.
Tenant agrees that Landlord shall not be liable in any way for any injury, loss or damage which may occur to any of Tenant’s property placed upon or installed in the Premises during Early Access, the same being at Tenant’s sole risk, and Tenant shall be liable for all injury, loss or damage to persons or property arising as a result of such entry into the Premises by Tenant or its Representatives.
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4. Ownership of Landlord Work. All Landlord Work, whether installed by Landlord or Tenant, shall become a part of the Premises, shall be the property of Landlord and, subject to the provisions of the Lease, shall be surrendered by Tenant with the Premises, without any compensation to Tenant, at the expiration or termination of the Lease in accordance with the provisions of the Lease. Tenant’s Trade Fixtures and personal property, including furnishings, shall remain the property of Tenant. Upon the expiration or earlier termination of the Lease, Tenant shall not be required to remove any portion of the Landlord Work as the same are depicted on Exhibit B-1 attached hereto.
5. Compliance with Laws. Landlord shall cause the Landlord Work to comply with all Laws and, at Landlord’s sole cost and expense, shall be responsible for correcting any violations of Laws with respect to the original construction of the Landlord Work. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by law, so long as the same does not materially interfere with Tenant’s occupancy of the Premises. Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment. Notwithstanding the foregoing, Tenant, not Landlord, shall be responsible for the correction of any violations that arise out of or in connection with any claims brought under any provision of the Americans With Disabilities Act other than Title III thereof with respect to the specific nature of Tenant’s business in the Premises, the acts or omissions of Tenant or any Tenant Parties, Tenant’s arrangement of any furniture, equipment or other property in the Premises, any repairs, alterations, additions or improvements performed by or on behalf of Tenant (other than the Landlord Work) and any design or configuration of the Premises specifically requested by Tenant after being informed that such design or configuration may not be in strict compliance with Laws.
6. Landlord Warranties. Except to the extent caused by the acts or omissions of Tenant or any Tenant Parties or by any alterations or improvements performed by or on behalf of Tenant, and subject to Landlord’s obligations to cause the Landlord Work to comply with applicable Laws described in Section 5 above, if there are any material defects in the design or construction of the Landlord Work as of the date of Substantial Completion of the Landlord Work and Tenant provides Landlord with notice of the same within two hundred seventy (270) days following the Commencement Date, Landlord shall be responsible for repairing or restoring the same, without pass through and at no cost to Tenant. To the extent assignable, Landlord shall assign to Tenant all warranties and guarantees by the applicable contractor for the Landlord Work to the extent applicable to Tenant’s obligations set forth in the Lease and further except to the extent such warranties and guaranties pertain to the Building’s structure or Building Systems or improvements other than the Landlord Work, and, except as set forth above, Tenant hereby waives all claims against Landlord relating to, or arising out of the construction of, the Landlord Work; provided, however, that to the extent that Tenant is prohibited by Law from enforcing such warranties or guarantees, Landlord shall, on Tenant’s behalf and at no additional cost to Landlord, make efforts to diligently and reasonably enforce such warranties and guarantees. In the event that any of Landlord’s contractors fails to respond within a reasonable period of time to Tenant’s efforts to enforce Tenant’s assigned rights under any warranty or guarantee after Tenant has diligently pursued such enforcement, Landlord shall make commercially reasonable efforts to assist in such enforcement efforts.
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B-6
EXHIBIT B-1
PRELIMINARY SPACE PLAN
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EXHIBIT B-2
LIST OF TENANT’S EQUIPMENT
General Information
B-2-1
EXHIBIT C-1
RULES AND REGULATIONS
1. No sidewalks, entrance, passages, courts, elevators, vestibules, stairways, corridors or halls shall be obstructed or encumbered by Tenant or used for any purpose other than ingress and egress to and from the Premises and if the Premises are situated on the ground floor of the Project, Tenant shall further, at Tenant’s own expense, keep the sidewalks and curb directly in front of the Premises clean and free from rubbish.
2. No awning or other projection shall be attached to the outside walls or windows of the Project without the prior written consent of Landlord. No curtains, blinds, shades, drapes or screens shall be attached to or hung in, or used in connection with any window or door of the Premises, without the prior written consent of Landlord. Such awnings, projections, curtains, blinds, shades, drapes, screens and other similar fixtures must be of a quality, type, design, color, material and general appearance approved by Landlord, and shall be attached in the manner approved by Landlord. All lighting fixtures hung in offices or spaces along the perimeter of the Premises must be of a quality, type, design, bulb color, size and general appearance approved by Landlord.
3. No sign, advertisement, notice, lettering, decoration or other thing shall be exhibited, inscribed, painted or affixed by Tenant on any part of the outside of the Premises or of the Project (or is visible from the outside of the Premises), without the prior written consent of Landlord. In the event of the violation of the foregoing by Tenant, Landlord may remove same without any liability, and may charge the expense incurred by such removal to Tenant.
4. The sashes, sash doors, skylights, windows and doors that reflect or admit light or air into the halls, passageways or other public places in the Project shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the window sills or in the public portions of the Project.
5. No showcases or other articles shall be put in front of or affixed to any part of the exterior of the Project, nor placed in public portions thereof without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags or other substances shall be thrown therein. All damages resulting from any misuse of the fixtures shall be borne by Tenant to the extent that Tenant or Tenant’s agents, servants, employees, contractors, visitors or licensees shall have caused the same.
7. Tenant shall not mark, paint, drill into or in any way deface any part of the Project. No boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Landlord, and as Landlord may direct.
8. No animal or bird of any kind shall be brought into or kept in or about the Premises or the Project, except dogs that qualify as “service animals” under the ADA.
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9. Tenant shall cooperate with Landlord’s efforts to implement the Project’s Sustainability Practices and the applicable Green Building Standards, including, but not limited to, complying with Landlord’s then-current energy saving efforts and participating in any recycling programs and occupant satisfaction and transportation surveys, without material cost to Tenant.
10. Prior to leaving the Premises for the day, Tenant shall draw or lower window coverings and extinguish all lights.
11. Tenant shall regularly conduct cleaning and janitorial act1v1tles, especially in bathrooms, kitchens and janitorial spaces, to remove mildew and prevent moist conditions and shall comply with the Project’s Sustainability Practices and Tenant is strongly encouraged to comply with the applicable Green Building Standards.
12. Tenant shall not make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of the Project, or neighboring buildings or premises, or those having business with them. Tenant shall not throw anything out of the doors, windows or skylights or down the passageways.
13. Except as expressly permitted in the Lease, neither Tenant nor any of Tenant’s agents, servants, employees, contractors, visitors or licensees shall at any time bring or keep upon the Premises any flammable, combustible or explosive fluid, chemical or substance.
14. No additional locks, bolts or mail slots of any kind shall be placed upon any of the doors or windows by Tenant, nor shall any change be made in existing locks or the mechanism thereof. Tenant must, upon the termination of the tenancy, restore to Landlord all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by Tenant, and in the event of the loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof.
15. All removals, or the carrying in or out of any safes, freight, furniture, construction material, bulky matter or heavy equipment of any description must take place during the hours which Landlord or its agent may determine from time to time, typically between 5pm and 9am on weekdays, or anytime during weekends, unless otherwise approved by Landlord, factoring in emergency situations. Landlord reserves the right to prescribe the weight and position of all safes, which must be placed upon two-inch thick plank strips to distribute the weight. The moving of safes, freight, furniture, fixtures, bulky matter or heavy equipment of any kind must be made upon previous notice to the Building Manager and in a manner and at times prescribed by the Building Manager, and the persons employed by Tenant for such work are subject to Landlord’s prior approval. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into the Project and to exclude from the Project all safes, freight or other bulky articles which exceed the load bearing capacity of the floors of the Building or which violate any of these Rules and Regulations or the Lease of which these Rules and Regulations are a part.
16. Tenant shall not purchase janitorial or maintenance or other like service from any company or persons not approved by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed.
17. Landlord shall have the right to prohibit any advertising or business conducted by Tenant referring to the Project which, in Landlord’s opinion, tends to impair the reputation of the Project or its desirability as a first class building for offices and/or commercial services and upon notice from Landlord, Tenant shall refrain from or discontinue such advertising.
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18. Landlord reserves the right to exclude from the Project between the hours of 6:00 p.m. and 8:00 a.m. Monday through Friday, after 1:00 p.m. on Saturdays and at all hours Sundays and legal holidays, all persons who do not present a pass to the Project issued by Landlord. Landlord may furnish passes to Tenant so that Tenant may validate and issue same. Tenant shall safeguard said passes and shall be responsible for all acts of persons in or about the Project who possess a pass issued to Tenant.
19. Tenant’s vendors and contractors shall, while in the Premises or elsewhere in the Project, be subject to and under the control and direction of the Building Manager (but not as agent or servant of said Building Manager or of Landlord) and, prior to commencing any work, shall be required to maintain and provide copies of such insurance coverage as reasonably approved by Landlord with liability policies naming Landlord and the Indemnitees as additional insureds.
20. If the Premises is or becomes infested with vermin as a result of the use or any misuse or neglect of the Premises by Tenant, its agents, servants, employees, contractors, visitors or licensees, Tenant shall forthwith at Tenant’s expense cause the same to be exterminated from time to time to the satisfaction of Landlord and shall employ such licensed exterminators as shall be approved in writing in advance by Landlord.
21. The requirements of Tenant will be attended to only upon application at the office of the Project. Project personnel shall not perform any work or do anything outside of their regular duties unless under special instructions from the office of Landlord.
22. Canvassing, soliciting and peddling in the Project are prohibited and Tenant shall cooperate to prevent the same.
23. No water cooler, air conditioning unit or system or other apparatus shall be installed or used by Tenant without the written consent of Landlord.
24. There shall not be used in any premises, or in the public halls, plaza areas, lobbies, or elsewhere in the Project, either by Tenant, Tenant’s contractors or others, in the delivery or receipt of merchandise, any hand trucks or dollies, except those equipped with rubber tires and sideguards.
25. Tenant, Tenant’s agents, servants, employees, contractors, licensees, or visitors shall not park any vehicles in any driveways, service entrances, or areas posted “No Parking” and shall comply with any other parking restrictions imposed by Landlord from time to time.
26. Tenant shall install and maintain, at Tenant’s sole cost and expense, an adequate visibly marked (at all times properly operational) fire extinguisher next to any duplicating or photocopying machine or similar heat producing equipment, which may or may not contain combustible material, in the Premises.
27. Tenant shall keep its window coverings closed during any period of the day when the sun is shining directly on the windows of the Premises.
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28. Tenant shall not use the name of the Project for any purpose other than as the address of the business to be conducted by Tenant in the Premises, nor shall Tenant use any picture of the Project in its advertising, stationery or in any other manner without the prior written permission of Landlord. Landlord expressly reserves the right at any time to change said name without in any manner being liable to Tenant therefor.
29. Tenant shall not prepare any food nor do any cooking, operate or conduct any restaurant, luncheonette or cafeteria for the sale or service of food or beverages to its employees or to others, except that food and beverage preparation by Tenant’s employees using microwave ovens or coffee makers shall be permitted provided no odors of cooking or other processes emanate from the Premises. Tenant shall not install or permit the installation or use of any vending machine except in such manner as reasonably approved in advance in writing by Landlord.
30. The Premises shall not be used as an employment agency, a public stenographer or typist, a labor union office, a physician’s or dentist’s office, a dance or music studio, a school, a beauty salon, or barber shop, the business of photographic reproductions or offset printing, a restaurant or bar, an establishment for the sale of confectionery, soda, beverages, sandwiches, ice cream or baked goods, an establishment for preparing, dispensing or consumption of food or beverages of any kind in any manner whatsoever, or news or cigar stand, or a radio, television or recording studio, theatre or exhibition hall, or manufacturing, or the storage or sale of merchandise, goods, services or property of any kind at wholesale, retail or auction, or for lodging or sleeping.
