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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-35798

(Mark One)

~~HUMANIGEN,~~☒ ~~INC.~~ANNUAL ~~(Exact~~REPORT ~~name~~PURSUANT ofTO ~~registrant~~SECTION as13 ~~specified~~OR in15(d) ~~its~~OF ~~charter)~~THE SECURITIES EXCHANGE ACT OF 1934

Delaware		77-0557236
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
830 Morris Turnpike, 4th Floor
Short Hills, NJ07078
(Address of Principal Executive Offices) (Zip Code)
(973) 200-3100
(Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act:

For the Fiscal Year Ended December 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35798

HUMANIGEN, INC.

(Exact name of registrant as specified in its charter)

Delaware

77-0557236

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

830 Morris Turnpike, 4^th Floor

Short Hills, NJ 07078

(Address of Principal Executive Offices) (Zip Code)

(973) 200-3100

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HGEN	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 UUSC.~~S.C.~~ 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒☐ No ☐☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s voting stock held by non-affiliates as of June 30, ~~2021~~2022, was approximately $~~710~~84,~~884~~020,~~199~~909 based on the closing price of $171.3877 of the Common Stock of the registrant as reported on the Nasdaq Capital Market on such date. Shares of common stock held by each executive officer and director and by each other person who may be deemed to be an affiliate of the Registrant have been excluded from this computation. The determination of affiliate status for this purpose is not necessarily a conclusive determination for other purposes. As of ~~February~~March 16, ~~2022~~2023, there were 65119,~~329~~080,~~177~~ 135 shares of the registrant’s Common Stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Information ~~The~~pertaining to Part III of this Form 10-K is incorporated by reference to our definitive proxy statement ~~relating~~for toour ~~the~~2023 ~~registrant’s~~annual ~~Annual~~meeting ~~Meeting~~ of ~~Stockholders~~stockholders toor, beif ~~held~~not onfiled ~~June~~within 9120 days of December 31, 2022, isas an ~~incorporated~~amended byreport ~~reference~~on inForm ~~Part~~10-K/A ~~III~~filed toin the ~~extent~~same ~~described~~time ~~therein~~period.

Unless the context indicates otherwise, the terms “Humanigen,” “we,” “us” and “our” refer to Humanigen, Inc., and its consolidated subsidiaries. This report also may include trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this report are the property of their respective owners.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that discuss future events or expectations, projections of results of operations or financial condition, trends in our business, business prospects and strategies and other “forward-looking” information. In some cases, you can identify “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “alignment” or “continue” or the negative of those words and other comparable words. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. These forward-looking statements may relate to, among other things, our expectations regarding: ~~our beliefs as to~~ the ~~potential~~scope, ~~benefits~~progress, of lenzilumab as a treatment for hospitalized COVID-19 patients; the timeline for announcement of release of topline results from the ACTIV-5/BET-B study being conducted by the National Institutes of Health; our efforts and potential timeline to make future regulatory submissions in respect of potential emergency use authorization or other marketing authorization or approval from applicable regulatory agencies in the United Statestiming, ~~United Kingdom~~expansion, ~~European Union~~ and ~~other~~costs ~~foreign jurisdictions for commercial use~~ of ~~lenzilumab~~researching, indeveloping ~~COVID-19 patients; our other plans to initiate or participate in planned clinical trials~~ and ~~otherwise~~commercializing ~~explore the effectiveness of lenzilumab and~~ our ~~other~~ product candidates; in our expectations ~~development~~relating ~~portfolio~~to asregulatory ~~therapies~~pathways ~~for~~to ~~other~~marketing ~~inflammation~~authorization and ~~immune-oncology~~the ~~indications our~~ opportunity to benefit from various regulatory incentives; expectations for our financial results, revenue, operating expenses and other financial measures in future periods; ~~and~~ the ~~availability and~~ adequacy of our sources of liquidity to satisfy our working capital needs, capital expenditures, and other liquidity requirements; and ~~continue as a going concern. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, the risks inherent in~~ our ~~lack~~ exploration of ~~profitability~~strategic and need for additional capital to conduct our business; our dependence on partners to further the development of our product candidates; the uncertainties inherent in the development, attainment of the requisite regulatory authorizations and approvals (including EUA in the United States and CMA in the United Kingdom and European Union) and launch of any new pharmaceutical product; challenges associated with manufacturing and commercializing a biologic such as lenzilumab; and the outcome of pending or future litigation or arbitrations to which we are a partyalternatives. ~~These~~Some ~~are only some of the factors that may affect the forward-looking statements contained in this Annual Report on Form 10-K. For a discussion identifying~~ additional ~~important~~ factors that could cause actual results to ~~vary~~differ materially from those anticipated in the forward-looking statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Annual Report on Form 10-K. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. However, we operate in a competitive and rapidly changing environment and new risks and uncertainties emerge, are identified or become apparent from time to time. It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. You should be aware that the forward-looking statements contained in this Annual Report on Form 10-K are based on our current views and assumptions. We undertake no obligation to revise or update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date hereof or to reflect new information or the occurrence of unanticipated events, except as required by law. include:

●

our ability to attain the significant amount of additional financing we need to continue as a going concern on favorable terms or at all, and the availability of future financing;

●

our ability to complete the proposed business combination and related financing transactions described under “Item 1. Business – Overview”, or to identify and execute upon another strategic transaction or alternative to maximize value for our stakeholders;

●

our ability to successfully appeal a determination from the Nasdaq Capital Market to delist our common stock and to gain additional time to regain compliance with the requirements for continued listing on the Nasdaq Capital Market, each of which is in the sole discretion of a Nasdaq Hearings Panel and will be considered at a hearing currently scheduled for April 6, 2023, as previously disclosed;

●

our ability to regain and maintain compliance with the listing requirements of the Nasdaq Capital Market during any extension period that may be granted by the Nasdaq Hearings Panel in its discretion, or otherwise;

●

the outcome of pending, threatened or future litigation or arbitration;

●

our ability to resolve pending or threatened litigation regarding payment disputes with certain Contract Manufacturing Organizations (“CMOs”) and other parties, and our ability to defer payments, negotiate lower amounts or successfully pursue other courses of action for certain amounts accrued at December 31, 2022;

●

our ability to successfully execute the strategic realignment of our pipeline and resources;

●

the timing of the initiation, enrollment and completion and results of ongoing or planned clinical trials;

●

our ability to research, develop and commercialize our product candidates, including our ability to do so after our competitors have developed and commercialized competing products or alternative therapies;

●

the ability of partners to initiate and conduct the PREACH-M and RATinG studies (as described below) of lenzilumab in chronic myelomonocytic leukemia (“CMML”) and in patients with acute Graft versus Host Disease (“aGvHD”), respectively, as currently planned;

●

our ability to assess and support further clinical assessment of lenzilumab as a companion therapy with commercially available chimeric antigen receptor T-cell (“CAR-T”) therapies in non-Hodgkin lymphoma through an investigator-initiated trial (“IIT”);

●

increasing levels of market acceptance of CAR-T therapies and stem cell transplants and the development of a market for lenzilumab in these therapies;

●

our ability to maintain licenses with third parties;

●

our ability to attain market exclusivity and/or to obtain, maintain, protect and enforce our intellectual property and to operate our business without infringing, misappropriating or otherwise violating, the intellectual property rights of others;

●

our ability to achieve collaborations, strategic alliances, or licensing arrangements for lenzilumab;

●

acquisitions or in-licensing or out-licensing transactions that we may pursue may fail to perform as expected;

●

changes in the regulatory landscape that may prevent us from pursuing or realizing any of the expected benefits from the various regulatory incentives, or the imposition of regulations that affect our products; and

●

the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing.

These are only some of the factors that may affect the forward-looking statements contained in this Annual Report on Form 10-K. For a discussion identifying additional important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Annual Report on Form 10-K. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. However, we operate in a competitive and rapidly changing environment and new risks and uncertainties emerge, are identified or become apparent from time to time. It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. You should be aware that the forward-looking statements contained in this Annual Report on Form 10-K are based on our current views and assumptions. We undertake no obligation to revise or update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date hereof or to reflect new information or the occurrence of unanticipated events, except as required by law.

TABLE OF CONTENTS

Humanigen, Inc.

Form 10-K

Index

		Page
	Summary of Principal Risk Factors
Part I
Item 1.	Business	5
Item 1A.	Risk Factors	2822
Item 1B.	Unresolved Staff Comments	5251
Item 2.	Properties	5251
Item 3.	Legal Proceedings	5251
Item 4.	Mine Safety Disclosures	5251
Part II
Item 5.	Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5352
Item 6.	Reserved	5352
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	6364
Item 8.	Financial Statements and Supplementary Data	6364
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6364
Item 9A.	Controls and Procedures	6364
Item 9B.	Other Information	6465
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	6465
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	6566
Item 11.	Executive Compensation	6566
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6566
Item 13.	Certain Relationships and Related Transactions, and Director Independence	6566
Item 14.	Principal Accountant Fees and Services	6566
Part IV
Item 15.	Exhibits and Financial Statement Schedules	6667
Item 16.	Form 10-K Summary	6970
	Signatures	6970

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SUMMARY OF PRINCIPAL RISK FACTORS

This summary briefly states the principal risks and uncertainties facing our business that could affect our common stock, which are only a select portion of those risks. A more complete statement of those risks and uncertainties is set forth in “Part I, Item 1A - Risk Factors” of this report. This summary is qualified in its entirety by that more complete statement. You should carefully read the entire statement and “Risk Factors” when considering the risks and uncertainties as part of your evaluation of an investment in our common stock.

·● ~~The~~We ~~U.S.~~need ~~Food~~to ~~and~~obtain ~~Drug~~additional ~~Administration~~financing ~~(“FDA”)~~to ~~declined~~fund our ~~initial~~operations ~~request for Emergency Use Authorization (“EUA”) for lenzilumab as a therapy for hospitalized patients with COVID-19. The Medicines~~ and, ~~Healthcare~~if ~~Products~~we ~~Regulatory Agency (“MHRA”) also has not approved our application for marketing authorization of lenzilumab in this indication. We~~ are ~~continuing~~unable to ~~pursue~~obtain ansuch ~~authorization or approval for lenzilumab’s use in hospitalized patients with COVID-19 in the United States (“U.S.”)~~financing, ~~United~~we ~~Kingdom~~may ~~(“UK”)~~be ~~and~~unable ~~European~~to ~~Union~~continue ~~(“EU”)~~to ~~but~~operate ~~may~~as ~~not~~a ~~obtain~~going ~~one~~concern.

·● ~~Results~~We ~~from~~have ~~the~~entered ~~ACTIV-5/BET-B~~into ~~(as~~a ~~defined~~non-binding ~~below)~~letter ~~trial~~of ~~will~~intent beand ~~critically~~are ~~important~~involved ~~for~~in ~~the~~exclusive ~~future~~negotiations ~~viability~~relating ofto ~~our~~a ~~development~~proposed ~~program~~business ofcombination ~~lenzilumab~~transaction as adescribed ~~therapy~~in ~~for~~“Item ~~hospitalized~~1. ~~patients~~Business–Overview,” ~~with~~but ~~COVID-19.~~we Ifcannot assure you that the ~~results~~proposed ~~from~~business ~~such~~combination ~~trial~~and ~~are~~related ~~not~~financing ~~confirmatory~~transactions ofcontemplated ~~the~~thereby ~~findings~~will ofbe ~~the~~consummated ~~C-reactive~~or, ~~protein~~if ~~level~~such ~~(“CRP”)~~transactions ~~subgroup~~are ~~from~~consummated, ~~the~~that ~~LIVE-AIR~~they ~~study~~will ~~(as~~yield ~~defined~~value ~~below),~~for our stockholders. If we ~~would~~are ~~either~~unable ~~conduct~~to acomplete ~~new~~the ~~clinical~~proposed ~~trial~~business ofcombination ~~our~~and ~~own~~related orfinancing ~~abandon~~transactions ~~this~~described ~~development~~under ~~program~~“Item ~~altogether~~1. ~~Even~~Business–Overview,” ifor ~~the~~to ~~results~~identify ofand ~~such~~complete ~~trial~~another ~~are~~strategic ~~favorable~~or ~~and~~financing ~~are~~transaction ~~included~~ in anthe ~~amendment~~first tohalf ~~our~~of ~~initial~~2023, ~~EUA~~we ~~application,~~may ~~there~~elect ~~can~~or be norequired ~~assurance~~to ~~that~~pursue ~~FDA~~a ~~will~~reorganization ~~agree~~or ~~with~~seek ~~our~~other ~~efficacy~~protection ~~claim~~under orthe ~~that~~federal webankruptcy ~~will obtain EUA~~code.

·● WePublic ~~need~~announcements toor ~~obtain~~updates ~~additional~~regarding ~~financing~~any tostrategic ~~fund our operations and~~transactions, iffinancings weor ~~are~~other ~~unable~~strategic tooptions ~~obtain~~and ~~such~~alternatives ~~financing,~~could weresult ~~may~~in bevolatility ~~unable to continue as a going concern. We expect the results of the ACTIV-5/BET-B (as defined below) trial to be important to investors~~ in ~~evaluating future financings we may undertake. If~~ the ~~results~~price ~~from such trial are not confirmatory~~ of ~~the~~shares ~~findings~~ of ~~the CRP subgroup from the LIVE-AIR study (as defined below),~~ our ~~ability~~common tostock ~~obtain~~and ~~financing~~dramatic ~~may~~spikes bein ~~further~~trading ~~impaired~~volume.

·● ~~Our~~The ~~commercial~~suspension ~~opportunity~~and indelisting ~~COVID-19~~of orour ~~other~~common ~~indications~~stock ~~may~~on bethe ~~reduced~~Nasdaq orCapital ~~eliminated~~Market ifhas ~~competing~~been ~~products~~stayed during the pendency of our appeal before a Nasdaq Hearings Panel scheduled for April 6, 2023 and subsequent determination from the ~~same~~Nasdaq ~~segment~~Hearings Panel as to the delisting of ~~patients~~our common stock. There can be no assurance that ~~lenzilumab~~the ~~targets~~Nasdaq ~~are~~Hearings ~~authorized~~Panel orwill ~~approved~~decide in our favor and provide additional time for us to regain compliance with the requirements for continued listing on the Nasdaq Capital Market. If our appeal is denied, our common stock will be subject to immediate delisting from the Nasdaq Capital Market.

·● ~~Manufacturing~~Even ~~efforts~~if inour ~~respect~~appeal ofbefore ~~lenzilumab~~the ~~have~~Nasdaq ~~been~~Hearings ~~extremely~~Panel ~~costly~~is ~~and~~successful, ~~inefficient~~if inwe ~~producing~~fail ~~treatments~~to ~~for~~regain ~~use~~and inmaintain ~~our~~compliance ~~clinical~~with ~~development~~the ~~program~~requirements orfor ~~potential~~continued ~~sale.~~listing Weon ~~are~~the ~~subject~~Nasdaq toCapital aMarket ~~multitude~~during ofany ~~manufacturing~~extension ~~risks~~period ~~and~~that ~~rely~~may ~~completely~~be ongranted ~~third~~by ~~parties~~the toNasdaq ~~manufacture~~Hearings ~~drug~~Panel ~~product~~in ~~and~~its ~~supply~~discretion, ~~drug~~our ~~substance.~~common Westock ~~may~~will ~~not~~ be ~~able~~subject to ~~obtain~~suspension ~~materials~~from ortrading ~~supplies~~and ~~necessary~~delisting, towhich ~~conduct~~would ~~clinical~~adversely ~~trials~~affect ~~or,~~the ~~following~~liquidity ~~requisite~~of ~~regulatory~~our ~~authorizations~~common orstock ~~approvals,~~and our ability to ~~manufacture~~raise ~~and~~additional ~~sell~~capital ~~our~~or ~~products~~enter into strategic transactions.

·● ~~Interim,~~We ~~top-line or preliminary data from our clinical trials that we announce~~ may ~~change~~be asrequired ~~more~~to ~~patient~~complete ~~data~~a ~~become~~reverse ~~available~~stock ~~and~~split ~~are subject~~ to ~~audit~~regain ~~and~~compliance ~~verification~~with ~~procedures~~Nasdaq ~~that~~listing ~~could~~rules ~~result~~and inwe ~~material~~cannot ~~changes~~predict in the ~~final~~effect ~~data.~~that ~~Disclosure~~any ofreverse ~~such~~stock ~~data~~split bywill ~~us,~~have ~~including~~on ~~data from~~ the ~~ACTIV-5/BET-B~~market ~~(as defined below) trial, or by our competitors could result in volatility in the~~ price offor shares of our common stock ~~and dramatic spikes in trading volume~~.

·● If anour ~~authorization~~common orstock ~~approval~~has isa ~~granted~~closing ~~for~~bid ~~lenzilumab,~~price weof ~~may~~$0.10 beor ~~unable~~less tofor ~~accurately~~any ~~predict~~ten ~~demand~~consecutive ~~for~~trading ~~lenzilumab~~days orour tocommon ~~produce~~stock ~~sufficient~~may ~~quantities~~be onsubject ato ~~timely~~immediate ~~basis~~delisting tofrom ~~meet~~the ~~demand~~Nasdaq Capital Market.

·● ~~There~~Currently ~~can~~pending, bethreatened noor ~~assurance~~future ~~that~~litigation, ~~lenzilumab~~arbitration, ~~even~~governmental ifproceedings ~~approved~~ or ~~authorized,~~inquiries ~~would~~could ~~ever~~result ~~become~~in ~~profitable,~~material ~~due~~adverse toconsequences, ~~government~~including orjudgments ~~healthcare provider~~ or ~~payer~~settlements, ~~interest~~ and ~~public~~adversely ~~perception~~affect ~~regarding~~our ~~vaccines~~ability ~~and~~to ~~treatments~~continue ~~for~~as ~~COVID-19~~a ~~related~~going ~~complications~~concern.

·● WeResults ~~currently~~from ~~have~~the noAccelerating ~~internal~~COVID-19 ~~sales~~Therapeutic Interventions and ~~marketing~~Vaccines-5 ~~capabilities~~(“ACTIV-5”) and ~~will~~Big ~~rely~~Effect onTrial, ~~third~~in ~~parties~~the “B” arm of the trial (“BET-B”), referred to ~~market~~as ~~and~~the ~~sell~~ACTIV-5/BET-B ~~lenzilumab~~trial, ifdid wenot ~~attain~~achieve ~~authorization~~statistical orsignificance ~~approval~~on ~~for~~the ~~its~~primary ~~commercialization,~~endpoint. ~~and~~As ~~any~~a ~~product~~result, ~~candidates~~in July 2022, we ~~may~~announced ~~successfully~~a ~~develop~~strategic realignment of our pipeline and resources. WeOur orforward-looking ~~they~~business ~~may~~operations ~~not~~are bedependent ~~able~~on our ability to ~~effectively~~successfully ~~market~~execute our strategic realignment plan, raise additional capital and ~~sell~~manage ~~any~~our ~~such~~liabilities ~~product~~in ~~candidates~~a way that permits us to continue as a going concern. If we are unsuccessful in accomplishing these objectives, we may elect or be required to seek bankruptcy protection.

·● WeOur ~~have~~forward-looking abusiness ~~history~~operations will depend on the success of ~~operating~~lenzilumab ~~losses~~as a therapy for CMML, aGvHD and other non-COVID-19 related indications, and our other product candidates, all of which are in the early stages of development. We cannot be certain that we ~~may~~will ~~never~~be ~~become~~able ~~profitable~~to obtain regulatory approval for, or successfully commercialize, any of our product candidates for these or any other indications.

·● ~~The~~Our ~~adoption~~lead ofdevelopment ~~chimeric~~programs ~~antigen receptor T-cell (“CAR-T”) therapies as the potential standard of care~~ for ~~treatment~~lenzilumab ofin ~~certain~~CMML ~~cancers is uncertain,~~ and ~~dependent~~aGvHD onare ~~the~~several ~~efforts~~years offrom apotential ~~limited~~commercialization. ~~number~~We ofdo ~~market entrants, and if~~ not ~~adopted~~anticipate asany ~~anticipated,~~cash ~~the~~flow ~~market~~from ~~for~~product ~~lenzilumab~~revenues orin ~~next-generation~~the ~~gene-edited~~foreseeable ~~CAR-T therapies may be limited or not develop~~future.

·● ~~Our~~In ~~business~~the ~~could~~event ~~target~~we ~~benefits~~pursue ~~from~~bankruptcy ~~various~~protection, ~~regulatory~~we ~~incentives,~~will be subject to the risks and uncertainties associated with such asproceedings. ~~orphan~~In ~~drug~~the ~~exclusivity,~~event ~~breakthrough~~we ~~therapy~~are ~~designation,~~unable ~~fast~~to ~~track~~pursue ~~designation~~bankruptcy protection under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), ~~and~~or, ~~priority~~if ~~review~~pursued, ~~but~~successfully weemerge from such proceedings, it may ~~not~~be ~~ultimately~~necessary ~~qualify~~to pursue bankruptcy protection under Chapter 7 of the Bankruptcy Code for all or ~~benefit~~a ~~from~~part ~~these~~of ~~incentives~~our businesses. Given our lack of liquidity, it is reasonably likely that any such bankruptcy filing would result in a complete loss of value for holders of our common stock.

· There is a limited amount of information about us upon which investors can evaluate our product candidates and business.

· If our current and any future collaborators cease development efforts under our collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products, and we may never receive milestone payments or future royalties under these agreements.

· We may experience delays in commencing or conducting our planned or contemplated clinical trials, which may render us unable to complete the development and commercialization of our product candidates.

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·● ~~Our~~Raising ~~product~~additional ~~candidates~~funds ~~are~~by ~~subject~~issuing tosecurities ~~extensive regulation, compliance with which is costly and time consuming,~~ may cause ~~unanticipated~~dilution ~~delays,~~to ~~and~~our ~~may~~existing ~~prevent~~stockholders, ~~the~~restrict ~~receipt~~our ofoperations ~~the~~or ~~required~~require ~~approvals~~us to ~~commercialize~~relinquish ~~our~~proprietary ~~product candidates~~rights.

·● IfA wesignificant ~~fail~~portion toof ~~attract~~our ~~and~~total ~~retain~~outstanding ~~key~~shares ~~management~~of ~~and~~common ~~clinical~~stock ~~development personnel~~are, or ifmay ~~the~~be, ~~attention~~eligible ofto ~~such~~be ~~personnel~~sold isinto ~~diverted~~the market in the near future, wewhich ~~may~~could because ~~unable~~the market price of our common stock to ~~successfully~~drop ~~manage~~significantly, even if our business is doing well.

·● We may ~~encounter~~experience ~~difficulties~~delays in ~~managing~~commencing ~~our~~or ~~growth~~conducting ~~and~~our ~~expanding~~planned ~~our~~or ~~operations~~contemplated ~~successfully~~clinical trials, ~~including~~which ~~internationally~~may ifrender ~~lenzilumab~~us isunable ~~authorized~~to orcomplete ~~approved~~the indevelopment ~~any~~and ~~foreign~~commercialization ~~country~~of orour ~~market~~product candidates.

·● ~~Currently pending~~Interim, ~~threatened~~top-line or ~~future~~preliminary ~~litigation,~~data ~~arbitration,~~from ~~governmental~~our ~~proceedings~~clinical ortrials ~~inquiries~~that are announced may change as more patient data become available and are subject to audit and verification procedures that could result in material ~~adverse~~changes ~~consequences,~~in ~~including~~the ~~judgments~~final ordata. ~~settlements~~Disclosure of such data could result in volatility in the price of shares of our common stock and dramatic spikes in trading volume.

·● We ~~may~~have ~~not~~a behistory ~~able~~of tooperating ~~obtain,~~losses ~~maintain,~~and ~~enforce~~we ormay ~~protect~~never ~~our~~become ~~intellectual property rights in the U~~profitable.~~S. and throughout the world.~~

·● ~~Our~~The ~~insurance~~adoption ~~policies~~of ~~are~~CAR-T ~~expensive~~therapies as the potential standard of care for treatment of certain cancers is uncertain, and ~~protect~~dependent uson ~~only~~the ~~from~~efforts ~~some~~of ~~business~~a ~~risks~~limited number of market entrants, ~~which~~and ~~leaves~~if usnot ~~exposed~~adopted toas ~~significant~~anticipated, ~~uninsured~~the ~~liabilities~~market for lenzilumab in the context of a companion treatment alongside CAR-T therapies or next-generation gene-edited CAR-T therapies may be limited or not develop.

·● Our ~~executive~~business ~~officers,~~could ~~directors~~target ~~and~~benefits ~~principal~~from ~~stockholders~~various regulatory incentives, ifsuch ~~they~~as ~~choose~~orphan todrug ~~act~~exclusivity, ~~together~~breakthrough therapy designation, ~~will~~fast ~~continue~~track todesignation, ~~have~~priority ~~the~~review ~~ability~~and toconditional ~~significantly~~or ~~influence~~provisional ~~all~~pathways, ~~matters~~but ~~submitted~~we tomay ~~stockholders~~not ultimately qualify for ~~approval~~or benefit from these incentives.

·● ~~Raising~~There ~~additional~~is ~~funds~~a bylimited ~~issuing~~amount ~~equity~~of ~~securities~~information ~~will~~about ~~cause~~us ~~dilution~~upon towhich investors can evaluate our ~~existing~~product ~~stockholders~~candidates and business.

●

If our current and any future collaborators cease development efforts under our collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products, and we may never receive milestone payments or future royalties under these agreements.

●

We are subject to a multitude of manufacturing risks and rely completely on third parties to manufacture drug product and supply drug substance. We may not be able to obtain materials or supplies necessary to conduct clinical trials.

●

Our product candidates are subject to extensive regulation, compliance with which is costly and time consuming, may cause unanticipated delays, and may prevent the receipt of the required approvals to commercialize our product candidates.

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PART I

ITEM 1. BUSINESS

Overview

We are a clinical stage biopharmaceutical company, developing our portfolio of proprietary Humaneered® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. Our proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. We have developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied our Humaneered technology to optimize them. Our lead product candidate, lenzilumab, and our other ~~two~~ product ~~candidates~~candidate, ifabotuzumab (“iFab”) ~~and HGEN005~~, are Humaneered monoclonal antibodies. Our Humaneered antibodies are closer to human antibodies than chimeric or conventionally ~~humanized~~ humanized antibodies and have a high affinity for their target. In addition, we believe our Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related reaction.

WePursuant ~~are~~to ~~focusing~~ our ~~efforts~~previously onreported ~~the development~~strategic ofrealignment plan, we are developing our lead product candidate, lenzilumab (“LENZ®”). Lenzilumab is a monoclonal antibody that has been demonstrated to neutralize human ~~granulocyte~~GM-~~macrophage~~CSF, a cytokine that we believe leads to the overproduction of monocytes which ~~colony-stimulating~~are ~~factor~~thought to be responsible for chronic myelomonocytic leukemia (“~~GM-CSF~~CMML”), a ~~cytokine~~rare ~~that~~blood wecancer ~~believe~~and ismay be of critical importance in acute graft versus host disease (“aGvHD”) associated with bone marrow transplants. Our strategic realignment plans include accelerating the development of LENZ in CMML, for which the ~~hyperinflammatory~~PREACH-M ~~cascade~~study is underway, and continuing ~~sometimes~~our ~~referred~~plans tofor the RATinG study in aGvHD, as ~~cytokine~~these ~~release~~studies ~~syndrome~~are ~~(“CRS”)~~majority orfunded ~~cytokine~~by ~~storm~~our partners. A leading network of centers, ~~associated~~The Mayo Clinics, is currently progressing with ~~COVID-19,~~an ~~chimeric~~IIT ~~antigen~~of ~~receptor T-cell~~lenzilumab (“in combination with CAR-T”) ~~therapy~~therapies. ~~and~~We are ~~acute~~also ~~Graft~~developing ~~versus~~iFab, ~~Host~~an ~~Disease~~EpAh-3 targeted monoclonal antibody, currently in Phase 1 development, as part of an antibody drug conjugate (“~~aGvHD~~ADC”), ~~associated~~for ~~with~~certain ~~bone~~solid ~~marrow transplants~~tumors.

Recent Developments

Our current capital resources are not sufficient to fund our operations for the remainder of 2023. Accordingly, as previously disclosed, we have been pursuing strategic alternatives and seeking to raise additional capital and settle or otherwise resolve payment disputes and other ongoing arbitration and litigation.

We have executed a non-binding letter of intent and are engaged in exclusive negotiations relating to a proposed business combination with a privately held biopharmaceutical company (the “Partner Company”). The proposed terms for the business combination contemplate a tax-free stock-for-stock merger, as a result of which we would issue shares of our capital stock to stockholders of the Partner Company which are expected to represent roughly two times the number of our currently outstanding shares of common stock.

We cannot assure you that we and the Partner Company will enter into a definitive agreement for the proposed transaction, and the final form and terms of any such transaction may be materially different from the terms described above. Our ability to enter into a definitive agreement is subject to conditions, including that we have received binding commitments for investment of additional capital that will be necessary to fund the operations of the combined company going forward and enable the combined company to maintain a listing of its common stock on the Nasdaq Capital Market or another national securities exchange, as well as customary matters such as approval of the terms of the definitive agreement by the Partner Company’s board of directors and stockholders. Certain of these conditions will be out of our control. Accordingly, we cannot provide any assurance that we will effect the proposed business combination and related financing transactions. If we are unable to complete the proposed transactions or identify and complete another strategic or financing transaction in the first half of 2023, we may elect or be required to pursue a reorganization or seek other protection under the federal bankruptcy code.

See “Risk Factors” beginning on page 22 of this Form 10-K for further discussion of the risks surrounding the proposed transaction and our company.

Our Pipeline

Our product candidates are in the clinical stage of development and require substantial time, resources, research and development, and regulatory approval prior to commercialization. Our ~~current~~ pipeline is depicted below:

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Lenzilumab

We are developing lenzilumab for potential commercial use in several indications:

● as a therapeutic for patients newly hospitalized with COVID-19;

● as a prophylactic companion for certain chimeric antigen receptor therapy (“CAR-T”) programs;

● for the prevention and/or treatment of acute graft versus host disease (“aGvHD”) associated with bone marrow transfers; and

●

as a therapeutic for chronic myelomonocytic leukemia (“CMML”).

~~Our~~● ~~development~~for ~~programs~~the inprevention ~~COVID-19, CAR-T~~ and ~~aGvHD are complementary in that all are focused on preventing~~ /or ~~reducing~~treatment ~~cytokine storm in those disease states. It is possible that results observed from the Phase 3 trials in COVID-19 described below may be predictive~~ of ~~results~~acute ingraft ~~these~~versus ~~other~~host ~~settings,~~disease ~~which~~(“aGvHD”) ~~are~~associated ~~also characterized~~with bybone ~~cytokine~~marrow ~~storm.~~transfers; and

~~Lenzilumab in~~● ~~COVID~~as a prophylactic companion for certain chimeric antigen receptor therapy (“CAR-19T”) programs.

~~Scientific Rationale~~2022 Developments

~~Following~~In July ~~the~~2022, ~~emergence~~topline ofresults from the ~~SARS~~Accelerating COVID-~~CoV~~19 Therapeutic Interventions and Vaccines-25 ~~virus~~(“ACTIV-5”) and Big Effect ~~that~~Trial, ~~leads~~in tothe “B” arm of the ~~condition~~trial (“BET-B”), referred to as ~~COVID~~the ACTIV-195/BET-B trial, ~~scientific~~were ~~literature~~released. ~~suggested~~The ~~that~~study was ~~GM-CSF~~sponsored isand ~~critical~~funded ~~for~~by the ~~initiation~~National Institutes of ~~the~~Health (“NIH”) and evaluated lenzilumab in combination with remdesivir, ~~hyperinflammatory~~compared ~~cascade~~to ~~experienced~~placebo byand ~~many~~remdesivir, in hospitalized COVID-19 patients. ~~characterized~~The intopline results showed the ~~later~~trial ~~and~~did ~~sometimes~~not ~~fatal~~achieve ~~stages~~statistical significance byon ~~lung~~the ~~dysfunction and~~primary endpoint, inalthough ~~many~~the ~~patients,~~topline ~~multi-organ~~results ~~impairment~~did indicate that lenzilumab demonstrated a positive trend in mortality. A ~~Multiple~~global ~~publications~~group ~~have~~of ~~pointed~~leading toinstitutions ~~GM-CSF~~and asresearch ~~being~~networks ahas ~~signature~~indicated ~~cytokine~~interest in ~~this~~including ~~process~~lenzilumab in their large-scale, multinational ~~with~~studies ~~elevated~~of GMCOVID-~~CSF~~19, ~~levels~~pending ~~correlated~~an touptick ~~poorer~~in ~~outcomes,~~ICU ~~including~~admissions. ~~ventilator~~Tocilizumab ~~use,~~and ~~Intensive~~baricitinib ~~Care~~demonstrated ~~Unit~~mortality ~~(“ICU”)~~benefit ~~admission,~~following inclusion in REMAP-CAP and ~~mortality~~RECOVERY, despite having failed to do so in smaller studies.

~~The~~We ~~severe~~are ~~clinical features associated with some~~executing ~~COVID-19~~the ~~infections~~strategic ~~result~~realignment ~~from~~plan anto ~~inflammation-induced~~deemphasize ~~lung~~the ~~injury~~deployment ~~which~~of ~~may~~certain ~~require~~resources ~~supplemental~~for ~~oxygen~~the ~~through~~development aof ~~nasal~~lenzilumab ~~cannula,~~for ~~non~~COVID-~~invasive or~~19 ~~invasive~~and ~~mechanical~~currently do ~~ventilation~~not orplan ~~Extra~~to ~~Corporeal~~pursue ~~Mechanical~~regulatory ~~Oxygenation~~pathways ~~(“ECMO”)~~unless ~~and~~further ~~sometimes~~data ~~ICU~~from ~~care.~~ACTIV-5/BET-B ~~This~~or ~~lung injury is~~ a ~~result~~future oflarge-scale astudy ~~hyperinflammatory~~merit ~~dysregulation~~such ofan ~~the~~approach. The ~~immune~~Named ~~system~~Patient ~~and~~program ~~associated~~in ~~with~~select ~~cytokine~~European ~~storm.~~Countries ~~The~~has ~~lung~~been ~~injury~~terminated. ~~that~~With ~~leads~~the ~~to death~~exception isof ~~not~~the ~~directly~~one ~~related~~lenzilumab tobatch ~~the~~in ~~virus~~process, we ~~but~~have ~~appears~~discontinued tothe bemanufacturing ~~a result~~ of alenzilumab ~~hyper-reactive~~and ~~immune~~are ~~response~~consolidating to the ~~virus~~remaining ~~triggering~~inventory aof ~~cytokine storm~~lenzilumab ~~that~~bulk ~~can~~drug ~~continue~~substance ~~even~~and drug ~~after~~product ~~viral~~in ~~titers~~a ~~remain~~central ~~stable~~location orfor ~~even~~potential ~~begin~~future ~~to fall~~use.

CRS is characterized by an elevation of inflammatory cytokines resulting in fever, hypotension, capillary leak syndrome, pulmonary edema, disseminated intravascular coagulation, respiratory failure, and Acute Respiratory Distress Syndrome (“ARDS”). The development of CRS as a direct result of immune hyper-stimulation has been previously described in patients with autoimmune and lymphoproliferative diseases, as well as in patients with B-cell malignancies receiving CAR-T therapy. Over the last several years, preclinical studies and correlative science from clinical trials in CAR-T therapy have shed light on the pathophysiology, development, characterization, and management of CRS.

CRS is also characterized by activation of myeloid cells and release of inflammatory cytokines, including GM-CSF, monocyte chemoattractant protein-1 (MCP-1), macrophage inflammatory protein 1α (MIP-1α), interferon gamma-induced protein 10 (IP-10), interleukin-6 (IL-6), and interleukin-1 (IL-1). The cascade, once initiated, can quickly evolve into a cytokine storm, resulting in further activation, expansion and trafficking of myeloid cells, leading to abnormal endothelial activation, increased vascular permeability, and disseminated intravascular coagulation.

Data from National Scientific Review (2020, Vol. 7, No. 6) titled “Pathogenic T-cells and inflammatory monocytes incite inflammatory storms in severe COVID-19 patients”, supports the hypothesis that GM-CSF induced cytokine storm immune mechanisms have contributed to patient mortality with the current pandemic strain. We believe that there is increasing acceptance that this pathophysiology may be responsible for worsening of clinical status and poor outcomes. The authors noted that steroid treatment in such cases has been disappointing in terms of outcome but suggested that a monoclonal antibody that targets GM-CSF may prevent or curb the hyper-active immune response caused by COVID-19 in this setting. Several publications point to GM-CSF as a so-called ‘signature cytokine’ including the largest inflammatory marker study in over 600 patients from a multicenter study in the UK. (Uncontrolled Innate and Impaired Adaptive Immune Responses in Patients with COVID-19 ARDS, deProst et al, AJRCCM Articles in Press., American Thoracic Society, August 31, 2020, 10.1164/rccm.202005-1885OC) (The dysregulated innate immune response in severe COVID-19 pneumonia that could drive poorer outcome, Blot et al. J Transl Med (2020) 18:457) (Elevated antiviral, myeloid and endothelial inflammatory markers in severe COVID-19, Openshaw et al, MedRxIV, doi). In March 2021, Thwaites RS et al and several, ISARIC4C (Coronavirus Clinical Characterisation Consortium) investigators published “Inflammatory profiles across the spectrum of disease reveal a distinct role for GM-CSF in severe COVID-19”, in Science Immunology, further confirming elevated GM-CSF levels are correlated with COVID-19 mortality (doi: 10.1126/sciimmunol.abg9873. PMID: 33692097; PMCID: PMC8128298).

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Through partners in Australia, we initiated a study of lenzilumab in cancer patients with COVID-19. The trial, known as C-SMART was a multi-center, four arm trial, which aimed to evaluate several different immune modulating drugs for prevention and treatment of COVID-19 in the cancer population. The investigational product is in the process of being destroyed, due to COVID-19 being deprioritized by us and the Australian Government.

In May 2022, our partners in South Korea dosed the final healthy volunteer of the 20 required for their Phase 1 bridging study. This study was conducted to explore the safety, tolerability, and pharmacokinetic (“PK”) properties of lenzilumab and compare it between Koreans and Caucasians. The clinical study report has been completed and the degree of exposure was observed to be higher in Koreans than in Caucasians. Lenzilumab was safe and well tolerated in both Koreans and Caucasians.

Lenzilumab in CMML and Related Hematological Cancers

Scientific Rationale

We believe that lenzilumab holds promise in CMML, a rare form of hematologic cancer with a three-year overall survival rate of 20% and median overall survival of 20 months. Standard therapies yield a complete response rate (“CR”) plus partial response rate (“PR”) in the 10-17% range. CMML is a clonal stem cell disorder of which monocytosis is a key feature. Clonal cytogenic abnormalities are commonly seen in CMML patients. RAS mutations, which make leukemic cells hyperresponsive to GM-CSF, are seen in approximately 50% of CMML patients and are the anticipated target patient population for lenzilumab. CMML has features of myelodysplastic syndrome (“MDS”), including abnormal, dysplastic bone marrow cells; cytopenia; transfusion dependence; and of myeloproliferative neoplasms, including overproduction of white blood cells, organomegaly (e.g., splenomegaly and hepatomegaly) and extramedullary disease. Independent publications have demonstrated the key role of GM-CSF and RAS pathway mutations in this and other cancers, including JMML, MDS, myeloproliferative neoplasms, and AML.^1,2,3

Our Development Program

In ~~response to~~a ~~the~~Phase ~~scientific~~1 ~~literature~~study conducted by Mayo Clinic, wethree of ~~designed~~six ~~and~~patients ~~conducted~~with aNRAS/KRAS/CBL ~~Phase~~mutations 3demonstrated a clinical ~~trial~~response ofto lenzilumab inby ~~newly~~the ~~hospitalized~~MDS/MPN ~~COVID-19~~International ~~patients,~~Working Group ~~which~~criteria. weThis ~~refer~~study toidentified as the Maximum Tolerated Dose (“~~LIVE-AIR~~MTD”) ~~study,~~or torecommended ~~examine~~Phase ~~whether~~2 dose of lenzilumab, and assessed lenzilumab’s ~~neutralization~~safety, pharmacokinetics, and clinical activity. Final results of ~~human~~this ~~GM-CSF~~study ~~could~~were ~~prevent or~~presented ~~reduce~~at ~~poor~~the ~~outcomes~~2019 ~~associated~~ASH ~~with~~Annual Meeting ~~COVID-19~~and published in blood.