31. Business machines and mechanical equipment shall be placed and maintained by Tenant at Tenant’s expense in settings sufficient in Landlord’s judgment to absorb and prevent vibration, noise and annoyance. Tenant shall not install any machine or equipment which causes noise, heat, cold or vibration to be transmitted to the structure of the building in which the Premises are located without Landlord’s prior written consent, which consent may be conditioned on such terms as Landlord may reasonably require. Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot that such floor was designed to carry and which is allowed by Law.
32. [Intentionally omitted].
33. Tenant shall not store any vehicle within the parking area. Tenant’s parking rights are limited to the use of parking spaces for short-term parking, of up to twenty-four (24) hours, of vehicles utilized in the normal and regular daily travel to and from the Project. Tenants who wish to park a vehicle for longer than a 24-hour period shall notify the Building Manager for the Project and consent to such long-term parking may be granted for periods up to two (2) weeks. Any motor vehicles parked without the prior written consent of the Building Manager for the Project for longer than a 24-hour period shall be deemed stored in violation of this rule and regulation and shall be towed away and stored at the owner’s expense or disposed of as provided by Law.
34. Smoking is prohibited in the Premises, the Building and all enclosed Common Areas of the Project, including all lobbies, all hallways, all elevators and all lavatories. “Smoking”, as used herein, shall be deemed to include the use of e-cigarettes, smokeless cigarettes and other similar products. All rules and regulations set forth in this Exhibit C-1 applicable to smoking also apply to the use of e-cigarettes, smokeless cigarettes and other similar products.
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35. Tenant shall not store any items within 18 inches of a sprinkler head.
36. Building ladders including fixed ladders and step ladders are not to be used by Tenant, Tenant’s agents, servants, employees, contractors, licensees or visitors.
37. Portable “space heaters” are not permitted.
38. Tenants are not permitted to open an electrical panel. Tenants are required to contact Landlord to reset a circuit breaker.
39. Tenant shall reimburse Landlord for the cost (plus an administrative charge at Landlord’s then prevailing rate not to exceed 5%) of Landlord providing any special services or work requested by Tenant to the extent such services or work are not specifically set forth as a Landlord obligation in the Lease.
40. During the continuance of any invasion, mob, riot, public excitement, “shelter in place” or similar governmental order, or other circumstance rendering such action advisable in Landlord’s opinion or as required by Law, Landlord reserves the right (but shall not be obligated) to prevent or limit access to the Building during the continuance of that event by any means it considers appropriate for the safety of tenants and protection of the Building, property in the Building or otherwise as required by Law and in no event shall the same render Landlord liable to Tenant, constitute a constructive eviction, or excuse Tenant from any obligation under the Lease.
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EXHIBIT C-2
LABORATORY RULES AND REGULATIONS
1. Any laboratory equipment (glass and cage washers, sterilizers, centrifuges, etc.) being used during Standard Operating Hours must be properly insulated for noise to prevent interruption of other tenants’ business. Landlord reserves the right to request all equipment be insulated prior to occupancy. Should other tenants complain of noise, the laboratory tenant will be responsible for abating any noise issues, at the laboratory tenant’s sole cost.
2. Any damages to property due to leaks from laboratory equipment will be the sole responsibility of the laboratory tenant. Should damage occur in other tenant spaces, any and all damages and clean-up will be the responsibility of the laboratory tenant, subject to applicable waivers of subrogation expressly set forth in the Lease.
3. Animal activities are a recognized and necessary process in the biotech industry. Such activities may only be conducted by laboratory tenants pursuant to all the requirements of their respective lease (including any “Use” clause) and require specific, written approval by Landlord in advance. Any animal activities shall be conducted pursuant to all regulations, standards and best industry practices relating to them.
4. The Project is a mixed-use facility, and laboratory tenants share space with office tenants. To reduce the potential interaction with office tenants and their employees and visitors with any biotech animal operations, any animal testing performed, any deliveries of animals and any equipment, foods, cleaners, etc. associated with animal activities, must be coordinated through the loading dock after hours and with the cooperation of the building management and security personnel. The laboratory tenant should make every effort to handle any deliveries relating to animal activities outside of Standard Operating Hours. The freight elevator must be used at all times, and delivery trucks should not be visible to the other tenants in the campus area. No cartons, containers or cardboard boxes bearing the nature of contents may be stored or left in common area spaces, including any garage/freight areas. Feed bags, animal carriers, and any and all other related containers must be disposed of properly and with discretion.
5. All exterior signage relating to laboratory operations (i.e., visible to common areas, including corridors) must be kept to the minimum required by Laws. All signs outside of the Premises or visible from the exterior of the Premises must have Landlord’s approval prior to installation.
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EXHIBIT D
FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Banc of California
[***]
Attention: Records Management
Assessor’s Identification Number: _________________________
SPACE ABOVE THE LINE FOR RECORDER’S USE
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
| NOTICE: | THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN THE LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. |
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is made to be effective as of ________________, by and among BANC OF CALIFORNIA (“Bank”), ___________________ (hereinafter referred to as “Landlord”), and ______________________ (“Tenant”);
WITNESSETH
WHEREAS, Bank is the owner and holder of a deed of trust dated as of _______________ (the “Deed of Trust”), covering, without limitation, that certain real property described in EXHIBIT “A”, attached hereto and made a part hereof for all purposes, and the buildings and improvements thereon, provided in the Lease (as hereinafter defined) (hereinafter collectively, the “Property”), which Deed of Trust was or shall be recorded in the Official Records of ______________ County, _______________, securing the payment of the loan (the “Loan”) made by Bank to Landlord pursuant to that certain loan agreement dated as of even date with the Deed of Trust (“Loan Agreement”), and evidenced by that certain promissory note by Landlord in favor of Bank dated as of even date with the Deed of Trust (the “Note”) (the Loan Agreement, Note, Deed of Trust and the other documents executed by Landlord in connection with the Loan being hereinafter sometimes referred to individually and collectively as “Loan Documents”);
WHEREAS, Tenant is the holder of a leasehold estate pursuant to a lease agreement between Landlord and Tenant, dated _________________ (together with any and all addendums, amendments, and/or modifications thereto, and any and all renewals and/or extensions thereof, collectively, the “Lease”) covering a portion of the Property as more particularly described therein (“Premises”);
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WHEREAS, Landlord (with such party and its successors and assigns occupying the position of landlord under the Lease being referred to collectively hereinafter as “Landlord”) has assigned its right, title and interest under the Lease and its rights as landlord under the Lease to Bank to facilitate repayment of the Loan and performance of its obligations under the Deed of Trust; and WHEREAS, Tenant and Bank desire to confirm their understanding with respect to the Lease and the Deed of Trust;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, Bank, Landlord and Tenant hereby agree and covenant as follows:
| 1. | SUBORDINATION. The Lease and all estates, rights, options, liens, and charges thereunder contained or created under the Lease are and shall at all times continue to be, subject and subordinate in each and every respect, to the lien of the Deed of Trust and to any and all liens, interests and rights created thereby and to any and all increases, renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Deed of Trust or the indebtedness or other obligations secured thereby. |
| 2. | NON-DISTURBANCE. So long as Tenant is not in default (beyond any period given to Tenant under the Lease to cure such default) in the payment of rent or additional rent or in the performance of any of the terms, covenants or conditions of the Lease on Tenant’s part to be performed, (a) Tenant’s possession of the Premises and Tenant’s rights, benefits, and privileges under the Lease, or any extensions or renewals thereof, shall not be diminished or interfered with by Bank in the exercise of any of its rights under the Loan Documents or by any party who acquires the Property from Bank as a result of the exercise by Bank of any such rights, and Bank and any party who acquires the Property from Bank shall be bound to Tenant under all of the terms and conditions of this Agreement, (b) Tenant’s occupancy of the Premises shall not be disturbed by Bank in the exercise of any of its rights under the Loan Documents during the term of the Lease or any extensions or renewals thereof or by any party who acquires the Property from Bank as a result of the exercise by Bank of any such rights, and (c) Bank will not join Tenant as a party defendant in any action or proceeding for the purpose of terminating Tenant’s interest and estate under the Lease because of any default under the Deed of Trust or any other instrument evidencing or securing the Loan or, except as expressly required by applicable law, in any other suit, action or proceeding to enforce any rights or remedies of Bank under the Deed of Trust or the obligations secured thereby. |
| 3. | ATTORNMENT. If any proceedings are brought for the foreclosure of the Deed of Trust, or if the Property is sold pursuant to a trustee’s sale under the Deed of Trust, or if Bank becomes owner of the Property by acceptance of a deed or assignment in lieu of foreclosure or otherwise, Tenant shall upon written notice attorn to Bank or purchaser, as the case may be, upon any such foreclosure sale or trustee’s sale, or acceptance by Bank of a deed or assignment in lieu of foreclosure, and Tenant shall recognize Bank or such purchaser, as the case may be, as the Landlord under the Lease. Such attornment shall be effective and self-operative without the execution of any further instrument on the part of any of the |
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| parties hereto. Tenant agrees, however, to execute and deliver at any time, and from time to time, within ten (10) business days after the request of Landlord, any holder(s) of any of the indebtedness or other obligations secured by the Deed of Trust, or any such purchaser, all instruments or certificates on forms reasonably satisfactory to Tenant which, in the reasonable judgment of Landlord, such holder(s) or such purchaser, may be necessary or appropriate in any such foreclosure proceeding or otherwise to evidence such attornment. In the event of any such attornment, Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect the Lease and the obligation of Tenant thereunder as a result of any such foreclosure proceeding or trustee’s sale. |
| 4. | BANK’S RIGHTS, REMEDIES AND LIABILITY AS A LANDLORD OR LENDER IN POSSESSION. If Bank shall succeed to the interest of Landlord under the Lease in any manner, or if any purchaser acquires the Property upon any foreclosure of the Deed of Trust or any trustee’s sale under the Deed of Trust, Bank or such purchaser, as the case may be, shall have the same remedies by entry, action or otherwise in the event of any default by Tenant (beyond any period given to Tenant under the Lease to cure such default) in the payment of rent or additional rent or in the performance of any of the terms, covenants and conditions of the Lease on Tenant’s part to be performed that Landlord had or would have had if Bank or such purchaser had not succeeded to the interest of Landlord. Thereafter, Bank or such purchaser shall be bound to Tenant under all the terms, covenants, and conditions of the Lease, and Tenant shall, from and after the succession to the interest of Landlord under the Lease by Bank or such purchaser, have the same remedies against Bank or such purchaser for the breach of an agreement contained in the Lease that Tenant might have had under the Lease against Landlord if Bank or such purchaser had not succeeded to the interest of Landlord, and Tenant shall be bound to Bank or such purchaser under all of the terms, covenants and conditions of the Lease; provided, however, that Bank or such purchaser shall not be: |
| a. | liable for any act or omission of any prior landlord (including Landlord); |
| b. | subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord), other than those offsets or defenses related to Landlord obligations that are of an ongoing nature (e.g. repair and maintenance and construction) that are continuing on the date (the “Transfer Date”) the Bank or purchaser takes possession of, or title to, the Property (“Continuing Defaults”). Tenant shall have any rights and remedies available under the Lease against Bank or purchaser with respect to any and all Continuing Defaults; |
| c. | bound by any rent or additional rent which Tenant might have paid for more than the one (1) month in advance to any prior landlord (including Landlord), unless the same was paid to and received by Bank from Landlord or unless the payment was required by the express terms of the Lease to be paid in advance (such as estimated operating cost payments which are subsequently reconciled) and actually received by Bank; |
| d. | [omitted] |
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| e. | bound by any amendment or modification of the Lease made after the date of this Agreement without Bank’s prior written consent (other than amendments or modifications of the Lease arising out of Tenant’s exercise of any express right or option contained in the Lease or which do not materially impact Landlord’s rights or remedies or expand Landlord’s obligations under the Lease), which consent shall not be unreasonably withheld, conditioned, or delayed; |
| f. | liable for return of any security deposit or other sum(s) paid by Tenant to Landlord, unless the same was paid to and received by Bank from Landlord Neither Bank nor any other party who from time to time shall be included in the definition of Bank hereunder, shall have any liability or responsibility under or pursuant to the terms of this Agreement from the date it ceases to own an interest in or to the Property. Tenant further acknowledges and agrees that neither Bank nor any purchaser of the Property at any foreclosure sale nor any grantee of the Property named in a deed-in-lieu of foreclosure, nor any heir, legal representative, successor, or assignee of Bank or of any such purchaser or grantee, has or shall have any personal liability for the obligations of Landlord under the Lease, any liability of such party being limited in all cases to its interest in the Property then owned by such party (including insurance and condemnation proceeds, the proceeds from any sale, lease or other disposition of the Property, and the rental income derived from the Property but, for the avoidance of doubt, only to the extent then owned and held by such party). |
| 5. | NO WAIVER. Nothing herein contained is intended, nor shall it be construed, to abridge or adversely affect any right or remedy of Landlord under the Lease in the event of any default by Tenant (beyond any period given to Tenant under the Lease to cure such default) in the payment of rent or additional rent or in the performance of any of the terms, covenants or conditions of the Lease on Tenant’s part to be performed. |
| 6. | NOTICES. Tenant hereby acknowledges and agrees that: |
| a. | From and after the date hereof, in the event of any act or omission of Landlord which would give Tenant the right, either immediately or after notice, the lapse of time, or both, to terminate the Lease or to claim a partial or total eviction, Tenant will not exercise any such right (i) until it has given written notice of such act or omission to Bank after the expiration of Landlord’s cure period under the Lease, and (ii) until the expiration of thirty (30) days following such giving of notice to Bank in which time period Bank shall be entitled to cure any such acts or omissions of Landlord, or begin the cure and diligently pursue the cure if such cure, by its nature, cannot reasonably be effected within such thirty (30) day period. |
| b. | Tenant shall send to Bank a copy of any default, notice or statement sent by Tenant to Landlord under the Lease, at the same time such default, notice or statement is sent to Landlord. |
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| c. | If Bank notifies Tenant of a default under the Deed of Trust and demands that Tenant pay its rent and all other sums due under the Lease to Bank, Tenant shall honor such demand and pay its rent and all of the sums due under the Lease directly to Bank or as otherwise required pursuant to such notice. In connection therewith, Landlord, by its execution of this Agreement, hereby acknowledges and agrees that in the event of a default under the Deed of Trust, Tenant may pay all rents and all of the sums due under the Lease directly to Bank as provided hereinabove upon notice from Bank that Landlord is in default. If Tenant shall make rental payments to Bank following receipt of notice that Landlord is in default, Landlord hereby waives any claims against Tenant for the amount of such payments made by Tenant to Bank and Tenant shall be credited for those rent payments under the Lease. |
| 7. | COVENANTS. Tenant shall not, without obtaining the prior written consent of Bank, (a) prepay any of the rents, additional rents or other sums due under the Lease for more than one (1) month in advance of the due dates thereof except as expressly permitted pursuant to the terms of the Lease, (b) voluntarily surrender the Premises or terminate the Lease unless Tenant has such right under the Lease, without Bank’s consent, or (c) assign the Lease or sublet the Premises other than pursuant to the provisions of the Lease. |
| 8. | AMENDMENTS/SUCCESSORS. This Agreement and the Lease may not be amended or modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and permitted assigns, and any purchaser or purchasers at foreclosure of the Property, and their respective heirs, personal representatives, successors and assigns. |
| 9. | NOTICE OF MORTGAGE. To the extent that the Lease shall entitle Tenant to notice of any mortgage or deed of trust, this Agreement shall constitute such notice to the Tenant with respect to the Deed of Trust and to any and all modifications, renewals, extensions, replacements and/or consolidations of the Deed of Trust and to any and all other mortgages or deeds of trust which may hereafter be subject to the terms of this Agreement as provided above. Tenant has not received notice of any assignment, hypothecation, mortgage, or pledge of Landlord’s interest in the Lease or the rents or other amounts payable thereunder other than that given to Bank. Tenant consents to the Deed of Trust and to the assignment of Landlord’s rights under the Lease to Bank. Bank may, at its election, in its sole and absolute opinion and judgment, subordinate the lien of the Deed of Trust to the Lease and the leasehold interest created thereby, and make said lien subject to the Lease by providing Landlord and Tenant written notice of such election at any time prior to completion of a foreclosure of the Deed of Trust, whether judicial or through the power of sale contained in the Deed of Trust, or the acceptance of any assignment or deed in lieu of foreclosure. From and after delivery of such notice to Tenant, the lien of the Deed of Trust shall be subject and subordinate to the Lease and the leasehold estate created thereby. |
| 10. | MULTIPLE COUNTERPARTS. This Agreement may be executed in several counterparts, and all so executed counterparts shall constitute one agreement, binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. |
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| 11. | GOVERNING LAW; JURISDICTION AND VENUE. |
| a. | Governing Law. This Agreement shall be governed by the laws of the State of California. |
| b. | Jurisdiction and Venue. Landlord and Tenant irrevocably submit to the nonexclusive jurisdiction of any Federal or state court sitting in California, over any suit, action or proceeding arising out of or relating to this Agreement. Landlord and Tenant irrevocably waive, to the fullest extent they may effectively do so under applicable law, any objection they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Landlord and Tenant hereby consent to any and all process which may be served in any such suit, action or proceeding, (i) by mailing a copy thereof by registered and certified mail, postage prepaid, return receipt requested, to their respective addresses shown in this Agreement or as notified to the Bank and (ii) by serving the same upon the Landlord and/or Tenant, as the case may be, in any other manner otherwise permitted by law, and agree that such service shall in every respect be deemed effective service upon Landlord and/or Tenant. |
| 12. | CAPTIONS. The captions, headings, and arrangements used in this Agreement are for convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions hereof. |
| NOTICE: | THIS AGREEMENT CONTAINS A PROVISION WHICH MAY ALLOW THE PARTIES AGAINST WHOM YOU CLAIM AN EQUITABLE INTEREST IN REAL PROPERTY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. |
[signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| BANK: | ||||
| BANC OF CALIFORNIA | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: [***] | ||||
| LANDLORD: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | ||||
| TENANT: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | ||||
[ALL SIGNATURES MUST BE ACKNOWLEDGED]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On __________________, _____, before me, _____________________________, Notary Public
(insert name and title of the officer)
personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. [SEAL]
Signature:
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On __________________, _____, before me, _____________________________, Notary Public
(insert name and title of the officer)
personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OP PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. [SEAL]
Signature:
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On __________________, _____, before me, _____________________________, Notary Public
(insert name and title of the officer)
personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. [SEAL]
Signature:
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EXHIBIT A
PROPERTY DESCRIPTION
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EXHIBIT E
HAZARDOUS MATERIALS QUESTIONNAIRE
This questionnaire is designed to solicit information regarding Tenant’s proposed use, generation, treatment, storage, transfer or disposal of hazardous or toxic materials, substances or wastes. If this questionnaire is attached to or provided in connection with a lease, the reference herein to any such items shall include all items defined as “Hazardous Materials,” “Hazardous Substances,” “Hazardous Wastes,” “Toxic Materials,” “Toxic Substances, “Toxic Wastes,” or such similar definitions contained in such lease. Please complete the questionnaire and return it to Landlord for evaluation. If your use of materials or substances, or generation of wastes is considered to be significant, further information may be requested regarding your plans for hazardous and toxic materials management. Submission to Landlord of this Hazardous Materials Questionnaire or Landlord’s request for additional information shall not deemed consent by Landlord to Tenant’s use of the materials disclosed herein. Your cooperation in this matter is appreciated. If you have any questions, do not hesitate to call us for assistance.
| 1. |
PROPOSED TENANT | |
| Name (Corporation, Individual, Corporate or Individual DBA, or Public Agency): | ||
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Standard Industrial Classification Code (SIC): | ||
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Street Address: | ||
| City, State, Zip Code: | ||
| Contact Person & Title: | ||
| Telephone Number: (____) _________________ | ||
| Facsimile Number: (____) _________________ | ||
| 2. |
LOCATION AND ADDRESS OF PROPOSED LEASE | |
| Street Address: | ||
| City, State, Zip Code: | ||
| Bordering Streets: | ||
| Streets to which Premises has Access: | ||
| 3. |
DESCRIPTION OF PREMISES | |
| Floor Area: | ||
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Number of Parking Spaces: | ||
| Date of Original Construction: | ||
| Past Uses of Premises: | ||
| Dates and Descriptions of Significant Additions, Alterations or Improvements: | ||
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| Proposed Additions, Alterations or Improvements, if any: | ||
| 4. | DESCRIPTION OF PROPOSED PREMISES USE | |
| Describe proposed use and operation of Premises including (i) services to be performed, (ii) nature and types of manufacturing or assembly processes, if any, and (iii) the materials or products to be stored at the Premises. | ||
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| Will the operation of your business at the Premises involve the use, generation, treatment, storage, transfer or disposal of hazardous wastes or materials? Do they now? Yes ____ No ____ If the answer is “yes,” or if your SIC code number is between 2000 to 4000, please complete Section 5. | ||
| 5. | PERMIT DISCLOSURE | |
| Does or will the operation of any facet of your business at the Premises require any permits, licenses or plan approvals from any of the following agencies? | ||
| U.S. Environmental Protection Agency |
Yes ____ No ____ | |
| City or County Sanitation District |
Yes ____ No ____ | |
| State Department of Health Services |
Yes ____ No ____ | |
| U.S. Nuclear Regulatory Commission |
Yes ____ No ____ | |
| Air Quality Management District |
Yes ____ No ____ | |
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| Bureau of Alcohol, Firearms and Tobacco |
Yes ____ No ____ | |
| City or County Fire Department |
Yes ____ No ____ | |
| Regional Water Quality Control Board |
Yes ____ No ____ | |
| Other Governmental Agencies (if yes, identify _______________________________) |
Yes ____ No ____ | |
| If the answer to any of the above is “yes,” please indicate permit or license numbers, issuing agency and expiration date or renewal date, if applicable. | ||
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| If your answer to any of the above is “yes,” please complete Sections 6 and 7. | ||
| 6. | HAZARDOUS MATERIALS DISCLOSURE | |
| Will any hazardous or toxic materials or substances be stored on the Premises? Yes ____ No ____ If the answer is “yes,” please describe the materials or substances to be stored, the quantities thereof and the proposed method of storage of the same (i.e., drums, aboveground or underground storage tanks, cylinders, other), and whether the material is a Solid (S), Liquid (L) or Gas (G): | ||
| Material/ Substance |
Quantity to be Stored on Premises |
Storage Method |
Amount to be Stored on a Monthly Basis |
Maximum Period of Premises Storage | ||||
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Attach additional sheets if necessary.
Is any modification of the Premises improvements required or planned to mitigate the release of toxic or hazardous materials substance or wastes into the environment? Yes ____ No ____ If the answer is “yes,” please describe the proposed Premises modifications:
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| 7. | HAZARDOUS WASTE DISCLOSURE |
Will any hazardous waste, including recyclable waste, be generated by the operation of your business at the Premises? Yes ____ No ____ If the answer is “yes,” please list the hazardous waste which is expected to be generated (or potentially will be generated) at the Premises, its hazard class and volume/frequency of generation on a monthly basis.
| Waste Name |
Hazard Class |
Volume Month |
Maximum Period of Premises Storage | |||
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Attach additional sheets if necessary.