~~The~~Building ~~LIVE-AIR~~on ~~study~~this ~~enrolled~~successful ~~520~~Phase ~~patients~~1 study in 35CMML, ~~sites~~we inare ~~the~~running ~~U.S.~~a ~~and~~Phase ~~Brazil~~2 ~~who~~study ~~were~~in atcombination ~~least~~with 18azacitidine ~~years~~in ofnewly ~~age;~~diagnosed ~~experienced~~high-risk ~~blood~~CMML ~~oxygen~~patients ~~saturation~~who ~~(“SpO2”)~~express ofNRAS/KRAS/CBL mutations ~~less~~which ~~than~~are orknown ~~equal~~ to ~~94%;~~be orhypersensitive ~~required~~to ~~low~~GM-~~flow~~CSF ~~supplemental~~and ~~oxygen,~~therefore ormay ~~high-flow~~lend ~~oxygen~~themselves ~~support~~to responsiveness to lenzilumab treatment. The Phase 2 study, known as “PREcision Approach to Chronic Myelomonocytic Leukemia” or ~~non~~“PREACH-~~invasive~~M”, ~~positive~~is ~~pressure~~being ~~ventilation;~~conducted in ~~and~~partnership ~~were~~with ~~hospitalized~~the ~~but~~South ~~did~~Australian ~~not~~Health ~~require~~& ~~invasive~~Medical ~~mechanical~~Research ~~ventilation~~Institute (“~~IMV~~SAHMRI”). ~~Following~~and ~~enrollment,~~the ~~subjects~~University ~~were~~of ~~randomized~~Adelaide. The tostudy ~~receive~~is ~~three~~currently ~~infusions~~enrolling ofat ~~either~~sites ~~lenzilumab~~in orAustralia ~~placebo,~~ with ~~each~~additional ~~infusion~~enrollment ~~separated~~anticipated byat ~~eight~~sites ~~hours~~in ~~over~~New aZealand. ~~24-hour~~As ~~period.~~of ~~The~~March ~~primary~~16, 2023, ~~objective~~ 13 ~~was~~lenzilumab-treated topatients ~~assess~~have ~~whether~~been ~~lenzilumab,~~enrolled in ~~addition~~the tostudy ~~standard~~of a total of ~~care~~15 patients and followed for multiple cycles, ~~which~~with ~~included~~what ~~dexamethasone~~are ~~(or~~believed ~~other~~to ~~steroids)~~be ~~and/or~~encouraging ~~remdesivir, could~~results. ~~prevent~~An orabstract ~~alleviate~~for the ~~immune~~PREACH-~~mediated~~M ~~cytokine~~trial ~~storm~~has ~~and~~been ~~improve~~accepted ~~survival~~to the ~~without~~American ~~ventilation~~Association ~~(“SWOV”)~~for ~~(sometimes referred~~Cancer toResearch aswith ~~“ventilator-free~~a ~~survival”)~~poster presentation scheduled for April 17, 2023.4 ~~SWOV~~We isare aproviding ~~composite~~lenzilumab for ~~endpoint~~this study and the majority of ~~time~~the tostudy ~~death~~costs ~~and~~are ~~time~~being toborne ~~IMV~~by the partner and ~~SWOV~~funded isby ana ~~important composite~~grant ~~clinical~~from ~~endpoint~~the ~~that~~Medical ~~measures~~Research ~~mortality~~Futures Fund, ~~mechanical~~a ~~ventilation~~research fund set up by the Australian Government.

~~The~~As ~~LIVE-AIR~~a ~~Phase~~treatment 3for ~~randomized,~~a ~~double-blind~~rare disease, ~~placebo-controlled~~ ~~trial~~lenzilumab ~~investigated~~may qualify ~~the~~for ~~efficacy~~certain regulatory and ~~safety~~commercial ofbenefits ~~lenzilumab~~that tomay ~~assess~~accelerate ~~the~~development ~~potential~~and ~~for~~approval. ~~lenzilumab~~We toare ~~improve~~assessing ~~the~~regulatory ~~likelihood~~pathways ofthat ~~SWOV,~~may ~~beyond~~enable ~~standard~~early ~~supportive~~results ~~care,~~to insupport ~~hospitalized~~a ~~subjects~~regulatory ~~with~~submission ~~severe~~and ~~COVID-19.~~potential ~~Subjects~~approval ~~with~~by ~~COVID-19~~the ~~(n=520),~~Therapeutic ~~>18~~Goods ~~years~~Administration in Australia, ~~and~~which ~~≤94%~~could ~~oxygen~~be ~~saturation~~expanded onthrough ~~room~~Project ~~air and/or requiring supplemental oxygen~~Orbis, ~~but~~an ~~not~~international ~~invasive~~regulatory ~~mechanical~~agency ~~ventilation~~collaboration, ~~were randomized~~ to ~~receive~~the ~~lenzilumab~~United ~~(600~~States ~~mg,~~and ~~n=261)~~the orUnited ~~placebo~~Kingdom. In ~~(n=259)~~addition, ~~via~~we ~~three~~are ~~intravenous~~evaluating ~~infusions~~approaches ~~administered~~to 8FDA ~~hours apart~~directly. ~~Subjects were followed through Day 28 following treatment.~~

In March 2021, we announced results from our LIVE-AIR study. Baseline demographics were comparable between the two modified intention-to-treat (“mITT”) populations: male, 65%; mean age, 61 years; mean BMI, 33 kg/m2; median CRP, 79 mg/L; CRP was <150 mg/L in 77.9% of subjects. The most common comorbidities were hypertension (66%), obesity (55%), diabetes (53%), chronic kidney disease (14%), and coronary artery disease (14%). Subjects received steroids (94%), remdesivir (72%), or both (69%). Lenzilumab improved the likelihood of SWOV by 54% in the mITT population (HR: 1.54; 95%CI: 1.02-2.32, p=0.040) compared to placebo. SWOV also relatively improved by 82% in subjects who received both corticosteroids and remdesivir (1.82; 1.16-2.86, nominal p=0.0092); by 3.04-fold in subjects with CRP<150 mg/L and age <85 years (3.04; 1.68–5.51, nominal p=0.0003). Survival was improved by 2.22-fold in subjects with CRP<150 mg/L and age <85 years (2.22; 1.07-4.67, nominal p=0.034)._____________________________

~~Lenzilumab~~1 ~~improved SWOV in hospitalized~~Gupta, ~~hypoxic subjects~~A. ~~with~~et ~~COVID-19~~al. ~~pneumonia~~(2021, ~~over~~February ~~and above treatment with remdesivir and/or corticosteroids~~28). ~~Subjects~~Juvenile ~~with C~~myelomonocytic leukemia-~~reactive~~A ~~protein~~comprehensive ~~level (“CRP”)<150~~review ~~mg/L~~ and ~~age~~recent ~~<85~~advances ~~years~~in ~~demonstrated~~management. anAmerican ~~improvement~~Journal inof ~~survival~~Blood ~~and~~Research, ~~had~~11(1), ~~the~~1–21. ~~greatest~~Retrieved July ~~benefit~~21, 2022, from ~~lenzilumab~~https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8010610/pdf/ajbr0011-0001.pdf

~~Following~~2 ~~completion of the LIVE-AIR study~~Padron, ~~we commenced a series of efforts to attain authorization to commercialize lenzilumab for use in hospitalized COVID-19 patients in the United States and other territories~~E., Weet ~~filed an application for Emergency Use Authorization (“EUA”) with U~~al.S. ~~Food and Drug Administration~~ (~~“FDA”)~~2013, atJune ~~the end of May 2021~~20). ~~We also submitted an application for marketing authorization of lenzilumab in hospitalized COVID~~GM-19CSF–dependent PSTAT5 ~~patients~~sensitivity tois ~~Medicines and Healthcare products Regulatory Agency (“MHRA”) of the United Kingdom and conducted~~ a ~~series of~~feature ~~exploratory discussions~~ with ~~representatives~~therapeutic ~~of European Medicines Agency (“EMA”) regarding our~~ potential ~~submission of lenzilumab for marketing authorization~~ in ~~the~~chronic ~~European~~myelomonocytic ~~Union~~leukemia. ~~In addition~~ Blood, ~~we commenced significant manufacturing efforts in support of potential commercialization~~ 121(25), ~~as described below under “—Manufacturing and Raw Materials~~5068–5077.” https://doi.org/10.1182/blood-2012-10-460170

On3 ~~September 8~~Emanuel, ~~2021~~P. D., ~~FDA~~et ~~declined~~al. ~~our EUA request~~(1991, ~~stating~~ inMarch ~~its~~1). ~~letter~~Selective ~~that it was unable~~ hypersensitivity to ~~conclude~~granulocyte-macrophage ~~that~~colony-stimulating ~~the~~factor ~~known~~by ~~and~~juvenile ~~potential~~chronic ~~benefits~~myeloid ofleukemia ~~lenzilumab~~hematopoietic ~~outweigh the known and potential risks of its use as a treatment for COVID-19~~progenitors. ~~In addition to raising similar concerns around efficacy~~Blood, ~~MHRA requested further information~~77(5), ~~related~~925–929. ~~to clinical, manufacturing and quality processes~~https://doi.org/10.1182/blood.v77.5.925.925

~~The~~4 ~~results from the LIVE-AIR study were published in the peer-reviewed journal~~Hiwase, ~~The Lancet Respiratory Medicine (“The Lancet”), on December 1, 2021~~D. ~~Per~~et the Lancet paper, the implication from all the available evidence is that “Lenzilumab significantly improved survival without invasive mechanical ventilation in hospitalized patients with COVID-19 who were treated concurrently with other available therapies”al. ~~The Lancet paper concluded that “LIVE-AIR showed that lenzilumab treatment of hospitalized patients with COVID-19 can improve the likelihood of survival without the need for mechanical ventilation~~(2023, ~~with~~April ~~a safety profile similar to that of placebo”~~17). AsA aphase ~~result~~2/3, ~~we continue to believe~~multicenter intrial ~~the potential therapeutic benefits~~ of lenzilumab and ~~remain~~azacitidine ~~committed~~in tochronic ~~our~~myelomonocytic ~~efforts~~leukemia: toThe ~~develop~~PREACH-M ~~lenzilumab~~trial. ~~for patients hospitalized with COVID-19~~https://www.abstractsonline.com/pp8/#!/10828/presentation/10428

The next anticipated step in our development program for lenzilumab in COVID-19 is the release of results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, which is sponsored and funded by the National Institutes of Health (“NIH”). This study is evaluating lenzilumab in combination with remdesivir, compared to placebo and remdesivir, in hospitalized COVID-19 patients as described more fully below. We provided lenzilumab for the study.

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A ~~retrospective~~clinical analysis of the LIVE-AIR study suggested that patients under the age of 85 and with a baseline CRP below 150 mg/L (the “CRP subgroup”) appeared to derive the greatest benefit from lenzilumab, therefore, the ACTIV-5/BET-B study protocol ~~was modified to include baseline CRP below 150 mg/L as the primary analysis population. The ACTIV-5/BET-B study~~ has ~~reached~~been ~~its~~developed ~~target~~for ~~enrollment~~a with over 400 patients enrolled that met this criterion. Topline results from ACTIV-5/BET-B are expected to be released late in the first quarter or early in the second quarter of 2022. If confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study~~, we plan to include the results from~~ ~~ACTIV-5/BET-B~~ in anjuvenile ~~amendment~~myelomonocytic toleukemia ~~our EUA submission, and to include these results in a responsive submission to MHRA along with certain performance process qualification~~ (“~~PPQ~~JMML”) ~~data~~an ~~around drug product batches, in the second quarter of 2022. In addition, as a result of feedback received from representatives of EMA, if the ACTIV~~ultra-~~5/BET-B~~orphan ~~data~~and ~~are~~devastating ~~confirmatory~~condition ofaffecting ~~the~~young results of the findings of the CRP subgroup from the LIVE-AIR study, we intend to submit a Conditional Marketing Authorization (“CMA”) for lenzilumab with an Accelerated Approval request to EMA later in 2022children.

Through partners in Australia, we have also initiated a study of lenzilumab in cancer patients with COVID-19. The trial, known as C-SMART (“COVID-19 Prevention and Treatment in Cancer; a Sequential Multiple Assignment Randomized Trial”), is a multi-center, four arm trial, which aims to evaluate several different immune modulating drugs for prevention and treatment of COVID-19 in the cancer population. C-SMART will include 2,282 cancer patients at risk of, or known positive for, COVID-19 infection. The study contemplates prophylaxis of 957 patients with IFN-alpha, 957 patients on placebo; post-exposure prophylaxis of 85 patients with IFN-alpha, 85 patients on placebo; 63 COVID-19 hospitalized patients on selinexor, 85 patients on placebo; 36 COVID-19 hospitalized pneumonia on lenzilumab and 36 patients on placebo. The C-SMART study is led by the National Centre for Infections in Cancer at the Peter MacCallum Cancer Centre and will be conducted at five Australian sites in Melbourne and Sydney. The study is supported by a grant from the Australian Government's Medical Research Future Fund.

In addition, our partners in South Korea are conducting a Phase 1 bridging study in 20 healthy volunteers. This Phase 1 clinical study is being conducted to explore the safety, tolerability, and pharmacokinetic (“PK”) properties of lenzilumab and compare it between Koreans and Caucasians.

Our Commercial Opportunity

IfThe anincidence ~~EUA~~of new CMML patients in the UUS, UK, and Australia is about 1,700 patients annually.S.5 orRAS ~~equivalent~~mutations, ~~marketing~~which ~~authorization~~drive GM-CSF hyperresponsiveness, are also seen in additional myeloid hematological malignancies including JMML, myelodysplastic syndromes (“MDS”) and acute myeloid leukemia (“AML”), totaling approximately 4,000 new cases annually in the EUUS. orWe UKbelieve ~~were~~success ~~granted,~~with weCMML ~~intend~~may toprovide ~~commercialize~~proof ~~lenzilumab~~of principle for ~~COVID-19.~~targeting ~~Our~~RAS ~~goal~~pathway ~~would~~mutations bein myeloid leukemias with lenzilumab and allow us to ~~position~~develop, and if successful, commercialize lenzilumab ourselves asor through a ~~front-line~~partner, in these additional patient populations. About 15 to 20% of CMML cases progress to AML. According to the ~~therapeutic~~American ~~for~~Cancer ~~use~~Society, approximately 1,100 individuals in ~~hypoxic~~the ~~COVID-19~~US are newly diagnosed annually with CMML, with the majority of these new patients being age 60 or older. These patients are typically unsuitable for stem cell transplants.

~~Lenzilumab~~For isFDA ~~intended~~approval, toa beconfirmatory ~~used~~study in ~~patients hospitalized for COVID-19 with oxygen saturation levels below 94%. Since~~ the ~~beginning of the pandemic through January 31, 2022 over 4.3 million patients~~US ~~have~~may ~~been hospitalized and the current number of hospitalized patients is estimated by the CDC to~~ be ~~over~~required ~~120,000. As of the end of January 2022, the vaccination rate in the United States is over 80%; however, given the emergence of new variants, waning protection from vaccinations~~ and ~~boosters, lack of efficacy from neutralizing monoclonals primarily due to emerging variants and potential limited efficacy of some oral anti-virals, and the 20% of people that remain unvaccinated,~~ we ~~believe~~plan ~~patients infected with COVID-19 will continue~~ to beseek ~~admitted to~~regulatory ~~the~~guidance hospital for treatment, particularly immunocompromised populations. Scientists and experts have stated beliefs that the COVID-19 pandemic will become endemic. Hospitalization rates due to influenza over the past decade have ranged from ~~140,000 to 800,000 per year. We believe~~ the ~~commercial~~agency ~~opportunity to treat COVID-19 hospitalized patients~~ with ~~lenzilumab~~interim ~~will~~results ~~continue~~from ~~to exceed 100,000 patients in the U~~PREACH-M.~~S. on an annual basis in the future.~~

~~Lenzilumab~~Pricing inand ~~CAR~~reimbursement for rare diseases are traditionally higher than treatments for more common diseases. There have been no new therapeutic agents for patients with high-Trisk CMML in 30 years.6

~~Scientific Rationale~~_____________________________

~~FDA-approved CAR-T~~5 ~~therapies~~Incidence ~~have~~extrapolated ~~demonstrated~~by ~~the~~applying ~~effectiveness~~American ofCancer Society ~~using~~incidence ~~targeted~~rate ~~immuno-cellular~~of ~~engineering~~four toper ~~cause~~one amillion ~~patient’s~~people ~~own T-cells~~ to ~~fight certain cancers that have not responded to standard therapies. T-cells are often called~~ the ~~“workhorses”~~population of ~~the~~US, ~~immune system~~UK, ~~because of their role in coordinating the immune response~~ and ~~killing~~Australia. ~~cells infected by pathogens and~~ https://www.cancer ~~cells~~. ~~As depicted below, each of the FDA~~org/cancer/chronic-~~approved CAR~~myelomonocytic-~~T therapies are currently a one~~leukemia/about/key-~~time treatment that involves multiple steps:~~statistics.html

∙6 ~~Harvesting~~Aim ~~white~~of ~~blood~~first-ever ~~cells~~CMML ~~from~~study ~~the~~– ~~patient’s~~to ~~blood~~improve survival. Leukaemia Foundation. (2021, ~~also~~October ~~known~~11). asRetrieved ~~apheresis;~~July 21, 2022, from https://www.leukaemia.org.au/stories/aim-of-first-ever-cmml-study-to-improve-survival/

∙ Engineering T-cells within this population to express cancer-specific receptors;

∙ Increasing and purifying the number of genetically re-engineered T-cells; and

∙ Infusing the functional cancer-specific T-cells back into the patient to allow for expansion and targeting the cancer cells.

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As of the date of this filing, five CAR-T therapies have been approved by FDA: Gilead/Kite’s Yescarta, and Tecartus, Novartis’s Kymriah, Bristol Myers Squibb’s Breyanzi and Abecma, which seek to treat forms of B-cell cancers such as various types of NHL, including DLBCL, Follicular Lymphoma (“FL”) Mantle Cell Lymphoma (“MCL”) and adult acute lymphoblastic leukemia (“ALL”) that are refractory or in second or later stage relapse. Although patients suffering from these aggressive cancers frequently undergo multiple treatments, including chemotherapy, radiation and targeted therapy including stem cell transplants, the five-year survival rate has been severely limited and patients who do not respond to, or have relapsed following at least two courses of standard treatment, have no other treatment options and a very poor outcome. According to U.S. governmental sources, including the Surveillance, Epidemiology, and End Results (“SEER”) program of the National Cancer Institute, which is a source of epidemiologic information on the incidence and survival rates of cancer in the U.S., based on incidence data, we estimate that there are 21,000 patients per year in the U.S. with B-cell DLBCL and FL (Yescarta) and 7,000 with MCL and ALL (Tecartus). The number of patients eligible for Yescarta and Tecartus will be lower than the incidence rate as only patients who have failed at least two prior systemic therapies are currently eligible for CAR-T therapy. In addition, both Yescarta and Breyanzi have reported positive data in second line therapy for (r/r) B-cell NHL. If CAR-T therapy is approved as a second line option versus stem cell transplantation, additional patients may be eligible for treatment. Moreover, there are multiple B-cell maturation antigen (“BCMA”) targeted CAR-T therapies in Phase 2 development for relapsed or refractory multiple myeloma and several other novel CAR-T therapies targeting various antigens and neo-antigens in development for a number of hematologic and solid cancers.

The five FDA-approved CAR-T therapies have significant limitations. Despite the exciting prospects for treating patients with limited options, significant and potentially life-threatening side-effects are associated with CAR-T therapy, including Immune Effector Cell Associated Neurotoxicity (“ICANS”) and CRS. While there may be individual differences between CAR-T therapy products, the overall toxicity profile is generally consistent with that reported for Yescarta and Tescartus, and it is known that various development-stage BCMA and other CAR-T therapies are hampered by the emergence of cytokine storm, ICANS and other serious and potentially fatal side-effects.

Both CRS and ICANS are caused by a large-scale release of pro-inflammatory cytokines and chemokines induced by the CAR-T therapy and remain significant unmet needs that must be addressed. Because ICANS and CRS can be life-threatening and have proven fatal in many instances, and because each product bears a “Boxed Warning” from FDA (the strictest FDA warning label intended to alert patients and providers about serious and life-threatening risks associated with a particular drug), patients seeking to benefit from Yescarta and Tescartus, generally may only do so if the treatment center is in compliance with the Risk Evaluation and Mitigation Strategy (“REMS”) program required by FDA.

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REMS is a drug safety program that FDA requires certain medications with serious safety concerns to adhere to strict on-going monitoring and reporting and is intended to assist and train certified treatment centers on the management of these serious side-effects. For example, each hospital and its associated clinics are required to have a minimum of two doses of tocilizumab available on-site for each patient for the potential treatment of moderate to severe cases of CRS. We believe the REMS requirement may have adversely impacted both market uptake and usage to date.

According to the original package inserts for Yescarta and Tecartus, 81% (NHL), 81% (MCL), 87% (ALL) of patients treated in the clinical trial setting experienced ICANS (with up to 35% of cases being severe, or grade >3). The package insert for Yescarta was recently updated to include the use of prophylactic corticosteroids across all approved indications. The update was based on the safety update from Cohort 6 of the ZUMA-1 study which showed that in 39 patients, prophylactic or early use of corticosteroids resulted in neurological events (Grade ≥3) in 13% or patients and 0% of the patients had CRS. These original rates may be more prevalent in practice, despite the availability and utilization of tocilizumab and corticosteroids. Moreover, based on feedback from leading treatment centers in the U.S., approximately 30% to 60% of patients receiving CAR-T therapy require admission to the ICU and in some cases require an extended stay, with multiple interventions, including ventilator support and other supportive measures, to be urgently administered to manage these side-effects. Some patients can suffer seizures, coma, brain swelling, heart arrhythmias, organ failure and serious and life-threatening clotting disorders, not only causing more complex and potentially fatal medical consequences, but significantly adding to cost of patient care. These can be particularly challenging and concerning issues, especially in younger and pediatric patients.

Our Development Program

There are currently no FDA-approved products for the prevention of CAR-T therapy-related side effects, nor are there any approved therapies for the treatment of CAR-T therapy related ICANS. Tocilizumab, among other indications, is approved for the treatment of CAR-T induced severe CRS. We believe lenzilumab has the potential to improve the efficacy and safety of CAR-T therapy and that the use of lenzilumab may minimize or eradicate the incidence, frequency, duration and/or severity of ICANS and/or CRS that frequently appear in CAR-T patients.

Accordingly, we are developing lenzilumab as a treatment for cytokine storm associated with ICANS and CRS in certain CD19-targeted CAR-T cell therapies. Further, GM-CSF neutralization may enhance CAR-T proliferation and effector functions and potentially confer additional benefits in terms of durable efficacy and healthcare resource utilization. Preclinical data generated in collaboration with the Mayo Clinic, which was published in Blood, a premier journal in hematology, indicates that the use of lenzilumab in combination with CAR-T therapy may also enhance the proliferation and improve the efficacy of CAR-T therapy. This may also result in durable, or longer term, responses in CAR-T therapies.

Lenzilumab has been studied in a multi-center Phase 1b trial as a sequenced therapy with Yescarta to prevent CRS and ICANS in patients with relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”) (NCT04314843), for which we announced positive results in April 2021. We intend to initiate a randomized, placebo-controlled, double-blind, registrational, Phase 3 study to evaluate the efficacy and safety of lenzilumab combined with Yescarta and Tecartus CAR-T therapies in non-Hodgkin lymphoma in 2022. This study is known as SHIELD (Study on How to Improve Efficacy and toxicity with Lenzilumab in DLBCL and other NHL patients treated with CAR-T therapy). We have alignment with FDA on the design of the Phase 3 study. Following a dose run-in period in approximately 25 patients, we currently plan to enroll more than 150 patients in the study. SHIELD will study lenzilumab for the prevention of CAR-T therapy-related toxicities including ICANS and CRS.

Our Commercial Opportunity

Revenues from the sales of the five approved CAR-T therapies exceeded $1.7 billion in 2021. We estimate that over 3,000 patients were treated with CAR-T therapy in 2021. Analysts predict that Yescarta only will reach peak sales in excess of $1.5 billion as additional patients become eligible for treatment. We believe we have the ability to transform CAR-T therapy and potentially a broad range of other T-cell engaging therapies, including both autologous and allogeneic cell transplantation. There is a direct correlation between the efficacy of CAR-T therapy and the incidence of life-threatening toxicities, including ICANS and CRS.

We believe that our GM-CSF pathway science, assets and expertise create two technology platforms to assist in the development of next-generation CAR-T therapies:

∙ Lenzilumab has the potential to be used in combination with any FDA-approved or development stage T-cell therapy, including CAR-T therapy, as well as in combination with other cell therapies such as allogeneic HSCT such as bone marrow transplants, to make these treatments safer and more effective.

∙ In addition, our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that may inherently avoid any efficacy/toxicity linkage, thereby potentially preserving the benefits of the CAR-T therapy while reducing or altogether avoiding its serious and potentially life-threatening side-effects.

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Lenzilumab in Acute GvHD

Scientific Rationale

Allogeneic hematopoietic stem cell therapy (“HSCT”), a potentially curative therapy for patients with hematological cancers, involves transferring stem cells from a healthy donor to the patient. HSCT has demonstrated effectiveness in treating these cancers. AsAllogeneic ~~depicted below, allogeneic~~ HSCT typically involves multiple steps:

∙● Collecting blood from a healthy donor;

∙● Processing the donor’s blood to remove the stem cells before returning the rest of the donor’s blood back to the donor;

∙● Pre-conditioning the patient with high-dose chemotherapy and/or radiation; and

∙● Infusing the donor’s stem cells into the patient to allow for the production of new blood cells.

Although a potentially life-saving treatment for patients suffering from hematological cancers, between 40-60% of patients receiving HSCT treatments experience acute or chronic ~~aGvHD~~GvHD, which together carries a 50% mortality rate. After being transplanted into the patient, donor-derived T cells are responsible for mediating the beneficial graft versus leukemia (“GvL”) effect. In many cases, however, donor-derived T cells that remain within the graft itself have also been linked to destruction of healthy tissue in the patient (the host), with particular risk of destroying cells in the patient’s skin, gut, and liver, resulting in aGvHD. Although depleting donor grafts of T cells can prevent or reduce the risk of aGvHD, this results in a reduced GvL effect, thereby having a detrimental impact on the efficacy of the allogeneic HSCT treatment itself and leading to increased relapse rates.

Despite new therapies, there remains a significant unmet medical need for an agent that can uncouple the beneficial GvL effect from harmful aGvHD. ~~The~~In ~~FDA~~December ~~has~~2022, ~~recently~~the FDA approved Orencia (abatacept) from Bristol Myers Squibb for the prevention of aGvHD and in 2019 Jakafi (ruxolitinib) from Incyte Corporation was approved for steroid-refractory aGvHD. Other treatments include pre-conditioning regimens for HSCT treatments that can vary significantly by treatment centers, including by unapproved, or “off-label,” use of agents that have been approved by FDA for other uses only.

11We believe that GM-CSF neutralization with lenzilumab has the potential to prevent or treat GvHD without compromising, and potentially improving, the beneficial GvL effect in patients undergoing allogeneic HSCT, thereby making allogeneic HSCT safer. The technology was featured in a November 2018 research article published in Science Translational Medicine, where the authors demonstrated in a murine model of GvHD, that donor T cell-derived GM-CSF drives GvHD through activation, expansion, and trafficking of myeloid cells but has no effect on the GvL response. Neutralization of GM-CSF (either using a neutralizing antibody or through GM-CSF gene knock-out) was able to uncouple the myeloid-mediated immunopathology resulting in GvHD from the T cell-mediated control of leukemic cells. This discovery provides a mechanistic proof-of-concept for neutralizing GM-CSF to prevent GvHD without compromising, and potentially improving, the GvL effect in patients undergoing allogeneic HSCT. Corroborating data related to the critical effect GM-CSF has on GvHD development in HSCT was published in blood advances in October 2019 by Gartlan et al.

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We believe that cytokine storm may be responsible, at least in part, for the emergence of GvHD in this setting. We believe that GM-CSF neutralization with lenzilumab has the potential to prevent or treat GvHD without compromising, and potentially improving, the beneficial GvL effect in patients undergoing allogeneic HSCT, thereby making allogeneic HSCT safer. The technology was featured in a November 2018 research article published in Science Translational Medicine, where the authors demonstrated in a murine model of GvHD, that donor T cell-derived GM-CSF drives GvHD through activation, expansion, and trafficking of myeloid cells but has no effect on the GvL response. Neutralization of GM-CSF (either using a neutralizing antibody or through GM-CSF gene knock-out) was able to uncouple the myeloid-mediated immunopathology resulting in GvHD from the T cell-mediated control of leukemic cells. This discovery provides a mechanistic proof-of-concept for neutralizing GM-CSF to prevent GvHD without compromising, and potentially improving, the GvL effect in patients undergoing allogeneic HSCT. Corroborating data related to the critical effect GM-CSF has on GvHD development in HSCT was published in blood advances in October 2019 by Gartlan et al.

Our Development Program

We believe that GM-CSF neutralization using lenzilumab has the potential to make allogeneic HSCT safer and more effective. Similar to GM-CSF neutralization with lenzilumab breaking the efficacy/toxicity linkage with CAR-T therapy, GM-CSF neutralization has demonstrated potential to attenuate acute GvHD while maintaining the beneficial GvL effect in patients undergoing allogeneic HSCT. Accordingly, we aim to position lenzilumab as a “must have” companion product to any allogeneic HSCT and as a part of the standard pre-conditioning that all patients receiving allogeneic HSCT should receive or as an early treatment option in patients identified as high risk for GvHD. We believe lenzilumab has potential to prevent or reduce aGvHD in allogeneic HSCT, thereby making allogeneic HSCT safer as a potentially curative therapy for patients with hematological cancers.

We ~~plan~~are tocurrently ~~study~~evaluating lenzilumab asfor athe early ~~companion~~treatment toof ~~allogeneic HSCT~~aGvHD ~~for~~in patients ~~with~~undergoing ~~hematological~~bone ~~cancers.~~marrow Wetransplants ~~plan~~in ~~to commence~~ a Phase 2/3 potentially registrational trial ~~for lenzilumab to treat patients who have undergone allogeneic HSCT who are at high and intermediate risk for aGvHD~~, known as the “RATinG” study. The study ~~will be~~is being conducted by the IMPACT Partnership, a collection of 22 stem cell transplant centers located in the United Kingdom. ~~and~~We isanticipate ~~expected to~~the ~~begin~~first ~~enrollment~~patient dosing in this study to occur in the ~~first~~second ~~half~~quarter of ~~2022~~2023 . We ~~will~~are ~~provide~~providing lenzilumab for the study including the cost of import, labeling and distribution of the study drug, and support ~~certain~~for certain laboratory tests related to the study, but the majority of the study costs will be borne by the IMPACT Partnership. The goal of the ~~trial, as it~~ study is ~~currently contemplated, would be~~ to determine the efficacy and safety of lenzilumab in reducing non-relapse mortality at six months.

Our Commercial Opportunity

The overall number of allogeneic HSCT treatments continues to increase annually in the ~~U.S.~~US and abroad. According to the Center for International Blood & Bone Marrow Transplant Research (“CIBMTR”), in 2019, approximately 10,000 allogeneic HSCT treatments were expected to be performed in the ~~U.S.~~US, with similar trends expected in Europe (Phelan, et al Current use and outcome of hematopoietic stem cell transplantation: CIBMTR US summary slides 2020). The cost of managing these patients in the first year is estimated at approximately $400,000.

~~Lenzilumab in CMML~~9

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Lenzilumab in CAR-T

Scientific Rationale

~~We believe that lenzilumab also holds promise in CMML, a rare form of hematologic cancer with no~~ FDA-approved ~~treatment options and a three~~ CAR-~~year~~T ~~overall~~therapies ~~survival~~have ~~rate~~demonstrated ofthe ~~20%~~effectiveness ~~and median overall survival~~ of 20using ~~months.~~targeted ~~CMML~~immuno-cellular isengineering ato ~~clonal~~cause ~~stem cell disorder of which monocytosis is~~ a ~~key~~patient’s ~~feature.~~own ~~Approximately~~T-cells to ~~40%~~fight ofcertain ~~CMML~~cancers ~~patients carry~~that ~~NRAS/KRAS/CBL~~have ~~mutations~~not ~~which~~responded ~~are~~to ~~associated~~standard ~~with~~therapies. GMT-~~CSF~~cells ~~hypersensitivity.~~are ~~CMML~~often ~~has~~called ~~features~~the ~~of myelodysplastic syndrome (~~“~~MDS~~workhorses”~~), including~~ ~~abnormal,~~of ~~dysplastic~~the ~~bone~~immune system ~~marrow~~because ~~cells;~~of ~~cytopenia;~~their ~~transfusion~~role ~~dependence;~~in ~~and~~coordinating ofthe ~~myeloproliferative~~immune ~~neoplasms,~~response ~~including~~and ~~overproduction of~~killing ~~white blood~~ cells, ~~organomegaly~~infected ~~(e.g.,~~by ~~splenomegaly~~pathogens and ~~hepatomegaly)~~cancer ~~and extramedullary disease~~cells. ~~About~~As ~~15 to 20% of CMML cases progress~~depicted ~~to acute myeloid leukemia~~below, oreach ~~AML.~~of ~~According to~~ the ~~American~~FDA-approved ~~Cancer~~CAR-T ~~Society,~~therapies ~~approximately 1,100 individuals in the United States~~ are ~~newly~~ ~~diagnosed~~currently ~~annually~~a ~~with~~one-time ~~CMML,~~treatment ~~with~~that ~~the~~involves ~~majority~~multiple ~~of these new patients being age 60 or older. These patients are typically unsuitable for stem cell transplants.~~steps:

●

Harvesting white blood cells from the patient’s blood, also known as apheresis;

●

Engineering T-cells within this population to express cancer-specific receptors;

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Increasing and purifying the number of genetically re-engineered T-cells; and

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Infusing the functional cancer-specific T-cells back into the patient to allow for expansion and targeting the cancer cells.

As of the date of this filing, six CAR-T therapies have been approved by FDA: Gilead/Kite’s Yescarta, and Tecartus, Novartis’s Kymriah, Johnson & Johnson’s Carvykti, Bristol Myers Squibb’s Breyanzi and Abecma, which seek to treat forms of B-cell and plasma cell cancers such as various types of NHL, including DLBCL, Follicular Lymphoma (“FL”) Mantle Cell Lymphoma (“MCL”), adult acute lymphoblastic leukemia (“ALL”), and multiple myeloma. Although patients suffering from these aggressive cancers frequently undergo multiple treatments, including chemotherapy, radiation and targeted therapy including stem cell transplants, the five-year survival rate has been severely limited and patients who do not respond to, or have relapsed following at least two courses of standard treatment, have no other treatment options and a very poor outcome. According to multiple sources, specifically US governmental sources, including the Surveillance, Epidemiology, and End Results (“SEER”) program of the National Cancer Institute, which is one source of epidemiologic information on the incidence and survival rates of cancer in the US, we estimate the US incidence of DLBCL to be approximately 24,000 patients annually, FL to be approximately 16,000 patients annually, ALL to be approximately 7,000 patients annually and MCL to be approximately 4,000 patients annually.

The FDA-approved CAR-T therapies have significant limitations. Despite the exciting prospects for treating patients with limited options, significant and potentially life-threatening side-effects are associated with CAR-T therapy, including Immune Effector Cell Associated Neurotoxicity (“ICANS”) and CRS. While there may be individual differences between CAR-T therapy products, the overall toxicity profile is generally consistent with that reported for Yescarta and Tecartus, and it is known that various development-stage BCMA and other CAR-T therapies are hampered by the emergence of ICANS, CRS and other serious and potentially fatal side-effects. In addition, durable efficacy is an area that could be improved upon.

Both ICANS and CRS are caused by a large-scale release of pro-inflammatory cytokines and chemokines induced by the CAR-T therapy and remain significant unmet needs. Because ICANS and CRS can be life-threatening and have proven fatal in many instances, and because each product bears a “Boxed Warning” from FDA (the strictest FDA warning label intended to alert patients and providers about serious and life-threatening risks associated with a particular drug), patients seeking to benefit from CAR-T therapy, generally may only do so if the treatment center is in compliance with the Risk Evaluation and Mitigation Strategy (“REMS”) program required by FDA.

According to the original package inserts for Yescarta and Tecartus, 81% (NHL), 81% (MCL), 87% (ALL) of patients treated in the clinical trial setting experienced ICANS (with up to 35% of cases being severe, or grade >3). The package insert for Yescarta was later updated to include the use of prophylactic corticosteroids across all approved indications. The update was based on the safety update from Cohort 6 of the ZUMA-1 study which showed that in 39 patients, prophylactic or early use of corticosteroids resulted in neurological events (Grade ≥3) in 13% of patients and 0% of the patients had CRS (Grade ≥3). These original rates may be more prevalent in practice. Moreover, based on feedback from leading treatment centers in the US, approximately 30% to 40% of patients receiving CAR-T therapy require admission to the ICU and in some cases require an extended stay, with multiple interventions, including ventilator support and other supportive measures, to be urgently administered to manage these side-effects. Some patients can suffer seizures, coma, brain swelling, heart arrhythmias, organ failure and serious and life-threatening clotting disorders, not only causing more complex and potentially fatal medical consequences, but significantly adding to the cost of patient care. These can be particularly challenging and concerning issues, especially in younger patients.

Our Development Program

InWe abelieve ~~Phase 1 study, 3 of 6 patients with NRAS/KRAS/CBL mutations demonstrated a clinical response to~~ lenzilumab byhas the ~~MDS/MPN~~potential ~~International~~to ~~Working Group criteria. The Phase 1 clinical trial~~improve ~~in patients with CMML identified~~ the ~~Maximum~~efficacy ~~Tolerated~~and ~~Dose~~safety ~~(“MTD”) or recommended Phase 2 dose~~ of ~~lenzilumab,~~CAR-T ~~and~~therapy ~~assessed lenzilumab’s safety, pharmacokinetics,~~ and ~~clinical~~that ~~activity.~~the ~~Final~~use ~~results~~ of ~~this~~lenzilumab ~~study~~may ~~were~~minimize ~~presented~~or ateradicate the ~~2019~~incidence, ~~ASH Annual Meeting and published in blood. Building on this successful Phase 1 study in CMML~~frequency, weduration ~~are running a Phase 2 study in combination~~and/or ~~with~~severity ~~azacitidine~~of inICANS ~~newly diagnosed CMML patients who express NRAS~~and/~~KRAS/CBL~~or ~~mutations~~CRS ~~which~~that ~~are~~frequently ~~known~~appear toin ~~be hypersensitive to GM~~CAR-~~CSF~~T ~~and therefore may lend themselves to responsiveness to lenzilumab treatment~~patients. ~~The~~In ~~Phase 2 study~~addition, ~~known~~lenzilumab asmay ~~“PREcision~~lead ~~Approach~~ to ~~Chronic Myelomonocytic~~an ~~Leukemia”~~improvement ~~or “PREACH-M”, is being conducted~~ in ~~partnership~~durable ~~with the South Australian Health & Medical Research Institute (“SAHMRI”) and the University of Adelaide~~efficacy. The study has begun enrollment at five sites in Australia and the first patient has been dosed. We will provide lenzilumab for this study and the majority of the study costs will be borne by the partner and funded by a grant from the Medical Research Futures Fund, a research fund set up by the Australian Government.

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~~Given~~Accordingly, ~~our~~we ~~interest~~have inidentified ~~developing~~ lenzilumab toas ~~prevent~~a ~~CRS/cytokine~~potential ~~storm~~companion intreatment ~~COVID~~alongside certain CD19-19targeted asCAR-T ~~well~~cell astherapies. inGM-CSF ~~the~~neutralization ~~treatment~~may ofenhance ~~rare~~CAR-T ~~cancers~~proliferation and effector functions and ~~other~~potentially ~~orphan~~confer ~~conditions~~additional ~~such~~benefits asin ~~aGvHD~~terms of durable efficacy and ~~CMML, we~~healthcare ~~believe~~resource ~~that~~utilization. wePreclinical data ~~have~~generated ~~the~~in ~~opportunity~~collaboration towith ~~benefit~~the ~~from~~Mayo ~~various~~Clinic, ~~regulatory~~which ~~and~~was ~~commercial~~published ~~incentives~~in blood, ~~such~~a aspremier ~~orphan~~journal ~~drug~~in ~~exclusivity~~hematology, indicates ~~breakthrough~~that the use of lenzilumab in combination with CAR-T therapy ~~designation,~~may ~~fast~~also ~~track~~enhance ~~designation~~the proliferation and improve the efficacy of CAR-T therapy. This may also result in durable, ~~priority~~or ~~review~~longer ~~and~~term, ~~accelerated~~responses ~~approval~~in CAR-T therapies.

Our Commercial Opportunity

Revenues from the sales of approved CAR-T therapies were valued at approximately $2.19 billion in 2022. We estimate globally over 15,000 patients have been treated with CAR-T therapies. Analysts predict that Yescarta only will reach peak sales in excess of $1.5 billion as additional patients become eligible for treatment. We believe lenzilumab has the ability to transform CAR-T therapy and potentially a broad range of other T-cell engaging therapies, including both autologous and allogeneic cell transplantation. There is a direct correlation between the efficacy of CAR-T therapy and the incidence of life-threatening toxicities, including ICANS and CRS.

We believe that our GM-CSF pathway science, assets and expertise create two technology platforms to assist in the development of next-generation CAR-T therapies:

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Lenzilumab has the potential to be used in combination with any FDA-approved or development stage T-cell therapy, including CAR-T therapy, as well as in combination with other cell therapies such as allogeneic HSCT such as bone marrow transplants, to make these treatments safer and more effective.

●

In addition, our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that may inherently avoid any efficacy/toxicity linkage, thereby potentially preserving the benefits of the CAR-T therapy while reducing or altogether avoiding its serious and potentially life-threatening side-effects.

Ifabotuzumab

Ifabotuzumab is a Humaneered monoclonal antibody, formerly referred to as KB004, which targets the EphA3 receptor, and in which the antibody carbohydrate chains lack fucose, thereby enhancing the targeted cell-killing activity of the antibody. We believe that ifabotuzumab as part of an antibody drug conjugate has the potential for treating solid tumors. In 2006, we entered into a license agreement with Ludwig Institute of Cancer Research (“LICR”) pursuant to which LICR granted certain exclusive rights to the ifabotuzumab prototype (referred to as IIIA4) as well as EphA3 intellectual property.

Ifabotuzumab binds to EphA3, which plays an important role in cell positioning and tissue organization during fetal development but is not thought to be expressed nor play a significant role in healthy adults. EphA3 is a tyrosine kinase receptor, aberrantly expressed on the tumor vasculature and tumor stroma in several solid tumors including melanoma, breast cancer, small and non-small cell lung cancer (“SCLC” and “NSCLC”), colorectal cancer, gastric cancer, renal cancer, glioblastoma multiforme (“GBM”), and prostate cancer, making it an attractive target for a range of cancers. Publications related to certain cancers have indicated that EphA3 tumor cell expression correlates with cancer growth and a poor prognosis. EphA3 appears to be critically involved in maintaining tumor cells in a less differentiated state by modulating mitogen-activated protein kinase signaling. EphA3 knockdown or depletion of EphA3-positive tumor cells may reduce tumorigenic potential to a degree comparable to treatment with a therapeutic radiolabeled EphA3-specific monoclonal antibody. We believe EphA3 is a functional, targetable receptor in solid tumors. A study published in December 2018 in ‘Cancers’ showed that an antibody drug conjugate (“ADC”) comprising IIIA4 (a predecessor monoclonal antibody and prototype for ifabotuzumab) showed significant survival benefit in mice with GBM.

Anti-EphA3 treatment has shown encouraging preclinical results in multiple experiment types, including patient primary tumor cell assays, colony forming assays, and xenograft mouse models. Upon binding to EphA3, ifabotuzumab causes cell killing to occur either through antibody-dependent, cell-mediated cytotoxicity or through direct apoptosis, and in the case of tumor neovasculature, through cell rounding and blood vessel disruption. Given the expression pattern of EphA3 in multiple tumor types, ifabotuzumab may have the potential to kill cancer cells and the tumor stem cell microenvironment, providing for long-term responses while sparing normal cells.

On April 10, 2021, we presented top-line results from the Phase 1 safety and bioimaging trial of ifabotuzumab in patients with GBM at the American Association for Cancer Research 2021 Annual Meeting. The Phase 1 study primarily sought to determine the safety and recommended Phase 2 dose of ifabotuzumab in patients with GBM, the most frequent and lethal primary brain neoplasm, with 5-year survival rates of 10%. There were no dose-limiting toxicities observed and all adverse events were readily manageable. Additional studies are being planned to evaluate ifabotuzumab as an ADC in patients with solid tumors, such as, colon, breast, prostate, and pancreatic cancer. These studies include the Olivia Newton-John Cancer Research Institute which plans to conduct a Phase 1b dose-escalation and imaging study in non-CNS solid tumors that is scheduled to begin in ~~2022~~2023.

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HGEN005

HGEN005 is a Humaneered monoclonal antibody, formerly referred to as KB005, which selectively targets the eosinophil receptor EMR1. HGEN005 is being explored as a potential treatment for a range of eosinophilic diseases including eosinophilic leukemia both as an optimized naked antibody and as the backbone for a novel CAR-T construct.

A major limitation of current eosinophil-targeted therapies is incomplete depletion of tissue eosinophils and/or lack of cell selectivity. Eosinophils are a type of white blood cell. If too many eosinophils are produced in the body, chronic inflammation and tissue and organ damage may result. The origin and development of eosinophilic disorders is mostly due to eosinophils infiltrating tissue. EMR1 is expressed exclusively on eosinophils, making it an ideal target for the treatment of eosinophilic disorders. Regardless of the eosinophilic disorder, mature eosinophils express EMR1 in tissue, blood and bone marrow in patients with eosinophilia. We believe that because of its high selectivity, HGEN005 has significant potential to treat serious eosinophil diseases.

In preclinical work, HGEN005’s anti-EMR1 activity resulted in dramatically enhanced Natural Killer (“NK”) of eosinophils from normal and eosinophilic donors and also induced a rapid and sustained depletion of eosinophils in a non-human primate model without any clinically significant adverse events. The development of HGEN005 is on hold while we focus on lenzilumab and ifabotuzumab.

Intellectual Property

Intellectual property is an important part of our strategy and has been a key focus area for Humanigen. We have and continue to file aggressively on our own inventions and in-license intellectual property and technology as it relates to our therapeutic interests. We believe that we are a leader in the field of GM-CSF neutralization toin ~~ameliorate cytokine storm as it relates to COVID-19~~particular, ~~CAR-T~~ and ~~GvHD~~in targeting EphA3.

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Licensing and Collaborations

The Mayo Foundation for Medical Education and Research

On June 19, 2019, we entered into the Mayo Agreement with the Mayo Foundation. Under the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lacking GM-CSF expression through various gene-editing tools including CRISPR-Cas9. The license covers various patent applications and know-how developed by Mayo Foundation in collaboration with us. These licensed technologies complement and broaden our position in the GM-CSF neutralization space and expand our discovery platform aimed at improving CAR-T to include gene-edited CAR-T cells. The Mayo Agreement requires the payment of milestones and royalties upon the achievement of certain regulatory and commercialization milestones.

The term of the Mayo Agreement runs from May 29, 2019 until the later of: (i) the expiration date of the last to expire of the patent rights granted; or (ii) the conclusion of a period of ten (10) years from the date of the first commercial sale, subject to termination rights specified in the agreement.

The University of Zurich

On July 19, 2019, we entered into an exclusive worldwide license agreement (the “Zurich Agreement”) with the University of Zurich (“UZH”). Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent GvHD through GM-CSF neutralization. The Zurich Agreement covers various patent applications filed by UZH which complement and broaden our position in the application of GM-CSF neutralization and expands our development platform to include improving allogeneic HSCT.

The Zurich Agreement required an initial one-time payment of $100,000, which we paid to UZH on July 29, 2019. The Zurich Agreement also requires the payment of annual license maintenance fees, as well as milestones and royalties upon the achievement of certain regulatory and commercialization milestones.

The term of the Zurich Agreement runs from July 19, 2019 until the expiration date of the longest-lived patent right, subject to termination rights specified in the agreement.

Clinical Trial Agreement with the National Institute of Allergy and Infectious Diseases

On July 24, 2020, we entered into a clinical trial agreement (the “Clinical Trial Agreement”) with NIAID, part of the National Institutes of Health, which is part of the United States Government Department of Health and Human Services, as represented by the Division of Microbiology and Infectious Diseases. Pursuant to the Clinical Trial Agreement, lenzilumab iswas ~~being~~ evaluated in the NIAID-sponsored ACTIV-5/ BET in hospitalized patients with COVID-19. The ACTIV-5/BET-B study protocol was modified to include baseline CRP below 150 mg/L (the CRP subgroup) as the primary analysis population. The ~~ACTIV-5/BET-B~~topline ~~study~~results ~~has~~showed ~~reached~~the ~~its~~trial ~~target~~did ~~enrollment~~not ~~with~~achieve ~~over~~statistical ~~400~~significance ~~patients~~on ~~enrolled~~the primary endpoint, although the topline results did indicate that ~~met~~lenzilumab ~~this~~demonstrated ~~criterion~~a positive trend in mortality. Pursuant to the Clinical Trial Agreement, NIAID served as sponsor and wewas ~~anticipate~~responsible ~~top~~for supervising and overseeing ACTIV-~~line data~~5/BET-B. inWe ~~late~~provided ~~first~~lenzilumab ~~quarter~~to orNIAID ~~early~~without ~~second~~charge ~~quarter~~and in quantities to ensure a sufficient supply of ~~2022~~lenzilumab.

Pursuant to the Clinical Trial Agreement, NIAID serves as sponsor and is responsible for supervising and overseeing ACTIV-5/BET-B. We provided lenzilumab to NIAID without charge and in quantities to ensure a sufficient supply of lenzilumab.12

The Ludwig Institute for Cancer Research

In 2004, we entered into a license agreement with the Ludwig Institute for Cancer Research (“LICR”) pursuant to which LICR granted to us an exclusive license for intellectual property rights and materials related to chimeric anti-GM-CSF antibodies that formed the basis for lenzilumab. Under the agreement, we were granted an exclusive license to develop antibodies related to LICR’s antibodies against GM-CSF. We are responsible for using commercially reasonable efforts to research, develop, and sell lenzilumab. We pay LICR a quarterly license fee and are obligated to pay to LICR a royalty from 1.5% to 3% of net sales of licensed products, subject to certain potential offsets and deductions. Our royalty obligation applies on a country-by-country and licensed product-by-licensed product basis, and will begin on the first commercial sale of a licensed product in a given country and end on the later of the expiration of the last to expire patent covering a licensed product in a given country (which in the U.S. is currently expected in 2029 for the composition of matter and 2038 for methods of use in CAR-T) or 10 years from first commercial sale of such licensed product in the country. We must also pay to LICR a certain percentage of sublicensing revenue received by us. Payments made to LICR under this license for each of the twelve months ended December 31, 2021 and 2020 were $0.1 million.

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The Ludwig Institute for Cancer Research

In 2004, we entered into a license agreement with the Ludwig Institute for Cancer Research (“LICR”) pursuant to which LICR granted to us an exclusive license for intellectual property rights and materials related to chimeric anti-GM-CSF antibodies that formed the basis for lenzilumab. Under the agreement, we were granted an exclusive license to develop antibodies related to LICR’s antibodies against GM-CSF. We are responsible for using commercially reasonable efforts to research, develop, and sell lenzilumab. We pay LICR a quarterly license fee and are obligated to pay to LICR a royalty from 1.5% to 3% of net sales of licensed products, subject to certain potential offsets and deductions. Our royalty obligation applies on a country-by-country and licensed product-by-licensed product basis, and will begin on the first commercial sale of a licensed product in a given country and end on the later of the expiration of the last to expire patent covering a licensed product in a given country (which in the US is currently expected in 2029 for the composition of matter and 2038 for methods of use in CAR-T) or 10 years from first commercial sale of such licensed product in the country. We must also pay to LICR a certain percentage of sublicensing revenue received by us. Payments made to LICR under this license for each of the twelve months ended December 31, 2022 and 2021 were $0.1 million.

Other License Agreements

LICR and ifabotuzumab

In 2006, we entered into a license agreement with LICR pursuant to which LICR granted to us certain exclusive rights to the ifabotuzumab prototype (IIIA4) which targets EphA3 and EphA3-related intellectual property. Under the agreement, we obtained rights to develop and commercialize products made through use of licensed patents and any improvements thereto, including human or Humaneered antibodies that bind to or modulate EphA3. We paid LICR an upfront option fee of $0.05 million and a further $0.05 million upon our exercise of the option for the exclusive license outlined above. We are responsible for contingent milestone payments of less than $2.5 million and royalties of 3% of net sales subject to certain potential offsets and deductions. In addition, we are obligated to pay to LICR a percentage of certain payments we receive from any sublicensee in consideration for a sublicense. Our royalty obligation exists on a country-by-country and licensed product-by-licensed product basis, which will begin on the first commercial sale and end on the later of the expiration of the last to expire patent covering such licensed product in such country, which in the ~~U.S.~~US is currently expected in 2031, or 10 years from first commercial sale of such licensed product in such country.

BioWa and Lonza

In 2010, we entered into a license agreement with BioWa, Inc. (“BioWa”), and Lonza Sales AG (“Lonza”) pursuant to which BioWa and Lonza granted us a non-exclusive, royalty-bearing, sub-licensable license under certain know-how and patents related to antibody expression and antibody-dependent cellular cytotoxicity enhancing technology using BioWa and Lonza’s Potelligent^® CHOK1SV technology. This technology is used to enhance the cell killing capabilities of antibodies and is currently used by us in connection with our development of ifabotuzumab. Under this agreement, we owe annual license fees, milestone payments in connection with certain regulatory and sales milestones and royalties in the low single digits on net sales of products developed under the agreement. The agreement expires upon the expiration of royalty payment obligations under the agreement, is terminable at will by us upon written notice, is terminable by BioWa and Lonza if we challenge or otherwise oppose any licensed patents under the agreement and is terminable by either party upon the occurrence of an uncured material breach or insolvency.

Patents and Trade Secrets

We use a combination of patent, trade secret and other intellectual property protections to protect our product candidates and platforms. We will be able to protect our product candidates from unauthorized use by third parties only to the extent they are covered by valid and enforceable patents or to the extent our technology is effectively maintained as trade secrets. Intellectual property is an important part of our strategy. We have and continue to file aggressively on our own inventions and in-~~license~~licensed intellectual property and technology as it relates to our therapeutic interests. Our success will depend in part on our ability to obtain, maintain, defend and enforce patent rights for and to extend the life of patents covering lenzilumab, ifabotuzumab, HGEN005, our Humaneered technology, and our GM-CSF gene-editing CAR-T platform technologies, to preserve trade secrets and proprietary know how, and to operate without infringing the patents and proprietary rights of third parties. We actively seek patent protection, if available, in the ~~U.S.~~US and select foreign countries for the technology we develop. We have ~~131~~140 registered patents, including 16 registered in the ~~U.S.~~US and ~~115~~124 registered in foreign countries. Of the ~~131~~140 registered patents, ~~107~~101 are owned by us, 929 are owned jointly with a third party and 1510 are exclusively licensed from a third party. We also have 7986 patent applications pending globally, of which 3346 are owned by us, 2013 are owned jointly with a third party and 2627 are exclusively licensed from a third party.

Using our Humaneered technology, we have developed and own two composition of matter U.S. patents covering lenzilumab and related anti-GM-CSF antibodies that provide patent protection through April 2029, a granted composition of matter patent in 15 European countries and certain foreign countries, and have four U.S. patents and nine additional pending patent applications in the U.S., 21 foreign patent applications, and one PCT international patent application covering various methods of treatment, including in the CAR-T space covering a broad and comprehensive range of approaches to neutralizing GM-CSF, including the use of GM-CSF k/o CAR-T cells, which, if granted, are expected to confer protection to at least September 2039. We also have one currently pending foreign patent application that is jointly owned with a third party for anti-EphA3 antibodies and their use, and we developed and own an issued U.S. composition of matter patent covering ifabotuzumab and related anti-EphA3 antibodies, which is currently expected to expire in 2031, and own 22 foreign patents to anti-EphA3 antibodies and therapeutic uses, in addition to owning four U.S. patents to therapeutic methods using anti-EphA3 antibodies, one European patent to be validated in 19 countries, and seven foreign patents owned jointly with a third party covering methods of treatment with anti-EphA3 antibodies. The two U.S. and 45 foreign patents to our Humaneered technology cover methods of producing human antibodies that are very specific for target antigens using only a small region from mouse antibodies.13

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Using our Humaneered technology, we have developed and own two composition of matter US patents covering lenzilumab and related anti-GM-CSF antibodies that provide patent protection through April 2029, a granted composition of matter patent in 15 European countries and certain foreign countries, and have four US patents, one foreign patent, and 14 additional pending patent applications in the US, 55 foreign patent applications, and three PCT international patent application covering various methods of treatment, including in the CAR-T space covering a broad and comprehensive range of approaches to neutralizing GM-CSF, including the use of GM-CSF k/o CAR-T cells, which, if granted, are expected to confer protection to at least September 2039.

We developed and own an issued US composition of matter patent covering ifabotuzumab and related anti-EphA3 antibodies, which is currently expected to expire in 2031, and own 22 foreign patents to anti-EphA3 antibodies and therapeutic uses, in addition to owning three US patents and jointly owning one US patent to therapeutic methods using anti-EphA3 antibodies, two European patents validated in 22 countries, and five foreign patents owned jointly with a third party covering methods of treatment with anti-EphA3 antibodies. The one US and 40 foreign patents to our Humaneered technology cover methods of producing human antibodies that are very specific for target antigens using only a small region from mouse antibodies.

Manufacturing and Raw Materials

We outsource all development activities, including the development of formulation prototypes. We do not have, nor do we plan to have, any manufacturing facilities. Instead, we have adopted a manufacturing strategy of contracting with third party contract manufacturing organizations (“CMOs”) for the manufacture of bulk drug substance (“BDS”) and fill, finish, labeling, packaging and distribution work for our product candidates. We believe our outsourcing approach allows us to maintain a leaner staff and a more flexible infrastructure, allowing us to focus our expertise on developing our products.

15In 2020 and the first half of 2021, we were aggressive in pursuing manufacturing slots for lenzilumab in contemplation of its potential commercialization under an EUA in the US or an equivalent authorization in the UK and EU. Please refer to “Part II, Item 7. Management’s Discussion and Analysis” for a further discussion of the costs we incurred in these efforts. Our production efforts were less successful than we had anticipated, as we experienced shortages of raw materials and critical components necessary for our manufacturing processes, delays in production and availability of manufacturing slots and failures in production at the BDS and DP level resulting in lower than anticipated yields. Further, certain of our CMOs had difficulties in producing BDS within specifications or were unable to produce BDS on a timely basis due to challenges in the supply of materials used in the production process. We have amended, and in some cases canceled, certain of these CMO agreements. More recently, we have settled our disputes with two of our CMOs. See Note 11 to the Consolidated Financial Statements in this Annual Report on Form 10-K for more information on these settlement agreements.

~~Table~~In connection with our realignment to deemphasize the deployment of ~~Contents~~certain resources for the development of lenzilumab for COVID-19, with the exception of one lenzilumab batch in process, we have discontinued the manufacturing of lenzilumab and are consolidating the remaining inventory of lenzilumab bulk drug substance and drug product in a central location for potential future use. We believe we have sufficient drug product for our currently planned clinical trials.

The successful execution of our manufacturing strategy is a key component of our overall business strategy, as we believe that our ability to obtain regulatory approval for lenzilumab to be used commercially depends at least in part on our ability to demonstrate to regulators that we will be able to scale the manufacturing to produce a sufficient quantity of dosages to address the potential demand for the product. Our experience has been that the overall time to manufacture a 2-to-4-thousand-liter batch of lenzilumab BDS at an existing CMO and to complete the fill, finish, labeling and packaging of the vials is approximately 6 to 9 months. Accordingly, our reliance on CMOs requires us to carefully plan the availability of manufacturing slots and the availability of drug for investigation in preclinical and clinical trials and, potential commercialization. Further, our current agreements with CMOs represent large financial commitments, including upfront amounts prior to commencement of manufacturing and progress payments through the course of the manufacturing process and include payments for the initial technology transfer, which takes several months in advance of any manufacturing taking place. For a description of risks related to our manufacturing strategy, including our complete reliance on CMOs, see “Item 1A. Risk Factors.”

In 2020 and the first half of 2021, we were aggressive in pursuing manufacturing slots for lenzilumab in contemplation of its potential commercialization under an EUA in the U.S. or an equivalent authorization in the UK and EU. Please refer to “Part II, Item 7. Management’s Discussion and Analysis” for a further discussion of the costs we incurred in these efforts. Our production efforts were less successful than we had anticipated, as we experienced shortages of raw materials and critical components necessary for our manufacturing processes, delays in production and availability of manufacturing slots and failures in production at the BDS and DP level resulting in lower than anticipated yields. Further, certain of our CMOs had difficulties in producing BDS within specifications or were unable to produce BDS on a timely basis due to challenges in the supply of materials used in the production process.

In addition, MHRA in the UK has advised us that it requires certain validation work to be conducted related to production of lenzilumab prior to potential approval for sale. Guidance from FDA is that validation is not required for materials produced for sale under EUA, that validation could be completed and submitted as part of the subsequent regulatory process and that lenzilumab made prior to validation may be available for sale under an EUA, if FDA were to grant such an authorization. For lenzilumab for which no validation is planned, FDA would rely on a comparability report to ensure lenzilumab would be available for sale under an EUA. As of February 15, 2022, lenzilumab treatments for approximately 67,000 patients were in various stages of the validation process and another approximately 24,000 lenzilumab treatments had been produced, or were in process of being produced, for which we do not plan to complete validation. Another 41,000 treatments are in production at one of our CMOs for which material has not yet been released, and which may require reprocessing prior to release. At this time, it is not possible to predict if these 41,000 treatments would be released and available for sale if authorization or approval for lenzilumab were to be attained.

We have sought to mitigate our financial commitments while continuing to position lenzilumab for a future authorization or approval in the U.S., EU and UK. Our mitigation efforts included the amendment or in some cases cancelation of certain of our agreements with CMOs for future manufacturing work, some of which were contingent on EUA, in an effort to reduce our future spending. We incurred cancellation fees for several of these modifications. We also have disputed several invoices for cancellation fees and for production batches for lenzilumab that had been submitted by CMOs that failed to produce BDS within our stated release specifications, but our mitigation efforts may not be successful to recoup any such loss of lenzilumab BDS or DP. See Item 3. To this Annual Report on Form 10-K and Note 11 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on these disputes. In the event of authorization by MHRA, EMA, or FDA, we anticipate that the demand for commercial product could exceed the in process and planned production of lenzilumab through 2022. We intend to seek additional manufacturing capacity if authorization is obtained. We expect to use a portion of the revenues generated from commercial sale of lenzilumab following receipt of a regulatory authorization to support our efforts to expand production capacity in 2023 and beyond.

Sales and Marketing

We intend to outsource our sales and marketing infrastructure necessary to market and sell our products, if authorized or approved. As our drug candidates progress, we may also seek strategic alliances and partnerships with third parties including those with existing infrastructure and with government bodies.

Competition

We compete in an industry characterized by rapidly advancing technologies, intense competition, a changing regulatory and legislative landscape and a strong emphasis on the benefits of intellectual property protection and regulatory exclusivities. Our competitors include pharmaceutical companies, other biotechnology companies, academic institutions, government agencies and other private and public research organizations. We compete with these parties to develop a potential ~~biologic~~treatment ~~therapies~~for tohematologic ~~treat COVID-19~~cancers, and to ~~make~~develop ~~CAR-T~~potential ~~therapy~~biologic ~~and~~therapies to make allogeneic HSCT ~~safer~~ and ~~more~~CAR-T ~~effective~~therapy safer and tomore ~~develop a potential treatment for hematologic cancers~~effective, in addition to recruiting highly qualified personnel. Our product candidates, if successfully developed and approved, may compete with established therapies, with new treatments that may be introduced by our competitors, including competitors relying to a large extent on our drug approvals or on our biologics approvals, or with generic copies of our product approved by FDA, as bio-similars, referencing our drug products. Many of our potential competitors have substantially greater scientific, research, and product development capabilities, as well as greater financial, marketing, sales and human resources capabilities than we do. In addition, many specialized biotechnology firms have formed collaborations with large, established companies to support the research, development and commercialization of products that may be competitive with ours.

16Competition for the treatment of solid tumors varies by tumor type. Surgery and/or radiation treatment is typically the first-line therapy, followed by chemotherapy. Chemotherapy may be used as front-line treatment in the case of inoperable tumors and targeted therapies may be used as second-line therapy for specific solid tumors that exhibit certain mutations. There are currently no known therapies that target EpAh3 antigen.

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~~The~~Lenzilumab ~~current~~and ~~standard of care for aGvHD is daily systemic steroids, with a patient response rate of approximately 50%.~~ CMML is currently treated via stem cell transplant, surgery or chemotherapy, typically azacytidine or decitabine. Competition for the treatment of solid tumors varies by tumor type. Surgery and/or radiation treatment is typically the first-line therapy, followed by chemotherapy. Chemotherapy may be used as front-line treatment in the case of inoperable tumors and targeted therapies may be used as second-line therapy for specific solid tumors that exhibit certain mutations. There are currently no known therapies that target EpAh3 antigen. competition

~~Lenzilumab~~CMML ~~and~~is ~~COVID~~currently treated via stem cell transplant, surgery or chemotherapy, typically azacytidine or decitabine. According to clinicaltrials.gov, there are a limited number of studies exclusively studying CMML. Most studies that include CMML also include other oncological conditions. Two Phase 2 open-19label ~~competition~~studies are focused exclusively on CMML, exploring the use of cobimetinib (Genentech, Inc.) and ruxolitinib (Incyte Corporation) with each study enrolling 29 patients.

~~There~~Lenzilumab ~~are currently no FDA-approved immunomodulators for the prevention of the hyperinflammatory state associated with COVID-19; however, Emergency Use Authorization has been granted to tocilizumab~~ and ~~baricitinib,~~aGvHD ~~two compounds that are approved for certain inflammatory conditions. The NIH treatment guidelines for therapeutic management of hospitalized adults with COVID-19 (as of December 2021) are shown below:~~competition

17The current standard of care for aGvHD is systemic steroids and for steroid refractory disease, ruxolitinib. Abatacept is approved for prevention of aGvHD in combination with MTX and CNI.

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Lenzilumab and CAR-T-related toxicities competition

~~There are currently no FDA-approved products for the prevention or treatment of ICANS or for the prevention of CRS associated with CAR-T therapy.~~ Medicines used to manage ICANS and CRS, such as tocilizumab and corticosteroids, have not adequately controlled the side-effects, and steroids may have a detrimental impact on the efficacy of the CAR-T therapy itself while tocilizumab may increase the risk of CAR-T therapy ~~induced~~ induced ICANS and is correlated with an increased risk of infections, including severe infections. Further, these medicines have not undergone prospective clinical trials for use in this patient population. Tocilizumab is ~~only approved for the treatment of severe cases of CRS, but is~~ not approved for prevention of CRS, nor is it approved for either prevention or treatment of ICANS.

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Other experimental approaches being explored include development of next-generation, CAR-T constructs, including introducing suicide genes into CAR-T cells using herpes simplex virus thymidine kinase (“HSV-TK”) or inducible caspase-9 (“iCasp9”) genes with “on / off” switches, incorporating a co-stimulatory molecule into T-cells, using RNA-guided DNA targeting technology or other epitope-based / gene-editing technology. While it is possible that some of these approaches could result in lower rates of ICANS and/or CRS, preliminary data suggests that improvements in the safety profile are associated with lower rates of efficacy and durable response. This is not surprising given the linkage that has been shown to exist between CAR-T cell expansion, efficacy and toxicity. There are also several other anti-GM-CSF compounds that are in various stages of development, however the focus of these compounds appears to be in chronic autoimmune disorders such as rheumatoid arthritis, ankylosing spondylitis, giant cell arteritis and related disorders.

Government Regulation

Drug Development and Approval in the ~~U.S.~~US

As a biopharmaceutical company operating in the ~~U.S.~~US, we are subject to extensive regulation by FDA and by other federal, state, and local regulatory agencies. FDA regulates biological products such as our product candidates under the ~~U.S.~~US Federal Food and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”) and their implementing regulations. These laws and regulations set forth, among other things, requirements for preclinical and clinical testing, development, approval, labeling, manufacture, storage, record keeping, reporting, distribution, import, export, advertising, and promotion of our products and product candidates. Under the PHSA, in most circumstances an FDA-approved BLA is required to market a biological product, or biologic, in the ~~U.S.~~US Biologics receive 12 years market exclusivity from first licensure. During the COVID-19 public health emergency, however, FDA has certain authority, under the FDCA and The Pandemic and All Hazards Preparedness Reauthorization Act of 2013, to bypass the BLA pathway and issue an EUA for certain medical products, including biologics, intended for use during the emergency. An EUA, once issued for a biologic, lasts only for a limited amount of time, after which a BLA will be required for continued marketing.

Emergency Use Authorization

FDA’s EUA authority allows the agency to facilitate greater availability and use of medical countermeasures, including biologics, when the Secretary of Health and Human Services (“HHS”) has declared that circumstances exist that justify such authorization. Under such circumstances, companies may request an EUA to permit the marketing and use of a product before that product has received FDA approval, or to permit the otherwise unapproved use of an approved product. FDA may only issue an EUA if it concludes that: the chemical, biological, radiological or nuclear agent referred to in the HHS Secretary’s public health emergency declaration is capable of causing a serious or life-threatening disease; the product at issue “may be effective” to prevent, diagnose, or treat serious or life-threatening diseases or conditions that can be caused by that agent or to mitigate a disease or condition caused by an FDA-regulated product used to diagnose, treat, or prevent a disease or condition caused by that agent; and that there are no adequate, approved, and available alternatives. The EUA “may be effective” standard requires a lower level of evidence than the “effectiveness” standard required for a BLA.

~~The~~An EUA ~~“may~~is benot ~~effective”~~a ~~standard~~permanent marketing authorization. ~~requires~~Rather, aan ~~lower~~EUA ~~level~~may ofbe ~~evidence~~terminated ~~than~~once the ~~“effectiveness”~~Secretary ~~standard~~of ~~required~~HHS ~~for~~declares athat ~~BLA.~~the ~~FDA~~public ~~assesses~~health ~~the~~emergency ~~potential~~is ~~effectiveness of~~terminated; when a ~~possible~~product that is marketed under an EUA ~~product~~obtains onfull amarketing ~~case-by-case~~approval ~~basis~~(for ~~using~~example, under a ~~risk-benefit~~BLA); ~~analysis.~~or Inwhen ~~deciding~~circumstances ~~whether~~change to(such ~~authorize~~as, ~~emergency~~for ~~use~~example, new ~~FDA~~data ~~will evaluate~~emerge ~~whether~~that change the ~~known~~risk-benefit ~~and~~calculation). ~~potential~~As ~~benefits~~a ofpractical ~~the~~matter, ~~product~~where ~~outweigh~~ the ~~known~~HHS ~~and~~Secretary ~~potential~~declares ~~risks,~~an ~~taking~~end ~~into~~to ~~account~~ the ~~totality~~public ofhealth ~~the~~emergency ~~scientific~~that ~~evidence.~~gave ~~Such~~rise ~~evidence~~to ~~may~~FDA’s ~~include~~EUA ~~clinical trial data~~authority, inthe ~~vivo~~Secretary ~~efficacy~~must ~~data~~provide ~~from~~advance ~~animal~~notice ~~models,~~that ~~and~~allows infor ~~vitro~~disposition ~~data.~~of ~~Even~~an ~~where~~unapproved a product. ~~“may~~As beof ~~effective,”~~late ~~FDA~~January ~~may~~2022, ~~only~~the ~~issue~~Biden anAdministration ~~EUA~~has ifindicated ~~there~~it isintends noto ~~adequate,~~let ~~approved,~~the ~~and~~coronavirus ~~available~~public ~~alternative~~health toemergency ~~the~~expire ~~candidate~~in ~~product,~~May ~~either~~2023. ~~because~~If ~~there~~and iswhen nothis ~~alternative~~public ~~product~~health atemergency ~~all~~is ~~or because of~~terminated, ~~for~~the ~~example,~~EUA anlandscape ~~insufficient~~will ~~supply~~change. ofProducts currently anmarketed ~~approved~~under ~~alternative~~a toCOVID-related ~~meet~~EUA ~~the~~will ~~emergency~~eventually ~~need;~~lose ~~contraindications~~their ~~for~~marketing ~~use~~eligibility, ofalthough anHHS ~~approved~~will ~~product~~provide inadvance ~~certain~~notice ~~populations~~and oris ~~circumstances;~~likely orto ~~the~~allow ~~agent~~time atfor ~~issue~~the indisposition ~~the~~of ~~public~~unapproved ~~health~~products ~~emergency~~and/or istheir ~~resistant~~transition to ~~approved~~a ~~and~~different ~~available products~~status.

When an EUA is issued, FDA will typically limit or restrict the amount of promotional activity that may be conducted for the medical product granted an EUA and may reissue an EUA to change the terms based on a change in circumstances, such as the emergence of new clinical trial data that change the risk-versus-benefit analysis.15

An EUA is not a permanent marketing authorization. Rather, an EUA may be terminated once the Secretary of HHS declares that the public health emergency is terminated; when a product that is marketed under an EUA obtains full marketing approval (for example, under a BLA); or when circumstances change (such as, for example, new data emerge that change the risk-benefit calculation). As a practical matter, where the HHS Secretary declares an end to the public health emergency that gave rise to FDA’s EUA authority, the Secretary must provide advance notice that allows for disposition of an unapproved product.

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Applications Relying on the Applicant’s Clinical Data

The approval process for a BLA under the PHSA requires the conduct of extensive studies and the submission of large amounts of data by the applicant. The biologic development process for these applications will generally include the following phases:

Preclinical Testing. Before testing any new biologic in human subjects in the ~~U.S.~~US, a company must generate extensive preclinical data. Preclinical testing generally includes ~~laboratory~~ laboratory evaluation of product chemistry and formulation, as well as toxicological and pharmacological studies in several animal species to assess the quality and safety of the product. Animal studies must be performed in compliance with FDA’s Good Laboratory Practice (“GLP”) regulations and the ~~U.S.~~US Department of Agriculture’s Animal Welfare Act.

IND Application. Human clinical trials in the ~~U.S.~~US cannot commence until an IND application is submitted and becomes effective. A company must submit preclinical testing results to FDA as part of the IND application, and FDA must evaluate whether there is an adequate basis for testing the product in initial clinical studies in human volunteers. Unless FDA raises concerns, the IND application becomes effective 30 days following its receipt by FDA. Once human clinical trials have commenced, FDA may stop the clinical trials by placing them on “clinical hold” because of concerns about the safety of the product being tested, or for other reasons.

Clinical Trials. Clinical trials involve the administration of the product to healthy human volunteers or to patients, under the supervision of a qualified investigator. The conduct of clinical trials is subject to extensive regulation, including compliance with FDA’s bioresearch monitoring regulations and Good Clinical Practice (“GCP”) requirements, which establish standards for conducting, recording data from, and reporting the results of clinical trials. GCP requirements are intended to assure that the data and reported results are credible and accurate, and that the rights, safety, and well-being of study participants are protected.

Clinical trials must be conducted under protocols that detail the study objectives, parameters for monitoring safety, and the efficacy criteria, if any, to be evaluated. Each protocol is submitted to FDA as part of the IND application. In addition, each clinical trial must be reviewed, approved, and conducted under the auspices of an Institutional Review Board (“IRB”), at the institution conducting the clinical trial. Companies sponsoring the clinical trials, investigators, and IRBs also must comply with regulations and guidelines for obtaining informed consent from the study subjects, complying with the protocol and investigational plan, adequately monitoring the clinical trial, and timely reporting of adverse events. Foreign studies conducted under an IND application must meet the same requirements that apply to studies being conducted in the UUS.S. Data from a foreign study not conducted under an IND application may be submitted in support of a BLA if the study was conducted in accordance with GCP and FDA is able to validate the data. A study sponsor is required to publicly post certain details about active clinical trials and clinical trial results on the government website clinicaltrials.gov.

Human clinical trials are typically conducted in three sequential phases, although the phases may overlap with one another and, notably, in the CAR-T setting, FDA has granted approval to all ~~five~~six currently marketed CAR-T therapies (Gilead/Kite’s Yescarta, and Tecartus, Novartis’s Kymriah, Johnson & Johnson’s Carvykti, and Bristol Myers Squibb’s Breyanzi and Abecma) based on Phase 2 data and to tocilizumab without any prospective data in the CAR-T setting:

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Phase 1 clinical trials include the initial administration of the investigational product to humans, typically to a small group of healthy human subjects, but occasionally to a group of patients with the targeted disease or disorder. Phase I clinical trials generally are intended to determine the metabolism and pharmacologic actions of the product, the side-effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

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Phase 2 clinical trials generally are controlled studies that involve a relatively small sample of the intended patient population and are designed to develop data regarding the product’s effectiveness, to determine dose response and the optimal dose range, and to gather additional information relating to safety and potential adverse effects.

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Phase 3 clinical trials are conducted after preliminary evidence of effectiveness has been obtained and are intended to gather additional information about safety and effectiveness necessary to evaluate the product’s overall risk-benefit profile, and to provide a basis for physician labeling. Generally, Phase 3 clinical development programs consist of expanded, large-scale studies of patients with the target disease or disorder to obtain statistical evidence of the efficacy and safety of the drug at the proposed dosing regimen, or with the safety, purity, and potency of a biological product.

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FDA does not always require every approved therapy to complete Phase 1 through 3 studies to secure approval. Approval through expedited routes is at the discretion of FDA.

The sponsoring company, FDA, or the IRB may suspend or terminate a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk. Further, success in early-stage clinical trials does not assure success in later-stage clinical trials. Data obtained from clinical activities are not always conclusive and may be subject to alternative interpretations that could delay, limit, or prevent regulatory approval.

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BLA Submission and Review

After completing clinical testing of an investigational biologic product, a sponsor must prepare and submit a BLA for review and approval by FDA. A BLA is a comprehensive, multi-volume application that must include, among other things, sufficient data establishing the safety, purity and potency of the proposed biological product for its intended indication. The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling. When a BLA is submitted, FDA conducts a preliminary review to determine whether the application is sufficiently complete to be accepted for filing. If it is not, FDA may refuse to accept the application for filing and may request additional information, in which case the application must be resubmitted with the supplemental information and review of the application is delayed.

FDA performance goals, which are target dates and other aspirational measures of agency performance to which the agency, Congressional representatives, and industry agree through negotiations that occur every five years, generally provide for action BLA applications within 10 months of submission or 10 months from acceptance for filing for an original BLA. FDA is not expected to meet those target dates for all applications, however, and the deadline may be extended in certain circumstances, such as when the applicant submits new data late in the review period. In practice, the review process is often significantly extended by FDA requests for additional information or clarification. In some circumstances, FDA can expedite the review of new biologics deemed to qualify for priority review, such as those intended to treat serious or life-threatening conditions that demonstrate the potential to address unmet medical needs. In those cases, the targeted action date is six months from submission, or for biologics constituting original biological products, six months from the date that FDA accepts the application for filing.16

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FDA performance goals, which are target dates and other aspirational measures of agency performance to which the agency, Congressional representatives, and industry agree through negotiations that occur every five years, generally provide for action on BLA applications within 10 months of submission or 10 months from acceptance for filing for an original BLA. FDA is not expected to meet those target dates for all applications, however, and the deadline may be extended in certain circumstances, such as when the applicant submits new data late in the review period. In practice, the review process is often significantly extended by FDA requests for additional information or clarification. In some circumstances, FDA can expedite the review of new biologics deemed to qualify for priority review, such as those intended to treat serious or life-threatening conditions that demonstrate the potential to address unmet medical needs. In those cases, the targeted action date is six months from submission, or for biologics constituting original biological products, six months from the date that FDA accepts the application for filing.

As part of its review, FDA may refer a BLA to an advisory committee for evaluation and a recommendation as to whether the application should be approved. Although FDA is not bound by the recommendation of an advisory committee, the agency usually has followed such recommendations. FDA may also determine that a REMS program is necessary to ensure that the benefits of a new product outweigh its risks, and that the product can therefore be approved. A REMS program may include various elements, ranging from a medication guide or patient package insert to limitations on who may prescribe or dispense the product, depending on what FDA considers necessary for the safe use of the product. Under the Pediatric Research Equity Act, a BLA must include an assessment, generally based on clinical study data, of the safety and effectiveness of the subject drug or biological product in relevant pediatric populations, unless the requirement is waived or deferred. Receiving orphan drug designation from FDA is one situation where such a requirement may be waived.

After review of a BLA, FDA may determine that the product cannot be approved, or may determine that it can only be approved if the applicant cures deficiencies in the application, in which case the agency endeavors to provide the applicant with a complete list of the deficiencies in correspondence known as a Complete Response Letter (“CRL”). A CRL may request additional information, including additional preclinical or clinical data. Even if such additional information and data are submitted, FDA may decide that the BLA still does not meet the standards for approval. Data from clinical trials are not always conclusive and FDA may interpret data differently than the sponsor interprets them. Additionally, as a condition of approval, FDA may impose restrictions that could affect the commercial success of a drug or require post-approval commitments, including the completion within a specified time period of additional clinical studies, which often are referred to as “Phase IV” studies or “post-marketing requirements.” Obtaining regulatory approval often takes several years, involves the expenditure of substantial resources, and depends on a number of factors, including the severity of the disease in question, the availability of alternative treatments, and the risks and benefits demonstrated in clinical trials.

Post-approval modifications to the drug or biologic product, such as changes in indications, labeling, or manufacturing processes or facilities, may require a sponsor to develop additional data or conduct additional preclinical or clinical trials. The proposed changes would need to be submitted in a new or supplemental BLA, which would then require FDA approval.

Regulatory Exclusivities

Biologics Price Competition and Innovation Act

In 2010, the Biologics Price Competition and Innovation Act (“BPCIA”) was enacted, creating an abbreviated approval pathway for biologic products that are biosimilar to, and possibly interchangeable with, reference biological products licensed under a BLA. The BPCIA also provides innovator manufacturers of original reference biological products 12 years of exclusive use from first licensure before biosimilar versions can be licensed in the UUS.S. This means that FDA may not approve an application for a biosimilar version of a reference biological product until 12 years ~~after~~ after the date of first licensure of the reference biological product (with a potential six-month extension of exclusivity if certain ~~pediatric~~ pediatric studies are conducted and the results reported to FDA), although a biosimilar application may be submitted four years after the date of first licensure of the reference biological product. Additionally, the BPCIA establishes procedures by which the biosimilar ~~applicant~~ applicant must provide information about its application and product to the reference product sponsor, and by which information about ~~potentially~~ potentially relevant patents is shared and litigation over patents may proceed in advance of approval of the biosimilar product, although the interpretation of those procedures has been subject to litigation and appears to continue to evolve. The BPCIA also provides a period of exclusivity for the first biosimilar to be determined by FDA to be interchangeable with the reference product.

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FDA approved the first biosimilar product under the BPCIA in 2015, and the agency continues to refine the procedures and standards it will apply in implementing this approval pathway. FDA has released guidance documents interpreting specific aspects of the BPCIA in the years since. We would expect lenzilumab, ifabotuzumab and HGEN005, as biologics, to each receive at least 12 years exclusivity from first licensure if they are approved.

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Pediatric Studies and Exclusivity

Under the Pediatric Research Equity Act, a BLA must contain data adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests and other information required by regulation. The applicant, FDA, and FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan. FDA or the applicant may request an amendment to the plan at any time.

For products intended to treat a serious or life-threatening disease or condition, FDA must, upon the request of an applicant, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addition, FDA will meet early in the development process to discuss pediatric study plans with sponsors and FDA must meet with sponsors by no later than the end-of-Phase I meeting for serious or life-threatening diseases and by no later than ninety (90) days after FDA’s receipt of the study plan.

FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after licensing of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in Food and Drug Administration Safety and Innovation Act (“FDASIA”). Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation.

The FDA Reauthorization Act of 2017 established new requirements to govern certain molecularly targeted cancer indications. Any company that submits a BLA three years after the date of enactment of that statute must submit pediatric assessments with the BLA if the biologic is intended for the treatment of an adult cancer and is directed at a molecular target that FDA determines to be substantially relevant to the growth or progression of a pediatric cancer. The investigation must be designed to yield clinically meaningful pediatric study data regarding the dosing, safety and preliminary potency to inform pediatric labeling for the product. Deferrals and waivers as described above are also available.