If the answer is “yes,” please also indicate if any such wastes are to be stored within the Premises and the proposed method of storage (i.e., drums, aboveground or underground storage tanks, cylinders, other).
| Waste Name |
Storage Method |
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Attach additional sheets if necessary.
If the answer is “yes,” please also describe the method(s) of disposal for each waste. Indicate where disposal will take place including the methods, equipment and companies to be used to transport the waste:
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Is any treatment or processing of hazardous wastes to be conducted at the Premises? Yes ____ No ____ If the answer is “yes,” please describe proposed treatment/processing methods:
Which agencies are responsible for monitoring and evaluating compliance with respect to the storage and disposal of hazardous materials or wastes at or from the Premises? (Please list all agencies):
Have there been any agency enforcement actions regarding Tenant (or any affiliate thereof), or any existing Tenant’s (or any affiliate’s) facilities, or any past, pending or outstanding administrative orders or consent decrees with respect to Tenant or any affiliate thereof? Yes ____ No ____ If the answer is “yes,” have there been any continuing compliance obligations imposed on Tenant or its affiliates as a result of the decrees or orders? Yes ____ No ____
If the answer is “yes,” please describe:
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Has Tenant or any of its affiliates been the recipient of requests for information, notice and demand letters, cleanup and abatement orders, or cease and desist orders or other administrative inquiries? Yes ____ No ____ If the answer is “yes,” please describe:
Are there any pending citizen lawsuits, or have any notices of violations been provided to Tenant or its affiliates or with respect to any existing facilities pursuant to the citizens suit provisions of any statute? Yes ____ No ____ If the answer is “yes,” please describe:
Have there been any previous lawsuits against the company regarding environmental concerns? Yes ____ No ____ If the answer is “yes,” please describe how these lawsuits were resolved:
Has an environmental audit ever been conducted at any of your company’s existing facilities? Yes ____ No ____ If the answer is “yes,” please describe:
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Does your company carry environmental impairment insurance? Yes ____ No ____ If the answer is “yes,” what is the name of the carrier and what are the effective periods and monetary limits of such coverage?
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| 8. | EQUIPMENT LOCATED OR TO BE LOCATED AT THE PREMISES |
Is (or will there be) any electrical transformer or other equipment containing polychlorinated biphenyls located at the Premises? Yes ____ No ____ If the answer is “yes,” please specify the size, number and location (or proposed location):
Is (or will there be) any tank for storage of a petroleum product located at the Premises? Yes ____ No ____ If the answer is “yes,” please specify capacity and contents of tank; permits, licenses and/or approvals received or to be received therefor and any spill prevention control or conformance plan to be taken in connection therewith:
| 9. | ONGOING ACTIVITIES (APPLICABLE TO TENANTS IN POSSESSION) |
Has any hazardous material, substance or waste spilled, leaked, discharged, leached, escaped or otherwise been released into the environment at the Premises? Yes ____ No ____ If the answer is “yes,” please describe including (i) the date and duration of each such release, (ii) the material, substance or waste released, (iii) the
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extent of the spread of such release into or onto the air, soil and/or water, (iv) any action to clean up the release, (v) any reports or notifications made of filed with any federal, state, or local agency, or any quasi-governmental agency (please provide copies of such reports or notifications) and (vi) describe any legal, administrative or other action taken by any of the foregoing agencies or by any other person as a result of the release:
This Hazardous Materials Questionnaire is certified as being true and accurate and has been completed by the party whose signature appears below on behalf of Tenant as of the date set forth below.
DATED: _________________
| Signature | ||
| Print Name | ||
| Title | ||
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EXHIBIT F
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _____________________
ISSUE DATE: ________________
ISSUING BANK:
FIRST-CITIZENS BANK & TRUST COMPANY
[***]
BENEFICIARY:
[***]
APPLICANT:
Attovia Therapeutics Inc
[***]
| AMOUNT: | US$_____________ (________ AND XX/100 U.S. DOLLARS) | |
| EXPIRATION DATE: | ________________ (ONE YEAR FROM ISSUE DATE) | |
| PLACE OF EXPIRATION: | ISSUING BANK’S COUNTERS AT ITS ABOVE ADDRESS | |
DEAR SIR/MADAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF _______ IN YOUR FAVOR AVAILABLE BY PAYMENT AGAINST YOUR PRESENTATION TO US OF THE FOLLOWING DOCUMENT:
BENEFICIARY’S SIGNED AND DATED STATEMENT STATING AS FOLLOWS:
“TENANT AND LANDLORD ARE PARTIES TO THAT CERTAIN LEASE AGREEMENT BETWEEN APPLICANT, AS TENANT, AND BENEFICIARY AS LANDLORD, AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED TO DATE. THE UNDERSIGNED HEREBY CERTIFIES THAT: (I) THE UNDERSIGNED IS AN AUTHORIZED REPRESENTATIVE OF LANDLORD; (II) LANDLORD IS THE BENEFICIARY OF LETTER OF CREDIT NO. SVBSF _____________ ISSUED BY FIRST-CITIZENS BANK & TRUST COMPANY.; (III) THE FUNDS REQUESTED IIEREBY ARE DUE AND OWING TO LANDLORD PURSUANT TO TIIE TERMS AND CONDITIONS OF THE LEASE, AS AMENDED; AND (IV) LANDLORD IS AUTHORIZED TO DRAW DOWN ON THE LETTER OF CREDIT. THE AMOUNT HEREBY DRAWN UNDER THE LETTER OF CREDIT IS US$__________, WITH PAYMENT TO BE MADE TO THE FOLLOWING ACCOUNT: [INSERT WIRE INSTRUCTIONS (TO INCLUDE NAME AND ACCOUNT NUMBER OF THE BENEFICIARY)].”
F-1
PARTIAL DRAWS AND MULTIPLE PRESENTATIONS ARE ALLOWED.
THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR ADDITIONAL PERIODS OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST 120 DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE SEND TO YOU A NOTICE BY REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE THEN CURRENT EXPIRATION DATE. IN NO EVENT SHALL THIS LETTER OF CREDIT BE AUTOMATICALLY EXTENDED BEYOND ______ [90 DAYS AFTER FINAL EXPIRATION DATE]. IN THE EVENT WE SEND SUCH NOTICE OF NON-EXTENSION, YOU MAY DRAW HEREUNDER BY YOUR PRESENTATION TO US OF YOUR SIGNED AND DATED STATEMENT STATING THAT YOU HAVE RECEIVED A NON-EXTENSION NOTICE IN RESPECT OF LETTER OF CREDIT NO. SVBSF ________, YOU ARE DRAWING ON SUCH LETTER OF CREDIT FOR US$_____________, AND YOU HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT ACCEPTABLE TO YOU.
ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF THE REQUIRED DOCUMENTS ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S OFFICE”) AT: FIRST-CITIZENS BANK & TRUST COMPANY, 3003 TASMAN DRIVE, MAIL SORT HF 210, SANTA CLARA, CA 95054, ATTENTION: GLOBAL TRADE FINANCE. AS USED IN THIS LETTER OF CREDIT, “BUSINESS DAY” SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN THE STATE OF CALIFORNIA ARE AUTHORIZED OR REQUIRED BYLAW TO CLOSE.
FACSIMILE PRESENTATIONS ARE ALSO PERMITTED. EACH FACSIMILE TRANSMISSION SHALL BE MADE AT: (408) 496-2418 OR (408) 969-6510; AND UNDER CONTEMPORANEOUS TELEPHONE ADVICE TO: (408) 450-5001 OR (408) 654-7176, FIRST-CITIZENS BANK & TRUST COMPANY
ATTENTION: GLOBAL TRADE FINANCE. ABSENCE OF THE AFORESAID TELEPHONE ADVICE SHALL NOT AFFECT OUR OBLIGATION TO HONOR ANY SUCH DRAW REQUEST.
THIS LETTER OF CREDIT IS TRANSFERABLE IN WHOLE BUT NOT IN PART, ONE OR MORE TIMES, BUT IN EACH INSTANCE ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND FOR THE THEN AVAILABLE AMOUNT, ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINALS OR COPIES OF ALL AMENDMENTS, IF ANY, TO THIS LETTER OF CREDIT MUST BE SURRENDERED TO US AT OUR ADDRESS INDICATED IN THIS LETTER OF CREDIT TOGETHER WITH OUR TRANSFER FORM ATTACHED HERETO AS EXHIBIT A DULY EXECUTED. APPLICANT SHALL PAY OUR TRANSFER FEE OF 1⁄4 OF 1% OF TIIE TRANSFER AMOUNT (MINIMUM US$250.00) UNDER THIS LETTER OF
F-2
CREDIT BUT DELIVERY OF SUCH PAYMENT SHALL NOT BE A CONDITION PRECEDENT TO OUR OBLIGATION TO HONOR A TRANSFER REQUEST. EACH TRANSFER SHALL BE EVIDENCED BY EITHER (1) OUR ENDORSEMENT ON THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE OR (2) OUR ISSUING A REPLACEMENT LETTER OF CREDIT TO THE TRANSFEREE ON THE SAME TERMS AND CONDITIONS AS THE TRANSFERRED LETTER OF CREDIT (IN WHICH EVENT THE TRANSFERRED LETTER OF CREDIT SHALL HAVE NO FURTHER EFFECT).
WE HEREBY AGREE WITH THE BENEFICIARY THAT DOCUMENTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE DULY HONORED, WITHOUT INQUIRY INTO THE EFFECTIVENESS OF BENEFICIARY’S SIGNED STATEMENT AND REGARDLESS OF WHETHER APPLICANT DISPUTES THE CONTENT OF SUCH STATEMENT, UPON PRESENTATION TO US ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT OR ANY AUTOMATICALLY EXTENDED EXPIRATION DATE.
IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED PAYEE.
THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.
| FIRST-CITIZENS BANK & TRUST COMPANY |
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| AUTHORIZED SIGNATURE |
F-3
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER ___________________
EXHIBIT A
FORM OF TRANSFER FORM
DATE:
| TO: | FIRST-CITIZENS BANK & TRUST COMPANY |
3003 TASMAN DRIVE
SANTA CLARA, CA 95054
ATTN: GLOBAL TRADE FINANCE COMPANY
| RE: | IRREVOCABLE STANDBY LETTER OF CREDIT |
NO. __________ ISSUED
BY FIRST-CITIZENS BANK & TRUST COMPANY
SANTA CLARA STANDBY LETTERS OF CREDIT L/C AMOUNT: ____________
LADIES AND GENTLEMEN:
FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:
(NAME OF TRANSFEREE)
(ADDRESS)
ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.
BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECTLY TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.
THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO EITHER (1) ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER, OR (2) ISSUE A REPLACEMENT LETTER OF CREDIT TO THE TRANSFEREE ON SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS THE TRANSFERRED LETTER OF CREDIT (IN WHICH EVENT THE TRANSFERRED LETTER OF CREDIT SHALL HAVE NO FURTHER EFFECT).
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F-5
Exhibit 10.10
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE AND CONFIDENTIAL.
Confidential
SECOND AMENDED AND RESTATED PLATFORM LICENSE AGREEMENT
This Second Amended and Restated Platform License Agreement (“Agreement”) is entered into by Alamar Biosciences, Inc. (“Alamar”), having its principal place of business at 47071 Bayside Parkway, Fremont, CA 94538, and Attovia Therapeutics, Inc. (“Licensee”), having its principal place of business at 1091 Industrial Road, Suite 301, San Carlos, CA 94070, and is retroactively effective June 1, 2023 (“Effective Date”). In consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows:
1. Definitions.
1.1 “Affiliate” means any Person which directly or indirectly controls, is controlled by, or is under common control with a party as of or at any time after the Effective Date, but only so long as such control exists. For the purpose of this Agreement, “control” shall mean the direct or indirect ownership of more than fifty percent (>50%) of the outstanding shares on a fully diluted basis or other voting rights of the subject entity to elect directors, or the maximum control or ownership percentage permitted in the country where such entity exists, if lower.