Pediatric exclusivity is another type of exclusivity in the ~~U.S.~~US and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by a further six months. This is not a patent term extension, but it effectively extends the regulatory period during which FDA cannot license another application.

Orphan Drug Designation

The Orphan Drug Act provides incentives for the development of therapeutic products intended to treat rare diseases or conditions. Rare diseases and conditions generally are those affecting less than 200,000 individuals in the ~~U.S.~~US, but also include diseases or conditions affecting more than 200,000 individuals in the ~~U.S. if~~US if there is no reasonable expectation that the cost of developing and making available in the ~~U.S.~~US a drug for such disease or condition ~~will~~ will be recovered from sales in the ~~U.S.~~US of such product.

If a sponsor demonstrates that a therapeutic product, including a biological product, is intended to treat a rare disease or condition, and meets certain other criteria, FDA grants orphan drug designation to the product for that use. FDA may grant multiple orphan designations to different companies developing the same product for the same indication, until the one company is the first to be able to secure successful approval for that product. The first product approved with an orphan drug designated indication is granted seven years of orphan drug exclusivity from the date of approval for that indication. During that period, FDA generally may not approve any other application for the same product for the same indication, although there are exceptions, most notably when the later product is shown to be clinically superior to the product with exclusivity. FDA can also revoke a product’s orphan drug exclusivity under certain circumstances, including when the holder of the approved orphan drug application is unable to assure the availability of sufficient quantities of the product to meet patient needs.

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A sponsor of a product application that has received an orphan drug designation is also granted tax incentives for clinical research undertaken to support the application. In addition, FDA will typically coordinate with the sponsor on research study design for an orphan drug and may exercise its discretion to grant marketing approval based on more limited product safety and efficacy data than would ordinarily be required, based on the limited size of the applicable patient population.

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Expedited Programs for Serious Conditions

FDA has implemented a number of expedited programs to help ensure that therapies for serious or life-threatening conditions, and for which there is unmet medical need, are approved and available to patients as soon as it can be concluded that the therapies’ benefits justify their risks. Among these programs are the following:

Fast Track Designation

FDA may designate a product for fast-track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition and where non-clinical or clinical data demonstrates the potential to address unmet medical need for such a disease or condition. A product can also receive fast track review if it receives breakthrough therapy designation.

For fast-track products, sponsors may have greater interactions with FDA and FDA may initiate review of sections of a fast-track product’s application before the application is complete, also referred to as a ‘rolling review’. This rolling review may be available if FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast-track product may be effective. The sponsor must also provide, and FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees. Furthermore, FDA’s time period goal for reviewing a fast-track application does not begin until the last section of the complete application is submitted. Finally, the fast-track designation may be withdrawn by FDA if FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Breakthrough Therapy Designation

A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the features of fast-track designation, as well as more intensive FDA interaction and guidance. FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design efficient clinical trials.

Accelerated Approval

Under the accelerated approval pathway, FDA may approve a drug or biologic based on a surrogate endpoint that is reasonably likely to predict clinical benefit; qualifying products must target a serious or life-threatening illness and provide meaningful therapeutic benefit to patients over existing treatments. In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4IV or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm a clinical benefit during post-marketing studies, would allow FDA to withdraw the product from the market on an expedited basis. All promotional materials for product candidates approved under accelerated regulations are subject to prior review by FDA.

Priority Review

FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. FDA generally determines, on a case-by-case basis, whether the proposed product represents a significant improvement in safety and effectiveness when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such applications and will shorten FDA’s goal for acting on a marketing application from the standard targeted ten months to a target of six months review.

23Created in 2012 under the FDASIA and extended with the 21st Century Cures Act in 2016, FDA is authorized under section 529 of the FDCA to grant a PRV to BLA sponsors receiving FDA approval for a product to treat a rare pediatric disease, defined as a disease that affects fewer than 200,000 individuals in the US, and where more than 50% of the patients affected are aged from birth to 18 years. We believe that our product candidates which may assist with the treatment of rare pediatric cancers or other rare pediatric diseases may qualify for a PRV under this program, depending on the indication.

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Created in 2012 under the FDASIA and extended with the 21st Century Cures Act in 2016, FDA is authorized under section 529 of the FDCA to grant a PRV to BLA sponsors receiving FDA approval for a product to treat a rare pediatric disease, defined as a disease that affects fewer than 200,000 individuals in the U.S., and where more than 50% of the patients affected are aged from birth to 18 years. We believe that our product candidates which may assist with the treatment of rare pediatric cancers or other rare pediatric diseases may qualify for a PRV under this program, depending on the indication.

The PRV program allows the voucher holder to obtain priority review for a product application that would otherwise not receive priority review, shortening FDA’s target review period to a targeted six months following acceptance of filing of an NDA or BLA, or four months shorter than the standard review period. The voucher may be used by the sponsor who receives it, or it may be sold to another sponsor for use in that sponsor’s own marketing application. The sponsor who uses the voucher is required to pay additional user fees on top of the standard user fee for reviewing an NDA or BLA.

We anticipate submitting applications for one or more of these expedited programs and the targeted therapeutic indications.

Regenerative Medicine Advanced Therapy Designation

Recently, through the 21st Century Cures Act (the “Cures Act”), Congress also established another expedited program, called a RMAT designation. The Cures Act directs FDA to facilitate an efficient development program for and expedite review of RMATs. To qualify for this program, the product must be a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or a combination of such products, and not a product solely regulated as a human cell and tissue product. The product must be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and preliminary clinical evidence must indicate that the product has the potential to address an unmet need for such disease or condition. Advantages of the RMAT designation include all the benefits of the fast track and breakthrough therapy designation programs, including early interactions with FDA. These early interactions may be used to discuss potential surrogate or intermediate endpoints to support accelerated approval.

Post-Licensing Regulation

Once a BLA is approved and a product marketed, a sponsor will be required to comply with all regular post-licensing regulatory requirements as well as any post-licensing requirements that FDA may have imposed as part of the licensing process. The sponsor will be required to report, among other things, certain adverse reactions and manufacturing problems to FDA, provide updated safety and potency or efficacy information and comply with requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their subcontractors are required to register their establishments with FDA and certain state agencies and are subject to periodic unannounced inspections by FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP regulations, which impose certain procedural and documentation requirements upon manufacturers. Changes to the manufacturing processes are strictly regulated and often require prior FDA approval before being implemented. Accordingly, the sponsor and its third-party manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliance with cGMP regulations and other regulatory requirements.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act (“PDMA”) and its implementing regulations, as well as the Drug Supply Chain Security Act (“DSCA”), which regulate the distribution and tracing of prescription drug samples at the federal level and set minimum standards for the regulation of distributors by the states. The PDMA, its implementing regulations and state laws limit the distribution of prescription pharmaceutical product samples, and the DSCA imposes requirements to ensure accountability in distribution and to identify and remove counterfeit and other illegitimate products from the market.

Drug Development and Approval in Australia, the European Union and United Kingdom

In order to market a drug product outside of the United States, a company must comply with a variety of foreign regulatory requirements governing clinical studies, product approval, and commercial sale and distribution of the product. Regardless of whether a company obtains FDA approval for the product, it must obtain any necessary approvals from foreign regulatory authorities prior to commencing clinical trials or marketing the product in the relevant countries. The approval process and regulatory requirements vary significantly across jurisdictions, and the time to approval and marketing may be longer or shorter than that required for FDA approval.

European Union

The process governing approval of medicinal products in the European Union generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication. It also requires the submission to the relevant competent authorities of a marketing authorization application, or MAA, and granting of a marketing authorization by these authorities before the product can be marketed and sold in the EU. As in the United States, the EU also has a standard marketing authorization approval process and a conditional authorization process that can be used to bring medicine to the market more quickly during a public health emergency.

24As in the US, companies may apply for designation of a product as an orphan drug for the treatment of a specific indication in the EU before the application for marketing authorization is made. Orphan drugs in Europe receive economic and marketing benefits, including up to 11 years of exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.

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~~The EU’s~~In ~~Clinical~~the ~~Trials~~EU, ~~Regulation~~companies developing ~~(“CTR”)~~a ~~went~~new ~~into~~medicinal ~~effect~~product onmust ~~January~~agree ~~31,~~to ~~2022.~~a ~~The~~Pediatric ~~CTR~~Investigation ~~repeals~~Plan ~~the Clinical Trials Directive~~ (“~~CTD~~PIP”) ~~and~~with ~~national~~EMA ~~implementing~~and ~~legislation~~must inconduct ~~EU Member States, which previously regulated~~ pediatric clinical trials in ~~the~~accordance ~~EU.~~with ~~The evaluation,~~that ~~authorization~~PIP, ~~and~~unless ~~supervision~~a ~~of clinical~~deferral ~~trials are~~or ~~the~~waiver ~~responsibilities~~applies, ~~of EU Member States and European Economic Area~~ (~~EEA) countries~~e.g., ~~Prior~~because to the ~~CTR,~~relevant ~~clinical~~disease ~~trial~~or ~~sponsors~~condition ~~had~~occurs only toin ~~submit~~adults). ~~clinical~~Products ~~trial~~that ~~applications~~are ~~separately~~granted toa ~~regulatory~~marketing ~~authorities in~~authorization ~~each~~on ~~country~~the tobasis ~~gain~~of ~~regulatory~~the ~~approval~~pediatric ~~to conduct~~ clinical trials. ~~The~~conducted ~~new~~in ~~CTR~~accordance with ~~aims~~the toPIP ~~harmonize~~are ~~the~~eligible ~~process~~ for ~~assessment~~a ~~and~~six-month ~~supervision~~ extension of ~~clinical~~the ~~trials~~protection byunder ~~enabling sponsors to submit~~ a ~~single~~supplementary ~~online~~protection ~~application~~certificate ~~for~~(if ~~approval~~any tois ~~run~~in aeffect at ~~clinical~~the ~~trial~~time inof ~~several~~approval) ~~European countries~~or, ~~making~~in itthe ~~more~~case ~~efficient~~of toorphan ~~carry~~medicinal ~~out~~products, ~~such~~a ~~multinational trials. A three~~two-year ~~phased-in~~extension ~~transition~~of ~~period~~the ~~has~~orphan ~~been~~market ~~established~~exclusivity.

Traditional marketing authorization in the EU may be obtained under a centralized procedure, a decentralized procedure, or a mutual recognition procedure. The data requirements and standards governing drug authorization are the same in the EU regardless of the authorization route.

The centralized procedure provides for a grant of a single marketing authorization that is valid for all EU Member States. Under the centralized procedure, drug companies submit a single marketing authorization application to European Medicines Agency (“EMA”). EMA’s Committee for Medicinal Products for Human Use (“CMPH”) will carry out a scientific assessment of the application and recommend whether or not the drug should be marketed. The European Commission will then make a legally binding decision based on the CMPH recommendation. Once granted by the European Commission, the centralized marketing authorization is valid in all EU Member States and in European Economic Area countries, although decisions about pricing and reimbursement will take place at the national and regional level before a medicine will be made available in a particular EU country. The centralized procedure is mandatory for drugs that contain a new active substance to treat certain condition (such as cancer); drugs derived from biotechnology processes, such as genetic engineering; advanced-therapy medicines, such as gene-therapy; orphan medicines for rare diseases; and some veterinary medicines. It is optional for other drugs.

The decentralized procedure allows an applicant to apply for simultaneous authorization by more than one EU Member State where a drug product has not yet been authorized by any EU Member State and does not fall within the mandatory scope of the centralized procedure. Under the decentralized procedure, one of the proposed EU Member States is asked by the applicant to act as a Reference Member State (“RMS”). The RMS conducts the initial evaluation of the product and issues a draft assessment report and related materials. The assessment report is submitted to the other “Concerned Member States” (“CMS”) who must decide whether to approve the report and related materials or to ask further questions and/or raise objections. If all issues are resolved and the application is successful, each Member State will then issue a Marketing Authorization for the product permitting it to be marketed in their country. If a CMS cannot approve the assessment report and related materials due to concerns regarding potential serious risk to public health, disputed elements may be referred to the European Commission, whose decision is binding on all Member States.

Finally, the Mutual Recognition Procedure must be used when a product has already been authorized in at least one Member State on a national basis and the Marketing Authorization Holder wishes to obtain a marketing authorization for the same product in at least one other Member State. The Member State that has already authorized the product (known as the RMS) submits its evaluation of the product to one or more other Concerned Member States, which are then asked to mutually recognize the marketing authorization of the RMS. If the application it successful, the Concerned Member State(s) will then issue a marketing authorization permitting the marketing of the product in their country.

As in the U.S., companies may apply for designation of a product as an orphan drug for the treatment of a specific indication in the EU before the application for marketing authorization is made. Orphan drugs in Europe enjoy economic and marketing benefits, including up to 11 years of exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.

In the EU, companies developing a new medicinal product must agree to a Pediatric Investigation Plan (“PIP”) with EMA and must conduct pediatric clinical trials in accordance with that PIP, unless a deferral or waiver applies, (e.g., because the relevant disease or condition occurs only in adults). The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two-year extension of the orphan market exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

European Union – Conditional Marketing Authorization

The EMA may grant a conditional marketing authorization for medicines that address unmet needs, on the basis of less comprehensive clinical data than normally required, where the benefit of immediate availability of the medicine outweighs the risk inherent in the fact that additional data are still required. Drugs for human use, including orphan drugs, are eligible for conditional marketing authorization if they are intended to treat, prevent, or diagnose serious debilitating or life-threatening diseases, if: (1) the risk-benefit balance of the product is positive; (2) it is likely that the applicant will be in a position to provide the required comprehensive clinical study data; (3) unmet medical needs will be fulfilled; and (4) the benefit to the public health of the immediate availability on the market of the product outweighs the risk inherent in the need for additional data. Conditional marketing authorization, which may specify additional requirements regarding completion of ongoing or new studies and collection of pharmacovigilance data, is valid for one year, and may be renewed annually if the risk-benefit balance remains positive, and after assessment of the need for additional or modified conditions.

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During the COVID-19 pandemic, EMA is using the conditional marketing authorization procedure to expedite the approval of safe and effective COVID-19 treatments and vaccines in the EU. In a public health emergency such as the pandemic, the conditional marketing authorization procedure can be combined with a rolling review of data during the development of a promising medication to further expedite evaluation.

The United Kingdom

Since the exit of the UK from the European Union, Great Britain (England, Scotland, and Wales) is no longer covered by EU procedures for the grant of marketing authorizations and a separate marketing authorization will be required to market drugs (Northern Ireland is covered by the centralized authorization procedure and can be covered under the decentralized or mutual recognition procedures). It will be necessary for applicants to make a separate application to the UK Medicines and Healthcare products Regulatory Agency ("MHRA") for a UK marketing authorization. For a period of two years from January 1, 2021, MHRA may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization. A separate application, however, is still required. There is currently no procedure for mutual EU/UK recognition of new medicinal products.

MHRA has introduced a national conditional marketing authorization scheme for new drugs in Great Britain. This scheme has the same eligibility criteria as the EU scheme and is intended for drugs that fulfill an unmet medical need, such as drugs for serious and life-threatening diseases where no satisfactory treatment methods are available or where the product offers a major therapeutic advantage. MHRA may grant a conditional marketing authorization where comprehensive clinical data is not yet complete, but it is judged that such data will become available soon. The marketing authorization application must still contain adequate evidence of safety and efficacy to enable MHRA to conclude that the risk-benefit balance of the drug is positive. MHRA may take into account the designation by EMA (or another jurisdiction) of a drug as eligible for conditional marketing authorization, but MHRA will make the final decision on eligibility of the product under the Great Britain framework. Conditional marketing authorizations will be valid for one year and will be renewable annually.

With the exit of the UK from the European Union, the UK will not be implementing the CTR and the UK provisions implementing the current law as set out in the CTD will continue to apply until amended by the UK.

Data exclusivity periods in the United Kingdom are currently in line with those in the European Union; however, the Trade and Cooperation Agreement that outlines the future trading relationship between the UK and EU provides that the periods for both data and market exclusivity are to be determined by domestic law; therefore, exclusivity periods in the two jurisdictions could diverge in the future.

Gaining orphan drug designation in Great Britain following Brexit is based on the prevalence of the condition in Great Britain (rather than in the EU). It is, therefore, possible that conditions that are currently designated as orphan conditions in Great Britain will no longer be and that conditions that are not currently designated as orphan conditions in the EU will be designated as such in Great Britain. Unlike in the EU, applications for orphan drug designation in Great Britain are reviewed in parallel with the corresponding marketing authorization application.

Australia

The Therapeutic Goods Administration (“TGA”) governs the review and approval of medicinal products for human use in Australia, and the processes and requirements for such. Generally, the requirements are similar to those in the US, UK and Europe. There are three regulatory product approval pathways; standard, priority, and provisional. The priority review pathway offers an expedited review potential for products that treat, prevent or diagnose a life-threatening or seriously debilitating condition. The goal for priority review is to decrease overall time to approval by 3 months. Both standard and priority review pathways require full and complete electronic Common Technical Document (“eCTD”) submissions. The provisional approval pathway allows for submission of preliminary or limited clinical data in cases whereby data demonstrates the medicine is likely to provide a significant improvement in efficacy or safety for a serious condition, and there is a substantiated plan to provide more comprehensive data within at least 6 years. TGA also offers Orphan Drug Designations which are associated with certain financial incentives for serious conditions in limited populations.

Employees and Human Capital Resources

As of December 31, ~~2021~~2022, we employed 11six full-time employees, and no part-time employees, the majority of whom work remotely in various locations throughout the United States and the world. In addition, we contract with several part-time independent consultants performing manufacturing, supply chain, quality assurance and control, regulatory and clinical development, intellectual property, public relations, ~~investor relations, commercial,~~ and finance and accounting functions. None of our employees are subject to a collective bargaining agreement. We consider our relationship with our employees to be good.

~~Information about our Executive Officers~~21

The following sets forth the names, ages and current positions of our executive officers as of February 16, 2022.

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~~Cameron Durrant,~~Information ~~M.D.,~~about ~~MBA, age 61, has served as~~ our ~~Chairman of our Board since January 2016, and as our Chief~~ Executive Officer since March 2016. In addition, Dr. Durrant served as our Interim Chief Financial Officer from July 1, 2019 to July 31, 2020. From May 2014 to January 2016, Dr. Durrant served as Founder and Director of Taran Pharma Limited, a private semi-virtual specialty pharma company developing and registering treatments in Europe for orphan conditions. Dr. Durrant served as President and Chief Executive Officer of ECR Pharmaceuticals Co., Inc., a subsidiary of Hi-Tech Pharmacal Co., Inc., from September 2012 to April 2014 until its acquisition by Akorn. He previously has been a senior executive at Johnson and Johnson, Pharmacia Corporation, GSK and Merck. Dr. Durrant was a director of Immune Pharmaceuticals Inc. from July 2014 to September 2018 and serves on the boards of directors of two privately held healthcare companies. Dr. Durrant earned his medical degree from the Welsh National School of Medicine, Cardiff, UK, his DRCOG from the Royal College of Obstetricians and Gynecologists, London, UK, his MRCGP from the Royal College of General Practitioners, London, UK, and his MBA from Henley Management College, Oxford, UK.Officers

~~Timothy~~The following ~~Morris,~~sets ~~CPA,~~forth ~~age~~the 60names, ~~joined~~ages ~~Humanigen as Chief Operating~~ and ~~Financial~~current ~~Officer~~positions ~~on August 1, 2020. Prior to assuming his position as a Humanigen officer, Mr. Morris served as a member~~ of our ~~Board~~executive ~~since~~officers ~~June 2016. Mr. Morris served~~ as ~~the Chief Financial Officer~~ of ~~Iovance Biotherapeutics, Inc., a biopharmaceutical company, from August 2017 until June 2020. From~~ March ~~2014~~ ~~to June 2017~~16, Mr2023. Morris served as Chief Financial Officer and Head of Business Development of AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company. From November 2004 to December 2013, Mr. Morris served as Senior Vice President Finance and Global Corporate Development, Chief Financial Officer of VIVUS, Inc. a biopharmaceutical company. Mr. Morris received his BS in Business with an emphasis in Accounting from California State University, Chico, and is a Certified Public Accountant (Inactive).

~~Dale Chappell~~Cameron Durrant, M.D., MBA, age 5162, ~~was appointed~~ has served as our ~~Chief~~Chairman ~~Scientific~~of ~~Officer~~our onBoard ~~July~~since 6January 2016, ~~2020.~~as ~~Dr.~~our ~~Chappell~~Chief isExecutive ~~the~~Officer ~~managing member of BH Management, a private investment~~since ~~manager~~March ~~that~~2016 ~~specializes in biopharmaceuticals~~ and aas ~~significant~~our ~~stockholder,~~Acting aChief ~~position~~Financial heOfficer ~~has held~~ since ~~2002~~October 2022. ~~Since~~In ~~April 2015~~addition, Dr. ~~Chappell~~ ~~has~~Durrant served as ~~CEO,~~our ~~President~~Interim ~~and~~Chief ~~CFO~~Financial Officer offrom ~~Cheval~~July ~~U.S. Holdings~~1, ~~Inc.,~~2019 ato ~~private~~July ~~investment company with holdings in the hospitality industry. Previously~~31, Dr2020. ~~Chappell~~He ~~was~~previously anhas ~~associate~~been ~~with~~a ~~Chilton~~senior ~~Investment~~executive ~~Company,~~at ~~covering~~Johnson ~~healthcare,~~ and anJohnson, ~~analyst~~Pharmacia atCorporation, ~~W.P. Carey~~GSK &and ~~Company~~Merck. Dr. ~~Chappell,~~Durrant ~~who~~currently ~~received~~serves ~~his~~on MDthe ~~from~~boards ~~Dartmouth~~of ~~Medical~~directors ~~School~~of ~~and~~two ~~his~~privately ~~MBA~~held ~~from~~healthcare ~~Harvard~~companies. ~~Business~~Dr. ~~School,~~Durrant ~~began~~earned his ~~career~~ asmedical adegree ~~Howard~~from ~~Hughes Medical Institute fellow at~~ the Welsh National ~~Cancer~~School ~~Institute~~of ~~where~~Medicine, heCardiff, ~~studied tumor immunology~~UK, ~~worked~~his asDRCOG afrom ~~researcher in~~ the ~~labs~~Royal College of ~~Dr.~~Obstetricians ~~Steven~~and A.Gynecologists, London, ~~Rosenberg~~UK, ~~(widely~~his ~~thought~~MRCGP offrom ~~as one of~~ the ~~pioneers~~Royal inCollege ~~CAR-T~~of ~~therapy)~~General ~~and~~Practitioners, ~~Dr.~~London, ~~Nicholas~~UK, ~~P. Restifo (a leading researcher in the field of immunology)~~ and ishis ~~published~~MBA infrom ~~the~~Henley ~~field~~Management ofCollege, ~~GM-CSF~~Oxford, UK. ~~Dr.~~He ~~Chappell~~was ~~served~~elected as a ~~member~~Fellow of the ~~Board~~Learned ~~from~~Society ~~June 2016~~of toWales ~~November 2017. Prior to joining Humanigen~~ in ~~a full-time role as our Chief Scientific Officer, Dr~~2022. ~~Chappell advised and consulted with management as our ex-officio chief scientific officer.~~

~~Edward~~Dale P.Chappell, ~~Jordan~~M.D., MBA, age 5452, was ~~appointed~~ appointed as our Chief ~~Commercial~~Scientific Officer on ~~August~~July 246, 2020. MrDr. ~~Jordan~~Chappell ~~has~~is ~~more~~the ~~than~~managing ~~two~~member ~~decades~~ of ~~commercial~~BH ~~operations~~Management, ~~experience~~a atprivate ~~leading~~investment ~~biotechnology~~manager ~~and~~that ~~pharmaceutical~~specializes ~~companies,~~in ~~having~~biopharmaceuticals ~~launched~~and ~~over~~ a ~~dozen~~significant ~~products~~stockholder, ~~and~~a ~~developed~~position ~~new~~he ~~therapeutic~~has ~~markets~~held insince ~~the U~~2002.S. ~~and abroad.~~Since ~~From~~April ~~2016 until joining Humanigen~~2015, MrDr. Chappell ~~Jordan~~has served as ~~Senior~~CEO, ~~Vice~~ President and CFO of ~~DBV~~Cheval ~~Technologies~~US Holdings, ~~where~~Inc., hea ~~built~~private ~~the~~investment ~~North~~company ~~American commercial~~with ~~organization~~holdings in ~~preparation~~the ~~for~~hospitality industry. ~~the~~Previously, ~~launch~~Dr. ofChappell awas ~~lifesaving~~an ~~pediatric~~associate ~~biologic.~~with ~~Prior~~Chilton toInvestment ~~DBV~~Company, ~~Technologies~~covering healthcare, ~~from~~and ~~January~~an ~~2014~~analyst at W.P. Carey to& ~~July~~Company. ~~2015~~Dr. Chappell, ~~Mr.~~who ~~Jordan~~received ~~was~~his ~~the~~MD ~~Senior~~from ~~Vice~~Dartmouth ~~President,~~Medical ~~Hematology~~School and ~~Oncology~~his ~~Sales~~MBA ~~and~~from ~~Marketing~~Harvard atBusiness ~~AMAG~~School, ~~Pharmaceuticals.~~began ~~Prior~~his tocareer ~~AMAG~~as ~~Pharmaceuticals~~a Howard Hughes Medical Institute fellow at the National Cancer Institute where he studied tumor immunology, ~~Mr.~~worked ~~Jordan~~as ~~served~~a researcher in ~~executive~~the ~~roles~~labs atof ~~Teva Pharmaceuticals~~Dr. MrSteven A. ~~Jordan~~Rosenberg ~~began~~(widely ~~his~~thought ~~career~~of atas ~~Schering-Plough,~~one ~~prior to~~of the ~~acquisition~~pioneers byin ~~Merck,~~CAR-T therapy) and ~~spent~~Dr. 18Nicholas ~~years~~P. Restifo (a leading researcher in ~~sales~~the field of immunology) and ~~marketing~~is ~~leadership~~published ~~positions~~in the field of GM-CSF. MrDr. ~~Jordan~~Chappell ~~received~~served ~~dual~~as ~~undergraduate~~a ~~degrees~~ member of the Board from ~~The~~June 2016 ~~University~~to ofNovember ~~Rhode~~2017. ~~Island~~Prior to joining Humanigen in a full-time role as our Chief Scientific Officer, Dr. Chappell advised and anconsulted with ~~MBA~~management ~~from~~as ~~Southern~~our ~~New~~ex-officio ~~Hampshire~~chief ~~University~~scientific officer.

~~Adrian~~Edward ~~Kilcoyne,~~P. MDJordan, MBA, ~~MPH,~~ age 5155, was ~~appointed~~ appointed as our Chief ~~Medical~~Commercial Officer on ~~April~~August 2124, ~~2021~~2020. DrMr. ~~Kilcoyne~~Jordan has ~~significant~~more ~~global~~than ~~pharmaceutical~~two ~~and~~decades ~~biotechnology~~of ~~industry~~ commercial operations experience ~~and~~at anleading biotechnology ~~extensive~~and ~~clinical~~pharmaceutical ~~background.~~companies, ~~From~~having ~~June~~launched ~~2019~~over ~~until~~a ~~joining~~dozen ~~Humanigen,~~products ~~Dr.~~and ~~Kilcoyne~~developed ~~served~~new astherapeutic ~~Vice~~markets ~~President~~in ofthe ~~Oncology~~US and ~~Global~~abroad. ~~Medical~~From ~~Affairs~~2016 until joining Humanigen, ~~AstraZeneca~~Mr. ~~most~~Jordan ~~recently~~served as ~~Head~~Senior ofVice ~~Evidence~~President ~~Generation~~of ~~and~~DBV ~~External Alliances~~Technologies, where he ~~oversaw~~built the ~~global~~North ~~evidence~~American ~~strategy~~commercial ~~across~~organization in preparation for the ~~company’s~~launch ~~entire~~of ~~oncology~~a ~~portfolio.~~lifesaving ~~Previously,~~pediatric Drbiologic. ~~Kilcoyne~~Prior ~~held~~to ~~several~~DBV ~~leadership~~Technologies, ~~positions~~from atJanuary ~~Celgene Corporation~~2014 ~~including~~to ~~Executive~~July ~~Medical Director~~2015, ~~Global~~Mr. ~~Lymphoma~~Jordan ~~Program~~was ~~Lead~~the Senior Vice President, ~~Clinical~~Hematology ~~Research~~and Oncology Sales and ~~Development,~~Marketing ~~overseeing~~at ~~the~~AMAG ~~development~~Pharmaceuticals. ofPrior ~~lenalidomide~~to inAMAG ~~DLBCL~~Pharmaceuticals, ~~and~~Mr. ~~worked~~Jordan ~~closely~~served onin ~~the~~executive ~~development~~roles ofat ~~Breyanzi~~Teva Pharmaceuticals. DrMr. ~~Kilcoyne~~Jordan ~~graduated~~began ~~from~~his ~~Trinity~~career ~~College~~at Schering-Plough, ~~Dublin~~prior to the acquisition by Merck, and ~~holds~~spent a18 ~~MSc~~years in ~~Public Health~~sales ~~from~~and ~~the~~marketing ~~London~~leadership ~~School~~positions. ofMr. ~~Hygiene~~Jordan ~~and~~received ~~Tropical~~dual ~~Medicine,~~undergraduate ~~along~~degrees from ~~with~~The aUniversity ~~MSc~~of inRhode ~~Business~~Island ~~Administration~~and an MBA from ~~the~~Southern ~~Warwick~~New ~~Business School~~Hampshire University.

Available Information

We were incorporated on March 15, 2000 in California and reincorporated as a Delaware corporation in September 2001. Effective August 7, 2017, we changed our legal name to Humanigen, Inc. Our principal executive offices are located at 830 Morris Turnpike, 4^th Floor, Short Hills, NJ 07078 and our telephone number is (973) 200-3010. Our website address is www.humanigen.com. Our common stock is currently listed on the Nasdaq Capital Market under the symbol HGEN. We operate in a single segment.

Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investor Relations portion of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, the SEC maintains an internet site that contains the reports, proxy and information statements, and other information we electronically file with or furnish to the SEC, located at www.sec.gov.

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ITEM 1A. RISK FACTORS

Our business faces significant risks and uncertainties. Certain factors may have a material adverse effect on our business prospects, financial condition, results of operations, and ~~results~~the trading price of ~~operations~~our common stock, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

~~Risks Related to Our Business and Industry~~22

Risks Related to Our Efforts to Develop Lenzilumab for COVID-19

FDA declined our initial request for emergency use authorization for lenzilumab as a therapy for hospitalized patients with COVID-19. The MHRA also has not approved our application for marketing authorization of lenzilumab in this indication. We are continuing to pursue an authorization or approval for lenzilumab’s use in hospitalized patients with COVID-19 in the U.S., UK and EU, but may not obtain one.

On September 8, 2021, FDA informed us that it had declined to issue an EUA for lenzilumab for patients hospitalized with COVID-19. FDA has advised us that we will need to submit further safety and efficacy data in an amended application for EUA. Likewise, MHRA raised a number of questions in its review of our application for marketing authorization, including around efficacy, to which we need to respond. It is possible, but not assured, that the results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, being conducted by NIH, if confirmatory of the findings of the CRP subgroup from the LIVE-AIR study, may support our efficacy claim in such a way as to support an amendment to the EUA application and our response to MHRA. In addition, if the results from ACTIV-5/BET-B are not confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, we would either conduct a new clinical trial of our own or abandon this development program altogether. Unfavorable results likely would have a material and adverse impact on our stock price and ability to obtain future financing needed to continue as a going concern, as well.

If ACTIV-5/BET-B results confirm our findings from the CRP subgroup from the LIVE-AIR study, we may be required to obtain and submit additional information related to the Chemistry Manufacturing and Control (“CMC”) aspects of lenzilumab production before we attain EUA or any other authorization or approval. We are in the process of obtaining additional CMC information but there is no assurance as to exactly when or if we will generate sufficient information to satisfy regulatory requirements.

More broadly, in the context of EUA or any other request for a conditional marketing authorization or approval, there is no requirement that FDA or any regulatory body reach a favorable conclusion about our submissions. A myriad of factors, including the regulator’s assessment of the urgency of the need for a therapeutic such as lenzilumab; the efficacy of lenzilumab in new or different variants that have emerged or may evolve; and other factors such as the development of more efficacious vaccines or therapies, may influence a regulator’s decision on any submissions we may make.

Furthermore, if an EUA is granted to permit lenzilumab to be commercialized for use in the treatment of COVID-19, the authorization would only remain in effect while a “Public Health Emergency” is underway and might be expressly conditioned or limited by FDA. An EUA, if granted, could also be terminated if, in the future, there are changes in available data that bear on the risk-benefit analysis, or if alternative approved products become available.

Accordingly, it is possible that FDA and other regulatory authorities may not authorize or approve lenzilumab for the treatment of COVID-19, or that any such authorization or approval, if granted, may have significant limitations on its use or subsequently be rescinded or terminated. We may never successfully commercialize lenzilumab for use in COVID-19 patients or realize a return on our significant investment in the development, supply, and commercialization of lenzilumab for this purpose.

We need to obtain additional financing to fund our operations and, if we are unable to obtain such financing, we may be unable to continue to operate as a going concern.

During 2021, we incurred significant costs associated with our development program for lenzilumab in COVID-19 without attaining a regulatory authorization or approval to commercialize it. Our liquidity position is highly constrained as a result. We need to obtain additional financing to pursue the development of lenzilumab and our other product candidates pending our ability to commence commercialization and begin generating revenues from product sales if lenzilumab were to be authorized or approved by a regulatory agency.

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~~Until~~Risks weRelated ~~can generate a sufficient amount of revenue, we intend~~ to ~~attempt to finance future cash needs through our at-~~the~~-market~~ ~~offering~~Proposed ~~program or other public or private equity offerings,~~Business ~~license~~Combination ~~agreements, grant financing~~ and support from governmental agencies, convertible debt, other debt financings, collaborations, strategic alliances, extending and managing amounts owed to vendors and marketing, supply, distribution or licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. We expect that the results of the ACTIV-5/BET-B trial will be important to potential investors in evaluating an investment in our ~~company.~~Exploration ~~Accordingly, our ability to raise capital on favorable terms in the future is linked closely to the success~~ of ~~that~~Strategic ~~trial, which we cannot assure. Unfavorable results likely would have a material and adverse impact on our stock price and ability to obtain future financing.~~Alternatives

IfWhile we have entered into a non-binding letter of intent and are ~~unsuccessful~~involved in ~~efforts~~exclusive negotiations with the Partner Company relating to ~~raise~~a ~~additional capital~~proposed business combination transaction, we ~~based~~cannot onassure ~~our~~you ~~current~~that ~~levels~~the ofproposed ~~operating~~business ~~expenses~~combination and related financing transactions contemplated thereby will be consummated or, that if such transactions are consummated, they will yield value for our ~~current~~stockholders. ~~capital~~If iswe ~~not~~are ~~expected~~unable to becomplete ~~sufficient~~the proposed business combination and related financing transactions, or to ~~fund~~identify ~~our~~and ~~operations for~~complete ~~the~~another ~~next~~strategic ~~twelve~~or ~~months.~~financing ~~These~~transaction ~~conditions~~in ~~raise~~the ~~substantial~~first ~~doubt~~half of ~~about~~2023, ~~our~~we ~~ability~~may toelect ~~continue~~or asbe required to pursue a ~~going~~reorganization ~~concern~~or seek other protection under the Bankruptcy Code.

~~The~~As ~~consolidated~~disclosed ~~financial~~elsewhere in ~~statements~~this Annual Report on Form 10-K, we have executed a non-binding letter of intent and are engaged in exclusive negotiations relating to a proposed business combination with the Partner Company. We cannot assure you that we and the Partner Company will agree to terms and enter into a definitive agreement for the ~~year~~proposed transaction on a timely basis or at all, which remains subject to satisfactory ~~ended~~due ~~December~~diligence 31and further negotiation, ~~2021~~among ~~were~~other ~~prepared~~things. onAccordingly, the ~~basis~~final form and terms of any such transaction may be materially different from the terms outlined in this Annual Report on Form 10-K. Our ability to enter into a ~~going~~definitive ~~concern,~~agreement ~~which~~is ~~contemplates~~subject to conditions, including that we have received binding commitments for investment of additional capital that will be ~~able~~necessary to ~~realize~~fund ~~our~~the ~~assets~~operations of the combined company going forward and enable the combined company to maintain a listing of its common stock on the Nasdaq Capital ~~discharge~~Market ~~liabilities~~or inanother national securities exchange, as well as customary matters such as approval of the ~~normal~~terms ~~course~~of the definitive agreement by the Partner Company’s board of ~~business~~directors and stockholders. ~~The~~We ~~financial~~also ~~statements~~will dobe ~~not~~required ~~include~~to ~~any~~obtain ~~adjustments~~the ~~that~~approval ~~might~~of beour ~~necessary~~stockholders ifprior weto ~~are~~the ~~unable~~issuance of more than 20% of our common stock in the proposed business combination and related financing transactions in accordance with applicable Nasdaq listing rules, and for an amendment to ~~continue~~our ascharter to effect a ~~going~~reverse ~~concern~~stock split or increase in our authorized capital stock. Certain of these conditions will be out of our control. Accordingly, we cannot provide any assurance that we will consummate the proposed business combination and related financing transactions in the time frame or in the manner currently anticipated, or at all.

InFurther, ~~addition~~even if we are able to agree to terms with the Partner Company and to consummate the business combination and related financing transactions, there is no guarantee that the ~~presence~~terms will be favorable to our stockholders or that we will recognize the anticipated benefits of the ~~explanatory~~transaction. Regardless ~~paragraph~~of whether we consummate the proposed business combination, the adverse pressures we have experienced may continue or intensify, ~~about~~and ~~our~~we ~~ability~~may continue to ~~continue~~face asall aof ~~going~~the ~~concern~~risks identified in ~~our~~this ~~financial~~section ~~statements~~entitled “Risk Factors” going forward. In addition, public ~~could~~announcements ~~also~~or ~~make~~updates itregarding ~~more~~any ~~difficult~~strategic totransactions, ~~raise~~financings ~~the~~or ~~capital~~other ~~necessary~~strategic options and alternatives could result toin ~~address~~volatility in the price of shares of our ~~current~~common ~~needs~~stock and dramatic spikes in trading volume.

~~Our~~If ~~commercial~~we ~~opportunity~~are unable to complete the proposed business combination and related financing transactions or identify and complete another strategic or financing transaction in ~~COVID-19~~the first half of 2023, we may elect or be ~~reduced~~required orto ~~eliminated if~~seek ~~competing~~protection ~~products~~from our creditors by filing a voluntary petition for relief under the ~~same~~Bankruptcy ~~segment~~Code in order to implement a restructuring plan or liquidation under Chapters 11 or 7 of ~~patients~~the Bankruptcy Code (“Bankruptcy Protection”), respectively, or we may be subject to an involuntary petition in bankruptcy. Given our lack of liquidity, it is reasonably likely that ~~lenzilumab~~any ~~targets~~such ~~are~~bankruptcy ~~authorized~~filing orwould ~~approved~~result in a complete loss of value for holders of our common stock.

WeFuture ~~may~~sales ~~not~~or beissuances ~~successful~~of ~~in attaining any authorization~~substantial oramounts ~~approval~~of ~~for~~our ~~lenzilumab~~common instock ~~hospitalized COVID-19 patients before competitors receive authorization~~ or ~~approval~~convertible ofequity ~~competitive therapeutics. In addition~~securities, ~~vaccines~~including, ~~neutralizing antibodies~~potentially, ~~and~~as ~~oral~~a ~~antivirals~~result ~~which~~of ~~have been granted EUA and/or FDA approval to prevent COVID-19 may indirectly compete for~~ the ~~same~~proposed ~~patients~~business ~~by preventing hospitalization. As discussed in greater detail under “Item 1. Business—–Lenzilumab~~combination ~~and~~with ~~COVID-19 Competition,” several neutralizing antibodies have been approved to prevent progression in~~ the ~~early~~Partner ~~stages~~Company ~~of infection, multiple vaccines~~ and ~~boosters~~related ~~have~~financing ~~been authorized by FDA and other regulatory agencies~~transactions, ~~and~~could ~~there~~result ~~are~~in ~~numerous~~significant ~~other~~dilution ~~companies working on therapies and/or vaccines~~ to ~~treat COVID-19. If additional competing therapies and/or vaccines are approved, such approval could have a material adverse impact on~~ our ~~ability~~current ~~to attain regulatory approvals needed to commercialize lenzilumab as a therapy for COVID-19~~stockholders.

~~Manufacturing~~The ~~efforts~~proposed ~~relating~~terms of the potential business combination with the Partner Company contemplate a stock-for-stock merger, as a result of which we would issue shares of our capital stock to stockholders of the Partner Company which are expected to represent roughly two times the number of our currently ~~lenzilumab~~outstanding ~~program~~shares of common stock. Additionally, in ~~COVID-19~~connection with the proposed business combination, we intend to raise additional ~~have~~capital ~~been~~that ~~extremely~~will ~~costly~~be necessary to fund the operations of the combined company going forward and ~~inefficient~~enable inthe ~~producing~~combined ~~treatments~~company ~~for~~to ~~use~~maintain a inlisting of its common stock on the Nasdaq Capital Market or another national securities exchange. If additional shares of our ~~clinical~~capital stock ~~development~~are ~~program~~issued in connection with the proposed business combination or ~~potential~~additional capital is raised through the sale. of common stock or convertible equity securities in the related financing transaction, or if additional shares are issued in another strategic or financing transaction, the issuance of those securities could result in significant dilution to our current stockholders by causing a reduction in their proportionate ownership and voting power.

Our complete reliance on third-party manufacturers to produce lenzilumab subjects us to a number of risks, as described in more detail under “—Other Risks Related to Our Business and Industry” below. We believe that our ability to obtain the requisite regulatory authorizations or approvals to permit lenzilumab to be used commercially for hospitalized patients with COVID-19 depends at least in part on our ability to demonstrate that we will be able to scale the manufacturing to produce a sufficient quantity of treatments, satisfying all applicable process performance qualification (“PPQ”) requirements, to address the potential demand for the product. Our efforts to develop that manufacturing scale have been impaired by the following:23

· We have experienced and expect to continue to experience shortages of raw materials and critical components necessary for our manufacturing processes.

· We struggled to reserve manufacturing slots at our CMOs. During the latter half of 2020, and continuing into 2021, it was and continues to be more challenging and expensive to obtain these slots due to increased demand for production at our CMOs, many of which also manufacture vaccines and other therapeutics.

· Even after being reserved and paid for, the manufacturing slots for which we contracted were in some cases displaced as mandated from Rated Orders issued under the U.S Defense Production Act (“DPA”). This displacement risk has caused us to expend significant efforts to manage our supply chain and add additional CMOs.

· Some of our CMOs struggled or outright failed to produce lenzilumab meeting our specifications. The process of manufacturing biologics is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral, foreign substances or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We lost batches of lenzilumab BDS to several of these disruptive errors, which has limited the number of potential treatments on hand. In addition, two of our CMOs have denied responsibility for the challenges they experienced and are demanding payment despite not delivering usable BDS; these payment demands, if resolved adversely to us, would further impair our liquidity.

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·The ~~Subsequent~~pursuit toof ~~FDA’s~~additional ~~declination~~capital and tostrategic ~~grant EUA following our initial request~~alternatives, weincluding ~~took~~the ~~action~~proposed tobusiness ~~cancel~~combination ~~future~~with ~~manufacturing~~the ~~slots.~~Partner ~~While~~Company ~~some~~and ~~in-process~~the ~~work~~related isfinancing ~~continuing~~transaction, has weand dowill ~~not~~continue ~~yet~~to ~~have~~consume ~~any~~a ~~capacity~~substantial ~~reserved~~portion ~~for~~of ~~lenzilumab~~the ~~production~~time ~~beyond~~and ~~2022,~~attention ~~nor~~of doour wemanagement ~~have~~and ~~agreements~~require inadditional ~~place~~capital ~~for~~resources and ~~the~~may ~~commercial~~be ~~production~~disruptive ~~of lenzilumab. Accordingly, our ability~~ to ~~scale~~ our ~~manufacturing~~business, which could behave ~~delayed if we were to attain~~ a ~~regulatory~~material ~~authorization~~adverse oreffect ~~approval~~on toour ~~commercialize~~business, ~~lenzilumab~~financial incondition ~~hospitalized~~and ~~COVID-19~~results ~~patients later in 2022~~of operations.

~~Interim,~~We ~~top-line,~~are ~~ad-hoc,~~not ~~retrospective,~~able ~~exploratory~~to predict orwith ~~preliminary data~~certainty ~~from~~the ~~our~~amount ~~clinical~~of ~~trials~~time ~~that~~and weresources ~~announce~~necessary to successfully execute and consummate the proposed business combination with the Partner Company, or ~~publish~~any ~~from~~other ~~time-~~strategic alternative, or to~~-time~~ obtain additional financing. The diversion of management’s attention may ~~change~~materially adversely affect the conduct of our business, and, as ~~more~~a ~~patient~~result, ~~data~~our ~~become~~financial ~~available~~condition and ~~are~~results ~~subject~~of operations. The toadditional ~~audit~~expense we accrue in connection with our review of strategic alternatives and ~~verification~~pursuit ~~procedures~~of ~~that~~additional ~~could~~capital ~~result~~may inmaterially adversely ~~material~~impact ~~changes~~our infinancial condition and partially offset the ~~final~~value ~~data~~of any strategic alternative we execute or additional financing we obtain.

~~From~~Risks ~~time-to-time,~~Related we may publicly disclose preliminary, “top-line” or other data from clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial. We may also seek to publish additional ad-hoc, retrospective or exploratory data, including results from patients with baseline CRP levels <150 mg/L. We also make assumptions, estimations, calculations and conclusions as part of our ~~analyses~~Financial ~~of data~~Condition, ~~and we may not have received~~ orNeed ~~had~~for ~~the~~Additional ~~opportunity~~Capital ~~to fully~~ and ~~carefully~~Ability evaluate all data. As a result, such results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Such data also remain subject to ~~audit~~Continue ~~and~~as ~~verification procedures that may result in the final data being materially different from the preliminary data we previously published. As~~ a ~~result,~~Going interim, top-line, or preliminary data should be viewed with caution until the final data are available. Such data from clinical trials 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 differences between such data and final data could significantly harm our business prospects. Further, disclosure of interim, top-line or preliminary data by us or by our competitors could result in volatility in the price of shares of our common stock and dramatic spikes in trading volume, as we experienced following our announcement of top-line data from the LIVE-AIR study in March 2021.Concern

InWe ~~addition,~~need ~~others,~~to ~~including~~obtain ~~regulatory~~additional ~~agencies,~~financing may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product, and our business in general. FDA’s action to ~~decline~~fund our ~~initial~~operations ~~request for EUA represents a dramatic manifestation of this risk. In addition~~and, ~~the~~if ~~information~~ we ~~choose~~are tounable ~~publicly disclose or~~ to ~~publish~~obtain ~~via~~such ~~a preprint publication regarding a particular study or clinical trial is based on what is typically extensive information~~financing, ~~and 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~~unable ~~significant~~to ~~with~~continue ~~respect~~ to ~~future~~operate ~~decisions,~~as ~~conclusions, views, activities or otherwise regarding~~ a ~~particular drug,~~going ~~product candidate, or our business~~concern. If ~~the top-line data that~~ we ~~report~~are ~~differ~~unsuccessful ~~from~~in ~~actual~~raising ~~results,~~additional ~~or if others~~capital, ~~including~~we ~~regulatory authorities,~~may ~~disagree~~elect ~~with~~or ~~the~~be ~~conclusions~~required ~~reached, our ability~~ to ~~obtain~~seek ~~approval~~Bankruptcy ~~for and commercialize our current or any our future product candidate, our business, operating results, prospects or financial condition may be harmed~~Protection.

~~Target~~Our ~~enrollment~~current ~~in the ACTIV-5/BET-B study has~~capital ~~been~~resources ~~reached~~are innot ~~the~~sufficient ~~primary~~to ~~analysis~~fund ~~group~~our ~~(CRP<150~~operations ~~mg/L~~for <the 85remainder ~~years~~of ~~old).~~2023, ~~Analysis~~making ofit ~~data~~critical ~~can~~for ~~begin~~us ~~once~~to ~~the~~raise ~~database~~additional ~~lock~~funds. ~~has~~These ~~occurred.~~conditions ~~The~~raise ~~NIH~~substantial ~~controls~~doubt ~~the~~about ~~data~~our ~~analysis~~ability ~~and we may be unable~~ to ~~influence~~continue ~~the~~as ~~timeline~~a ~~for~~going ~~completion~~concern. ~~The~~There ~~primary~~can ~~endpoint~~be isno ~~based on~~assurance anthat ~~assessment 29 days after treatment, and accordingly~~ we ~~believe~~can ~~top-line~~remain ~~data~~a ~~from this study could be available in late first quarter~~going orconcern ~~early~~long inenough ~~the~~to ~~second~~consummate ~~quarter~~a ofstrategic ~~2022~~transaction, ~~but~~including the ~~NIH~~proposed ~~may~~business ~~choose~~combination towith ~~wait~~the ~~until~~Partner ~~day~~Company, 60or to realize ~~complete their analysis. In addition,~~ the ~~COVID-19 pandemic,~~clinical ~~and~~milestones inenvisioned ~~particular~~under the ~~widespread~~strategic ~~transmission~~realignment ~~of the omicron variant even among vaccinated people~~plan, ~~has~~which ~~had~~may ain ~~significant~~turn ~~negative impact~~allow onus ~~worker productivity. It is possible that, due~~ to ~~COVID-19~~raise oradditional ~~other~~capital. In ~~reasons,~~order ~~the timeline~~ to ~~collect~~remain ~~and~~a ~~analyze~~going ~~the data from ACTIV-5/BET-B may be delayed~~concern, ~~causing the anticipated timeline to slip. There can be no assurance that~~ we ~~will~~must bealso ~~able~~successfully tosettle ~~report~~disputes, ~~top-line results~~including ~~within~~current ~~the~~and ~~timeline~~potential ~~established~~future byarbitration ~~our guidance or that the top-line results will be consistent with the final results as reported~~and ~~after Day 60~~litigation.

WeAccordingly, ~~cannot~~our forward-looking ~~predict~~business ~~public~~operations ~~reaction~~are ordependent ~~the impact~~ on ~~the~~our ~~market~~ability ~~price~~to ofraise additional capital and manage our ~~common~~liabilities ~~stock~~to ~~once~~certain ~~further~~contract manufacturing ~~announcements~~and ~~regarding~~other ~~lenzilumab~~partners. orAdditional ~~developments~~funds ~~from~~may ~~ACTIV-5/BET-B~~not be available when we need them on terms that are ~~announced~~acceptable to us, or at all. ~~Given~~If ~~the~~we ~~attention~~are ~~being~~unsuccessful ~~paid~~in accomplishing these objectives, we may not be able to ~~the COVID-19 pandemic~~continue ~~and~~our ~~the~~operations ~~public~~as ~~scrutiny~~a ~~of COVID-19 development~~going ~~announcements~~ concern and ~~data~~may ~~releases~~elect or be required to ~~date,~~seek ~~any~~Bankruptcy ~~public~~Protection, ~~announcements~~or we ~~make~~may inbe ~~the~~subject ~~coming~~to ~~months~~an ~~regarding~~involuntary ~~the~~petition ~~ongoing~~in ~~development~~bankruptcy. ~~and~~Given ~~regulatory~~our ~~process~~lack of liquidity, ~~for~~it ~~lenzilumab may~~is ~~attract~~reasonably ~~significant~~likely ~~attention~~that ~~and~~any ~~scrutiny~~such ~~and~~bankruptcy asfiling awould result, ~~the~~in ~~price~~a ofcomplete ~~our~~loss ~~common~~of ~~stock~~value ~~may~~for beholders ~~volatile~~of ~~during this~~our ~~time~~common stock.

IfSEC anregulations ~~authorization~~may limit orthe ~~approval~~amount ~~were~~of ~~granted~~funds ~~for~~we ~~lenzilumab,~~can raise during any 12-month period pursuant to our Form S-3. As of the filing of this Annual Report on weForm ~~may~~10-K, bewe ~~unable~~are subject to ~~accurately~~General ~~predict~~Instruction ~~demand~~I.B.6 ~~for~~to ~~lenzilumab~~Form S-3, or the Baby Shelf Rule, and the amount of funds we can raise through primary public offerings of securities in any 12-month period using our Form S-3 is limited to ~~produce~~one-third ~~sufficient~~of ~~quantities~~the onaggregate market value of the voting and non-voting common equity held by non-affiliates. We will continue to be limited by the Baby Shelf Rule until such time as our public float exceeds $75 million. If we are required to file a ~~timely~~new ~~basis~~registration statement on another form, we may incur additional costs and be subject to ~~meet~~delays ~~demand~~due to review by SEC staff.

IfThe ~~lenzilumab~~consolidated ~~were~~financial statements ~~authorized~~for orthe ~~approved~~year ~~for commercial~~ended ~~use~~December 31, we2022 ~~may~~were beprepared ~~unsuccessful~~on inthe ~~estimating~~basis ~~user~~of ~~demand~~a ~~and~~going ~~may~~concern, ~~not~~which becontemplates ~~effective~~that inwe ~~matching~~will ~~inventory~~be ~~levels~~able to ~~and~~realize ~~locations~~our ~~to actual~~assets ~~end~~and ~~user~~discharge ~~demand,~~liabilities in ~~particular~~the ifnormal ~~the~~course ~~COVID-19~~of ~~pandemic,~~business. ~~including~~The ~~emerging~~financial ~~variants,~~statements isdo ~~effectively~~not ~~contained~~include orany ~~the~~adjustments that ~~risk~~might ofbe ~~patients being~~necessary ~~hospitalized~~if aswe aare ~~result~~unable ofto ~~coronavirus~~continue ~~infection~~as isa ~~significantly~~going ~~diminished~~concern. In addition, ~~adverse~~the ~~changes~~presence inof ~~economic~~the ~~conditions, increased~~explanatory ~~competition,~~paragraph ~~including through approved/authorized vaccines or other therapeutics (including neutralizing antibodies and oral~~about ~~antivirals),~~our orability ~~other~~to ~~factors~~continue ~~may~~as ~~cause~~a ~~hospitals~~going orconcern ~~other~~in ~~users or distributors of lenzilumab to reduce inventories of~~ our ~~products, which~~financial ~~would~~statements ~~reduce~~could ~~their~~also ~~orders~~make ~~for~~it ~~lenzilumab,~~more ~~even~~difficult ifto ~~end~~raise ~~user~~the ~~demand~~capital ~~has not changed. As a result, our revenues could be difficult~~necessary to ~~predict~~address ~~and~~our ~~vulnerable~~current ~~to extreme fluctuations~~needs.

30Further, doubts about our ability to continue as a going concern could impact our relationships with our development partners and other third parties and our ability to obtain, maintain or renew contracts with them, or negatively impact our negotiating leverage with such parties, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, any loss of key personnel, employee attrition or material erosion of employee morale arising out of doubts about our ability to operate as a going concern could have a material adverse effect on our ability to effectively conduct our business, and could impair our ability to execute our strategic realignment plan and implement our business objectives, thereby having a material adverse effect on our business, financial condition and results of operations.

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~~There~~Currently ~~can~~pending, bethreatened noor future ~~assurance that lenzilumab~~litigation, ~~even~~ ~~if approved~~arbitration, ~~would~~governmental ~~ever~~proceedings ~~become~~or ~~profitable,~~inquiries ~~due~~could toresult ~~government~~in ormaterial ~~healthcare~~adverse ~~provider~~consequences, including judgments or ~~payer~~settlements, ~~interest~~ and ~~public~~adversely ~~perception~~affect ~~regarding vaccines~~our ~~and~~ability ~~treatments~~to ~~for~~continue ~~COVID-19~~as ~~related~~a ~~complications~~going concern.

AsWe aare ~~result of the emergency~~currently, ~~situations~~and inmay ~~many~~from ~~countries~~time-to-time become, ~~there~~involved isin alawsuits, ~~heightened~~arbitration ~~risk~~and ~~that~~other ~~a COVID-19 therapy~~legal or ~~other~~governmental ~~treatments~~proceedings. ~~for~~See ~~COVID-19~~Item ~~symptoms may~~3—Legal beProceedings ~~subject~~ to ~~adverse~~this ~~governmental~~Annual ~~actions~~Report inon ~~certain~~Form ~~countries,~~10-K ~~including~~and ~~intellectual~~Note ~~property~~11 ~~expropriation,~~to ~~compulsory~~the ~~licenses,~~Consolidated ~~strict price~~Financial ~~controls~~Statements orincluded ~~other~~in ~~actions.~~this ~~Additionally,~~Annual weReport ~~may~~on Form ~~need,~~10-K orfor weinformation ~~may~~regarding becurrently ~~required~~pending bylitigation ~~governmental~~and ~~or non-governmental authorities, to~~arbitration ~~set~~that ~~aside~~could ~~specific~~have ~~quantities~~a ofmaterial ~~doses~~impact ofon ~~lenzilumab~~us. ~~for~~Many ~~designated~~of ~~purposes~~these matters orraise ~~geographic~~complicated ~~areas.~~factual Weand ~~may~~legal ~~face~~issues ~~challenges~~and ~~related~~are subject to ~~the~~ ~~allocation~~uncertainties ofand ~~supply~~complexities, all of ~~lenzilumab,~~which ~~particularly~~make ~~with~~the ~~respect~~matters costly to ~~geographic distribution~~address. ~~Thus,~~The ~~even~~timing ifof ~~lenzilumab~~the isfinal ~~approved,~~resolutions ~~such governmental actions may limit our ability~~ to ~~recoup~~any ~~our~~such ~~current~~lawsuits, inquiries, and ~~future~~other ~~expenses~~legal ~~incurred~~proceedings tois ~~develop and commercialize lenzilumab~~uncertain.

~~Furthermore,~~The ~~public~~possible ~~sentiment~~outcomes ~~regarding~~or ~~commercialization~~resolutions ofto athese ~~COVID-19~~matters ~~therapy~~could orinclude ~~other~~adverse ~~treatment~~judgments ~~may limit~~ or ~~negate~~settlements, ~~our~~either ~~ability~~of towhich ~~generate~~could ~~revenues~~require ~~from~~substantial ~~sales~~payments, ofadversely ~~lenzilumab.~~affecting Ifour ~~authorized~~consolidated orfinancial ~~approved~~condition, weresults ~~may~~of ~~face~~operations ~~significant~~and ~~public~~cash ~~attention~~flows, and ~~scrutiny~~our ~~over~~ability ~~any~~to ~~future~~continue ~~business~~as ~~models~~a ~~and~~going ~~pricing~~concern. ~~decisions~~Unless ~~with~~we ~~respect~~are able to ~~lenzilumab.~~obtain Ifadditional wefinancing, ~~are~~given ~~unable~~our tocurrent ~~successfully~~lack ~~manage~~of ~~these risks~~liquidity, weit ~~could~~is ~~face~~reasonably ~~significant~~likely ~~reputational~~that ~~harm~~any adverse judgment, ~~which~~settlement, ~~could~~or ~~negatively~~court ~~affect~~order requiring the ~~price~~payment of ~~our~~a ~~common~~significant ~~stock~~amount of damages would require us to seek Bankruptcy Protection.

WeIn addition, currently pending ~~have~~litigation noor ~~internal~~arbitration ~~sales~~could ~~and marketing~~also ~~capabilities~~make ~~and~~it ~~will~~more ~~rely~~difficult onfor ~~third~~us ~~parties~~ to ~~market~~raise ~~and~~the ~~sell~~capital ~~lenzilumab~~necessary ifto weaddress ~~attain~~our ancurrent ~~EUA~~needs and orto ~~other~~consummate ~~regulatory~~a ~~approval~~strategic ~~for its commercialization~~transaction, ~~and~~as the uncertainty of any ~~product~~such ~~candidates~~litigation weor arbitration may ~~successfully~~deter ~~develop.~~potential Weinvestors orfrom participating ~~they~~in ~~may~~any ~~not~~financing beand ~~able~~potential toprospects ~~effectively~~from ~~market~~entering ~~and~~into ~~sell~~ any ~~such~~definitive ~~product~~agreement ~~candidates~~for a strategic transaction with us.

WeIf ~~currently~~we dopursue ~~not~~Bankruptcy ~~have internal sales and marketing~~Protection, ~~infrastructure~~we inwill ~~place that would~~ be ~~necessary~~subject to ~~sell and market products and we may choose to not build this capability in-house. As is~~ the ~~case~~risks ~~with many, if not most, small companies seeking to commercialize their products~~ and ~~who~~uncertainties ~~have~~associated ~~not yet partnered~~ with asuch ~~larger biotech or pharmaceutical company, we have entered into an arrangement to outsource logistics and distribution services as described under “Item 1~~proceedings. ~~Business—Sales and Marketing.” There can be no assurance that our partner will be effective in distributing lenzilumab.~~

If we orfile ~~any~~for ofprotection under the Bankruptcy Code, our ~~potential~~operations, ~~partners~~our ~~fail~~ability to develop and execute our business plan and our continuation as a going concern ~~hire,~~will ~~train,~~be ~~retain~~subject to the risks and ~~manage~~uncertainties ~~qualified~~associated ~~sales~~with ~~personnel~~bankruptcy proceedings, ~~market~~including, among others: our ~~product~~ability ~~successfully~~to orexecute, confirm onand consummate a ~~cost-effective~~plan ~~basis,~~of reorganization; the high costs of bankruptcy proceedings and related fees; our ability to obtain sufficient ~~generate~~financing ~~revenue~~to ~~will~~allow beus ~~limited~~to emerge from bankruptcy and weexecute ~~will~~our ~~need~~business plan post-emergence, and our ability to ~~identify~~comply with terms and conditions ~~retain~~of anthat ~~alternative~~financing; our ability to continue our operations in the ordinary course; our ability to maintain our relationships with our partners, counterparties, employees and other third~~-party~~ parties; our ability to obtain, maintain or ~~develop~~renew contracts that are critical to our ~~own~~operations ~~sales~~on reasonably acceptable terms and ~~marketing~~conditions; our ability to attract, motivate and retain key employees; the ability ~~capability.~~of ~~The~~third ~~establishment~~parties to use certain limited safe harbor provisions of anthe ~~in-house~~Bankruptcy ~~sales~~Code to terminate contracts without first seeking bankruptcy court approval; the ability of third parties to force us to into Chapter 7 proceedings rather than Chapter 11 proceedings and ~~marketing~~the ~~operation~~actions and ~~can~~decisions of our stakeholders and other third parties who have interests in our bankruptcy proceedings that may be ~~expensive~~inconsistent with our operational and ~~time~~strategic ~~consuming~~plans. Any delays in our bankruptcy proceedings would increase the risks of our being unable to reorganize our business and emerge from bankruptcy proceedings and may increase our costs associated with the bankruptcy process or result in prolonged operational disruption for us. Also, we would need the prior approval of the bankruptcy court for transactions outside the ordinary course of business during the course of any bankruptcy proceedings, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with any bankruptcy proceedings, we cannot accurately predict or quantify the ultimate impact of events that could ~~delay~~occur during any ~~product~~such proceedings. There can be no guarantees that if we seek Bankruptcy ~~candidate~~Protection ~~launch~~we will emerge from Bankruptcy Protection as a going concern or that holders of our common stock will receive any recovery from any bankruptcy proceedings.

~~Other~~In ~~Risks~~the ~~Related~~event we are unable to pursue Bankruptcy Protection under Chapter 11 of the Bankruptcy Code, or, if pursued, successfully emerge from such proceedings, it may be necessary to ~~Our~~pursue ~~Business~~Bankruptcy ~~and~~Protection ~~Industry~~under Chapter 7 of the Bankruptcy Code for all or a part of our businesses.

WeIn ~~have~~the aevent ~~history~~we are unable to pursue Bankruptcy Protection under Chapter 11 of ~~operating~~the ~~losses~~Bankruptcy Code, weor, if pursued, successfully emerge from such proceedings, ~~expect~~it tomay ~~continue~~be necessary for us to ~~incur~~pursue ~~losses~~Bankruptcy Protection under Chapter 7 of the Bankruptcy Code for all or a part of our businesses. In such event, ~~and~~a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to our stakeholders than those we ~~may~~might ~~never~~obtain ~~become~~under ~~profitable~~Chapter 11 primarily because of the likelihood that the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern.

We have incurred net losses in nearly every year since our inception. For the year ended December 31, 2021, we incurred a net loss of $236.6 million, and we have an accumulated deficit of $611.1 million as of December 31, 2021. Since inception, we have recognized a nominal amount of revenue from payments for license or collaboration fees, $3.6 million of which was recognized in the year ended December 31, 2021. We expect to make substantial expenditures and incur additional operating losses in the future to further develop and commercialize our product candidates. Our accumulated deficit is expected to increase significantly as we continue our development and clinical trial efforts. Our ability to achieve and sustain profitability depends on obtaining regulatory approvals for and successfully commercializing our product candidates, either alone or with third parties. We do not currently have the required approvals to market any of our product candidates and we may never receive them. We may not be profitable even if we or any future development partners succeed in commercializing any of our product candidates. Because of the numerous risks and uncertainties associated with developing and commercializing our product candidates, we are unable to predict the extent of any future losses or when we will become profitable, if at all.25

Our business depends on the success of our current product candidates. We cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our product candidates.

We have a limited pipeline of product candidates and we do not plan to conduct active research at this time for discovery of new molecules or antibodies. We depend on the successful development and attainment of regulatory authorization or approval of our current product candidates for our future business success. The future clinical, regulatory and commercial success of our product candidates is subject to a number of risks, including the following:

· we may not be able to enroll adequate numbers of eligible patients in the clinical trials we propose to conduct, whether alone or through collaborations;

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·Risks weRelated ~~may not have sufficient financial and other resources~~ to ~~fund~~Our ~~our~~Continued ~~clinical~~Listing on ~~trials~~the orNasdaq ~~collaborations;~~Capital Market

·The wesuspension ~~may~~and ~~not~~delisting beof our ~~able~~common tostock ~~provide~~on ~~acceptable~~the ~~evidence~~Nasdaq Capital Market has been stayed during the pendency of ~~safety~~our appeal before a Nasdaq Hearings Panel scheduled for April 6, 2023 and ~~efficacy~~subsequent determination from the Nasdaq Hearings Panel as to the delisting of our common stock. There can be no assurance that the Nasdaq Hearings Panel will decide in our favor and provide additional time for us to regain compliance with the requirements for continued listing on the Nasdaq Capital Market. If our ~~product~~appeal ~~candidates;~~is denied, our common stock will be subject to immediate delisting from the Nasdaq Capital Market.

·On August 24, 2022, Nasdaq notified us that, for 30 consecutive business days, the ~~results~~bid ofprice for our ~~clinical~~common ~~trials~~stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A) we were provided an initial period of 180 calendar days, or ~~collaborations~~until ~~may~~February 20, 2023, to regain compliance with the Bid Price Rule. We did not ~~meet~~regain compliance by February 20, 2023. On February 21, 2023, we received a letter from the ~~level~~Staff of ~~statistical~~Nasdaq ornotifying ~~clinical~~us ~~significance~~that we had not regained compliance with the minimum bid price requirement as of February 20, or2023 and ~~product~~that ~~safety~~we were not eligible for a second 180-day extension period, ~~required~~and that accordingly our common stock would be delisted unless we were to ~~move~~appeal successfully to a Nasdaq Hearings Panel. The Nasdaq Staff’s letter specifically noted that the ~~next~~Company ~~stage~~does not comply with the stockholders’ equity initial listing requirement for the Nasdaq Capital Market. The total market value of ~~development~~the ~~or,~~Company’s listed ~~ultimately,~~securities ~~obtain~~also ~~marketing~~remains ~~approval~~below ~~from~~the ~~FDA;~~$35 million requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”).

·We have appealed the delisting determination to a Nasdaq Hearings Panel, which hearing is currently scheduled for April 6, 2023. In our submission to Nasdaq, we ~~may~~outlined ~~not~~our beplans ~~able~~and requested additional time to ~~obtain~~regain compliance with the Bid Price Rule, ~~maintain~~the MVLS Rule and ~~enforce~~other applicable requirements. There can be no assurance that the Nasdaq hearings panel will decide in our ~~patents~~favor and ~~other~~provide ~~intellectual~~additional ~~property~~time ~~rights;~~for us to pursue the proposed business combination and related financing transactions or otherwise to regain compliance with the requirements for continued listing on The Nasdaq Capital Market.

·Even if our appeal before the Nasdaq Hearings Panel is successful, if we fail to regain and maintain compliance with the requirements for continued listing on the Nasdaq Capital Market during any extension period that may ~~not~~be granted by the Nasdaq Hearings Panel in its discretion, our common stock will be ~~able~~subject to ~~obtain~~suspension from trading and ~~maintain~~delisting, ~~commercial~~which ~~manufacturing~~would ~~arrangements~~adversely ~~with~~affect ~~third-party~~the ~~manufacturers~~liquidity orof ~~establish~~our ~~commercial-scale~~common ~~manufacturing~~stock ~~capabilities~~and our ability to raise additional capital.

InDelisting ~~addition,~~from ~~the fluid and~~Nasdaq ~~unpredictable~~could ~~nature~~adversely ~~of the COVID-19 pandemic may~~ affect our ability to ~~conduct~~consummate ~~our~~a ~~ongoing~~strategic ~~clinical trials~~transaction, ~~delay~~including the ~~initiation~~proposed ofbusiness ~~planned and~~combination ~~future~~with ~~clinical~~the ~~trials~~Partner Company, ~~cause~~and ~~interruptions~~raise inadditional ~~the~~financing ~~supply~~through ofthe ~~raw~~public ~~materials~~ or ~~products,~~private ~~delay~~sale ~~the collection~~ of ~~clinical~~equity ~~trial~~securities ~~data,~~ and ~~disrupt~~would ~~regulatory~~significantly ~~activities.~~affect ~~Accordingly,~~the ~~we cannot assure you that our product candidates will be successfully developed or commercialized.~~ability Ifof weinvestors ~~or any future development partners are unable~~ to ~~develop,~~trade orour ~~obtain~~securities ~~regulatory~~and ~~approval~~negatively ~~for~~affect ~~or,~~the ifvalue ~~approved,~~and ~~successfully~~liquidity ~~commercialize one or more~~ of our ~~product~~common ~~candidates, we may not be able to generate sufficient revenue to continue our business~~stock.

If our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days our common stock may be subject to immediate delisting from the Nasdaq Capital Market.

While there is a grace period of 180 days to regain compliance with the Bid Price Rule and MVLS Rule, our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days. As of March 16, 2023, the closing bid price for our common stock was $0.16.

Even if we regain compliance with the Bid Price Rule and the MVLS Rule, Nasdaq may subsequently delist our common stock if we fail to comply with ongoing listing standards going forward.

The Nasdaq Capital Market’s rules for listed companies require us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our common stock. In addition to specific listing and maintenance standards, the Nasdaq Capital Market has broad discretionary authority over the continued listing of securities, which it could exercise with respect to the listing of our common stock.

As a listed company, we are required to meet the continued listing requirements applicable to all Nasdaq Capital Market companies. Even if we were to regain compliance with the Bid Price Rule and the MVLS Rule previously described, if we fail to meet any Nasdaq Capital Market listing requirement going forward, our common stock may be subject to delisting, as applied by the Nasdaq Capital Market in its discretion. If our common stock is delisted in the future, it is not likely that we will be able to list our common stock on another national securities exchange on a timely basis or at all and, as a result, we expect our securities would be quoted on an over-the-counter market; however, if this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. In addition, in the event of such delisting, we could experience a decreased ability to issue additional securities and obtain additional financing in the future. Delisting could also have other negative results, including the potential loss of confidence by employees and the loss of institutional investor interest.

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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our common stock is listed on the Nasdaq Capital Market, shares of our common stock qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on the Nasdaq Capital Market, our securities would not qualify as covered securities under the statute, and we would be subject to regulation in each state in which we offer our securities.

Further, there can be no assurance that an active trading market for our common stock will be sustained despite our listing on the Nasdaq Capital Market.

We will be required to complete a reverse stock split to regain compliance with Nasdaq listing rules and we cannot predict the effect that any reverse stock split will have on the market price for shares of our common stock.

The compliance plan that we submitted for consideration by the Nasdaq Hearings Panel contemplates, among other initiatives, that we will complete a reverse stock split in order to regain compliance with the Bid Price Rule. We cannot predict the effect that a reverse stock split will have on the market price for shares of our common stock, and the history of similar reverse stock splits for companies in like circumstances has varied. Some investors may have a negative view of a reverse stock split. Even if a reverse stock split has a positive effect on the market price for shares of our common stock, performance of our business and financial results, general economic conditions and the market perception of our business, and other adverse factors which may not be in our control could lead to a decrease in the price of our common stock following the reverse stock split.

Furthermore, even if the reverse stock split does result in an increased market price per share of our common stock, the market price per share following the reverse stock split may not increase in proportion to the reduction of the number of shares of our common stock outstanding before the implementation of the reverse stock split. Accordingly, even with an increased market price per share, the total market capitalization of shares of our common stock after a reverse stock split could be lower than the total market capitalization before the reverse stock split. Also, even if there is an initial increase in the market price per share of our common stock after a reverse stock split, the market price may not remain at that level.

If the market price of shares of our common stock declines following a reverse stock split, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the reverse stock split due to decreased liquidity in the market for our common stock. Accordingly, the total market capitalization of our common stock following the reverse stock split could be lower than the total market capitalization before the reverse stock split.

Risks Related to our Strategic Realignment Plan

Our forward-looking business operations are dependent on our ability to successfully execute our strategic realignment plan, raise additional capital and manage our liabilities in a way that permits us to continue as a going concern. If we are unsuccessful in accomplishing these objectives, we may elect or be required to seek Bankruptcy Protection.

As previously disclosed, topline results from the ACTIV-5/BET-B trial did not achieve statistical significance on the primary endpoint. As a result, we have deemphasized the deployment of certain resources for the development of lenzilumab for COVID-19 as per the strategic realignment of our pipeline and resources, as announced in July 2022. In accordance with our strategic realignment plan, among other things, we have accelerated the development of lenzilumab in CMML, a rare blood cancer, for which the PREACH-M study is already underway, and continued our plans for the RATinG study in aGvHD, for which we anticipate the first patient to be dosed in the second quarter of 2023. We also intend to assess and support further clinical assessment of lenzilumab for prevention of CAR-T therapy related toxicities and potential improvement in durable efficacy through an IIT. In accordance with our strategic realignment plan, we have significantly reduced our go-forward, cash-based research and development and general and administrative expenses. Accordingly, our forward-looking business operations are dependent on our ability to raise additional capital and manage our liabilities to certain contract manufacturing and other partners in such a way as to permit us to execute our strategic realignment plan. If we are unsuccessful in accomplishing these objectives, we may not be able to continue our operations as a going concern and may elect or be required to seek Bankruptcy Protection.

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Our forward-looking business operations will primarily depend on the success of lenzilumab as a therapy for CMML, aGvHD and other non-COVID-19 related indications for lenzilumab and oncology indications for ifabotuzumab, all of which are in the early stages of development and are several years from potential commercialization. We do not anticipate any cash flow from product revenues in the foreseeable future. We cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our product candidates for these or any other indications.

We have a limited pipeline of product candidates and we do not plan to conduct active research at this time for discovery of new molecules or antibodies. We are currently focused on executing our strategic realignment plan, which contemplates investigator-initiated studies of lenzilumab as a therapy for CMML and other non-COVID-19 related indications, including aGvHD and CAR-T therapy, and our limited work around oncology indications for ifabotuzumab. The recent realignment of our pipeline may make it more difficult for investors to be able to evaluate our business and prospects.

Our current development programs for lenzilumab, including our lead development programs for lenzilumab in CMML and aGvHD, and for ifabotuzumab are in the early stages of development and will require substantial clinical development, testing, and regulatory approval prior to commercialization. Accordingly, we do not anticipate any cash flow from product revenues in the foreseeable future. With our development pipeline in the early stages, we need to obtain additional financing to execute our strategic realignment plan and continue as a going concern.

We will need to successfully enroll and complete clinical trials with lenzilumab for CMML, aGvHD and CAR-T therapy, and with ifabotuzumab, and obtain regulatory approval or other expedited authorization to market these products. With respect to the ongoing PREACH-M study of lenzilumab for the treatment of high-risk CMML, there can be no assurance that additional patients will be enrolled in the PREACH-M study, that the interim results will be favorable or that regulatory authorities will agree that a modified trial design will be sufficient for registration and approval. In addition, recruitment for the RATinG study of lenzilumab in aGvHD was previously halted due to an administrative issue. Although recruitment has since resumed and we anticipate the first patient to be dosed in this study in the second quarter of 2023, any additional delays or halts in the recruitment of additional patients in this study or otherwise may impact the ability of the sponsor to complete this clinical trial on a timely basis or at all.

The future clinical, regulatory and commercial success of our realigned strategic plan for lenzilumab and ifabotuzumab is subject to a number of risks, including the following:

●

The sponsors of the studies may not be able to enroll adequate numbers of eligible patients in the clinical trials proposed to be conducted;

●

we may not have sufficient financial and other resources to fund our obligations under these collaborations;

●

we will not control the conduct, timing or release of data from the studies sponsored by investigators;

●

we may not be able to provide acceptable evidence of safety and efficacy for our product candidates;

●

the results of our clinical trials or collaborations may not meet the level of statistical or clinical significance, or product safety, required to move to the next stage of development or, ultimately, obtain marketing approval from applicable regulatory authorities;

●

we may not be able to obtain, maintain and enforce our patents and other intellectual property rights; and

●

we may not be able to obtain and maintain commercial manufacturing arrangements with third-party manufacturers or establish commercial-scale manufacturing capabilities.

In addition, delays related to the initiation of planned and future clinical trials, interruptions in the supply of raw materials or products, delay in the collection of clinical trial data, and impaired regulatory activities may impact our ability, or the ability of our partners, to complete clinical trials. There can be no assurance that our product candidates will be successfully developed or commercialized. If we or any future development partners are unable to develop, or obtain regulatory approval for or, if approved, successfully commercialize one or more of our product candidates, we may not be able to generate sufficient revenue to continue our business.

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Furthermore, even if we do receive regulatory approval to market any of our product candidates, any such approval may be subject to limitations on the indicated uses for which we may market the product. If any of our product candidates are unsuccessful, that could have a substantial negative impact on our business.

~~The~~Risks ~~adoption~~Related ofto ~~CAR-T~~Our ~~therapies~~Common as the potential standard of care for treatment of certain cancers is uncertain, and dependent on the efforts of a limited number of market entrants, and if not adopted as anticipated, the market for lenzilumab or next-generation gene-edited CAR-T therapies may be limited or not develop.Stock

WeA ~~are~~significant ~~seeking~~portion ~~to advance the development~~ of ~~lenzilumab~~our total tooutstanding ~~address,~~shares ~~among other things~~are, ~~the~~or ~~serious~~may ~~and potentially fatal side effects~~be, ~~specifically~~eligible ~~ICANS~~to ~~and~~be ~~CRS~~sold ~~associated~~into ~~with~~the ~~CAR-T~~market ~~therapies and~~in ~~to improve~~ the ~~efficacy~~near ~~of these treatments. We~~future, ~~through~~which ~~our~~could ~~collaboration~~cause ~~with~~the ~~Mayo~~market ~~Clinic,~~price ~~are~~of ~~also~~our ~~working to create next-generation~~common ~~gene-edited~~stock ~~CAR-T therapies using GM-CSF gene knockout technologies. Although five CAR-T therapies have been approved by FDA~~ to ~~date~~drop significantly, ~~the~~ ~~use~~even ofif ~~engineered~~our Tbusiness ~~cells as a potential cancer treatment~~ is adoing ~~recent development and may not be broadly accepted by physicians, patients, hospitals, cancer treatment centers, payers and others in the medical community~~well.

IfSales of a substantial number of shares of our common stock in the ~~medical~~public ~~and~~market ~~payer~~or ~~community~~the isperception ~~not~~in ~~sufficiently persuaded~~the ofmarket that the ~~safety,~~holders ~~efficacy~~of ~~and~~a ~~cost-effectiveness~~large number of ~~CAR-T~~shares intend ~~therapy~~to ~~and~~sell shares, could depress the ~~potential~~market ~~advantages~~price of ~~using~~our ~~lenzilumab~~common ~~compared~~stock ~~to existing~~ and could impair our future ~~therapeutics~~ability to obtain capital, ~~and~~especially through ~~there~~an isoffering ~~not~~of ~~significant~~equity ~~market~~securities. ~~acceptance~~In addition, holders of ~~CAR-T~~a ~~therapy~~substantial asnumber ~~the~~of ~~standard~~shares of ~~care~~our ~~for~~common ~~treatment of~~stock ~~certain~~have ~~cancers~~rights, ~~the~~subject to ~~market~~certain ~~for~~conditions, ~~lenzilumab~~to orrequire ~~next-generation~~us ~~gene-edited~~to ~~CAR-T~~file ~~therapies~~registration ~~may~~statements becovering ~~limited~~their shares or ~~not~~to ~~develop,~~include ~~and~~their ~~our~~shares ~~stock~~in registration ~~price~~statements ~~could~~that bewe ~~adversely~~may ~~affected~~file for ourselves or other stockholders.

~~CAR-T~~In ~~therapies~~addition, ~~currently~~certain shares inof ~~early~~our ~~development~~common ~~purport~~stock ~~to incorporate technology~~ that ~~may~~are ~~minimize~~currently oroutstanding ~~eliminate~~but ~~the~~have ~~adverse~~not ~~side-effects,~~been ~~namely~~registered ~~ICANS~~for ~~and~~resale ~~CRS,~~may ~~and~~currently ~~improve~~be onsold ~~efficacy,~~under ~~that~~Rule ~~we believe have~~144 ~~impaired the uptake~~ of the ~~approved~~Securities ~~CAR-T therapies~~Act. IfSales ~~these~~of ~~developing~~a ~~therapies~~substantial ~~are~~number ~~proven~~of ~~safer~~these ~~and~~shares ~~equally or more efficacious~~ in ~~their~~ ~~proposed~~the ~~indications~~public ~~and~~market, ~~approved~~or ~~for~~the ~~use~~perception bythat ~~FDA~~those ~~and~~sales ~~other~~may ~~regulatory agencies~~occur, could cause the market ~~growth~~price ~~for~~of ~~the~~our ~~currently~~common ~~approved~~stock ~~CAR-T therapies~~to ~~may be limited, impairing demand for lenzilumab~~decline.