1.2 “Alamar Acquirer” means any Person that acquires Alamar or its assets, or with which Alamar merges.
1.3 “Alamar IP” means all Alamar Know-How and Alamar Patents.
1.4 “Alamar Know-How” means any Know-How owned or Controlled by Alamar or its Affiliates as of the Effective Date or during the Term that are necessary or reasonably useful for (a) the use of the Attobody Platform or the Platform Improvements1 in the Therapeutic Field to (i) identify, research, and develop New Attobodies and (ii) develop Platform Improvements, and (b) the research, development, manufacture, use, or commercialization of the Existing Attobodies as part of Therapeutic Products and Companion Diagnostic Products. For clarity, [*] (collectively, the “Excluded Alamar Acquirer IP”).
1.5 “Alamar Patents” means Patents owned or Controlled by Alamar or its Affiliates as of the Effective Date or during the Term that would be infringed (absent the licenses granted herein) by (a) the use of the Attobody Platform or Platform Improvements in the Therapeutic Field to (i) identify, research and develop New Attobodies and (ii) develop Platform Improvements, and (b) the research, development, manufacture, use or commercialization of the Existing Attobodies and New Attobodies as part of Therapeutic Products and Companion Diagnostic Products. For clarity, [*]. For the avoidance of doubt, [*].
1.6 “Attobody” means (a) a biparatopic antibody (the “Original”); (b) [*]; (c) [*]; (d) [*]; and (e) [*]. For clarity, [*] the Original.
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1.7 “Attobody Platform” means the antibody engineering platform developed by or on behalf of Alamar and to be provided to Licensee hereunder and including any improvements thereto developed by or on behalf of Alamar or its Affiliates during the Term that are applicable to the Therapeutic Field.
1.8 “Available” means, with respect to a Target, [*].
1.9 “Collaboration Patent” means a Patent Controlled by Licensee or its Affiliate or Sublicensee that claims a New Attobody, Existing Attobody, or any existing or future Existing Attobody Derivatives.
1.10 “Companion Diagnostic Product” means a test or device which provides information that is essential for the safe and effective use of a corresponding Therapeutic Product, [*].
1.11 “Control” means the ability of a Person to grant a license or sublicense to intellectual property as provided herein without violating the terms of any agreement with any third party.
1.12 “Development Candidate” means a New Attobody or Existing Attobody that the Licensee or its Affiliate or any Sublicensee intends to take into clinical development studies, with the goal of becoming a Therapeutic Product.
1.13 “EMA” means the European Medicines Agency or any successor thereto.
1.14 “Excluded Attobody(ies)” means, with respect to each Target (as defined below) that is subject to Licensee’s research and development activities under this Agreement, [*]. For clarity, [*].
1.15 “Excluded Transfer” means (a) any sale or other disposition of Product among Licensee and its Affiliates, except where such Affiliate is the end user of the applicable Product, or (b) any sale or other disposition of Products in connection with clinical and non-clinical research and trials, indigent programs, Products provided for free in connection with promotional programs, compassionate use sales or named patient sales, in each case if no monetary consideration exceeding the cost of goods for such Product is received for such sale or disposition.
1.16 “Existing Attobody(ies)” means the Attobodies developed by or for Alamar or its Affiliates using the Attobody Platform, and any compound embodying or incorporating any of the foregoing, in each case that are listed in Exhibit A and delivered to Licensee hereunder. For clarity, [*].
1.15 “Existing Attobody Derivative” means a derivative of an Existing Attobody identified, developed or otherwise resulting from activities by or on behalf of Licensee, its Affiliates or Sublicensee.
1.17 “FDA” means the United States Food and Drug Administration or any successor thereto.
1.18 “First Commercial Sale” means, with respect to any country, the first sale of a Product to any third party resulting in Net Sales in such country after Regulatory Approval is granted with respect to such country for such Product. For clarity, [*].
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1.19 “Know-How” means any proprietary scientific or technical information, inventions, discoveries, results and data of any type whatsoever, in any tangible or intangible form, including inventions, discoveries, databases, safety information, practices, methods, instructions, techniques, processes, drawings, documentation, specifications, formulations, formulae, knowledge, know-how, trade secrets, skill, experience, test data and other information and technology applicable to formulations, compositions or products or to their manufacture, development, registration, use, marketing or sale or to methods of assaying or testing them, including pharmacological, pharmaceutical, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, physical and analytical, safety, quality control data, manufacturing, and stability data, studies and procedures, and manufacturing process and development information, results and data.
1.20 “Licensee Acquirer” means any Person that acquires Licensee in its entirety or all or substantially all of its assets, or with which Licensee merges, in each case resulting in such Person controlling (as such term is defined in Section 1.1) Licensee.
1.21 “MHRA” means the United Kingdom’s Medicines and Healthcare products Regulatory Agency or any successor thereto.
1.22 “Net Sales” means [*].
Notwithstanding the foregoing, (a) [*], and (b) [*].
For clarity, [*].
1.23 “New Attobody(ies)” [*].
1.24 “Patents” means all patents and patent applications (including any certificates of invention, supplementary protection certificates and applications therefor, applications for certificates of invention and priority rights) in any country or jurisdiction, including all international applications, provisional applications, substitutions, continuations, continuations-in-part, continued prosecution applications, including requests for continued examination, divisional applications and renewals, and all letters, patents or certificates of invention granted thereon, and all reissues, reexaminations, term extensions, term adjustments, term restorations, renewals, substitutions, confirmations, registrations, revalidations, revisions and additions of or to any of the foregoing, in each case, in any country or jurisdiction.
1.25 “Person” means any person or entity.
1.26 “Phase I Trial” means any human clinical trial designed to initially evaluate the safety, metabolism and/or pharmacokinetics of a Product, or a trial that would otherwise satisfy the requirements defined in 21 C.F.R. 312.21(a), or other comparable regulation imposed by the FDA, the MHRA, the EMA or their foreign counterparts for an equivalent clinical trial in the applicable country where such clinical trial takes place.
1.27 “Phase III Trial” means any human clinical trial designed to establish safety and efficacy of a Product as a basis for obtaining Regulatory Approval in the applicable country where such clinical trial takes place, or a trial that would otherwise satisfy the requirements defined in 21 C.F.R. 312.21(c), or other comparable regulation imposed by the FDA, the MHRA, the EMA or their foreign counterparts for an equivalent clinical trial in the applicable country where such clinical trial takes place.
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1.28 “Product” means a product for the cure, treatment or prevention of human or animal diseases that comprises or contains New Attobodies or Existing Attobodies and their respective Derivatives For avoidance of doubt, each product that comprises or contains a different composition of New Attobodies or Existing Attobodies (e.g., by adding, substituting, or eliminating New Attobodies or Existing Attobodies) shall be treated as a different Product.
1.29 “Prosecution” means with respect to a Patent, the filing, preparation, prosecution (including conducting all correspondence and interactions with any patent office and seeking, conducting and defending all any interferences, inter partes reviews, reissue proceedings, reexaminations, and oppositions and similar proceedings), and maintenance thereof, including obtaining patent term extensions, regulatory exclusivity, supplemental protection certificates, or their equivalents with respect thereto. When used as a verb, “Prosecute” and “Prosecuting” mean to engage in Prosecution.
1.30 “Platform Improvement(s)” means improvements, enhancements, derivatives, and/or modifications of the Attobody Platform (including, for clarity, protocol changes) developed during the Term by or on behalf of Licensee, its Affiliates and Sublicensees.
1.31 “Regulatory Approval” means, with respect to a country, the grant of all approvals (including all applicable pricing and governmental reimbursement approvals) required from the relevant regulatory authority(ies), to market and sell a Product labeled for the cure, treatment or prevention of a human or animal disease in such country.
1.32 “Royalty Term” means, on a Product-by-Product and country-by-country basis, the period beginning on the First Commercial Sale of a Product in such country and ending on the later of (a) [*] thereafter and (b) the expiration of the last Valid Claim covering such Product in such country.
1.33 “SciNeuro Agreement” means [*].
1.34 “[*]” means [*].
1.35 “Sequence Identity” means [*].
1.36 “Sublicense” means a license or other right granted to an Affiliate or third party to (a) exercise Licensee’s rights to the Alamar IP granted in Section 3.1 hereunder, and/or (b) exercise any rights in any Existing Attobodies, New Attobodies, Derivatives, or any Product.
1.37 “Sublicensee” means any recipient of a Sublicense.
1.38 “Target” means a polypeptide or entity comprising a combination of at least one polypeptide and other macromolecules that is a site or potential site of therapeutic intervention by a therapeutic agent (e.g., a protein or protein segment to which a different protein, known or unknown, binds to and that may play a role in a disease process that is the intended site of therapeutic activity).
1.39 “Therapeutic Field” means the use of biological or chemical substances for the medical cure, treatment, or prevention of diseases of human beings or animals, [*].
1.40 “Therapeutic Product” means [*].
1.41 “Valid Claim” means a claim of an issued and unexpired Alamar Patent or Collaboration Patent which has not been revoked or held unenforceable or invalid by a decision of a court or other governmental authority of competent jurisdiction, which is unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.
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2. Technology Transfer; Consulting.
2.1 Initial Delivery and Support. Promptly after the Effective Date, Alamar shall deliver the Attobody Platform and Existing Attobodies to Licensee in a manner to be mutually agreed by the parties. During the [*] following the Effective Date, Alamar shall provide, [*], reasonable technical assistance and support by making appropriate Alamar employees available to Licensee at reasonable times, places, and frequency, for the purpose of assisting Licensee to understand and use the Alamar IP in connection with Licensee’s research, development, manufacture and commercialization of Products. The Parties hereby acknowledge that Alamar has generated and delivered to Licensee the Existing Attobodies listed in Exhibit A.
2.2 Additional Consulting. Upon the parties’ mutual agreement, Alamar shall provide additional technical assistance and/or training beyond the initial [*] period, [*] unless otherwise mutually agreed by the parties.
2.3 Additional Alamar Know-How. On an ongoing basis throughout the Term, Alamar will transfer to Licensee, reasonably promptly following the discovery or development thereof, any material Alamar Know-How that to Alamar’s knowledge was not delivered to Licensee pursuant to Section 2.1.
3. Intellectual Property Rights.
3.1 License to Attobody Platform and Existing Attobodies. Subject to compliance with all terms and conditions of this Agreement, Alamar hereby grants to Licensee, under the Alamar IP (exclusively as to Alamar Patents and non-exclusively as to Alamar Know-How), a worldwide, non-transferable, sublicenseable (only in accordance with Section 3.2), royalty-bearing license to (a)
use the Attobody Platform in the Therapeutic Field to (i) identify, research, and develop New Attobodies (including all Derivatives thereof), (ii) to the extent necessary, manufacture and have manufactured New Attobodies (including all Derivatives thereof) and, (iii) develop Platform Improvements, and (b)
research, develop, manufacture, have manufactured, use, sell, offer for sale, import, export and commercialize the Existing Attobodies and New Attobodies (including all Derivatives thereof) as part of Therapeutic Products and Companion Diagnostic Products used solely with Therapeutic Products commercialized by Licensee.
3.2 Sublicenses. Licensee may grant Sublicenses (through multiple tiers) to any Sublicensee without the prior written consent of Alamar, provided that the terms of such Sublicense shall be no less protective of Alamar’s Confidential Information and the Alamar IP than the terms of this Agreement (including with respect to confidentiality and prohibitions on reverse engineering). Each Sublicense granted hereunder shall be in writing and shall incorporate terms and conditions sufficient to enable Licensee to comply with this Agreement. Licensee shall notify Alamar in writing promptly after entering into each Sublicense, and Licensee shall provide Alamar with a true and complete copy of each such Sublicense agreement within [*] after it becomes effective, subject to Licensee’s right to redact any confidential or proprietary information contained therein that is not necessary for Alamar to determine compliance with this Agreement.