InAny ~~recent~~material ~~years,~~weaknesses ~~several~~in ~~biotechnology~~our ~~companies~~internal ~~describing~~control ~~business~~over ~~plans~~financial ~~focusing~~reporting ~~on development of CAR-T therapies have completed or announced they are pursuing initial public offerings (“IPOs”). Several of these companies have described their belief~~ that ~~their~~we ~~therapies~~may ~~will~~identify ~~not result~~ in the ~~same~~future level of ICANS or CRS as has been experienced in use of previously FDA-approved CAR-T therapies. While these products are in early-stage development, the data is limited and these products have not yet been approved for use by FDA, if new CAR-T therapies with lower occurrences of CRS and ICANS are approved, the market for lenzilumab in conjunction with CAR-T therapy may be diminished. Any such failure of a market for lenzilumab to develop could adversely affect ~~our~~investor ~~stock price. In addition~~confidence, ifimpair ~~new CAR-T therapies that offer improved efficacy, either with or without improved safety, are approved,~~ the ~~market~~value ~~for~~of ~~lenzilumab which is used in conjunction with CAR-T therapy may be diminished~~our ifcommon ~~such~~stock ~~CAR-T~~and ~~therapy~~increase isour ~~used~~cost inof ~~preference~~raising ~~to existing CAR-T therapy~~capital. ~~For more information regarding FDA-approved CAR-T therapies, see “Item 1. Business—Lenzilumab in CAR-T.”~~

~~Our~~If ~~business~~we ~~could~~were ~~target~~to ~~benefits~~identify any ~~from~~material ~~various~~weaknesses ~~regulatory~~or ~~incentives~~significant deficiencies in our internal controls over financial reporting in the future, our operating results might be harmed, we may fail to meet our reporting obligations or fail to prevent or detect material misstatements in our financial statements. Any such asfailure ~~orphan~~could, ~~drug~~in ~~exclusivity~~turn, ~~breakthrough~~affect ~~therapy~~the ~~designation,~~future ~~fast~~ability ~~track~~of ~~designation,~~our ~~and~~management ~~priority~~to ~~review,~~certify ~~but~~that weinternal ~~may~~control ~~not~~over ~~ultimately~~our financial reporting ~~qualify~~is ~~for~~effective. Inferior internal control over financial reporting could also subject us to the scrutiny of the SEC and other regulatory bodies which could cause investors to lose confidence in our reported financial information and could subject us to civil or ~~benefit~~criminal penalties ~~from~~or ~~these~~stockholder ~~incentives~~litigation, which could have an adverse effect on our results of operations and the market price of our common stock.

WeIn ~~may seek various regulatory incentives~~addition, ~~such~~if we asor ~~orphan~~our ~~drug~~independent ~~exclusivity,~~registered ~~breakthrough~~public ~~therapy~~accounting ~~designation,~~firm ~~fast~~identify ~~track~~deficiencies ~~designation,~~in ~~accelerated~~our ~~approval,~~internal ~~priority~~control ~~review~~over ~~and~~financial ~~Priority Review Vouchers (“PRVs”)~~reporting, ~~where~~the ~~available,~~disclosure of that ~~provide for certain periods of exclusivity~~fact, ~~expedited~~even ~~review~~if ~~and/or~~quickly ~~other benefits~~remedied, ~~and~~could wereduce ~~may also seek similar designations elsewhere in~~ the ~~world.~~market’s ~~Often,~~confidence ~~regulatory agencies have broad discretion~~ in ~~determining whether~~our orfinancial ~~not~~statements ~~products qualify for such regulatory incentives~~ and ~~benefits.~~harm Weour ~~cannot~~share ~~guarantee that we will be able to receive orphan drug status from FDA or equivalent regulatory designations elsewhere~~price. ~~We also cannot guarantee that we will obtain breakthrough therapy~~ ~~or fast track designation~~Furthermore, ~~which~~deficiencies ~~may~~could ~~provide~~result ~~certain~~in ~~potential~~future ~~benefits~~non-compliance ~~such~~with asSection ~~more~~404 ~~frequent~~of ~~meetings~~the ~~with~~Sarbanes-Oxley ~~FDA~~Act toof ~~discuss~~2002. ~~the~~Such ~~development~~non-compliance ~~plan,~~could ~~intensive~~subject ~~guidance~~us onto ana ~~efficient~~variety ~~drug~~of ~~development~~administrative ~~program~~sanctions, ~~and~~including ~~potential eligibility for rolling~~ review orby ~~priority review. Legislative developments in~~ the ~~U.S.,~~SEC ~~including~~or ~~proposed~~other ~~legislation~~regulatory ~~that would restrict eligibility for PRVs, may affect our ability to qualify for these programs in the future~~authorities.

32We have never paid and do not intend to pay cash dividends and, consequently, the ability to achieve a return on any investment in our common stock will depend on appreciation in the price of our common stock.

We have never paid cash dividends on any of our capital stock, and we currently intend to retain future earnings, if any, to fund the development and growth of our business. Therefore, a holder of our stock is not likely to receive any dividends on our common stock for the foreseeable future. Since we do not intend to pay dividends, the ability to receive a return on an investment in our common stock will depend on any future appreciation in the market value of our common stock. There is no guarantee that our common stock will appreciate or even maintain the price at which it was purchased.

Anti-takeover provisions in our charter documents and Delaware law, could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock.

We are a Delaware corporation, and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders.

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~~Even~~Our ifAmended weand ~~are successful in obtaining beneficial~~Restated ~~regulatory~~Certificate ~~designations~~of byIncorporation, ~~FDA~~as oramended ~~other~~(the ~~regulatory~~“Charter”), ~~agency~~and ~~for~~ our ~~product~~Second ~~candidates,~~Amended ~~such designations may not lead to faster development or regulatory review or approval~~ and ~~does~~Restated ~~not~~Bylaws ~~increase~~ (the ~~likelihood that our product candidates will receive marketing approval. We~~“Bylaws”) may ~~not be able to obtain or maintain such designations for our product candidates~~discourage, ~~and our competitors may obtain these designations for their product candidates~~delay, ~~which~~or ~~could~~prevent ~~impact~~a ~~our~~change ~~ability~~in ~~to develop and commercialize~~ our ~~product~~management ~~candidates~~ or ~~compete~~control ~~with~~over ~~such competitors,~~us ~~which~~that ~~would~~stockholders ~~adversely~~may ~~impact~~consider ~~our~~favorable. ~~business,~~Our ~~financial~~Charter and ~~condition or results of operations.~~Bylaws:

~~There~~● isprovide athat ~~limited~~vacancies ~~amount~~on ~~of information about us upon which investors can evaluate~~ our ~~product~~board ~~candidates~~of ~~and business prospects~~directors, including ~~because~~newly wecreated ~~have a limited operating history developing product candidates~~directorships, ~~and~~may webe ~~have~~filled ~~not~~only ~~yet~~by ~~successfully~~a ~~commercialized~~majority ~~any~~vote ~~products,~~of ~~and~~directors ~~have~~then ain ~~relatively small management team.~~office;

~~Our~~● ~~primary~~do ~~focus~~not isprovide ~~developing~~stockholders ~~our~~with ~~proprietary monoclonal~~the ~~antibody~~ability ~~portfolio, primarily lenzilumab and iFab. Our limited operating history developing clinical-stage product candidates may make it more difficult for us~~ to ~~succeed~~cumulate ortheir ~~for~~votes; ~~investors to be able to evaluate our business~~ and prospects. In addition, as an early-stage clinical development company, we have limited experience in development activities, including conducting clinical trials, or seeking and obtaining regulatory approvals, even though our executives have had relevant experience at other companies. We currently have ten full-time employees and therefore are heavily dependent on external consultants and expert vendors for clinical, scientific, contract manufacturing and regulatory expertise. To execute our business plan, we will need to successfully:

·● ~~execute~~require ~~our~~advance ~~product~~notification ~~candidate~~of ~~development~~stockholder ~~activities,~~nominations ~~including successfully completing our clinical trial programs, including those conducted under our collaborations~~ and ~~partnerships;~~proposals.

·In ~~obtain~~addition, ~~required~~our Charter ~~regulatory~~permits ~~approvals~~the Board to issue up to 25 million shares of preferred stock with such powers, rights, terms and conditions as may be designated by the Board upon the issuance of shares of preferred stock at one or ~~authorizations~~more ~~for~~times in the ~~development~~future. Specifically, the Charter permits the Board to approve the future issuance of all or any shares of the preferred stock in one or more series, to determine the number of shares constituting any series and ~~commercialization~~to determine any voting powers, conversion rights, dividend rights, and other designations, preferences, limitations, restrictions and rights relating to such shares without any further authorization by our stockholders. The Board’s power to issue preferred stock could have the effect of delaying, deterring or preventing a transaction or a change in control of our company ~~product~~that ~~candidates;~~might otherwise be in the best interest of our stockholders.

·Other ~~manage~~Risks ~~our~~Related ~~costs and expenses related~~ to ~~clinical~~Our ~~trials, regulatory approvals, manufacturing~~ Business and ~~commercialization;~~Industry

·The ~~secure~~adoption ~~substantial~~of ~~additional~~CAR-T ~~funding;~~therapies as the potential standard of care for treatment of certain cancers is uncertain, and dependent on the efforts of a limited number of market entrants, and if not adopted as anticipated, the market for lenzilumab in the context of a companion treatment alongside CAR-T therapies or next-generation gene-edited CAR-T therapies may be limited or not develop.

·Through ~~develop~~an IIT being led by Mayo Clinic, we are seeking to advance the development of lenzilumab to address, among other things, the serious and ~~maintain~~potentially fatal ~~successful~~side ~~strategic~~effects, ~~relationships;~~specifically ICANS and CRS, associated with CAR-T therapies and to improve the efficacy of these treatments. We, through our collaboration with Mayo Clinic, are also working to create next-generation gene-edited CAR-T therapies using GM-CSF gene knockout technologies. Although six CAR-T therapies have been approved by FDA to date, the use of engineered T cells as a potential cancer treatment is a recent development and may not be broadly accepted by physicians, patients, hospitals, cancer treatment centers, payers and others in the medical community.

·If ~~build~~the medical and payer ~~maintain~~community is not sufficiently persuaded of the safety, efficacy and cost-effectiveness of CAR-T therapy and the potential advantages of using lenzilumab compared to existing and future therapeutics, and there is not significant market acceptance of CAR-T therapy as the standard of care for treatment of certain cancers, the market for lenzilumab in the context of a ~~strong~~companion ~~intellectual~~treatment ~~property~~alongside ~~portfolio;~~CAR-T therapies or next-generation gene-edited CAR-T therapies may be limited or not develop.

·CAR-T ~~build~~therapies ~~and~~currently ~~maintain~~in ~~appropriate~~early development ~~clinical,~~purport ~~sales,~~to ~~manufacturing,~~incorporate ~~distribution~~technology that may minimize or eliminate the adverse side-effects, such as ICANS and ~~marketing~~CRS, ~~capabilities~~and improve on ~~our~~efficacy, ~~own~~that we believe have impaired the uptake of the approved CAR-T therapies. If these developing therapies are proven safer and equally or ~~through~~more ~~third~~efficacious ~~parties;~~in their proposed indications and approved for use by FDA and other regulatory agencies, the market growth for the currently approved CAR-T therapies may be limited, impairing demand for lenzilumab as a companion therapy alongside CAR-T therapy.

·In ~~gain~~recent ~~market~~years, several ~~acceptance~~biotechnology companies describing business plans focusing on development of CAR-T therapies have described their belief that their therapies will not result in the same level of ICANS or CRS as has been experienced in use of previously FDA-approved CAR-T therapies. If new CAR-T therapies with lower occurrences of CRS and ~~favorable~~ICANS ~~reimbursement~~are ~~status~~approved, the market for ~~our~~lenzilumab ~~product~~in ~~candidates~~conjunction with CAR-T therapy may be diminished. Any such failure of a market for lenzilumab to develop could adversely affect uptake of lenzilumab. In addition, if new CAR-T therapies that offer improved efficacy, either with or without improved safety, are approved, the market for lenzilumab which is used in conjunction with CAR-T therapy may be diminished if such CAR-T therapy is used in preference to existing CAR-T therapy. For more information regarding FDA-approved CAR-T therapies, see “Item 1. Business—Lenzilumab in CAR-T.”

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There is a limited amount of information about us upon which investors can evaluate our product candidates and business prospects, including because we have recently implemented a strategic realignment of our pipeline, have a limited operating history developing product candidates, and we have not yet successfully commercialized any products, and have a relatively small management team.

Our primary focus is developing our proprietary monoclonal antibody portfolio, primarily lenzilumab and iFab. Our limited operating history developing clinical-stage product candidates may make it more difficult for us to succeed or for investors to be able to evaluate our business and prospects. In addition, we have limited experience in development activities, or seeking and obtaining regulatory approvals, even though our executives have had relevant experience at other companies. We currently have six full-time employees and therefore are heavily dependent on external consultants and expert vendors for clinical, scientific, contract manufacturing and regulatory expertise. To execute our business plan, we will need to successfully:

●

execute our product candidate development activities, including successfully completing our clinical trial programs, including those conducted under our collaborations and partnerships;

●

obtain required regulatory approvals or authorizations for the development and commercialization of our product candidates;

●

manage our costs and expenses related to clinical trials, regulatory approvals, manufacturing and commercialization;

●

secure substantial additional funding;

●

develop and maintain successful strategic relationships;

●

build and maintain a strong intellectual property portfolio;

●

build and maintain appropriate clinical, sales, manufacturing, distribution, and marketing capabilities on our own or through third parties; and

●

gain market acceptance and favorable reimbursement status for our product candidates.

If we are unsuccessful in accomplishing these objectives, we may not be able to develop product candidates, raise capital, expand our business, or continue our operations.

In addition to our collaborations with the ~~NIH,~~ Mayo Clinic, IMPACT Partnership, SAHMRI and the University of Adelaide, and the Olivia Newton-John Cancer Research Centre, we may, in the future, seek to enter into collaborations with other third parties for the discovery, development and commercialization of our product candidates. If our collaborators cease development efforts under our collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products, and we may never receive milestone payments or future royalties under these agreements.

We may in the future seek to enter into agreements with other third-party collaborators for research, development and commercialization of ~~other~~our therapeutic technologies or product candidates. Biopharmaceutical companies are our likely future collaborators for any marketing, distribution, development, licensing, or broader collaboration arrangements. If we fail to enter into future collaborations on commercially reasonable terms, or at all, or such collaborations are not successful, we may not be able to execute our strategy to develop our product candidates or therapies that we believe could benefit from the resources of either larger biopharmaceutical companies or those specialized in a particular area of relevance.

With respect to our existing collaboration agreements, we have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Moreover, our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Collaborations involving our product candidates pose the following risks to us, among others:

·● collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

· collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on preclinical studies or clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;31

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·● collaborators may ~~delay~~not ~~clinical~~pursue ~~trials,~~development ~~provide~~and ~~insufficient~~commercialization ~~funding~~of ~~for~~our aproduct ~~clinical~~candidates ~~trial~~or ~~program,~~may ~~stop~~elect anot ~~clinical~~to ~~trial~~continue or ~~abandon~~renew adevelopment ~~product~~or ~~candidate,~~commercialization ~~repeat~~programs orbased ~~conduct~~on ~~new~~preclinical studies or clinical ~~trials~~trial results, changes in the collaborators’ strategic focus or ~~require~~available afunding, ~~new~~or ~~formulation~~external offactors asuch ~~product~~as ~~candidate~~an ~~for~~acquisition ~~clinical~~that ~~testing~~diverts resources or creates competing priorities;

·● collaborators ~~could~~may ~~independently~~delay ~~develop,~~clinical ~~or develop with third parties~~trials, ~~products~~provide ~~that~~insufficient ~~compete~~funding ~~directly~~for ora ~~indirectly~~clinical ~~with~~trial ~~our~~program, ~~product~~stop ~~candidates~~a ifclinical ~~the~~trial ~~collaborators~~or ~~believe~~abandon ~~that~~a ~~competitive~~product ~~products~~candidate, ~~are~~repeat ~~more~~or ~~likely~~conduct tonew beclinical ~~successfully~~trials ~~developed~~ or ~~can~~require bea ~~commercialized~~new ~~under~~formulation ~~terms~~of ~~that~~a ~~are~~product ~~more~~candidate ~~economically~~for ~~attractive~~clinical ~~than ours~~testing;

·● collaborators could independently develop, or develop with ~~marketing~~third ~~and~~parties, ~~distribution~~products ~~rights~~that tocompete ~~one~~directly or ~~more~~indirectly ~~products~~with ~~may~~our ~~not~~product ~~commit~~candidates ~~sufficient~~if ~~resources~~the tocollaborators ~~the~~believe ~~marketing~~that ~~and~~competitive ~~distribution~~products ofare ~~such~~more ~~product~~likely to be successfully developed or ~~products~~can be commercialized under terms that are more economically attractive than ours;

·● collaborators ~~may~~with ~~not~~marketing ~~properly~~and ~~maintain~~distribution orrights ~~defend~~to ~~our~~one ~~intellectual~~or ~~property~~more ~~rights~~products or may ~~use~~not ~~our~~commit ~~proprietary~~sufficient ~~information~~resources ~~in such a way as~~ to ~~invite~~the ~~litigation~~marketing ~~that~~and ~~could~~distribution ~~jeopardize~~of orsuch ~~invalidate~~product ~~our intellectual property~~ or ~~proprietary information or expose us to litigation or potential liability~~products;

·● collaborators may ~~infringe~~not ~~the~~properly maintain or defend our intellectual property rights ofor ~~third~~may ~~parties,~~use ~~which~~our ~~may~~proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation ~~and~~or potential liability;

·● ~~disputes~~collaborators may ~~arise~~infringe ~~between~~ the ~~collaborators~~intellectual ~~and~~property usrights ~~that result in the delay or termination~~ of ~~the~~third ~~research~~parties, ~~development~~which ormay ~~commercialization~~expose ofus ~~our~~to ~~product candidates or that result in costly~~ litigation ~~or arbitration that diverts management attention~~ and ~~resources;~~potential ~~and~~liability;

·● ~~collaborations~~disputes may bearise ~~terminated~~between ~~and,~~the ifcollaborators ~~terminated,~~and ~~may~~us that result in athe ~~need~~delay ~~for~~or ~~additional~~termination ~~capital~~of tothe ~~pursue~~research, ~~further~~ development or commercialization of ~~the~~our ~~applicable~~ product candidates. or that result in costly litigation or arbitration that diverts management attention and resources; and

●

collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

As a result of the foregoing, our current and any future collaboration agreements may not lead to development or commercialization of our product candidates in the most efficient manner or at all. Any failure to successfully develop or commercialize our product candidates pursuant to our current or any future collaboration agreements could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Moreover, to the extent that any of our existing or future collaborators were to terminate a collaboration agreement, we may be forced to independently develop these product candidates, including funding preclinical studies or clinical trials, assuming marketing and distribution costs and defending intellectual property rights, or, in certain instances, abandon product candidates altogether, any of which could result in a change to our business plan and have a material adverse effect on our business, financial condition, results of operations and prospects.

We have relied and may in the future rely on third parties to conduct ~~Investigator~~IITs ~~Sponsored Trials (“ISTs”)~~ of our products, which is cost-effective for us but affords the investigators the ability to retain significant control over the design and conduct of the trials, as well as the use of the data generated from their efforts.

We have relied and may in the future rely on third parties to conduct and sponsor clinical trials relating to lenzilumab, our GM-CSF gene knockout platform and our other immunotherapy product candidates, iFab and HGEN005. Such ~~ISTs~~IITs may provide us with valuable clinical data that can inform our future development strategy in a cost-efficient manner, but we do not control the design or conduct of the ~~ISTs~~IITs, and it is possible that FDA or non-~~U.S.~~US regulatory authorities will not view these ~~ISTs~~IITs as providing adequate support for future clinical trials, 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.

These arrangements provide us limited information rights with respect to the ~~ISTs~~ IITs, including access to and the ability to use and reference the data, including for our own regulatory filings, resulting from the ~~ISTs~~ IITs. However, we would not have control over the timing and reporting of the data from ~~ISTs~~ IITs, nor would we own the data from the ~~ISTs~~IITs. If we are unable to confirm or replicate the results from the ~~ISTs~~IITs 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 first-hand knowledge, we might have gained had the ~~ISTs~~IITs been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be adversely affected.

If the third parties conducting our clinical trials do not conduct the trials in accordance with our agreements with them, our ability to pursue our clinical development programs could be delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at all.32

We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. Therefore, the timing of the initiation and completion of these trials is uncertain and may occur on substantially different timing from our estimates. We also use CROs to conduct our clinical trials and rely on medical institutions, clinical investigators, CROs, and consultants to conduct our trials in accordance with our clinical protocols and regulatory requirements. Our CROs, investigators, and other third parties play a significant role in the conduct of these trials and subsequent collection and analysis of data.

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~~There~~If isthe ~~no guarantee that NIH, any CROs, investigators, or other~~ third parties ~~on which we rely for administration and conduct of~~ conducting our clinical trials ~~will~~do ~~devote~~not ~~adequate~~conduct ~~time~~the ~~and resources to such~~ trials orin ~~perform~~accordance aswith ~~contractually~~our ~~required.~~agreements Ifwith ~~any of these third parties fails to meet expected deadlines~~them, ~~fails~~our toability ~~adhere~~ to ~~our~~ ~~clinical~~pursue ~~protocols, or otherwise performs in a substandard manner,~~ our clinical ~~trials~~development programs ~~may~~could be ~~extended,~~ delayed, or ~~terminated.~~unsuccessful ~~If any~~and ~~of our clinical trial sites terminates for any reason,~~ we may ~~experience~~not ~~the~~be ~~loss of follow-up information on subjects enrolled in our ongoing clinical trials unless we are~~ able to ~~transfer~~obtain ~~those~~regulatory ~~subjects~~approval ~~to another qualified clinical trial site. In addition, principal investigators~~ for ~~our clinical trials may serve as scientific advisors~~ or ~~consultants~~commercialize toour usproduct ~~from time-to-time and may receive cash or~~candidates ~~equity~~when ~~compensation~~expected ~~in connection with such services. If these relationships and any related compensation result in perceived~~ or ~~actual conflicts of interest, the integrity of the data generated~~ at ~~the applicable clinical trial site may be jeopardized~~all.

We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. Therefore, the timing of the initiation and completion of these trials is uncertain and may occur on substantially different timing from our estimates. We also use Contract Research Organizations (“CROs”) to conduct our clinical trials and rely on medical institutions, clinical investigators, CROs, and consultants to conduct our trials in accordance with our clinical protocols and regulatory requirements. Our CROs, investigators, and other third parties play a significant role in the conduct of these trials and subsequent collection and analysis of data.

There is no guarantee that CROs, investigators, or other third parties on which we rely for administration and conduct of our clinical trials will devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fails to meet expected deadlines, fails to adhere to our clinical protocols, or otherwise performs in a substandard manner, our clinical trials may be extended, delayed, or terminated. If any of our clinical trial sites terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in our ongoing clinical trials unless we are able to transfer those subjects to another qualified clinical trial site. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time-to-time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized.

We may experience delays in commencing or conducting our clinical trials, in receiving data from third parties or in the continuation or completion of clinical testing, which could result in increased costs to us, delay our ability to generate product candidate revenue or, ultimately, render us unable to complete the development and commercialization of our product candidates.

We have product candidates in clinical development and preclinical development. To obtain marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Before we can initiate clinical trials in the ~~U.S.~~US for any new product candidates, we are required to submit the results of preclinical testing to FDA as part of an IND application, along with other information including information about product candidate chemistry, manufacturing, and controls and our proposed clinical trial protocol.

In order to continue with our testing programs already underway, we are required to report or provide information to appropriate regulatory authorities, and any failure to timely submit such reports or information will delay our plans for our clinical trials. If third parties conducting our trials do not make the required data available to us, we will likely have to identify and contract with another third party or develop necessary preclinical and clinical data on our own, which will lead to significant delays. In addition, FDA may require us to conduct additional preclinical testing for any product candidate before it allows us to initiate clinical testing under any IND application, which may lead to additional delays. Moreover, despite the presence of an active IND application for a product candidate, clinical trials can be delayed for a variety of reasons, including delays in:

·● identifying, recruiting, enrolling and retaining or replacing qualified subjects to participate in a clinical trial, which may be slower than anticipated due to the number of companies and institutions competing for subjects in clinical studies with similar patient populations;

·● identifying, recruiting, and training suitable clinical investigators;

·● reaching agreements on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation, may be subject to modification from time-to-time, and may vary significantly among different CROs and trial sites;

·● obtaining and maintaining sufficient quantities of a product candidate for use in clinical trials;

·● obtaining and maintaining Institutional Review Board (“IRB”) or ethics committee approval to conduct a clinical trial at an existing or prospective site;

~~· developing any companion diagnostic necessary to ensure the study enrolls the target population;~~33

·Table ~~being~~of ~~required by FDA to add more patients or sites or to conduct additional trials; or~~Contents

·● ~~FDA~~developing ~~placing~~any acompanion ~~clinical~~diagnostic ~~trial~~necessary onto ~~hold.~~ensure the study enrolls the target population;

●

being required by FDA to add more patients or sites or to conduct additional trials; or

●

FDA placing a clinical trial on hold.

Clinical trials may also be delayed as a result of ambiguous or negative interim results. Further, a clinical trial may be suspended or terminated by us, an IRB, an ethics committee, or a data safety monitoring committee overseeing the clinical trial, any of our clinical trial sites with respect to that site, or FDA or other regulatory authorities, due to several factors, including unforeseen safety issues, known safety issues that occur at a greater frequency or severity than we anticipate, any determination that the clinical trial presents unacceptable health risks, or lack of adequate funding.

Any delays in our clinical trials may delay or preclude our ability to further develop or pursue regulatory approval for our product candidates. Changes in ~~U.S.~~US and foreign regulatory requirements and guidance also may occur, and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for re-examination, which may affect the costs, timing, and likelihood of a successful completion of a clinical trial.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or do not meet the standard for acceptability by regulatory authorities or if there are safety concerns, we may:

·● be delayed in obtaining marketing approval for our product candidates;

·● not obtain marketing approval or ~~EUA~~expedited marketing approval at all;

35● obtain approval for indications or patient populations that are not as broad as intended or desired;

~~Table~~● ofobtain ~~Contents~~approval with labeling that includes significant use or distribution restrictions or safety warnings;

·● ~~obtain~~be ~~approval~~subject ~~for~~to ~~indications~~additional orpost-marketing ~~patient~~testing ~~populations~~requirements; ~~that are not as broad as intended~~ or ~~desired;~~

·● ~~obtain~~have ~~approval~~the ~~with~~product ~~labeling~~removed ~~that~~from ~~includes~~the ~~significant~~market ~~use~~after orobtaining ~~distribution~~marketing ~~restrictions or safety warnings;~~approval.

· be subject to additional post-marketing testing requirements; or

· have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in testing or in obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also determine to change the design or protocol of one or more of our clinical trials, including to add additional arms or patient populations, which could result in increased costs and expenses and/or delays. If we or any future development partners experience delays in the completion of, or if we or any future development partners must terminate, any clinical trial of any product candidate, our ability to obtain regulatory approval for that product candidate will be delayed and the commercial prospects, if any, for the product candidate may suffer as a result. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

Interim, top-line, ad-hoc, retrospective, exploratory or preliminary data from our clinical trials that we announce or publish from time-to-time may change as more patient data become available and 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, top-line or other data from clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial. We may also seek to publish additional ad-hoc, retrospective or exploratory data. 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 evaluate all data fully and carefully. As a result, such results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Such data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim, top-line, or preliminary data should be viewed with caution until the final data are available. Such data from clinical trials 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 differences between such data and final data could significantly harm our business prospects. Further, disclosure of interim, top-line or preliminary data by us or by our competitors could result in volatility in the price of shares of our common stock and dramatic spikes in trading volume.

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In addition, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product, and our business in general. FDA’s action to decline our initial request for EUA for lenzilumab in COVID-19 patients represents a manifestation of this risk. In addition, the information we choose to publicly disclose or to publish via a preprint publication regarding a particular study or clinical trial is based on what is typically extensive information, and 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 drug, product candidate, or our business. If the top-line data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our current or any of our future product candidate, our business, operating results, prospects or financial condition may be harmed.

Our business could target benefits from various regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, and priority review, but we may not ultimately qualify for or benefit from these incentives.

We may seek various regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, accelerated approval, priority review and Priority Review Vouchers (“PRVs”), where available, that provide for certain periods of exclusivity, expedited review and/or other benefits, and we may also seek similar designations elsewhere in the world. Often, regulatory agencies have broad discretion in determining whether or not products qualify for such regulatory incentives and benefits. We cannot guarantee that we will be able to receive orphan drug status from FDA or equivalent regulatory designations elsewhere. We also cannot guarantee that we will obtain breakthrough therapy or fast track designation, which may provide certain potential benefits such as more frequent meetings with FDA to discuss the development plan, intensive guidance on an efficient drug development program, and potential eligibility for rolling review or priority review. Legislative developments in the US, including proposed legislation that would restrict eligibility for PRVs, may affect our ability to qualify for these programs in the future.

Even if we are successful in obtaining beneficial regulatory designations by FDA or any other regulatory agency for our product candidates, such designations may not lead to faster development or regulatory review or approval and does not increase the likelihood that our product candidates will receive marketing approval. We may not be able to obtain or maintain such designations for our product candidates, and our competitors may obtain these designations for their product candidates, which could impact our ability to develop and commercialize our product candidates or compete with such competitors, which would adversely impact our business, financial condition or results of operations.

Our product candidates are subject to extensive regulation, compliance with which is costly and time consuming, may cause unanticipated delays, may prevent the receipt of the required approvals to commercialize our product candidates, or may result in substantial harm to our business if we fail to comply with these requirements.

The clinical development, approval, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing, and distribution of our product candidates are subject to extensive regulation by FDA in the ~~U.S.~~US and by comparable authorities in foreign markets. In the ~~U.S.~~US, we are not permitted to market our product candidates until we receive regulatory approval or other expedited authorization, such as EUA, from FDA. The process of obtaining regulatory approval is expensive, often takes many years, and can vary substantially based upon the type, complexity, and novelty of the products involved, as well as the target indications. Approval policies or regulations may change, and FDA has substantial discretion in the drug approval process, including the ability to delay, limit, or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed. FDA or other comparable foreign regulatory authorities can delay, limit, or deny approval of a product candidate for many reasons, including:

·● such authorities may disagree with the design or implementation of our or any future development partners’ clinical trials;

~~· such authorities may not accept clinical data from trials that are conducted at clinical facilities or in countries where the standard of care is potentially different from the U.S.;~~35

·Table ~~the results~~ of ~~clinical trials may not demonstrate the safety or efficacy required by such authorities for approval;~~Contents

·● wesuch orauthorities ~~any~~may ~~future~~not ~~development~~accept ~~partners~~clinical ~~may~~data befrom ~~unable~~trials ~~to demonstrate~~ that aare ~~product~~conducted ~~candidate’s~~at clinical ~~and~~facilities ~~other~~or ~~benefits~~in ~~outweigh~~countries ~~its~~where ~~safety~~the ~~risks~~standard of care is potentially different from the US;

·● ~~such~~the ~~authorities~~results of clinical trials may ~~disagree~~not ~~with~~demonstrate ~~our~~the ~~interpretation~~safety ofor ~~data~~efficacy ~~from~~required ~~preclinical~~by ~~studies~~such orauthorities ~~clinical~~for ~~trials~~approval;

·● ~~such~~we ~~authorities~~or ~~may~~any ~~find~~future ~~deficiencies~~development inpartners ~~the~~may ~~manufacturing~~be ~~processes~~unable orto ~~facilities~~demonstrate ofthat ~~third-party~~a ~~manufacturers~~product ~~with~~candidate’s ~~which~~clinical weand orother ~~any~~benefits ~~future~~outweigh ~~development~~its ~~partners~~safety ~~contract for clinical and commercial supplies~~risks; or

·● ~~the approval policies or regulations of~~ such authorities may ~~significantly~~disagree ~~change~~with inour ainterpretation ~~manner~~of ~~rendering~~data ~~our~~from orpreclinical ~~any~~studies ~~future~~or ~~development partners’~~ clinical ~~data insufficient for approval.~~trials;

●

such authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers with which we or any future development partners contract for clinical and commercial supplies; or

●

the approval policies or regulations of such authorities may significantly change in a manner rendering our or any future development partners’ clinical data insufficient for approval.

With respect to foreign markets, approval procedures vary widely among countries and, in addition to the aforementioned risks, can involve additional product testing, administrative review periods, and agreements with pricing authorities. In addition, events raising questions about the safety of certain marketed pharmaceuticals may result in increased caution by FDA and comparable foreign regulatory authorities in reviewing new drugs based on safety, efficacy or other regulatory considerations and may result in significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to obtain, applicable regulatory approvals may delay or prevent us or any future development partners from commercializing our product candidates.

If we receive regulatory approval for our product candidates, we will be subject to ongoing FDA obligations and continued regulatory oversight and review, such as continued safety reporting requirements, and we may also be subject to additional FDA post-marketing obligations. If we are not able to maintain regulatory compliance, we may not be permitted to market our product candidates, may be subject to product recalls, import and export restrictions or seizures, and/or may be subject to civil and/or criminal penalties.

The results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate we or any future development partners advance into clinical trials may not have favorable results in later clinical trials, if any, or receive regulatory approval.

Drug development has substantial inherent risk. We or any future development partners will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are effective, with a favorable benefit-risk profile, for use in their target populations for their intended indications before we can seek regulatory approvals for their commercial sale. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of development, including after commencement of any of our clinical trials. Success in early clinical trials does not mean that later clinical trials will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. Furthermore, our future trials will need to demonstrate sufficient safety and efficacy for approval by regulatory authorities in larger patient populations. Companies frequently suffer significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results. In addition, only a small percentage of drugs under development result in the submission of an NDA or BLA to FDA, and even fewer are approved for commercialization.

We face risks associated with clinical operations abroad, which may adversely affect our financial condition and results of operations, and we may not be able to receive conditional marketing or other approvals for our product candidates in markets outside the US.

Partners are conducting or planning to conduct clinical trials involving lenzilumab in the UK, Korea and Australia, as well as potentially in other countries. We have not received any authorization or approval to sell our product candidates in any country but would expect to commence commercial operations, through a partner or on our own, only after such authorization or approval were received. As with our development programs in the US, our product candidates must be approved for marketing and sale by regulatory authorities in each jurisdiction to which we may apply for approval and, once approved, are subject to extensive regulation by regulatory agencies in other countries. Any future marketing applications we file may not be approved by the regulatory authorities on a timely basis, or at all. Even if marketing approval is granted for these products, there may be significant limitations on their use. We cannot state with certainty when or whether any of our product candidates under development will be approved by any foreign regulators or launched; whether we will be able to develop, license or acquire additional product candidates or products; or whether any products, once launched, will be commercially successful.

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~~Drug~~International ~~development has substantial inherent risk.~~operations Weinvolve orrisks ~~any future development partners will be required to demonstrate through adequate and well-controlled clinical trials~~ that ~~our product candidates~~ are ~~effective,~~different ~~with~~from athose ~~favorable~~faced ~~benefit-risk profile, for use~~ in ~~their~~the ~~target~~US ~~populations~~and ~~for~~would ~~their~~subject ~~intended~~us ~~indications~~to ~~before we~~complex ~~can~~and ~~seek~~frequently ~~regulatory~~changing ~~approvals~~laws ~~for their commercial sale. Drug development is a long, expensive~~ and ~~uncertain process~~regulations, ~~and delay or~~ ~~failure~~including ~~can~~differing ~~occur~~labor ~~at any stage of development~~laws, ~~including~~such ~~after~~as ~~commencement~~the ofUnited ~~any~~Kingdom of(“UK”) ~~our~~Modern ~~clinical~~Slavery ~~trials~~Act. ~~Success~~In in early clinical trials does not mean that later clinical trials will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. Furthermoreaddition, ~~our~~operations ~~future~~abroad ~~trials~~are ~~will need to~~accompanied ~~demonstrate sufficient safety and efficacy for approval~~ by ~~regulatory~~certain ~~authorities in larger patient populations. Companies frequently suffer significant setbacks in advanced clinical trials~~financial, ~~even after earlier clinical trials have shown promising results. In addition~~political, ~~only~~ aeconomic ~~small~~and ~~percentage~~other ~~of drugs under development result in the submission of an NDA or BLA to FDA~~risks, ~~and~~including ~~even~~those ~~fewer~~listed ~~are approved for commercialization.~~below:

We● ~~face~~Foreign Currency Exchange: Operations internationally may subject us to risks ~~associated~~related ~~with~~to ~~clinical~~foreign ~~operations~~currency ~~abroad~~exchange risks as we make payments, ~~which may~~or ~~adversely~~incur ~~affect~~obligations, ~~our~~denominated ~~financial~~in ~~condition~~foreign ~~and~~currencies. ~~results~~We cannot predict future fluctuations in the foreign currency exchange rates of ~~operations,~~the US dollar. If the US dollar appreciates significantly against certain currencies and weour ~~may~~practices do not besufficiently ~~able~~offset tothe ~~receive~~effects ~~conditional~~of ~~marketing~~such orappreciation, ~~other approvals~~our ~~for~~results ~~lenzilumab~~of inoperations ~~COVID-19~~would ~~patients~~be inadversely ~~markets~~affected, ~~outside~~and ~~the~~our Ustock price may decline.S.

~~Partners~~● ~~are~~Anti-Bribery: ~~conducting~~We orare ~~planning~~subject to ~~conduct clinical~~the ~~trials~~US ~~involving~~Foreign ~~lenzilumab~~Corrupt inPractices ~~the~~Act ~~UK, Korea~~ and ~~Australia,~~similar asworldwide ~~well~~anti-bribery aslaws ~~potentially~~that inwill ~~other~~govern ~~countries~~our ininternational ~~patients~~operations with ~~COVID-19 and~~respect ~~other~~to ~~indications.~~payments ~~In addition, we are working~~ to ~~seek~~government ~~CMA~~officials. ~~for~~Our ~~lenzilumab~~international inoperations ~~hospitalized~~would ~~COVID-19~~be ~~patients~~heavily inregulated ~~the European Union~~ and ~~the~~require ~~United~~significant ~~Kingdom.~~interaction Wewith ~~have~~foreign ~~not~~officials. ~~received~~In ~~any~~certain ~~authorization~~circumstances, orstrict ~~approval~~compliance towith ~~sell~~anti-bribery ~~lenzilumab~~laws inmay ~~any~~conflict ~~country~~with ~~but~~local ~~would~~customs ~~expect~~and topractices ~~commence commercial operations, through a partner~~ or onmay ~~our~~require ~~own,~~us ~~only~~to ~~after~~interact ~~such authorization or approval were received. As~~ with ~~our~~doctors ~~development programs~~and ~~in the U.S.~~hospitals, ~~our~~some ~~product~~of ~~candidates must be approved for marketing and sale by regulatory authorities in each jurisdiction to~~ which we may ~~apply~~be ~~for~~state ~~approval and~~controlled, ~~once approved, are subject to extensive regulation by regulatory agencies~~ in ~~other~~a ~~countries.~~manner ~~We anticipate~~ that weis ~~may~~different ~~file~~than ~~for~~local ~~marketing~~custom. ~~approval~~In inaddition, ~~additional~~despite ~~countries~~our ~~and~~efforts, ~~for~~our ~~additional~~policies ~~indications~~ and ~~products~~procedures ~~over the next several years. These and any future marketing applications we file~~ may not beprotect ~~approved~~us byfrom ~~the~~reckless ~~regulatory authorities on a timely basis,~~ or ~~at all.~~criminal ~~Even~~acts ifcommitted ~~marketing~~by ~~approval~~persons iswho ~~granted~~act ~~for these products, there may be significant limitations~~ on ~~their~~our ~~use~~behalf. WeEnforcement ~~cannot~~activities ~~state with certainty when or whether any of our product candidates~~ under ~~development~~anti-bribery ~~will~~laws becould ~~approved~~subject byus ~~any~~to ~~foreign~~administrative ~~regulators~~and orlegal ~~launched;~~proceedings ~~whether we~~and ~~will be able to develop~~actions, ~~license~~which orcould ~~acquire~~result ~~additional~~in ~~product~~civil ~~candidates~~and orcriminal ~~products;~~sanctions, orincluding ~~whether~~monetary ~~any~~penalties ~~products,~~and ~~once~~exclusion ~~launched,~~from ~~will be~~health ~~commercially~~care ~~successful~~programs.

International operations involve risks that are different from those faced in the U.S. and would subject us to complex and frequently changing laws and regulations, including differing labor laws, such as the United Kingdom (“UK”) Modern Slavery Act. In addition, operations abroad are accompanied by certain financial, political, economic and other risks, including those listed below:

· Foreign Currency Exchange: Operations internationally may subject us to risks related to foreign currency exchange risks as we make payments, or incur obligations, denominated in foreign currencies. We cannot predict future fluctuations in the foreign currency exchange rates of the U.S. dollar. If the U.S. dollar appreciates significantly against certain currencies and our practices do not sufficiently offset the effects of such appreciation, our results of operations would be adversely affected, and our stock price may decline.

· Anti-Bribery: We are subject to the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws that will govern our international operations with respect to payments to government officials. Our international operations would be heavily regulated and require significant interaction with foreign officials. In certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices or may require us to interact with doctors and hospitals, some of which may be state controlled, in a manner that is different than local custom. In addition, despite our efforts, our policies and procedures may not protect us from reckless or criminal acts committed by persons who act on our behalf. Enforcement activities under anti-bribery laws could subject us to administrative and legal proceedings and actions, which could result in civil and criminal sanctions, including monetary penalties and exclusion from health care programs.

Other risks inherent in conducting foreign operations include:

·● International operations, including any use of third-party manufacturers, distributors, CROs and collaboration arrangements outside the ~~U.S.~~US, expose us to increased risk of theft of our intellectual property and other proprietary technology, particularly in jurisdictions with less robust intellectual property protections than the ~~U.S.~~US, as well as restrictive government actions against our intellectual property and other foreign assets such as nationalization, expropriation or the imposition of compulsory licenses.

·● We may be subject to protective economic policies taken by foreign governments, such as trade protection measures and import and export licensing requirements, which may result in the imposition of trade sanctions or similar restrictions by the ~~U.S.~~US or other governments.

·● Our foreign operations, third-party manufacturers, CROs or strategic partners could be subject to business interruptions for which we or they may be uninsured or inadequately insured.

·● Our operations may also be adversely affected if there is political instability or disruption in any other geographic region where we may have operations, which could impact our ability to do business in those areas.