3.3 Alamar Retained Rights. The exclusive portion of the foregoing licenses in Section 3.1 is exclusive in the Therapeutic Field even as to Alamar and its Affiliates, and Alamar and its Affiliates shall not exploit the Attobody Platform or any Alamar Patents or Alamar Know-How in the Therapeutic Field. For clarity, [*]. Alamar will promptly notify Licensee if it becomes aware of any activities by any of its customers in breach of the foregoing, and will take reasonable steps to cause the customer to cease such activities. Any authorizations or licenses granted by Alamar or its Affiliates to a third party in violation of this Section 3.3 will be null and void. Without limiting the foregoing, upon written notice by Licensee, Alamar or its Affiliate will terminate any such authorization or license.
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3.4 License Restrictions. Except to the extent necessary to exercise the rights granted pursuant to Section 3.1, Licensee shall not (and shall not permit others to) (i) [*], (ii) [*], or (iii) permit third parties access to the Attobody Platform or Existing Attobodies (except (a) pursuant to a Sublicense in accordance with Section 3.2, (b) as permitted in accordance with Section 3.9(b), and (c) to Subcontractors during the Term, pursuant to Section 10.1 below).
3.5 [*]. As between the parties, and without limiting any other available remedy, Alamar owns the [*] and all intellectual property rights thereto. [*] constitutes a valuable trade secret of Alamar, and Alamar has used diligent efforts to maintain such items as its trade secret and Confidential Information (defined below). As owner of the entire right, title, and interest in and to [*], Alamar shall have the sole right, but not the obligation, to Prosecute any Patents disclosing or claiming the [*].
3.6 Target Clearance Process.
| (a) | [*]. |
| (b) | [*]. |
| (c) | [*]. |
| (d) | [*]. |
| (e) | [*]. |
| (f) | [*]. |
3.7 Excluded Attobodies. With respect to any Existing Attobody or New Attobody that Licensee wishes to designate as an Excluded Attobody, Licensee shall either (a) [*], or (b) [*] and either (i) [*] or (ii) [*]. An Excluded Attobody, once designated, may be [*]. For clarity, [*]. For further clarity, [*].
3.8 License Back. Licensee hereby grants to Alamar, on behalf of itself and its Affiliates, an exclusive (even as to Licensee and its Affiliates, but subject to Licensee’s rights with respect to Companion Diagnostic Products used in connection with the Therapeutic Products as set forth in Section 3.1), perpetual, irrevocable, worldwide, royalty-free, sublicenseable, transferable right and license, under Licensee’s intellectual property rights in and to the (a) [*], (b) [*] and (c) [*]. [*]. [*]. Prior to entering into any Sublicense to a potential Sublicensee or potential Licensee Acquirer, Licensee will use reasonable efforts to require such potential Sublicensees or potential Licensee Acquirer to grant to Alamar a license of the same scope as the license set forth in this Section 3.8 with respect to New Attobodies, Existing Attobody Derivatives (in each case, other than Excluded Attobodies) and Platform Improvements that may be developed by such potential Sublicensees or potential Licensee Acquirer. If any potential Sublicensee or potential Licensee Acquirer does not grant such a license to Alamar, then Licensee may not grant to such potential Sublicensee or potential Licensee Acquirer, and such potential Sublicensee or potential Licensee Acquiror shall not have, any rights under any Alamar Know-How or Alamar Patents covering inventions developed by or for Alamar or its Affiliates after the effective date of the applicable Sublicense or Acquisition. Notwithstanding anything else, [*].
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3.9 Development and Commercialization; Platform Improvements.
(a) As between the parties, Licensee owns (i) all right, title and interest (including all intellectual property rights) in and to the Existing Attobodies, New Attobodies, and any Products (ii) the Platform Improvements (subject to Alamar’s ownership of intellectual property rights in and to the Attobody Platform), and (iii) all Patents, Know-How and other intellectual property rights in and to the Existing Attobodies, New Attobodies, and Platform Improvements (“Licensee IP”). Alamar shall assign, and hereby assigns, its entire right, title, and interest in and to the Existing Attobodies to Licensee, including without limitation any Patents disclosing or claiming any Existing Attobody. At Licensee’s request and expense, Alamar shall undertake all further reasonable actions required to evidence, record and perfect Licensee’s title to the Existing Attobodies. As between the parties, Licensee shall have the sole responsibility and right to research, develop, make, have made, and commercialize the Products, and shall be responsible for all marketing, regulatory and development costs directed towards obtaining Regulatory Approval for and selling Products. As owner of the entire right, title, and interest in and to the Licensee IP, Licensee shall have (A) [*].
(b) Licensee shall ensure that any third party to whom Licensee discloses, licenses or otherwise provides the Platform Improvements is bound by an enforceable written agreement that (A) requires such third party to maintain the Platform Improvements as confidential and not to disclose the Platform Improvements or any information related thereto to any third party, and (B) prohibits reverse engineering of the Platform Improvements and the underlying Attobody Platform, in each case of (A) and (B) except to the extent necessary to exercise the rights granted pursuant to Section 3.1. 3.10 Incomplete Nature of Attobody Platform. Licensee acknowledges and agrees that as of the Effective Date, the Attobody Platform has not been completed, and is under development by Alamar. Nothing herein shall obligate Alamar to (a) complete such development (which Alamar may complete in its sole discretion), (b) develop the Attobody Platform to any particular standards or specifications, or (c) provide any improvements to or completed version of the Attobody Platform to Licensee.
3. 11 Reservation of Rights. Except for the rights specifically and unambiguously granted in this Agreement, (a) no right or license is granted or implied, and (b) nothing herein shall be construed to limit or restrict, in any manner, (i) Alamar’s ability to use and exploit, or allow any Person to use or exploit, the Attobody Platform and/or any materials derived or developed therefrom (including antibodies or pharmaceutical products) outside the Therapeutic Field. Alamar does not own and therefor grants no rights or licenses hereunder in or to the Platform Improvements, Existing Attobodies, New Attobodies, and/or any modifications or derivatives thereof developed by or on behalf of Licensee, its Affiliates or Sublicensees.
4. Financial Terms.
4.1 Milestones. Licensee shall pay to Alamar, on a Product-by-Product basis, the following one-time fees:
| (a) | [*]; |
| (b) | [*]; |
| (c) | [*]; |
| (d) | [*]. |
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Milestone payments shall be payable regardless of whether the applicable milestone event was achieved by Licensee, an Affiliate, either of their Sublicensees. Licensee shall pay each milestone payment to Alamar within [*] after the achievement of each milestone event. All milestone payments shall be accompanied by a detailed written report (in a form reasonably acceptable to Alamar) that includes all relevant information regarding the development activities that occurred with respect to the achievement the applicable milestone event.
4.2 Royalty on Net Sales. On a Product-by-Product basis, Licensee shall pay to Alamar the following royalties on Net Sales during the applicable Royalty Term for such Product:
For that portion of Net Sales less than or equal to [*] in the aggregate:[*]
For that portion of Net Sales greater than [*] in the aggregate: [*]
Within [*] after the end of the first [*] during which the First Commercial Sale of such Product occurs, and within [*] after the end of each [*] thereafter, Licensee shall deliver to Alamar, together with the applicable royalty payment due, a detailed written report (in a form reasonably acceptable to Alamar) on a country-by-country basis, of Net Sales for such Product for such [*], including [*]. With respect to the Net Sales of Products any Sublicensee of Licensee or any of its Affiliates, if Licensee is unable to collect the corresponding payment from such Sublicensees or Affiliates during the [*], after using diligent efforts to do so, then Licensee shall report such failure to collect to Alamar immediately along with reasonable supporting documentation, and Licensee shall be granted [*], during which to collect and remit the applicable Net Sales royalties to Alamar, without the application of interest in accordance with Section 4.8 during such [*]; the foregoing shall not, however, extend the deadline to provide the detailed written report to Alamar of such Net Sales. For avoidance of doubt, Alamar is only required to provide such extension one time per calendar year and no more than a total of three times, though Licensee may make reasonable additional requests to be approved in Alamar’s sole discretion.
4.3 Royalty Adjustment for Patent Expiration. If for any [*] during the Royalty Term for a Product in a country, such Product is not covered by a Valid Claim in such country, then notwithstanding anything to the contrary in Section 4.2, Licensee shall pay to Alamar royalties on Net Sales of such Product in such country at a rate of [*] of the amounts that would otherwise be due on such Net Sales under Section 4.2.
4.4 Acknowledgement. The parties acknowledge and agree that the royalty and milestone payments hereunder are not solely a royalty on Alamar IP, but also consideration paid over time for access to the Attobody Platform and Existing Attobodies, subject to the limitations described herein, and are in lieu of, for example, upfront and/or annual payments for access to such Attobody Platform and Existing Attobodies.
4.5 Records.
(a) Maintenance. Licensee shall keep (and shall cause its Subcontractors, Affiliates, and Sublicensees to keep) complete and accurate books and records pertaining to each such party’s research, development, and commercialization activities related to the Attobody Platform, New Attobodies, Existing Attobodies, Platform Improvements, and Products (the “Relevant Subject Matter”) for a period of at least [*] after the relevant payment is owed pursuant to this Agreement. The record-keeping obligations and inspection rights in this Section 4.5 shall supplement, and not replace or supersede, any similar rights or obligations hereunder.
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(b) Semi-Annual Report. Within [*] after each six (6) month “anniversary” of the Effective Date during the Term, Licensee shall deliver to Alamar a written report, in a form reasonably acceptable to Alamar, detailing the progress of Licensee’s (and its Subcontractors’, Affiliates’, and Sublicensees’) research, development, and commercialization activities related to the Relevant Subject Matter, during the previous six (6) month period. Such report shall consist of: (i) [*], (ii) [*] (iii) [*], and (iv) [*] (all of the foregoing, a “Semi-Annual Report”). Notwithstanding anything to the foregoing, under section 4(b)(iv), Licensee, Sublicensee and its Subcontractors, Affiliates, and Sublicensees may at their reasonable discretion limit the provision of Net Sales calculations to the annual reporting obligations described in 4.2. Upon Alamar’s assessment of such New or Existing Attobodies’ data described in Section 4.5(b)(i), Licensee shall, at Alamar’s request, provide Alamar with [*].
(c) Records Examination. During the Term and for [*] thereafter, Licensee shall permit its books and records to be examined by an independent certified public accounting firm designated by Alamar and reasonably acceptable to Licensee, upon reasonable notice during normal business hours, provided such examination is requested in writing at least [*] in advance. Such examination is to be made at the expense of Alamar, except in the event that the results of the examination reveal an underpayment by Licensee of [*] or more over the period being examined, in which case the costs and expenses of such examination shall be paid (or reimbursed to Alamar, if such amounts have already been paid) by Licensee. If the examination establishes that Licensee underpaid any amounts due hereunder, Licensee shall pay Alamar such deficiency within [*] after Licensee’s receipt of a written report thereof, including interest thereon at the rate set forth in Section 4.8, and, if applicable pursuant to the previous sentence, the costs and expenses of the examination. The results of any such examination shall be Licensee’s Confidential Information. Licensee shall require its Affiliates and Sublicensees to afford Alamar the same rights as those granted Alamar in this Section 4.5(c).
4.6 Method of Payment. All payments due to Alamar under this Agreement shall be paid in United States Dollars by wire transfer to a bank in the U.S. designated in writing by Alamar. All references to “dollars” or “$” herein shall refer to United States Dollars. All amounts paid hereunder are non-refundable and non-creditable.
4.7 Taxes. Any amounts payable by Licensee to Alamar hereunder are exclusive of any and all applicable sales, use, VAT, GST, excise, property, withholding, and other taxes, levies, duties or fees (collectively, “Taxes”). Licensee shall be responsible for billing and collection from its customers and remitting to the appropriate taxing authority any and all Taxes which it is required to collect or remit. Each party shall be responsible for its own income, withholding, and property taxes.
4.8 Late Payments. Any amount owed by Licensee to Alamar under this Agreement that is not paid within the applicable time period set forth herein shall accrue interest at the lower of (a) [*], or (b) the highest rate permitted under applicable law.
4.9 Equity Interest. As further consideration, on the Effective Date, Licensee shall issue to Alamar 22,562,123 shares of Licensee’s common stock (the “Shares”) pursuant to a standard stock subscription agreement between Licensee and Alamar, which Shares shall be granted at the fair market value of Licensee’s common stock as determined by Licensee’s Board of Directors (“Board”) on the date the Board approves such grant. In connection with its receipt of the Shares, Alamar hereby agrees to execute counterparty signature pages to Licensee’s stockholders’ agreements, which will contain customer drag-along provisions, rights of first refusal, co-sale rights and other provisions applicable to Alamar. The Parties hereby acknowledge that Licensee has issued the Shares to Alamar, and has fulfilled its obligations to Alamar pursuant to this Section 4.9 in full.
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5. Confidentiality.
5.1 Definition. “Confidential Information” means proprietary information, materials, and data of a financial, commercial or technical nature that the disclosing party or its Affiliates (the “Disclosing Party”) has supplied or otherwise made available to the other party or its Affiliates (the “Receiving Party”) hereunder. Notwithstanding anything to the contrary, the terms of this Agreement are deemed Confidential Information of both parties.
5.2 Obligations. The Receiving Party shall protect all Confidential Information against unauthorized disclosure to third parties with the same degree of care as the Receiving Party uses for its own similar information, but in no event less than a reasonable degree of care. The Receiving Party shall not use the Confidential Information except as necessary to exercise its rights and fulfill its obligations under this Agreement. The Receiving Party may disclose the Confidential Information only to its and its Affiliates’ respective directors, officers, employees, subcontractors, actual and potential licensees, consultants, attorneys, accountants, and banks (collectively, “Recipients”), who have a need-to-know such information in order for Receiving Party to exercise its rights or fulfill its obligations under this Agreement provided that the Receiving Party shall hold all Recipients to written obligations of confidentiality and non-use with terms and conditions at least as protective of the Confidential Information as those set forth in this Agreement. Receiving Party shall be liable for any breach of such written obligations or this Section 5 by its Recipients. For avoidance of doubt, (a) Licensee shall not disclose or make available the Attobody Platform, or any information or materials relating thereto to any third party or Recipient (except to a Subcontractor, Sublicensee, or Licensee Acquirer, and only then to the sole extent necessary for Licensee or such Subcontractor, Sublicensee or Licensee Acquirer to fulfill its obligations and/or exercise its rights pursuant to this Agreement and/or an applicable Sublicense or acquisition agreement). and (b) Alamar shall not disclose or make available the Platform Improvements, the Existing Attobodies, New Attobodies (including the sequences thereof) or any Licensee IP received by it hereunder to any third party or Recipient (except to a subcontractor, sublicensee, or acquirer, and only then to the sole extent necessary for Alamar or such subcontractor, sublicensee, or acquirer to fulfill its obligations and/or exercise its rights pursuant to this Agreement and an applicable sublicense or acquisition agreement). For clarity, the terms of this Section 4.9 shall serve to supplement, and not replace, amend, or abate any other restrictions on use and exploitation of the Attobody Platform set forth herein. Without limiting the above, Licensee may also disclose the terms and existence of this Agreement to its potential licensees, investors and acquirers on a confidential basis in connection with a potential collaboration, investment or acquisition (as applicable).
5.3 Exceptions. The obligations under this Section 5 shall not apply to any information to the extent the Receiving Party can demonstrate by competent evidence that such information:
(a) is (at the time of disclosure) or becomes (after the time of disclosure) generally known to the public through no breach of this Agreement by the Receiving Party or any Recipients to whom it disclosed such information;
(b) was rightfully known by, or was otherwise in the rightful possession of, the Receiving Party prior to the time of disclosure by the Disclosing Party;
(c) is disclosed to the Receiving Party on a non-confidential basis by a third party who is entitled to disclose it without breaching any confidentiality obligation (directly or indirectly) to the Disclosing Party; or
(d) is independently developed by or on behalf of the Receiving Party, as evidenced by its written records, without use of, reliance upon or access to the Confidential Information.
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5.4 Disclosure Pursuant to Law or Order. Receiving Party may disclose Confidential Information that it is required to disclose under applicable laws or a court order, provided that the Receiving Party: (a) provides the Disclosing Party with prompt notice of such disclosure requirement if legally permitted, (b) affords the Disclosing Party an opportunity to oppose or limit, or secure confidential treatment for such required disclosure and (c) if the Disclosing Party is unsuccessful in its efforts pursuant to subsection (b), discloses only that portion of the Confidential Information that the Receiving Party is legally required to disclose.
6. Representations and Warranties; Disclaimer.
6.1 Representations and Warranties of Each Party. Each party represents and warrants to the other party that:
(a) it is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;
(b) it has full corporate power and authority to execute, deliver, and perform under this Agreement, and has taken all corporate action required by applicable law and its organizational documents to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement;
(c) to such party’s knowledge, this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms;
(d) the execution and delivery of this Agreement and all other instruments and documents required to be executed pursuant to this Agreement, and the consummation of the transactions contemplated hereby, do not and shall not: (i) conflict with or result in a breach of any provision of its organizational documents, (ii) result in a breach of any agreement to which it is a party that would impair the performance of its obligations hereunder; or (iii) violate any applicable law; and
(e) it shall comply with all applicable laws in connection with this Agreement.
6.2 Representations and Warranties of Alamar. Alamar represents and warrants to Licensee that:
(a) To Alamar’s knowledge as of the Effective Date, (i) there are no existing third party rights that would prevent Licensee from making use of the Attobody Platform or Existing Attobodies as contemplated herein, and (ii) there are no actions, claims, or proceedings pending or, to Alamar’s knowledge, threatened with respect to the Attobody Platform or Existing Attobodies;
(a) Alamar has and will continue to have the rights to grant to Licensee the license purported to be granted to Licensee herein, and Licensee’s practice of the Alamar Patents and Alamar Know-How in accordance with this Agreement will not require the payment of any royalty or similar payment obligation to any third party;
(b) Alamar has not assigned, licensed or transferred, and will not assign, license or transfer, any rights in any Alamar IP to any third party in any manner that is inconsistent with the licenses granted to Licensee herein;
(c) Alamar will not [*] in any manner that would adversely affect Licensee’s rights hereunder [*];
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(d) To Alamar’s knowledge, all Alamar Know-How presented to Licensee prior to the Effective Date and during the Term is and will be, as of the time it is presented to Licensee, accurate in all material respects; and
(e) Alamar will not (while an Attobody is designated as an Excluded Attobody in accordance with Section 3.7) research, develop, manufacture, have manufactured, use, transfer to a third party, sell, offer for sale, import, export or commercialize the [*] Excluded Attobodies, for any purpose.
Notwithstanding anything to the contrary, Alamar makes no representation, warranty, or covenant regarding the Platform Improvements or New Attobodies.
6.3 Representations and Warranties of Licensee. Licensee represents and warrants to Alamar that:
(a) Licensee will not, and will ensure all Sublicensees will not, assign, license or transfer any rights in any Platform Improvements, Existing Attobodies, and/or New Attobodies in any manner that is inconsistent with the licenses granted to Alamar herein; and
(b) Licensee (or its successor or assign) will continue to have the rights to grant to Alamar the license purported to be granted to Alamar herein.
6.4 Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS SECTION 6, (A) NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, (B) THE ATTOBODY PLATFORM, EXISTING ATTOBODIES, PLATFORM IMPROVEMENTS, NEW ATTOBODIES AND ANYTHING ELSE PROVIDED BY OR ON BEHALF OF EITHER PARTY PURSUANT TO THIS AGREEMENT ARE PROVIDED “AS IS,” AND (B) EACH PARTY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND OR NATURE, WHETHER EXPRESS OR IMPLIED, RELATING TO THE SUBJECT MATTER HEREUNDER, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. ALAMAR MAKES NO REPRESENTATION OR WARRANTY REGARDING THE PATENTABILITY, SAFETY, EFFICACY, PERFORMANCE DESIGN, MARKETABILITY, TITLE AND/OR QUALITY OF ANY PRODUCTS.
7. Indemnification.
7.1 Indemnification of Licensee. Subject to Section 7.3 below, Alamar agrees to indemnify, hold harmless and defend Licensee, its Affiliates, directors, officers, licensors, employees and agents (each a “Licensee Indemnitee”) from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) incurred by Licensee Indemnitees in connection with any and all suits, investigations, claims or demands of a third party (collectively, “Third Party Claims”) to the extent arising out of, resulting from or relating to [*]. Notwithstanding anything to the contrary herein, in no event shall Alamar be obligated to indemnify Licensee Indemnitees for (a) any Third Party Claims to the extent such Third Party Claims would be subject to indemnification by Licensee pursuant to Section 7.2, or (b) any Third Party Claims to the extent relating to (i) Platform Improvements or New Attobodies, (ii) any combination of the Attobody Platform with any other material or organism, in each case not made or provided by Alamar, or (iii) any use by Licensee, its Affiliates or Sublicensees of the Attobody Platform in violation of the terms of this Agreement.
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7.2 Indemnification of Alamar. Subject to Section 7.3 below, Licensee agrees to indemnify, hold harmless and defend Alamar, its Affiliates, directors, officers, licensors, employees and agents (each an “Alamar Indemnitee”) from and against all Losses incurred by Alamar Indemnitees in connection with Third Party Claims to the extent arising out of, resulting from or relating to (a) the production, use, marketing, or sale of Products by Licensee or any other Person (except to the extent that such Third Party Claims would be subject to indemnification by Alamar pursuant to Section 7.1), and (b) the use by Licensee, its Affiliates or Sublicensees of the Attobody Platform in violation of the terms of this Agreement.
7.3 Indemnification Procedure. All indemnification claims provided for in Sections 7.1 and 7.2 shall be made solely by such party to this Agreement seeking indemnification hereunder (the “Indemnified Party”). The Indemnified Party shall promptly notify the indemnifying party (the “Indemnifying Party”) of any Third Party Claim, provided that failure to provide such notice will not relieve the Indemnifying Party of its indemnity obligations hereunder except to the extent that its defense of the Third Party Claim is materially prejudiced thereby. The Indemnified Party shall cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in connection with the defense and settlement of the Third Party Claim, and permit the Indemnifying Party to solely control the defense and settlement of the Third Party Claim, provided, however, that the Indemnified Party may participate in and monitor such defense and settlement with counsel of its own choice at its own expense. Further, notwithstanding the foregoing, the Indemnifying Party shall not settle any Third Party Claim without the prior written consent of the Indemnified Party if the settlement would: (a) result in or impose any payment obligations on the Indemnified Party; (b) result in any admission of wrong-doing or fault by the Indemnified Party (or, in the case of Licensee, adversely affect the licenses granted to Licensee under this Agreement), or (c) subject the Indemnified Party to an injunction or otherwise limit the Indemnified Party’s ability to take any actions or refrain from taking any actions under this Agreement.
8. Term and Termination.
8.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated as provided herein (the “Term”).