If we were to encounter any of these risks, our foreign operations may be adversely affected, which could have an adverse effect on our overall business and results of operations.

If we fail to attract and retain key management and clinical development personnel, or if the attention of such personnel is diverted, we may be unable to successfully manage our business and develop or commercialize our product candidates.

We will need to effectively manage our managerial, operational, financial, and other resources in order to successfully pursue our clinical development and commercialization efforts. As a company with a limited number of personnel, we are heavily affected by turnover and highly dependent on the expertise of the members of our senior management. If we are unable to provide competitive compensation to these employees, it may be difficult to retain them. For 2022, the Board of Directors froze the salary levels of all employees; however, stock option grants were awarded for 2022 and were intended to enhance the Company’s ability to retain its executive officers and provide them continuing incentives to execute against our strategic realignment plan. There can be no assurance that these decisions will not have a negative impact on the retention of our employees. Furthermore, we rely on third party consultants for a variety of services. We cannot predict the impact of the loss of such individuals or the loss of services of any of our other senior management, should they occur, or the difficulty in replacing such individuals. Such losses could delay or prevent the further development and potential commercialization of our product candidates and, if we are not successful in finding suitable replacements, could harm our business.

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We will need to effectively manage our managerial, operational, financial, and other resources in order to successfully pursue our clinical development and commercialization efforts. As a company with a limited number of personnel, we are heavily affected by turnover and highly dependent on the expertise of the members of our senior management. If we are unable to provide competitive compensation to these employees, it may be difficult to retain them. For 2021, the Board of Directors froze the salary levels of all but one employee who was promoted and did not award any cash bonuses for 2021 performance, opting instead to grant options to employees to purchase shares of common stock in satisfaction of amounts earned under the Company's 2021 annual incentive plan. There can be no assurance that these decisions will not have a negative impact on the retention of our employees. Furthermore, we rely on third party consultants for a variety of services. We cannot predict the impact of the loss of such individuals or the loss of services of any of our other senior management, should they occur, or the difficulty in replacing such individuals. Such losses could delay or prevent the further development and potential commercialization of our product candidates and, if we are not successful in finding suitable replacements, could harm our business.

If our competitors develop similar or comparable treatments for the target indications of our product candidates that are approved more quickly, marketed more successfully or are demonstrated to be safer or more effective than our product candidates, or if FDA approves generic or biosimilar competitors to our products post-approval, our commercial opportunity will be reduced or eliminated.

We compete in an industry characterized by rapidly advancing technologies, intense competition, a changing regulatory and legislative landscape and a strong emphasis on the benefits of intellectual property protection and regulatory exclusivities. Our competitors include pharmaceutical companies, other biotechnology companies, academic institutions, government agencies and other private and public research organizations. We compete with these parties in immunotherapy and oncology treatments and in recruiting highly qualified personnel. Our product candidates, if successfully developed and approved, may compete with established therapies, with new treatments that may be introduced by our competitors, including competitors relying on our biologics approvals under section 351(k) of the Public Health Service Act, or with generic copies of our products approved by FDA under an abbreviated new drug application (“ANDA”), referencing our drug products. We believe that competitors are actively developing competing products to our product candidates. See “Item 1. Business—Competition” for a discussion of competition with respect to our current product candidates.

Many of our competitors and potential competitors have substantially greater scientific, research, and product development capabilities, as well as greater financial, marketing, sales and human resources capabilities than we do. In addition, many specialized biotechnology firms have formed collaborations with large, established companies to support the research, development and commercialization of products that may be competitive with ours. Accordingly, our competitors may be more successful with respect to their products than we may be in developing, commercializing, and achieving widespread market acceptance for our products. If a competitor obtains approval for an orphan drug that is the same drug or the same biologic as one of our candidates before we do, we will be blocked from obtaining FDA approval for seven years from the date of the competitor’s product, unless we can establish that our product is clinically superior to the previously-approved competitor’s product or we can meet another exception, such as by showing that the competitor has failed to provide an adequate supply of its product to patients after approval. In addition, our competitors’ products may be more effective or more effectively marketed and sold than any treatment we or our development partners may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses related to developing and supporting the commercialization of any of our product candidates. Developments by competitors may render our product candidates obsolete or noncompetitive. After one of our product candidates is approved, FDA may also approve a generic version with the same dosage form, safety, strength, route of administration, quality, performance characteristics and intended use as our product. These generic equivalents would be less costly to bring to market and could generally be offered at lower prices, thereby limiting our ability to gain or retain market share.

The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to in-license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions. The more established companies may have a competitive advantage over us due to their size, cash flows, institutional experience and historical corporate reputation.

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our products and rely completely on third parties to manufacture drug product, which could adversely impact our business.

The process of manufacturing our products is complex, costly, highly regulated, and subject to several risks. As such, we have no present plan or intention of developing in-house manufacturing capabilities for nonclinical, clinical or commercial scale production, and are wholly dependent on third party contract manufacturers for the timely supply of adequate quantities of our products which meet or exceed requisite quality and production standards for use in clinical and nonclinical studies. Our dependence on CMOs increases our manufacturing risks, including the possible breach of the manufacturing agreement by the CMO, the possible cancellation, delay or modification of any contracted manufacturing slots by the CMO, or the termination or nonrenewal of the agreement by the CMO at a time that is costly or inconvenient for us, and could adversely affect our ability to develop and commercialize our product candidates on a timely basis. In addition, in order to balance risk and conserve financial and human resources, we have and may continue from time-to-time to defer commitment to production of product, which could result in delays to the continued progress of our clinical and nonclinical testing.

We, and our CMOs, must comply with extensive Good Manufacturing Practices (“cGMP”) regulations and are subject to inspections by FDA and comparable agencies in other jurisdictions to confirm compliance with applicable regulatory requirements. If, as a result of these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing operations. Suppliers of key components and materials must also be named in the EUA, BLA or other marketing authorization application filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required. Foreign agencies have not inspected the Catalent site in Madison, WI. This site is the primary source of BDS for lenzilumab.

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We, and our CMOs, may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel. Any failure to follow cGMP or other regulatory requirements or any delay, interruption or other issues that arise in the manufacture, fill-finish, packaging, or storage of our products as a result of a failure of our or our CMOs’ facilities, could significantly impair our ability to develop and commercialize our products, including leading to significant delays in the availability of products for our clinical studies or the termination or hold of a clinical study, or the delay or prevention of a filing or approval of marketing applications for our product candidates. Further, we may have to pay the costs of manufacturing any batch produced by a CMO that fails to pass quality inspection or meet regulatory approval.

Significant noncompliance with manufacturing regulations could also result in the imposition of sanctions, including injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions, adverse publicity, and criminal prosecutions, any of which could damage our reputation. If we are not able to maintain regulatory compliance, we may not be permitted to market our products and/or may be subject to product recalls, seizures, injunctions, or criminal prosecution. Any adverse developments affecting manufacturing operations for our products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products. Once our product candidates are approved, we may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives.

As is the case with MHRA, we are required to provide information from the PPQ runs at certain CMOs. It is our belief that lenzilumab manufactured at CMOs that have not completed PPQ will not be available for commercial sale in the UK. Historically, FDA provided guidance that we would not have to complete PPQ at all of our CMOs and that we could rely on compatibility reports to sell product under EUA. We believe EMA may require PPQ information similar to the requirements from MHRA. We do not know if FDA’s position on the PPQ requirement has changed. If FDA requires similar PPQ information, our ability to commercialize a significant amount of the lenzilumab produced to date will be limited.

In addition, the manufacturing facilities in which our products are made could be adversely affected by equipment failures, plant closures, capacity constraints, competing customer priorities or changes in corporate strategy or priorities, process changes or failures, changes in business models or operations, materials or labor shortages, natural disasters, power failures and numerous other factors.

Our third-party manufacturers are independent entities subject to their own unique operational and financial risks that are out of our control. Additionally, our third-party manufacturers may only be able to produce some of our products at one or a limited number of facilities and, therefore, we have limited manufacturing capacity for certain products, and we may not be able to locate additional or replacement facilities on a reasonable basis or at all. Our sales of such products could also be adversely impacted by our reliance on such limited number of facilities. To the extent these risks materialize and affect their performance obligations to us, our financial results may be adversely affected.

In addition, we, our third-party suppliers and our CMOs have experienced disruptions in supply of product candidates and/or procuring items that are essential for our research, development and manufacturing activities, including raw materials and components used in the manufacturing of our product candidates for which there have been shortages because of ongoing efforts to address the COVID-19 pandemic. These delays have impacted our overall manufacturing supply chain operations to date, and while we continue to explore back up or alternative sources of supply, any future disruption in the supply chain from the COVID-19 outbreak, or any continued outbreak, could have a material adverse impact on our clinical trial plans, manufacturing activities and business operations.

If any product candidate that we successfully develop does not achieve broad market acceptance among physicians, patients, healthcare payers and the medical community, the revenue that it generates may be limited.

Even if our product candidates receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare payers, and the medical community. Coverage and reimbursement of our product candidates by third-party payers, including government payers, generally is also necessary for commercial success. The degree of market acceptance of any approved product candidates will depend on several factors, including:

● the efficacy and safety as demonstrated in clinical trials;

● the clinical indications for which the product candidate is approved;

● acceptance by physicians, major operators of hospitals and clinics, and patients of the product candidate as a safe and effective treatment;

● the potential and perceived advantages of product candidates over alternative treatments;

● the safety of product candidates seen in a broader patient group, including its use outside the approved indications;

● the cost of treatment in relation to alternative treatments;

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~~Even if our product candidates receive regulatory~~● the ~~approval,~~availability ~~they~~of ~~may~~adequate ~~not~~reimbursement ~~gain market acceptance among physicians, patients, healthcare payers,~~ and ~~the~~pricing ~~medical community. Coverage and reimbursement of our product candidates~~ by ~~third-party~~ payers~~, including government payers, generally is also necessary for commercial success. The degree of market acceptance of any approved product candidates will depend on several factors, including:~~;

·● relative convenience ~~the efficacy~~ and ~~safety~~ease asof ~~demonstrated in clinical trials~~administration;

· ● the prevalence ~~clinical~~and ~~indications~~severity ~~for~~of ~~which~~adverse ~~the product candidate is approved~~events;

·● the effectiveness ~~acceptance by physicians, major operators~~ of ~~hospitals~~our ~~and~~sales ~~clinics,~~ and ~~patients~~marketing ofefforts; ~~the product candidate as a safe~~ and ~~effective treatment;~~

· ● the ability ~~potential~~to ~~and~~manage ~~perceived~~any ~~advantages~~unfavorable ofpublicity ~~product~~relating ~~candidates~~to ~~over~~the ~~alternative~~product ~~treatments;~~candidate.

· the safety of product candidates seen in a broader patient group, including its use outside the approved indications;

· the cost of treatment in relation to alternative treatments;

· the availability of adequate reimbursement and pricing by payers;

· relative convenience and ease of administration;

· the prevalence and severity of adverse events;

· the effectiveness of our sales and marketing efforts; and

· the ability to manage any unfavorable publicity relating to the product candidate.

If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payers, and patients, we may not generate sufficient revenue from that product candidate and may not become or remain commercially attractive as a standalone indication for that product.

Reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates profitably.

Market acceptance and sales of our product candidates will depend significantly on the availability of adequate insurance coverage and reimbursement from third-party payers for any of our product candidates and may be affected by existing and future health care reform measures. Government authorities and third-party payers, such as private health insurers and health maintenance organizations, decide which drugs they will pay for and establish reimbursement levels. Reimbursement by a third-party payer may depend upon a number of factors including the third-party payer’s determination that use of a product candidate is:

· ● a covered benefit under its health plan;

· ● safe, effective, and medically necessary;

· ● appropriate for the specific patient;

· ● cost-effective; and

· ● neither experimental nor investigational.

Obtaining coverage and reimbursement approval for a product candidate from a government or other third-party payer is a time-consuming and costly process that could require us to provide supporting scientific, clinical, and cost effectiveness data for the use of our product candidates to the payer. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will be available for any of our product candidates. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our product candidates. If reimbursement is not available or is available only to limited levels or with restrictions, we may not be able to commercialize certain of our product candidates profitably, or at all, even if approved.

In the ~~U.S.~~US and in certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could affect our ability to sell our product candidates profitably. In particular, the Medicare Modernization Act of 2003 revised the payment methods for many product candidates under Medicare. This has resulted in lower rates of reimbursement. There have been numerous other federal and state initiatives designed to reduce payment for pharmaceuticals.

As a result of legislative proposals and the trend toward managed health care in the ~~U.S.~~US, third-party payers are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. They may also refuse to provide coverage of approved product candidates for medical indications other than those for which FDA has granted market approvals. As a result, significant uncertainty exists as to whether and how much third-party payers will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs. We could be subject to pricing pressures in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations, and additional legislative proposals as well as country, regional, or local healthcare budget limitations. Similar concerns about the costs of treatment have been raised in Europe ~~and~~ , the United Kingdom and Australia.

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We face potential product liability exposure and, if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.

The use of our product candidates in clinical trials and the sale of any product candidates for which we may obtain marketing approval expose us to the risk of product liability claims. Product liability claims may be brought against us or any future development partners by participants enrolled in our clinical trials, patients, health care providers, or others using, administering, or selling our product candidates. If we cannot successfully defend ourselves against any such claims, or have insufficient insurance protection, we would incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in:

· ● withdrawal of clinical trial participants;

· ● termination of clinical trial sites or entire trial programs;

· ● costs of related litigation;

· ● substantial monetary awards to trial participants or other claimants;

· ● decreased demand for our product candidates and loss of revenue;

· ● impairment of our business reputation;

· ● diversion of management and scientific resources from our business operations; and

· ● the inability to commercialize our product candidates.

We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials. As such, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for all expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to product liability. We intend to expand our insurance coverage for product candidates to include the sale of commercial products if we obtain marketing approval for our product candidates in development; however, we may be unable to obtain commercially reasonable product liability insurance for any product candidates approved for marketing. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our working capital and adversely affect our business.

Our employees and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees or consultants could include intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, failure to provide accurate information to FDA or comparable foreign regulatory authorities, failure to comply with manufacturing standards, failure to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, failure to report financial information or data accurately, violations of anti-bribery laws, or failure to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, 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 or consultant misconduct could also involve the improper use of confidential information obtained in the course of our business, which could result in civil or criminal legal actions, regulatory sanctions, or serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics and other corporate policies, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance 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 significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing, and sales capabilities, and contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various development partners, suppliers, and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend in part on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively. We may not be able to accomplish these tasks and our failure to accomplish any of them could prevent us from successfully growing our company.

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We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing, and sales capabilities, and contract with third parties to provide these capabilities for us. If and as our operations expand, we may need to manage additional relationships with various development partners, suppliers, and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend in part on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively. We may not be able to accomplish these tasks and our failure to accomplish any of them could prevent us from successfully growing our company.

We and any current or future development partners, third-party manufacturers and suppliers may use hazardous materials, and any claims relating to improper handling, storage, or disposal of these materials could be time consuming or costly.

We and any current or future development partners, third-party manufacturers and suppliers may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety or the environment. Our operations and the operations of our development partners, third-party manufacturers and suppliers also produce hazardous waste products. Federal, state, and local laws and regulations govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage and our property, casualty, and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

Legislative or regulatory healthcare reforms in the ~~U.S.~~countries where we may seek drug approval may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to produce, market, and distribute our products after approval is obtained.

From time-to-time, legislation is drafted and introduced in ~~Congress~~various countries that could significantly change the statutory provisions governing the regulatory approval, manufacture, and marketing of regulated products or the reimbursement thereof. In addition, ~~FDA~~regulatory ~~regulations~~agency ~~and~~ guidance ~~are~~may ~~often~~ be revised or reinterpreted by ~~FDA~~ such agencies in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our current product candidates or any future product candidates. There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability of health care and containing or lowering the overall cost of health care. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations, and other payers of healthcare services to contain or reduce costs of health care may adversely affect:

· ● the demand for any drug products for which we may obtain regulatory approval;

· ● our ability to set a price that we believe is fair for our product candidates;

· ● our ability to gain reimbursement at commercially acceptable levels;

· ● our ability to generate revenue and achieve or maintain profitability;

· ● the level of taxes that we are required to pay; and

· ● the availability of capital.

In addition, such changes could, among other things, require:

· ● changes to manufacturing methods;

· ● additional studies, including clinical studies;

· recall, replacement, or discontinuance of one or more of our products; and

· additional record-keeping.

Each of these would likely entail substantial time and cost and could materially harm our business and our financial results. In addition, delays in receipt of or failure to receive regulatory approvals for any future products would harm our business, financial condition, and results of operations.

We and any of our future development partners will be required to report to regulatory authorities if any of our approved products cause or contribute to adverse medical events, and any failure to do so would result in sanctions that would materially harm our business.

If we and any future development partners are successful in commercializing our products, FDA and foreign regulatory authorities would require that we and any future development partners report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We and any future development partners may fail to report adverse events we become aware of within the prescribed timeframe. We and any future development partners may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we and any future development partners fail to comply with our reporting obligations, FDA or a foreign regulatory authority could take action including criminal prosecution, the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

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● recall, replacement, or discontinuance of one or more of our products; and

● additional record-keeping.

If we and any future development partners are successful in commercializing our products, regulatory authorities would require that we and any future development partners report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We and any future development partners may fail to report adverse events we become aware of within the prescribed timeframe. We and any future development partners may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we and any future development partners fail to comply with our reporting obligations, a regulatory authority could take action including criminal prosecution, the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or the BPCIA, as part of the Affordable Care Act, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway establishes legal authority for FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as ‘‘“interchangeable~~’’ based~~” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by FDA ~~until~~ until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted and implemented by FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

We believe that any of our product candidates, such as lenzilumab, iFab and/or HGEN005, if approved as biological products under a BLA, should qualify for the 12-year period of exclusivity. However, there is a risk that FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products 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. Finally, there is a risk that the 12-year exclusivity period could be reduced which could negatively affect our products.

In addition, foreign regulatory authorities may also provide for exclusivity periods for approved biological products. For example, biological products in Europe may be eligible for a 10-year period of exclusivity. However, biosimilar products have been approved under a sub-pathway of the centralized procedure since 2006. The pathway allows sponsors of a biosimilar product to seek and obtain regulatory approval based in part on the clinical trial data of an originator product to which the biosimilar product has been demonstrated to be ‘‘“similar.’’ ” In many cases, this allows biosimilar products to be brought to market without conducting the full suite of clinical trials typically required of originators. It is unclear whether we and any future development partners would face competition to our products in European markets sooner than anticipated.

We may in the future be subject to various ~~U.S.~~US federal and state laws pertaining to health care fraud and abuse, including anti-kickback, self-referral, false claims and fraud laws, and any violations by us of such laws could result in fines or other penalties.

If one or more of our product candidates is approved, we will likely be subject to the various ~~U.S.~~US federal and state laws intended to prevent health care fraud and abuse. The federal anti-kickback statute prohibits the offer, receipt, or payment of remuneration in exchange for or to induce the referral of patients or the use of products or services that would be paid for in whole or part by Medicare, Medicaid, or other federal health care programs. Remuneration has been broadly defined to include anything of value, including cash, improper discounts, and free or reduced-price items and services. Many states have similar laws that apply to their state health care programs as well as private payers. Violations of the anti-kickback laws can result in exclusion from federal health care programs and substantial civil and criminal penalties.

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The False Claims Act imposes liability on persons who, among other things, present or cause to be presented false or fraudulent claims for payment by a federal health care program. The False Claims Act has been used to prosecute persons submitting claims for payment that are inaccurate or fraudulent, that are for services not provided as claimed, or for services that are not medically necessary. The False Claims Act includes a whistleblower provision that allows individuals to bring actions on behalf of the federal government and share a portion of the recovery of successful claims. If our marketing or other arrangements were determined to violate the False Claims Act or anti-kickback or related laws, then our revenue could be adversely affected, which would likely harm our business, financial condition, and results of operations.

State and federal authorities have aggressively targeted medical technology companies for alleged violations of these anti-fraud statutes, based on improper research or consulting contracts with doctors, certain marketing arrangements that rely on volume-based pricing, off-label marketing schemes, and other improper promotional practices. Companies targeted in such prosecutions have paid substantial fines in the hundreds of millions of dollars or more, have been forced to implement extensive corrective action plans or corporate integrity agreements, and have often become subject to consent decrees severely restricting the manner in which they conduct their business. If we become the target of such an investigation or prosecution based on our contractual relationships with providers or institutions, or our marketing and promotional practices, we could face similar sanctions, which would materially harm our business.

Even if regulatory authorization or approval were received for lenzilumab or any other product candidate, the later discovery of previously unknown problems associated with the use of lenzilumab or other product may result in restrictions, including withdrawal of the product from the market, and lead to significant liabilities and reputational damage.

Serious adverse or undesirable side effects may emerge or be identified during later stages of development of our products that were not observed in earlier stages. If our product candidates, either alone or in combination with other therapeutics, are associated with serious adverse events or undesirable side effects or unacceptable drug interactions in clinical trials or have characteristics that are unexpected in clinical trials or preclinical testing, we may need to abandon their development or limit development to more narrow uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. In pharmaceutical development, many compounds that initially show promise in early-stage or clinical testing are later found to cause side effects that prevent further development of the compound. In addition, if third parties manufacture or use our product candidates without our permission, and generate adverse events or unacceptable side effects, this could also have an adverse impact on our development efforts.

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Unacceptable adverse events caused by any of our product candidates that we advance into clinical trials could cause us or regulatory authorities to interrupt, delay, or halt clinical trials and could result in the denial of regulatory approval by the applicable regulatory authorities for any or all targeted indications and markets. This in turn could prevent us from completing development or commercializing the affected product candidate and generating revenue from its sale. We have not yet successfully completed testing of any of our product candidates for the treatment of the indications for which we intend to seek approval in humans, and we currently do not know the extent of adverse events, if any, that will be observed in individuals who receive any of our product candidates. Even if lenzilumab or any other products are approved, if previously unknown problems with the product or its manufacture are subsequently discovered, we may be restricted or prohibited from marketing or manufacturing such product and/or may be subject to substantial liabilities, which may adversely affect our ability to generate revenue and our financial condition.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be subject to certain limitations.

We have incurred substantial losses during our history and do not expect to become profitable in the foreseeable future and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. We may be unable to use these losses to offset income before such unused losses expire. The Tax Cuts and Jobs Act, enacted in 2017, limited the use of net operating loss carryforwards for periods beginning after 2017 to eighty percent of taxable income in the period to which the losses were carried. However, this limitation on the use of the carryforwards was eliminated by the Coronavirus Aid, Relief and Economic Security Act (the “CARES” Act) for tax years beginning before January 1, 2021. In addition, Section 382 of the Internal Revenue Code of 1986, as amended, may limit the utilization of net operating loss carryforwards. Under Section 382, if a corporation undergoes an ‘‘“ownership change’’” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have recently and in the past experienced ownership changes that have resulted in limitations on the use of a portion of our net operating loss carryforwards. If we experience further ownership changes our ability to utilize our net operating loss carryforwards could be further limited.

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We rely completely on third parties to supply drug substance and manufacture drug product for our clinical trials and preclinical studies and intend to rely on other third parties to produce commercial supplies of product candidates, and our dependence on third parties could adversely impact our business.

We are dependent on third-party suppliers. If our third-party suppliers do not supply sufficient quantities for product candidates to us on a timely basis and in accordance with applicable specifications and other regulatory requirements including ~~PPQ~~Process Performance Qualification, or PPQ, we may be unable to supply our product candidates in development for clinical trials or ship them to customers, if authorized or approved for commercial use. In addition, as further discussed above, our third-party suppliers have experienced disruptions in supply of product and/or procuring essential items as a result of supply chain issues caused by the COVID-19 pandemic. We regularly evaluate potential alternate sources of supply of raw materials, various components used in production, drug substance and drug product, but there can be no assurance that any such suppliers would be available, acceptable, or successful.

We will also rely on our CMOs to purchase from third-party suppliers the materials necessary to produce our product candidates for our anticipated clinical trials. There are a small number of suppliers for certain capital equipment and raw materials used to manufacture our product candidates. We do not have any control over the process or timing of the acquisition of these raw materials by our contract manufacturers. Moreover, we currently do not have agreements in place for the commercial production of these raw materials. Any significant delay in the supply of a product candidate or the raw material components thereof for an ongoing clinical trial could considerably delay completion of that clinical trial, product candidate testing, and potential regulatory approval of that product candidate.

In addition, a significant portion of the raw materials and intermediates used to manufacture our product candidates are supplied by third-party manufacturers and corporate partners outside of the UUS.S. As a result, any political or economic factors in a specific country or region, including any changes in or interpretations of trade regulations, compliance requirements or tax legislation, that would limit or prevent third parties outside of the ~~U.S.~~US from supplying these materials could adversely affect our ability to conduct our pending or contemplated clinical trials.

We may not be successful in establishing and maintaining development partnerships and licensing agreements, which could adversely affect our ability to develop and commercialize product candidates.

Part of our strategy is to enter into development partnerships and licensing agreements. We face significant competition in seeking appropriate partners and the negotiation process is time consuming and complex. Even if we are successful in securing a development partnership, we may not be able to continue it. Moreover, we may not be successful in our efforts to establish a development partnership or other alternative arrangements for any of our other existing or future product candidates and programs because, among other reasons, our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. Even if we are successful in our efforts to establish new development partnerships, the terms that we agree upon may not be favorable to us and we may not be able to maintain such development partnerships if, for example, development or approval of a product candidate is delayed or sales of an approved product candidate are disappointing. In addition, our ability to enforce our partners’ obligations under any future collaboration efforts may be limited due to time and resource constraints, competing corporate priorities of our future partners, and other factors.

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If we fail to establish and maintain additional development partnerships related to our product candidates:

·● the development and commercialization of our current or future product candidates may be terminated or delayed;

·● our cash expenditures related to development of certain of our current or future product candidates would increase significantly and we may need to seek additional financing;

· we may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted; and

· we will bear all of the risk related to the development of any such product candidates.

Our or any new partner’s failure to develop, manufacture or effectively commercialize our product would result in a material adverse effect on our business and results of operations and would likely cause our stock price to decline.

Currently pending, threatened or future litigation, arbitration, governmental proceedings or inquiries could result in material adverse consequences, including judgments or settlements.

We are, or may from time-to-time become, involved in lawsuits and other legal or governmental proceedings. See Item 3. to this Annual Report on Form 10-K and Note 11 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding currently pending litigation that could have a material impact on us. Many of these matters raise complicated factual and legal issues and are subject to uncertainties and complexities, all of which make the matters costly to address. The timing of the final resolutions to any such lawsuits, inquiries, and other legal proceedings is uncertain.

Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting our consolidated financial condition, results of operations and cash flows. Any judgment against us, the entry into any settlement agreement, or the imposition of any fine could have a material adverse effect on our consolidated financial condition, results of operations and cash flows.

The terms of our loan agreement with Hercules may restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions, including to pay dividends to our stockholders.

On March 10, 2021, we entered into the Loan and Security Agreement with Hercules Capital, Inc. (the “Term Loan”) with a scheduled maturity date of March 1, 2025. As described in more detail in Note 5 to the Consolidated Financial Statements, the Term Loan contains, and any future indebtedness we incur will likely contain, a number of restrictive covenants that impose operating restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interests.

A breach of any of these covenants could result in an event of default under the Loan Agreement. Upon the occurrence of such an event of default, Hercules may, at its discretion, accelerate and demand payment of all or any part of the outstanding advances, together with a prepayment charge, end of term charge, and all interest due and payable under the Term Loan. Hercules also may seek to realize on the collateral we have pledged as security for the Term Loan. If our indebtedness is accelerated, we cannot assure you that we will have sufficient assets to repay the indebtedness. The restrictions and covenants in the Term Loan and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities.

We review and explore strategic alternatives on an on-going basis, but there can be no assurance that we will be successful in identifying or completing any strategic alternative, and any such strategic alternative, including future acquisitions of and investments in new businesses, could impact our business and financial condition.

We regularly review strategic alternatives to ensure our current structure optimizes our ability to execute our strategic plan and to maximize stockholder value. The review of strategic alternatives could result in, among other things, a sale, merger, consolidation or business combination, asset divestiture, partnering, licensing or other collaboration agreements, or potential acquisitions of or investments in new businesses or recapitalizations, in one or more transactions, or continuing to operate with our current business plan and strategy. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction.

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~~The~~● ~~process~~we ~~of exploring strategic alternatives~~ may be ~~time~~required ~~consuming, disruptive~~ to ~~our~~hire ~~business~~additional ~~operations~~employees ~~and divert the attention of management, and if we are unable to effectively manage the process~~ or ~~successfully~~otherwise ~~integrate~~develop ~~any acquired personnel or operations~~expertise, ~~our~~such ~~business,~~as ~~financial~~sales ~~condition~~ and ~~results~~marketing ~~of operations could be adversely affected. We also cannot assure that any potential transaction or other strategic alternative~~expertise, iffor ~~identified,~~which ~~evaluated and~~we ~~consummated,~~have ~~will~~not ~~perform~~budgeted; as expected, will realize the expected benefits, synergies, or developments or that it will provide greater value to our stockholders than that reflected in our current stock price. Any potential transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business or product candidates and ~~the availability of financing to potential buyers on reasonable terms.~~

In● ~~addition,~~ we ~~may~~will ~~incur substantial~~bear ~~expenses~~all ~~associated~~of ~~with identifying and evaluating potential strategic alternatives. To~~ the ~~extent~~risk werelated ~~finance any acquisition or other strategic alternative in cash, it would reduce our cash reserves, and~~ to the ~~extent~~development ~~the purchase price is paid with shares~~ of ~~our~~ ~~common or preferred stock, it could be dilutive to our current stockholders. To the extent we finance~~ any ~~acquisition~~such orproduct ~~investment with the proceeds from the incurrence of debt, this would increase our level of indebtedness and could negatively affect our liquidity, credit rating and restrict our operations~~candidates. ~~Moreover, we may face contingent liabilities in connection with any acquisitions or investments.~~

We currently have no internal sales and marketing capabilities and will rely on third parties to market and sell our product candidates if we attain regulatory approval for commercialization. We or they may not be able to effectively market and sell any such product candidates.

We currently do not have internal sales and marketing infrastructure in place that would be necessary to sell and market products and we may choose to not build this capability in-house. As is the case with many, if not most, small companies seeking to commercialize their products and who have not yet partnered with a larger biotech or pharmaceutical company, we plan to outsource logistics and distribution services. There can be no assurance that any such partner will be effective in distributing any of our product candidates, if approved.

If we or any of our potential partners fail to hire, train, retain and manage qualified sales personnel, market our product successfully or on a cost-effective basis, our ability to generate revenue will be limited and we will need to identify and retain an alternative third-party, or develop our own sales and marketing capability. The establishment of an in-house sales and marketing operation can be expensive and time consuming and could delay any product candidate launch.

Risks Related to Intellectual Property

If we fail to obtain, maintain and adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish, and our business and competitive position would suffer.

Our success, competitive position and future revenues will depend in part on our ability and the abilities of our licensors and licensees to obtain and maintain patent protection for our products, methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing the proprietary rights of third parties. We have an active patent protection program that includes filing patent applications on new compounds, formulations, delivery systems and methods of making and using products and prosecuting these patent applications in the ~~U.S.~~US and abroad. As patents issue, we also file continuation applications as appropriate. Although we have taken steps to build what we believe to be a strong patent portfolio, we cannot predict:

·● the degree and range of protection any patents will afford us against competitors, including whether third parties find ways to invalidate or otherwise circumvent our licensed patents;

·● if and when patents will issue in the ~~U.S.~~US or any other country;

·● whether or not others will obtain patents claiming aspects similar to those covered by our licensed patents and patent applications;

·● whether we will need to initiate litigation or administrative proceedings to protect our intellectual property rights, which may be costly whether we win or lose;

·● whether any of our patents will be challenged by our competitors alleging invalidity or unenforceability and, if opposed or litigated, the outcome of any administrative or court action as to patent validity, enforceability or scope;

·● whether a competitor will develop a similar compound that is outside the scope of protection afforded by a patent or whether the patent scope is inherent in the claims modified due to interpretation of claim scope by a court;

·● whether there were activities previously undertaken by a licensor that could limit the scope, validity or enforceability of licensed patents and intellectual property; or

·● whether a competitor will assert infringement of its patents or intellectual property, whether or not meritorious, and what the outcome of any related litigation or challenge may be.

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Our success also depends upon the skills, knowledge and experience of our scientific and technical personnel, our consultants and advisors as well as our licensors, sublicensees and contractors. To help protect our proprietary know-how and our inventions for which patents may be unobtainable or difficult to obtain, we rely on trade secret protection and confidentiality agreements. To this end, we require all employees, consultants and board members to enter into agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. These agreements may not provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure or the lawful development by others of such information. If any of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired, and our business and competitive position would suffer.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication and avoid infringing the proprietary rights of others. Our patent rights, and the patent rights of biopharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. These uncertainties also mean that any patents that we own or may obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Patents already issued to us, or our pending applications may become subject to dispute, and any dispute could be resolved against us.

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If some or all of our or any licensor’s patents expire or are invalidated or are found to be unenforceable, or if some or all of our patent applications do not result in issued patents or result in patents with narrow, overbroad, or unenforceable claims, or claims that are not supported in regard to written description or enablement by the specification, or if we are prevented from asserting that the claims of an issued patent cover a product of a third party, we may be subject to competition from third parties with products in the same class of products as our product candidates or products with the same active pharmaceutical ingredients as our product candidates, including in those jurisdictions in which we have no patent protection.

Our commercial success will depend in part on obtaining and maintaining patent and trade secret protection for our product candidates, as well as the methods for treating patients in the product indications using these product candidates. We will be able to protect our product candidates and the methods for treating patients in the applicable product indications using these product candidates from unauthorized use by third parties only to the extent that we or any licensor owns or controls such valid and enforceable patents or trade secrets.

Even if our product candidates and the methods for treating patients for prescribed indications using these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification, the patents will provide protection only for a limited amount of time. Our and any licensor’s ability to obtain patents can be highly uncertain and involve complex and in some cases unsettled legal issues and factual questions. Furthermore, different countries have different procedures for obtaining patents, and patents issued in different countries provide different degrees of protection against the use of a patented invention by others. Therefore, if the issuance to us or any licensor, in a given country, of a patent covering an invention is not followed by the issuance, in other countries, of patents covering the same invention, or if any judicial interpretation of the validity, enforceability, or scope of the claims in, or the utility, written description or enablement in, a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in those countries may be limited. Changes in either patent laws or in interpretations of patent laws in the ~~U.S.~~US and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection.

We may be subject to competition from third parties with products in the same class of products as our product candidates, or products with the same active pharmaceutical ingredients as our product candidates in those jurisdictions in which we have no patent protection. Even if patents are issued to us or any licensor regarding our product or methods of using them, those patents can be challenged by our competitors who can argue such patents are invalid or unenforceable on a variety of grounds, including lack of utility, lack sufficient written description or enablement, utility, or that the claims of the issued patents should be limited or narrowly construed. Patents also will not protect our product candidates if competitors devise ways of making or using these products without legally infringing our patents. The current US ~~U.S.~~ regulatory environment may have the effect of encouraging companies to challenge branded drug patents or to create non-infringing versions of a patented product in order to facilitate the approval of ANDAs for generic substitutes. These same types of incentives encourage competitors to submit NDAs that rely on literature and clinical data not prepared for or by the drug sponsor, providing another less burdensome pathway to approval.

If we infringe the rights of third parties, we could be prevented from selling products and be forced to defend against litigation and pay damages.

There is a risk that we may be inadvertently infringing the proprietary rights of third parties because numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields that are the focus of our development and manufacturing efforts. Others might have been the first to make the inventions covered by each of our or any licensor’s pending patent applications and issued patents and/or might have been the first to file patent applications for these inventions. In addition, because patent applications take many months to publish and patent applications can take many years to issue, there may be currently pending applications, unknown to us or any licensor, which may later result in issued patents that cover the production, manufacture, synthesis, commercialization, formulation or use of our product candidates. In addition, the production, manufacture, synthesis, commercialization, formulation or use of our product candidates may infringe existing patents of which we are not aware. Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our development or commercialization efforts. If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business.

If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and may have to:

· obtain licenses, which may not be available on commercially reasonable terms, if at all;

· redesign our products or processes to avoid infringement, which may not be possible or could require substantial funds and time;

· stop using the subject matter claimed in patents held by others, which could cause us to lose the use of one or more of our drug candidates;

· pay damages royalties, or other amounts; or

· grant a cross license to our patents to another patent holder.

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If we infringe the rights of third parties, we could be prevented from selling products and be forced to defend against litigation and pay damages.

There is a risk that we may be inadvertently infringing the proprietary rights of third parties because numerous US and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields that are the focus of our development and manufacturing efforts. Others might have been the first to make the inventions covered by each of our or any licensor’s pending patent applications and issued patents and/or might have been the first to file patent applications for these inventions. In addition, because patent applications take many months to publish and patent applications can take many years to issue, there may be currently pending applications, unknown to us or any licensor, which may later result in issued patents that cover the production, manufacture, synthesis, commercialization, formulation or use of our product candidates. In addition, the production, manufacture, synthesis, commercialization, formulation or use of our product candidates may infringe existing patents of which we are not aware. Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our development or commercialization efforts. If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business.

If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and may have to:

● obtain licenses, which may not be available on commercially reasonable terms, if at all;

● redesign our products or processes to avoid infringement, which may not be possible or could require substantial funds and time;

● stop using the subject matter claimed in patents held by others, which could cause us to lose the use of one or more of our drug candidates;

● pay damages royalties, or other amounts; or

● grant a cross license to our patents to another patent holder.

We expect that, as our drug candidates move further into clinical trials and commercialization and our public profile is raised, we will be more likely to be subject to such claims.

We may fail to comply with any of our obligations under existing agreements pursuant to which we license or have otherwise acquired rights or technology, which could result in the loss of rights or technology that are material to our business.

We are a party to technology licenses and have acquired certain assets and rights that are important to our business and we may enter into additional licenses or acquire additional assets and rights in the future. We currently hold licenses from Ludwig Institute for Cancer Research (“LICR”), BioWa, Inc. (“BioWa”), Lonza Sales AG (“Lonza”), Mayo Foundation (“Mayo”) and the University of Zurich (“UZH”). These licenses impose various commercial, contingent payments, royalty, insurance, indemnification, and other obligations on us. If we fail to comply with these obligations, the licensor may have the right to terminate the license or take back rights or assets, in which event we would lose valuable rights under our collaboration agreements, potential claims and our ability to develop product candidates.

We may be subject to claims that our consultants or independent contractors have wrongfully used or disclosed alleged trade secrets of their other clients or former employers to us.

As is common in the biotechnology and pharmaceutical industry, we engage the services of consultants to assist us in the development of our product candidates. Many of these consultants were previously employed at or may have previously or may be currently providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may become subject to claims that our company or a consultant inadvertently or otherwise used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and we intend to seek patent protection only in selected countries. Our intellectual property rights in some countries outside the U.S. can be less extensive than those in the U.S. 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 U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in and into the U.S. 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 U.S. These products may compete with our product candidates and our patents 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 certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. 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 at risk of being invalidated or interpreted narrowly and our patent applications 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.

Risks Related to Our Common Stock

A significant portion of our total outstanding shares are eligible to be sold into the market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market or the perception in the market that the holders of a large number of shares intend to sell shares, could depress the market price of our common stock and could impair our future ability to obtain capital, especially through an offering of equity securities. In addition, holders of a substantial number of shares of our common stock have rights, subject to certain 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 other stockholders.

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We ~~have also entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), under which we~~ may ~~issue~~not ~~and~~be ~~sell~~able ~~from time-~~to~~-time~~ ~~shares~~protect ~~of common stock through Cantor, as sales agent. Sales of a substantial number of shares under the Sales Agreement, or the perception that those sales may occur, could cause the market price of~~ our ~~common stock to decline.~~ ~~See~~intellectual ~~Notes~~property 8rights ~~and~~throughout ~~13 to~~ the ~~Consolidated Financial Statements for additional information regarding the Sales Agreement and our sales of common stock pursuant to the Sales Agreement~~world.

~~Further~~Filing, ~~certain~~prosecuting and ~~shares~~defending ofpatents ~~our~~on ~~common~~product ~~stock~~candidates ~~that~~in all countries throughout the world would be prohibitively expensive, and we intend to seek ~~are~~patent ~~currently~~protection ~~outstanding~~only ~~but~~in ~~have~~selected ~~not~~countries. ~~been~~Our ~~registered~~intellectual ~~for~~property ~~resale~~rights ~~may~~in ~~currently~~some countries outside the US can be ~~sold~~less ~~under~~extensive than ~~Rule~~those ~~144~~in ~~under~~the US. In addition, the ~~Securities~~laws ~~Act~~of orsome foreign countries do not protect intellectual property rights to the same extent as ~~Securities~~federal ~~Act~~and state laws in the US. ~~Sales~~Consequently, ofwe amay ~~substantial~~not ~~number~~be ofable ~~these~~to ~~shares~~prevent third parties from practicing our inventions in ~~the~~all ~~public~~countries outside ~~market~~the US, or from selling or importing products made using our inventions in and into the ~~perception~~US ~~that~~or ~~those~~other ~~sales~~jurisdictions. Competitors may ~~occur~~use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, ~~could~~may ~~cause~~export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the ~~market~~US. These ~~price~~products ofmay compete with our ~~common~~product ~~stock~~candidates and our patents or other intellectual property rights may not be effective or sufficient to ~~decline~~prevent them from competing.