8.2 Termination for Convenience. Licensee may terminate this Agreement at any time upon [*] written notice to Alamar.
8.3 Termination for Breach. Either party may terminate this Agreement upon a material breach of this Agreement by the other party by providing [*] written notice to the other party. The termination shall become effective at the end of the notice period unless the breaching party cures such breach during such notice period (or, if the breach, by its nature, is incurable, the breaching party takes action to mitigate the impact of such breach and reasonable precautions to prevent such breach from recurring within such period (the breaching party’s “Mitigation Procedures”), in a manner reasonably acceptable to the non-breaching party). If the allegedly breaching party disputes in good faith the existence, materiality, or cure of the applicable material breach (or the non-breaching party does not find the Mitigation Procedures reasonably acceptable), such matter will be subject to the dispute resolution provisions in Section 10.9 and this Agreement will remain in effect, and the cure period will be tolled, during the pendency of any such dispute.
8.4 Termination for Insolvency. Either party may terminate this Agreement immediately if the other party files in any court or agency pursuant to any statute or regulation of any state, county or jurisdiction, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that party or of its assets, or if such other party is served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within [*] after the filing thereof, or if such other party shall propose to be a party to any dissolution or liquidation, or if such other party shall make an assignment for the benefit of its creditors.
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8.5 Termination for IP Challenge. Alamar may terminate this Agreement upon [*] written notice if Licensee directly or indirectly challenges in a legal or administrative proceeding the patentability, enforceability or validity of any patents owned by Alamar that cover the Attobody Platform (other than in response to a subpoena or court or administrative law request) unless Licensee (a) withdraws from or terminates (or causes to be terminated) such proceeding during such [*] period, or (b) challenges such patents in defense of claims raised by or on behalf of Alamar or its Affiliate against Licensee or its Affiliate; provided that this provision shall not apply to the sole extent such a provision is prohibited by applicable law.
8.6 Effect of Expiration or Termination.
(a) Upon termination or expiration of this Agreement or any reason, all rights and licenses granted hereunder shall terminate except as set forth herein, and the following provisions shall survive termination or expiration of this Agreement: Sections 1, 3.5, 3.7, 3.8, 3.9, 3.10, 3.11, 4, and 5-10. Upon termination of this Agreement, Licensee may continue to exploit Products, subject to ongoing compliance with the surviving provisions hereof (including Section 4). Licensee acknowledges and agrees that Alamar may seek to enforce by any form of equitable relief (including specific performance) the obligations to cease development and commercialization as provided in this Section, and Licensee shall not contest Alamar’s right to pursue the foregoing and Alamar shall not be required to post a bond in connection therewith. Notwithstanding anything to the contrary herein, Licensee may continue to exercise any of the rights granted to it hereunder for the continuation of treatment of or administration of Products to subjects enrolled in clinical trials for medical, ethical, or safety reasons as reasonably determined Licensee, or any study sites or physicians involved in such clinical trials, for as long as necessary for such purposes.
(b) Upon termination of this Agreement, provided that a Sublicensee is not in material breach of its Sublicense, and at the request of the Sublicensee, Alamar will enter into a separate written agreement for the grant to such Sublicensee of license rights of the same scope granted by Licensee to such Sublicensee under the Sublicense, on terms and conditions substantially similar to those in the Sublicense, provided that, to the extent any of the Licensee’s obligations under such Sublicense are greater than Alamar’s obligations under this Agreement, Alamar and the Sublicensee will discuss and mutually agree on the applicability of such terms to Alamar.
(c) Within [*] after the date of termination of this Agreement, Licensee shall pay to Alamar all amounts that have accrued and are due hereunder on or prior to the date of termination. Upon termination or expiration of this Agreement, each Receiving Party shall return to the Disclosing Party or, if instructed by the Disclosing Party, properly destroy (and certify destruction of) all Confidential Information of the Disclosing Party, including any extracts, notes, modifications, or derivatives thereof, and the foregoing shall include Licensee’s return to Alamar, or destruction of, the Attobody Platform, in each case except to the extent needed to exercise any surviving rights hereunder.
9. Limitation of Liability. In no event shall either party or its directors, officers, employees, consultants, licensees and agents (collectively, “Agents”), be responsible or liable in connection with this Agreement for any indirect, special, punitive, incidental or consequential damages or lost profits to the other party or its Agents, or any other individual or entity regardless of legal theory. The above limitations on liability apply even though a party or its Agents may have been advised of the possibility of such damage. A party shall not, and shall require that its Agents do not, make any statements, representations or warranties or accept any liabilities or responsibilities whatsoever on behalf of the other party or its Agents.
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10. General Provisions.
10.1 Subcontracting. Licensee may use subcontractors in the performance of its obligations and exercise of its rights hereunder (each, a “Subcontractor”), provided that Licensee (a) is responsible and liable for all actions and omissions of its Subcontractors and (b) Licensee binds each Subcontractor in writing to terms no less protective of Alamar and the Attobody Platform (including any intellectual property rights of Alamar) than those set forth herein (an “Subcontractor Agreement”). Licensee shall not permit any Subcontractor to take any action in connection with the Attobody Platform that is outside the scope of the rights granted to Licensee herein.
10.2 Relationship of the Parties. The parties to this Agreement recognize and agree that each is operating as an independent contractor and not as an agent of the other. This Agreement shall not constitute a partnership or joint venture, and neither party shall have the authority to bind the other party to any contract, arrangement or understanding or to take any action on behalf of the other party.
10.3 Assignment and Acquisition Protections. This Agreement is not assignable or transferable by either party without the other party’s prior written consent, provided that either party may assign or transfer this Agreement to (a) its Affiliate or (b) a third party that acquires all or substantially all of its business or assets to which this Agreement relates (whether by merger, restructuring, asset sale or other change of control). For clarity and notwithstanding anything to the contrary, any attempt to assign or transfer any rights in any Existing Attobodies, New Attobodies, Derivatives, or Products shall be deemed an assignment of this Agreement, and may not be so assigned or transferred without the applicable recipient of such rights agreeing in writing to be bound by all of the terms of this Agreement as they relate to such Existing Attobodies, New Attobodies, Derivatives, and/or Products.
10.4 Notices. Any notice, report, approval or consent required or permitted hereunder shall be in writing and shall be deemed to have been duly given to a party if delivered personally or mailed by first-class, registered or certified mail, postage prepaid to the address of that party as set forth on the first page of this Agreement; or such other address as is provided by that party to the other upon [*] written notice.
10.5 Force Majeure. Except for payment obligations, a party shall not be held liable or responsible to the other party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing party, including fires, floods, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), acts of terrorism, insurrections, riots, civil commotion or acts of God. The non-performing party shall provide reasonable notice of any force majeure event to the other party.
10.6 Waiver. No failure to exercise, and no delay in exercising, on the part of either party, any privilege, power, or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any privilege, right or power hereunder preclude further exercise of any other privilege, right or power hereunder. Any waivers or amendments shall be effective only if made in writing and signed by authorized representatives of the parties.
10.7 Severability. If any provision of this Agreement shall be adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.
10.8 Governing Law. This Agreement shall be governed by and construed pursuant to the laws of the State of California without regard to conflicts of laws provisions thereof and without regard to the United Nations Convention on Contracts for the International Sale of Goods.
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10.9 Dispute Resolution. Any dispute arising out of or in connection with this Agreement shall be referred to and finally resolved by binding arbitration in San Francisco, California, U.S. administered by the International Chamber of Commerce (“ICC”) (or any successor entity thereto) pursuant to its arbitration rules and procedures then in effect (the “Rules”) then in force. The number of arbitrators will be one, and the language to be used in such arbitration will be English. The decision of the arbitrator will be deemed final and binding upon each of the parties, and the prevailing party will be entitled to enter and enforce the decision of the arbitrator in any court of competent jurisdiction. Notwithstanding the foregoing, any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patents shall be submitted to a court of competent jurisdiction in the country in which such Patents were granted or arose. Nothing in this Section 10.9 will preclude either party from seeking equitable, interim or provisional relief from a court of competent jurisdiction, including a preliminary injunction, either prior to or during any arbitration if necessary to protect the interests of such party or to preserve the status quo pending the arbitration proceeding.
10.10 Publicity. Neither party shall, without the prior written consent of the other party, issue any press release or make any other public announcement concerning the existence of this Agreement or its terms and conditions, or otherwise use the other party’s name(s), mark(s), and/or logo(s), such consent not to be unreasonably withheld.
10.11 Equitable Relief. The parties acknowledge that money damages alone may not adequately compensate a party in the event of a breach by the other party of this Agreement (including any unauthorized use of the Attobody Platform, Platform Improvements, or Existing or New Attobodies) and that, in addition to all other remedies available to a party at law or in equity, it shall be entitled to seek equitable relief (including injunction and specific performance) for the enforcement of its rights hereunder, without the requirement of posting a bond.
10.12 Entire Agreement. This Agreement is the complete and exclusive statement of the agreement and understanding of the parties and supersedes and cancels all previous written and oral agreements, understandings and communications relating to the subject matter of this Agreement. No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and duly executed on behalf of both parties.
10.13 Headings. The headings to the sections in this Agreement are not a part of this Agreement, but are included merely for convenience of reference only and shall not affect its meaning or interpretation. Any use of the term “including” shall mean “including without limitation.”
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and Restated Platform License Agreement to be executed so as to be effective on the date set forth above.
| Alamar Biosciences, Inc. | Attovia Therapeutics, Inc. | |||||||
| By: | /s/ Tod White |
By: | /s/ Zaneta Odrowaz | |||||
| Name: Tod White | Name: Zaneta Odrowaz | |||||||
| Title: CFO/CBO | Title: CBO | |||||||
Exhibit A
Existing Attobodies
[*]
Exhibit B
Neurological Targets Excluded from the Therapeutic Field
[*]
Exhibit C
Certain Licensee Reserved Targets
[*]
Exhibit D
Additional Licensee Reserved Targets
[*]
Exhibit E
Excluded Attobodies
[*]
Exhibit 21.1
Subsidiaries of Attovia Therapeutics, Inc.
| Name of Subsidiary |
Jurisdiction | |
| Attovia Therapeutics Cayman Co., Ltd | Cayman Islands | |
| Attovia Therapeutics (Shanghai) Co., Ltd. | China |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of Attovia Therapeutics, Inc. of our report dated June 5, 2026 relating to the financial statements of Attovia Therapeutics, Inc., which appears in this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
July 14, 2026
Exhibit 99.1
Consent of LifeSci Consulting
Attovia Therapeutics, Inc.
1091 Industrial Road, Suite 310
San Carlos, California 94070
We, LifeSci Consulting, hereby consent to the references to our name and logos, and to the quotation of data and statements from the research reports dated August 2025 entitled “Pruritus Disease Opportunity Assessment for ATTO-1310: Final Deliverable,” October 2025 entitled “Pruritus Disease Opportunity Assessment for ATTO-1310: Cholestatic Pruritus Expansion” and May 2026 entitled “Attovia Atopic Dermatitis Opportunity Assessment for ATTO-1310,” in each case, prepared by us (collectively, the “Reports”) and provided to Attovia Therapeutics, Inc. (the “Company”), in each of (i) the registration statement on Form S-1 (the “Registration Statement”) in relation to the initial public offering (the “IPO”) of the Company to be confidentially submitted and thereafter to be publicly filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended, (ii) any amendments or supplements to the Registration Statement, and (iii) any written correspondence by the Company with the SEC. We also consent to references to our name and logos, and to the quotation of the data and statements from the Reports that are included in the Registration Statement, in institutional and retail road shows and other materials and activities in connection with the IPO that is the subject of the Registration Statement by the Company.
We consent to the reference to our organization, under the caption “Market and Industry Data” in the Registration Statement, as acting in the capacity of an author of independent industry publications.
We also hereby consent to the filing of this letter as an exhibit to the Registration Statement and any amendments thereto.
| Sincerely,
| ||
| LifeSci Consulting
| ||
| By: |
/s/ Trey Turner | |
| Name: Trey Turner | ||
| Title: Partner | ||
| Date: 6/4/2026 | ||