~~Despite~~Many ~~our~~companies ~~listing~~have encountered onsignificant ~~the~~problems ~~Nasdaq~~in ~~Capital~~protecting ~~Market~~and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, ~~there~~particularly ~~can~~certain bedeveloping countries, do not favor the enforcement of patents and other intellectual property noprotection, ~~assurance~~particularly ~~that~~those anrelating ~~active~~to ~~trading~~biopharmaceuticals, ~~market~~which could make it difficult for ~~our~~us ~~common~~to ~~stock~~stop ~~will~~the ~~develop~~infringement of our patents or bemarketing ~~sustained~~of competing products in violation of our proprietary rights generally. 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 at risk of being invalidated or interpreted narrowly and ~~the~~our ~~Nasdaq~~patent ~~Capital~~applications ~~Market~~at risk of not issuing and could provoke third parties to assert claims against us. We may ~~subsequently~~not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if ~~delist~~any, may not be commercially meaningful. Accordingly, our ~~common~~efforts ~~stock~~to ifenforce weour ~~fail~~intellectual property rights around the world may be inadequate to ~~comply~~obtain ~~with~~a ~~ongoing~~significant ~~listing~~commercial ~~standards.~~advantage from the intellectual property that we develop or license.

As a listed company, we are required to meet the continued listing requirements applicable to all Nasdaq Capital Market companies. If we fail to meet those standards, as applied by the Nasdaq Capital Market in its discretion, our common stock may be subject to delisting. We intend to take all commercially reasonable actions to maintain our Nasdaq listing. If our common stock is delisted in the future, it is not likely that we will be able to list our common stock on another national securities exchange and, as a result, we expect our securities would be quoted on an over-the-counter market; however, if this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. In addition, in the event of such delisting, we could experience a decreased ability to issue additional securities and obtain additional financing in the future.

Further, there can be no assurance that an active trading market for our common stock will be sustained despite our listing on the Nasdaq Capital Market.

Raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance could result in further dilution to our stockholders by causing a reduction in their proportionate ownership and voting power.

Any future debt financing may involve covenants that restrict our operations, including, among other restrictions, limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. In addition, if we raise additional funds through licensing arrangements, it may be necessary to grant potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us.

Any material weaknesses in our internal control over financial reporting that we may identify in the future could adversely affect investor confidence, impair the value of our common stock and increase our cost of raising capital.

If we were to identify any material weaknesses or significant deficiencies in our internal controls over financial reporting in the future, our operating results might be harmed, we may fail to meet our reporting obligations or fail to prevent or detect material misstatements in our financial statements. Any such failure could, in turn, affect the future ability of our management to certify that internal control over our financial reporting is effective. Inferior internal control over financial reporting could also subject us to the scrutiny of the SEC and other regulatory bodies which could cause investors to lose confidence in our reported financial information and could subject us to civil or criminal penalties or stockholder litigation, which could have an adverse effect on our results of operations and the market price of our common stock.

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In addition, if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our share price. Furthermore, deficiencies could result in future non-compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Such non-compliance could subject us to a variety of administrative sanctions, including review by the SEC or other regulatory authorities.

We have never paid and do not intend to pay cash dividends and, consequently, the ability to achieve a return on any investment in our common stock will depend on appreciation in the price of our common stock.

Anti-takeover provisions in our charter documents and Delaware law, could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock.

Our Amended and Restated Certificate of Incorporation, as amended (the “Charter”), and our Second Amended and Restated Bylaws (the “Bylaws”) may discourage, delay, or prevent a change in our management or control over us that stockholders may consider favorable. Our Charter and Bylaws:

· provide that vacancies on our board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office;

· do not provide stockholders with the ability to cumulate their votes; and

· require advance notification of stockholder nominations and proposals.

In addition, our Charter permits the Board to issue up to 25 million shares of preferred stock with such powers, rights, terms and conditions as may be designated by the Board upon the issuance of shares of preferred stock at one or more times in the future. Specifically, the Charter permits the Board to approve the future issuance of all or any shares of the preferred stock in one or more series, to determine the number of shares constituting any series and to determine any voting powers, conversion rights, dividend rights, and other designations, preferences, limitations, restrictions and rights relating to such shares without any further authorization by our stockholders. The Board’s power to issue preferred stock could have the effect of delaying, deterring or preventing a transaction or a change in control of our company that might otherwise be in the best interest of our stockholders.

General Risk Factors

Our internal computer systems, or those of our third-party vendors, collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs, compromise sensitive information related to our business or prevent us from accessing critical information, potentially exposing us to liability or otherwise adversely affecting our business.

Our internal computer systems and those of our current and any future third-party vendors, collaborators and other contractors or consultants are vulnerable to damage or interruption from computer viruses, computer hackers, malicious code, employee theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we seek to protect our information technology systems from system failure, accident and security breach, if such an event were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other disruptions. For example, the loss of clinical trial data from clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. If we were to experience a significant cybersecurity breach of our information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counterparties and data subjects could be material. In addition, our remediation efforts may not be successful. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology and cybersecurity infrastructure, we could suffer significant business disruption, including transaction errors, supply chain or manufacturing interruptions, processing inefficiencies, data loss or the loss of or damage to intellectual property or other proprietary information.

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To the extent that any disruption or security breach were to result in a loss of, or damage to, our or our third-party vendors’, collaborators’ or other contractors’ or consultants’ data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability including litigation exposure, penalties and fines, we could become the subject of regulatory action or investigation, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed. Any of the above could have a material adverse effect on our business, financial condition, results of operations or prospects.

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Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.

We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include general liability, employment practices liability, property, inventory and cargo, auto, workers’ compensation, products liability, and directors’ and officers’ insurance. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage. Any significant, uninsured liability may require us to pay substantial amounts, which would adversely affect our working capital and results of operations.

Changes in laws or regulations relating to data privacy and security, or any actual or perceived failure by us to comply with such laws and regulations, or contractual or other obligations relating to data privacy and security, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.

We are, and may increasingly become, subject to various laws and regulations, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate. The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the foreseeable future. These laws and regulations may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material adverse effect on our business, financial condition, results of operations or prospects.

In the ~~U.S.~~US, various federal and state regulators, including governmental agencies like the Consumer Financial Protection Bureau and the Federal Trade Commission, have adopted, or are considering adopting, laws and regulations concerning personal information and data security. In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) establish privacy and security standards that limit the use and disclosure of protected health information and require the implementation of safeguards to protect the privacy, integrity and availability of protected health information. Determining whether protected health information has been handled in compliance with applicable privacy standards and our contractual obligations can be complex and may be subject to changing interpretation. If we fail to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties. In addition, state ~~attorneys~~ attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents. We cannot be sure how these regulations will be interpreted, enforced or applied to our operations.

Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international, or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts. For example, the California Consumer Privacy Act (“CCPA”), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020. Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data protection and privacy rights, including the ability to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

On August 10, 2021, we were notified that the production website used by one of our service providers to prepare for FDA’s decision regarding our EUA request for lenzilumab had been compromised and source code from the website was posted on various internet message boards. Our service provider has taken additional security measures to ensure that drafts and other unapproved materials are no longer visible to the public. Despite additional security measures taken by our service provider, there can be no assurance that their information systems, or any materials prepared in advance by us, or any of our service providers related to potential regulatory decisions would not be compromised, stolen, copied or manipulated. We remind investors that information posted online may be false, misleading or inaccurate. We undertake no obligation to review and/or correct false, misleading, or inaccurate information posted, published or disclosed other than that information made available by us in formal submissions to the SEC.

Internationally, laws, regulations and standards in many jurisdictions apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information. For example, the E.U. General Data Protection Regulation (“GDPR”), which became effective in May 2018, greatly increased the European Commission’s jurisdictional reach of its laws and adds a broad array of requirements for handling personal data. EU member states are tasked under the GDPR to enact, and have enacted, certain implementing legislation that adds to and/or further interprets the GDPR requirements and potentially extends our obligations and potential liability for failing to meet such obligations. The GDPR, together with national legislation, regulations and guidelines of the EU member states governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, use, retain, protect, disclose, transfer and otherwise process personal data. In particular, the GDPR includes obligations and restrictions concerning the consent and rights of individuals to whom the personal data relates, the transfer of personal data out of the European Economic Area, security breach notifications and the security and confidentiality of personal data. The GDPR authorizes fines for certain violations of up to 4% of global annual revenue or €20 million, whichever is greater.

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All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training associates and engaging consultants, which are likely to increase over time. In addition, such requirements may require us to modify our data processing practices and policies, distract management or divert resources from other initiatives and projects, all of which could have a material adverse effect on our results of operations, financial condition and cash flows. Any failure or perceived failure by us to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security could result in damage to our reputation and our relationship with our customers, as well as proceedings or litigation by governmental agencies or customers, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal executive offices are located at 830 Morris Turnpike, 4th Floor, Short Hills, New Jersey 07078. We lease the office in Short Hills, New Jersey and another office in Burlingame, California, which leases will expire on August 31, 2023 and September 30, ~~2022~~2023, respectively. We believe these leased offices are in satisfactory condition and are suitable for the conduct of our business.

ITEM 3. LEGAL PROCEEDINGS

~~Please~~From ~~see~~time-to-time ~~Note~~we 11may ~~to the~~be ~~Consolidated~~involved ~~Financial~~in ~~Statements for a summary of material pending~~ legal proceedings. Asrelating ~~further~~to ~~described~~intellectual ~~in Note 11~~property, ~~one of our CMOs filed a demand for arbitration~~commercial, ~~claiming~~employment ~~more~~and ~~than~~other ~~$20.5~~matters ~~million~~arising in ~~damages.~~the ~~The~~ordinary ~~demand is for breach~~ course of ~~contract~~business. ~~and~~Such ~~trade~~matters ~~defamation relating~~are subject to ~~their~~uncertainty ~~inability~~and tothere ~~perform.~~can ~~The~~be ~~CMO~~no ~~claims~~assurance that wesuch ~~cancelled~~legal ~~the~~proceedings ~~contract~~will ~~after~~not ~~the~~have ~~CMO~~a ~~was~~material adverse ~~unable~~effect toon ~~successfully~~our ~~produce any~~business, ~~full~~results ~~batches~~ of ~~lenzilumab BDS~~operations, ~~but~~financial ~~that~~position weor ~~still~~cash ~~owe~~flows. ~~the~~Please ~~full~~see ~~amount~~the ~~due~~matters under the ~~contract~~caption ~~for all batches never produced. The CMO~~“Part ~~blamed its failed attempts on a subcontractor~~II.—Item ~~To date, we have paid this CMO $10~~8.6 ~~million,~~Financial ~~despite~~Statements itand ~~not~~Supplementary ~~being~~Data—Note ~~able to produce any full BDS batches~~11. ~~We intend to vigorously defend against these claims and to assert our own claims against this CMO~~Litigation.”

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

~~Our common stock is currently listed on the Nasdaq Capital~~ Market ~~under~~Information the symbol “HGEN”. As of February 16, 2022, we had 65,329,177 shares of common stock outstanding held by approximately 33 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

~~Reverse~~Our ~~Stock~~common ~~Split~~stock is currently listed on the Nasdaq Capital Market under the symbol “HGEN”. As of March 16, 2023, we had 119,080,135 shares of common stock outstanding held by approximately 31 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

~~Effective~~Dividend asPolicy of 4:30 p.m. Eastern Time on September 11, 2020, we amended our charter to effect a reverse stock split at a ratio of 1-for-5. Unless stated otherwise, all share data in this Annual Report on Form 10-K have been adjusted, as appropriate, to reflect the reverse stock split.

We have never declared or paid any cash dividends on our capital stock. We anticipate that we will retain all available funds and any future earnings to support our operations and finance the growth and development of our business and, therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors may deem relevant.

Recent Sales of Unregistered Securities

None.

ITEM 6. RESERVED

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ITEM 7. 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 together with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Part I, Item 1A - Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical stage biopharmaceutical company, developing our portfolio of proprietary Humaneered® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. Our proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. We have developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied our Humaneered technology to optimize them. Our lead product candidate, lenzilumab ~~(known as “LENZ” in the U.S.)~~, and our other ~~two~~ product ~~candidates~~candidate, ifabotuzumab (“iFab”) ~~and HGEN005~~, are Humaneered monoclonal antibodies. Our Humaneered antibodies are closer to human antibodies than chimeric or conventionally ~~humanized~~ humanized antibodies and have a high affinity for their target. In addition, we believe our Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related reaction.

WePursuant ~~are~~to ~~focusing~~ our ~~efforts~~previously onreported ~~the development~~strategic ofrealignment plan, we are developing our lead product candidate, lenzilumab (“LENZ®”). Lenzilumab is a monoclonal antibody that has been demonstrated to neutralize human ~~granulocyte~~GM-~~macrophage~~CSF, a cytokine that we believe leads to the overproduction of monocytes which ~~colony-stimulating~~are ~~factor~~responsible for chronic myelomonocytic leukemia (“~~GM-CSF~~CMML”), a ~~cytokine~~rare ~~that~~blood wecancer ~~believe~~and is of critical importance in acute graft versus host disease (“aGvHD”) associated with bone marrow transplants. Our strategic realignment plans include accelerating the ~~hyperinflammatory~~development ~~cascade~~of LENZ in CMML, for which the PREACH-M study is already underway, and continuing ~~sometimes~~our ~~referred~~plans tofor the RATinG study in aGvHD, as ~~cytokine~~these ~~release~~studies ~~syndrome~~are majority funded by our partners. A leading network of centers, The Mayo Clinics, is currently progressing with an investigator-initiated trial (“~~CRS~~IIT”) orof ~~cytokine~~lenzilumab ~~storm,~~in ~~associated~~combination with ~~COVID~~CAR-19T therapies. We are also developing iFab, ~~chimeric~~an ~~antigen~~EpAh-3 ~~receptor~~targeted monoclonal antibody, currently in Phase ~~T-cell~~1 ~~(“CAR-T”)~~development, ~~therapy~~as ~~and~~part ~~acute~~of ~~Graft~~an ~~versus~~antibody ~~Host~~drug ~~Disease~~conjugate (“~~aGvHD~~ADC”), ~~associated~~for ~~with~~certain ~~bone~~solid ~~marrow transplants~~tumors.

WeOur have completed a Phase 3 registrational trial with lenzilumab in newly hospitalized COVID-19 patients and announced positive topline data from the study known as “LIVE-AIR” in March 2021. Following completion of the LIVE-AIR study, we commenced a series of efforts to attain authorization to commercialize lenzilumab for use in hospitalized COVID-19 patients in the United States and other territories. We filed an application for Emergency Use Authorization (“EUA”) with U.S. Food and Drug Administration (“FDA”) at the end of May 2021. We also submitted an application for marketing authorization of lenzilumab in hospitalized COVID-19 patients to Medicines and Healthcare products Regulatory Agency (“MHRA”) of the United Kingdom and conducted a series of exploratory discussions with representatives of European Medicines Agency (“EMA”) regarding our potential submission of lenzilumab for marketing authorization in the European Union. In addition, we commenced significant manufacturing efforts in support of potential commercialization, as described in “Item 1. Business—Manufacturing and Raw Materials.”Pipeline

OnIn ~~September~~addition 8,to ~~2021, FDA declined~~ our ~~EUA~~lead product ~~request~~candidate, ~~stating~~ inlenzilumab, ~~its~~our ~~letter~~development ~~that~~portfolio itfeatures ~~was~~our ~~unable~~other totwo ~~conclude~~product ~~that~~candidates, ~~the~~ifabotuzumab ~~known~~ and ~~potential~~HGEN005, ~~benefits~~all of ~~lenzilumab outweigh the known and potential~~which ~~risks~~are ofHumaneered ~~its~~monoclonal ~~use as a treatment for COVID-19~~antibodies. InPlease ~~addition~~refer to ~~raising~~“Item ~~similar concerns around efficacy, MHRA requested further information related to clinical, manufacturing and quality processes~~1. ~~Despite~~Business—Our ~~these~~Pipeline” ~~regulatory~~for ~~setbacks,~~a wedetailed ~~continue~~discussion toof ~~believe in its potential therapeutic~~our ~~benefits~~development ~~and remain committed to bringing lenzilumab to patients hospitalized with COVID-19~~programs.

2022 Developments

In July 2022, topline results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, were released. The study was sponsored and funded by the National Institutes of Health (“NIH”) and evaluated lenzilumab in combination with remdesivir, compared to placebo and remdesivir, in hospitalized COVID-19 patients. The topline results show the trial did not achieve statistical significance on the primary endpoint, although the topline results did indicate that lenzilumab demonstrated a positive trend in mortality. A global group of leading institutions and research networks has indicated interest in including lenzilumab in their large-scale, multinational studies of COVID-19, pending an uptick in ICU admissions. Tocilizumab and baricitinib demonstrated mortality benefit following inclusion in REMAP-CAP and RECOVERY having failed to do so in smaller studies.

We are executing the strategic realignment plan to deemphasize the deployment of certain resources for the development of lenzilumab for COVID-19 and currently do not plan to pursue regulatory pathways unless further data from ACTIV-5/BET-B or a future large-scale study merit such an approach. The Named Patient program in select European Countries has been terminated. With the exception of one lenzilumab batch in process, we have discontinued the manufacturing of lenzilumab and are consolidating the remaining inventory of lenzilumab bulk drug substance and drug product in a central location for potential future use.

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~~The~~In ~~next~~May ~~anticipated~~2022, ~~step in~~ our ~~development program~~partners ~~for lenzilumab~~ in ~~COVID-19~~South isKorea dosed the ~~release~~final ofhealthy ~~results~~volunteer ~~from~~of the ~~Accelerating~~20 ~~COVID-19~~required ~~Therapeutic~~for ~~Interventions~~their ~~and~~Phase ~~Vaccines~~1 ~~(“ACTIV”)-5 and~~bridging ~~Big~~study. ~~Effect~~This ~~Trial,~~study inwas ~~the~~conducted ~~“B”~~to ~~arm~~explore the ofsafety, ~~the~~tolerability, ~~trial~~and pharmacokinetic (“~~BET-B~~PK”), ~~referred~~properties toof aslenzilumab ~~the~~and ~~ACTIV-5/BET-B trial,~~compare ~~which~~it isbetween ~~sponsored~~Koreans and ~~funded~~Caucasians. The byclinical ~~the~~study ~~National~~report ~~Institutes~~has ofbeen ~~Health~~completed ~~(“NIH”).~~and ~~This~~the ~~study~~degree isof ~~evaluating~~exposure ~~lenzilumab in~~was ~~combination~~observed ~~with remdesivir, compared~~ to ~~placebo~~be ~~and~~higher ~~remdesivir,~~ in ~~hospitalized~~Koreans ~~COVID-19~~than ~~patients,~~in asCaucasians. ~~more~~Lenzilumab was ~~fully~~safe ~~described~~and ~~below. We~~well ~~provided~~tolerated ~~lenzilumab~~in ~~for~~both ~~the~~Koreans ~~study~~and Caucasians.

~~A retrospective analysis of the LIVE~~PREACH-~~AIR~~M ~~study suggested~~Study that patients under the age of 85 and with a baseline CRP below 150 mg/L (the “CRP subgroup”) appeared to derive the greatest benefit from lenzilumab, therefore, the ACTIV-5/BET-B study protocol was modified to include baseline CRP below 150 mg/L as the primary analysis population. The ACTIV-5/BET-B study has reached its target enrollment with over 400 patients enrolled that met this criterion. Topline results from ACTIV-5/BET-B are expected to be released late in the first quarter or early in the second quarter of 2022. If confirmatory of the findings of the CRP subgroup from the LIVE-AIR study, we plan to include the results from ACTIV-5/BET-B in an amendment to EUA submission, and to include these results in a responsive submission to MHRA along with certain performance process qualification (“PPQ”) data around drug product batches, in the second quarter of 2022. In addition, as a result of feedback received from representatives of EMA, if the ACTIV-5/BET-B data are confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, we intend to submit a Conditional Marketing Authorization (“CMA”) for lenzilumab with an Accelerated Approval request to EMA later in 2022.

We ~~believe~~are ~~that~~currently weevaluating ~~have~~lenzilumab ~~built~~for athe ~~strong~~treatment ~~intellectual~~of high-risk ~~property~~CMML ~~position~~ in ~~the~~patients ~~area~~with ofNRAS/ ~~GM-CSF~~KRAS/CBL ~~neutralization~~genetic ~~through~~mutations ~~multiple~~in ~~approaches~~an ~~and~~ongoing ~~mechanisms~~Phase 2 study, known as ~~they~~“PREcision ~~pertain~~Approach to ~~COVID~~Chronic Myelomonocytic Leukemia” or “PREACH-~~19,~~M.” ~~CAR~~The PREACH-T,M study is being conducted in partnership with the South Australian Health & ~~aGvHD~~Medical Research Institute (“SAHMRI”) and ~~multiple~~the ~~other~~University ~~oncology/transplantation~~of Adelaide. The study is currently enrolling at sites in Australia with additional enrollment anticipated at sites in New Zealand. As of March 16, ~~inflammation~~2023, ~~fibrosis~~13 lenzilumab-treated patients have been enrolled in the study of a total of 15 patients and ~~autoimmune~~followed ~~conditions~~for ~~which~~multiple ~~may~~cycles, with what are believed to be ~~driven~~encouraging byresults. GMAn abstract for the PREACH-~~CSF~~M trial has been accepted to the American Association for Cancer Research with a poster presentation scheduled for April 17, 2023. We are providing lenzilumab for this study and the majority of the study costs are being borne by the partner and funded by a grant from the Medical Research Futures Fund, a research fund set up by the Australian Government.

~~Development~~RATinG ~~Programs~~Study

InWe ~~addition~~are tocurrently ~~our~~evaluating ~~lead~~lenzilumab for the ~~product~~early ~~candidate,~~treatment ~~lenzilumab,~~of ~~our~~aGvHD ~~development~~in ~~portfolio~~patients ~~features~~undergoing ~~our~~bone ~~other~~marrow ~~two~~transplants ~~product~~in ~~candidates~~a Phase 2/3 potentially registrational trial, ~~ifabotuzumab~~known ~~and~~as ~~HGEN005~~the “RATinG” study. The study is being conducted by the IMPACT Partnership, ~~all~~a collection of ~~which~~22 stem cell transplant centers located ~~are~~in ~~Humaneered~~the ~~monoclonal~~United ~~antibodies~~Kingdom. ~~Please~~We ~~refer~~anticipate the first patient dosing in this study to ~~“Item~~occur 1in the second quarter of 2023 . We ~~Business—Our~~are ~~Pipeline”~~providing lenzilumab for athe ~~detailed~~study ~~discussion~~including the cost of ~~our~~import, labeling and distribution of the study drug, and support certain ~~development~~laboratory ~~programs~~tests related to the study, but the majority of the study costs will be borne by the IMPACT Partnership. The goal of the study is to determine the efficacy and safety of lenzilumab in reducing non-relapse mortality at six months.

Market Opportunity in CMML and Related Hematological Cancers

Clonal cytogenic abnormalities are commonly seen in CMML patients. RAS mutations, which make leukemic cells hyperresponsive to GM-CSF, are seen in approximately 50% of CMML patients and are the anticipated target patient population for lenzilumab. The incidence of new CMML patients in the US, UK, and Australia is about 1,700 patients annually. RAS mutations, which may drive GM-CSF hyperresponsiveness, are also seen in additional myeloid hematological malignancies including juvenile myelomonocytic leukemia (“JMML”), myelodysplastic syndromes (“MDS”) and acute myeloid leukemia (“AML”), totaling approximately 4,000 new cases annually in the US. We believe success with CMML may provide proof of principle for targeting RAS pathway mutations in myeloid leukemias with lenzilumab and allow us to develop, and if successful, commercialize lenzilumab ourselves or through a partner, in these additional patient populations. About 15 to 20% of CMML cases progress to AML. According to the American Cancer Society, approximately 1,100 individuals in the US are newly diagnosed annually with CMML, with the majority of these new patients being age 60 or older. These patients are typically unsuitable for stem cell transplants.

For FDA approval, a confirmatory study in the US may be required and we plan to seek regulatory guidance from the agency with interim results from PREACH-M. As a treatment for a rare disease, lenzilumab may qualify for certain regulatory and commercial benefits that may accelerate development and approval. Pricing and reimbursement for rare diseases are traditionally higher than treatments for more common diseases.

We are assessing regulatory pathways that may enable early results to support a regulatory submission and potential approval by the Therapeutic Goods Administration in Australia, which could be expanded through Project Orbis, an international regulatory agency collaboration, to the United States and the United Kingdom.

There have been no new therapeutic agents for patients with high-risk CMML in 30 years and independent publications have demonstrated the key role of GM-CSF and RAS pathway mutations in this and other cancers, including JMML, MDS, myeloproliferative neoplasms, and AML.

A clinical protocol has been developed for a study in JMML, an ultra-orphan and devastating condition affecting young children.

Review of Strategic Options and Alternatives

As previously reported, during 2022 we engaged SC&H Capital, an affiliate of SC&H Group, (“SC&H”) to advise us on exploration of strategic options. SC&H is an investment banking and advisory firm providing merger and acquisition (M&A), financial restructuring and related business advisory solutions. SC&H has acted as our advisor as we explore strategic options to maximize value around lenzilumab and ifabotuzumab. We also have considered and pursued a full range of options to raise additional capital and to address, satisfy, defer or restructure our accounts payable and accrued liabilities to manufacturing and other parties.

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We cannot assure you that we and the Partner Company will enter into a definitive agreement for the proposed transaction, and the final form and terms of any such transaction may be materially different from the terms described above. Our ability to enter into a definitive agreement is subject to conditions, including that we have received binding commitments for investment of additional capital that will be necessary to fund the operations of the combined company going forward and enable the combined company to maintain a listing of its common stock on the Nasdaq Capital Market or another national securities exchange, as well as customary matters such as approval of the terms of the definitive agreement by the Partner Company’s board of directors and stockholders. Certain of these conditions will be out of our control. Accordingly, we cannot provide any assurance that we will effect the proposed business combination or related financing transactions. If we are unable to complete the proposed transactions or identify and complete another strategic or financing transaction in the first half of 2023, we may elect or be required to pursue a reorganization or seek other protection under the federal bankruptcy code. See Part I, Item 1A, “Risk Factors.”

Nasdaq Listing Deficiencies

As previously reported, we have received two notices from The Nasdaq Stock Market, LLC (“Nasdaq”) regarding our failures to satisfy the $1 minimum bid price and $35 million total market value of listed securities standards for continued listing. As disclosed, we had 180 days from the date of the applicable notice to cure each deficiency. On February 21, 2023, we received a letter from the Listing Qualifications Department (the “Staff”) of Nasdaq notifying us that we had not regained compliance with the minimum bid price requirement as of February 20, 2023 and that we were not eligible for a second 180-day extension period. The letter specifically noted that we do not comply with the stockholders’ equity initial listing requirement for The Nasdaq Capital Market. The total market value of our listed securities also remains below the $35 million requirement for continued listing on The Nasdaq Capital Market. On March 2, 2023, the Nasdaq Hearings Panel (the “Panel”) granted our request for a hearing to appeal the determination from the Staff. The hearing before the Panel has been scheduled for April 6, 2023. In addition, our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days. See Part I, Item 1A, “Risk Factors.”

Critical Accounting Policies and Critical Accounting 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 ~~U.S.~~US, or GAAP. The preparation of our financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the amounts and disclosures reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Our management believes judgment is involved in determining revenue recognition, the fair value-based measurement of stock-based compensation and accruals. Our management evaluates estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Consolidated Financial Statements. If our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material adverse effect on our statements of operations, liquidity and financial condition.

While our significant accounting policies are described in more detail in Note 2 to our Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our 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. This process involves reviewing contracts and purchase orders, reviewing the terms of our license agreements, 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 service when we have not yet been invoiced or otherwise notified of actual cost. Some of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees to:

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contract research organizations and other service providers in connection with clinical studies;

∙

contract manufacturers in connection with the production of lenzilumab, including cancellation and termination charges and charges for product that does not meet specifications; and

∙

vendors in connection with preclinical development activities.

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We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing these costs, we estimate the time period over which services will be performed for which we have not been invoiced and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly. 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 our reporting changes in estimates in any particular period.

Stock-Based Compensation

Our stock-based compensation expense for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option pricing model and is recognized as expense over the requisite service period. The Black-Scholes option pricing model requires various highly judgmental assumptions including expected volatility and expected term. The expected volatility is based on the combined historical stock volatilities of our own common stock and that of several of our publicly listed peers over a period equal to the expected terms of the options as we do not have a sufficient trading history to rely solely on the volatility of our own common stock. To estimate the expected term, we have opted to use the simplified method, which is the use of the midpoint of the vesting term and the contractual term. If any of the assumptions used in the Black-Scholes option pricing model changes significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience and our expectations regarding future pre-vesting termination behavior of employees. To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly.

Revenue Recognition

Our revenue to date has been generated primarily through license agreements and research and development collaboration agreements. We have recorded revenue from licensing of $32.65 million and $0.3.6 million for the years ending December 31, ~~2021~~2022 and ~~2020~~2021, respectively. ~~Commencing~~We ~~January 1, 2018, we~~ recognize revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASC 606”). The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods and/or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and/or services. To determine the appropriate amount of revenue to be recognized for arrangements that we determine are within the scope of ASC 606, we perform the following steps: (i) identify the contract(s) with the 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) each performance obligation is satisfied.

Revenue under technology licenses and collaborative agreements typically consists of nonrefundable and/or guaranteed license fees, collaborative research funding, and various milestone and future product royalty or profit-sharing payments.

The fair value of deliverables under the arrangement may be derived using a best estimate of selling price if vendor specific objective evidence and third-party evidence is not available. Deliverables under the arrangement will be separate units of accounting if a delivered item has value to the customer on a standalone basis and if the arrangement includes a general right of return for the delivered item, delivery or performance of the undelivered item is considered probable and substantially in our control.

We recognize upfront license payments as revenue upon delivery of the license only if the license has standalone value from any undelivered performance obligations and that value can be determined. The undelivered performance obligations typically include manufacturing or development services or research and/or steering committee services. If the fair value of the undelivered performance obligations can be determined, then these obligations would be accounted for separately. If the license is not considered to have standalone value, then the license and other undelivered performance obligations would be accounted for as a single unit of accounting. In this case, the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed or deferred indefinitely until the undelivered performance obligation is determined.

Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we determine the period over which the performance obligations will be performed, and revenue will be recognized. Revenue is recognized using a proportional performance or straight-line method. The proportional performance method is used when the level of effort required to complete performance obligations under an arrangement can be reasonably estimated. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of the level of effort performed to date to the estimated total level of effort required to complete performance obligations under the arrangement. If we cannot reasonably estimate the level of effort to complete performance obligations under an arrangement, we recognize revenue under the arrangement on a straight-line basis over the period we are expected to complete our performance obligations. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement.

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Our collaboration agreements typically entitle us to additional payments upon the achievement of development, regulatory and sales performance-based milestones. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in our revenue calculation. Typically, these milestones are not considered probable at the inception of the collaboration. As such, milestones will typically be recognized in one of two ways depending on the timing of when the milestone is achieved. If the milestone is achieved during the performance period, then we will only recognize revenue to the extent of the proportional performance achieved at that date, or the proportion of the straight-line basis achieved at that date, and the remainder will be recorded as deferred revenue to be amortized over the remaining performance period. If the milestone is achieved after the performance period has completed and all performance obligations have been delivered, then we will recognize the milestone payment as revenue in its entirety in the period the milestone was achieved.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set forth in Note 2 to our Consolidated Financial Statements included in this Annual Report on Form 10-K. We do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.

Results of Operations

At December 31, ~~2021~~2022, we had an accumulated deficit of $~~611~~681.18 million~~, primarily as a result of research and development and general and administrative expenses~~. Since inception, we have recognized a nominal amount of revenue from payments for license or collaboration fees~~, $3~~.6 ~~million~~Our of which was recognized in the year ended December 31, 2021. While we may in the future generate additional revenue from a variety of sources, including license fees, milestone payments, and research and development payments in connection with strategic partnerships, our product candidates may never be successfully developed or commercialized and we may therefore never realize revenue from any product sales. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenue or profits. Our ability to continue as a going concern depends on our ability to attain a significant amount of additional financing, as more fully described under “—Liquidity and Capital Resources” below and in “Risk Factors” in Item 1A of Part I above.

Comparison of Years Ended December 31, ~~2021~~2022 and ~~2020~~2021

The following table summarizes the results of our operations for the periods indicated (amounts in thousands, except percentages):

	Year Ended December 31,						Increase/ (Decrease)
	2021			2020			Amount			%
	2022			2021			Amount			%
Revenue:
License revenue	$	32,~~595~~514		$	~~312~~3,595		$	3(1,~~283~~081	)		~~1,052~~(30	)
Total revenue		32,~~595~~514			~~312~~3,595			3(1,~~283~~081	)		~~1,052~~(30	)
Operating expenses:
Research and development		~~213~~55,~~115~~210			72213,~~713~~115			~~140~~(157,~~402~~905	)		~~193~~(74	)
General and administrative		2315,~~252~~608			1523,~~797~~252			(7,~~455~~644	)		47(33	)
Total operating expenses		~~236~~70,~~367~~818			88236,~~510~~367			~~147~~(165,~~857~~549	)		~~167~~(70	)
Loss from operations		(~~232~~68,~~772~~304	)		(88232,~~198~~772	)		(~~144~~164,~~574~~468	)		~~164~~(71)
Other expense:
Other income (expense):
Interest expense		(2,~~264~~918	)		(12,~~336~~264	)		~~(928~~654	)		6929
Other expense, net		(1,613	)		(1	)		(1,612	)		*
Other income (expense), net		492			(1,613	)		2,105			131
Net loss	$	(~~236~~70,~~649~~730	)	$	(89236,~~535~~649	)	$	(~~147~~165,~~114~~919	)		~~164~~(70	)

* Percentage is not meaningful

Revenue

Revenue in the fiscal years ended December 31, ~~2021~~2022 and ~~2020~~ 2021 represents license revenue under the license agreement (the “South Korea Agreement”) with KPM and its affiliate, Telcon, (together with KPM, the “Licensee”), described in more detail in Note 3 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. License revenue ~~increased~~decreased $31.31 million in ~~2021~~2022 from $0.3.6 million for the year ended December 31, 2021 ~~2020~~ to $32.65 million for the year ended December 31, ~~2021~~2022. Through June 30, 2022, revenue was being amortized through March 31, 2023, the expected end of the performance period. During the quarter ended September 30, 2022, the performance period was reevaluated, and the estimated end date of the performance period was adjusted to December 31, 2025. The change in estimate resulted in a decrease of $0.8 million in quarterly license revenue as compared to amounts that would have been recorded under the previous timeline. Prospective periods will reflect the impact of this change in estimate.

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Research and Development Expenses

Conducting research and development is central to our business model. We expense both internal and external research and development costs as incurred. We track external research and development costs incurred by project for each of our clinical programs. Our external research and development costs consist primarily of:

∙● expenses incurred under agreements with contract research organizations, investigative sites, and consultants that conduct our clinical trials and our pre-clinical activities;

∙● the cost of acquiring and manufacturing clinical trial, pre-commercial and other materials, the cost to transfer the manufacturing process for bulk drug substance and fill/finish production, development of and periodic performance of a variety of tests and assays for stability, release, comparability and product characterization, costs associated with quality management, the preparation of documents and information necessary to file with regulatory authorities~~, cancellation and termination charges and charges for failed batches~~; and

∙● other costs associated with development activities, including additional studies.

Other research and development costs consist primarily of internal research and development costs such as salaries and related fringe benefit costs for our employees, stock-based compensation charges, and travel costs not allocated to one of our clinical programs. Internal research and development costs generally benefit multiple projects and are not separately tracked per project.

The following table shows a summary of our research and development expenses for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

	Year Ended December 31,
(in thousands)	~~2021~~2022		~~2020~~2021
External Costs
Lenzilumab	$	~~210~~53,~~129~~092	$	71210,~~341~~129
Ifabotuzumab		~~112~~542		~~225~~112
Internal costs		21,~~874~~576		12,~~147~~874
Total research and development	$	~~213~~55,~~115~~210	$	72213,~~713~~115

Research and development expenses ~~increased~~decreased by $~~140~~157.49 million from $72213.71 million for the year ended December 31, ~~2020~~2021 to $~~213~~55.12 million for the year ended December 31, ~~2021~~2022. The ~~increase~~decrease is primarily due to ana ~~increase of~~ $~~143~~142.97 million decrease in lenzilumab manufacturing costs, ~~including consulting fees, and~~ a $18.73 million ~~increase~~ decrease in ~~internal~~clinical ~~costs~~trial expenses, primarily due ~~compensation~~to the completion of the LIVE-~~related~~AIR study and the termination of the CAR-T trial in the third quarter of 2022, ~~partially~~as ~~offset~~part byof our plan to reduce costs, and a $53.26 million ~~reduction~~decrease in ~~clinical~~consulting ~~trial~~ expenses ~~for lenzilumab~~.

We expect our development costs will decrease in ~~2022~~2023 as compared to ~~2021~~2022. WeIn ~~have~~connection ~~sought~~with ~~to mitigate~~ our ~~financial~~realignment ~~commitments while continuing~~ to ~~position~~deemphasize ~~lenzilumab for a future authorization or approval in~~ the ~~U.S.,~~deployment EUof ~~and~~certain ~~UK.~~resources ~~Our~~for ~~mitigation efforts included~~ the ~~amendment~~development ~~or in some cases cancelation~~ of ~~certain of our agreements~~ ~~with~~lenzilumab ~~CMOs~~ for ~~future manufacturing work~~COVID-19, ~~some~~with ofthe ~~which~~exception ~~were contingent on EUA, in an effort to reduce our future spending. We incurred cancellation fees for several~~ of ~~these~~one ~~modifications. We also have disputed several invoices for cancellation fees and for production batches for~~ lenzilumab ~~that~~batch ~~had~~in ~~been submitted by CMOs that failed to produce BDS within our stated release specifications~~process, ~~but~~we ~~our~~have ~~mitigation efforts~~discontinued ~~may~~the ~~not~~manufacturing ~~be successful to recoup any such loss~~ of lenzilumab ~~BDS or DP. See Item 3. To this Annual Report on Form 10-K~~ and ~~Note~~ 11are toconsolidating the ~~Consolidated~~remaining ~~Financial~~inventory ~~Statements included in this Annual Report on Form 10-K for more information on these disputes. In the event~~ of ~~authorization~~lenzilumab bybulk ~~MHRA,~~drug ~~EMA,~~substance orand ~~FDA,~~drug ~~we anticipate that the demand for commercial~~ product ~~could exceed the~~ in~~-process~~ ~~and~~a ~~planned production~~central oflocation ~~lenzilumab~~for ~~through~~potential ~~2022~~future use. We ~~intend~~believe towe ~~seek~~have ~~additional~~sufficient ~~manufacturing~~drug ~~capacity~~product iffor ~~authorization is obtained. We expect to use a portion of the revenues generated from commercial sale of lenzilumab following receipt of a regulatory authorization to support~~ our ~~efforts~~currently toplanned ~~expand~~clinical ~~production capacity in 2023 and beyond~~trials.

General and Administrative Expenses

General and administrative expenses consist principally of personnel-related costs (including stock-based compensation), professional fees for legal and patent expenses, ~~consulting~~insurance, ~~audit and~~consulting, ~~tax services~~audit, ~~public, governmental and~~ investor relations costs, and other general operating expenses not otherwise included in research and development.

57General and administrative expenses decreased by $7.7 million from $23.3 million for the year ended December 31, 2021, to $15.6 million for the year ended December 31, 2022. The decrease for the year ended December 31, 2022, is primarily due to decreases of $7.3 million in consulting expenses and $1.3 million in investor and public relations expenses partially offset by a $1.1 million increase in non-cash stock-based compensation expense. We expect that our overall general and administrative expenses may decrease in the near-term due to our realignment plan designed to significantly reduce our go-forward, cash-based general and administrative expenses; however, our ongoing litigation costs may more than offset any such expense reductions.

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General and administrative expenses increased by $7.5 million from $15.8 million for the year ended December 31, 2020, to $23.3 million for the year ended December 31, 2021. The increase for the year ended December 31, 2021, is primarily due to increases in consulting and other professional services fees of $6.4 million, personnel-related expenses of $2.9 million, including $2.3 million in non-cash stock-based compensation expense, primarily attributable to new hires since the first quarter of 2020, an increase of $0.8 million in business insurance, and other net increases in general and administrative expenses of $0.8 million, all in support of our increased operating activities to support the trial for COVID-19 and prepare for potential commercialization of lenzilumab, partially offset by a decrease in public and investor relations expenses of $3.4 million. We expect our overall general and administrative costs to decrease in the near-term until and if authorization is received in the UK, EU, or U.S.

Interest Expense

Interest expense ~~increased $1.0 million from $1.3 million~~ for the ~~year~~years ended December 31, ~~2020 to $2.3 million for the year ended December 31, 2021. Interest expense for the year ended~~ ~~December~~2022 ~~31,~~and 2021 is primarily related to the Loan and Security Agreement with Hercules Capital as agent for its affiliates serving as lenders thereunder (the “Term Loan”). OnInterest ~~March~~expense ~~29,~~increased ~~2021,~~$0.6 wemillion ~~borrowed~~from $252.03 million ~~under~~for the ~~Term~~year ~~Loan.~~ended ~~See~~December ~~Note~~31, 5 2021 to ~~the~~$2.9 ~~Consolidated Financial~~million ~~Statements~~for ~~included~~the inyear ~~this~~ended ~~Annual~~December ~~Report~~31, on2022. ~~Form~~Interest ~~10-K~~expense ~~for~~in ~~additional~~the ~~information~~year onended ~~the~~December ~~Term~~31, ~~Loan~~2022 included $1.2 ~~Interest~~million ~~expense~~in unamortized ~~for~~loan ~~the~~fees ~~year~~recognized ~~ended~~in ~~December~~connection ~~31,~~with ~~2020~~the ~~primarily~~loan ~~related~~payoff toin ~~our~~July ~~previously~~2022. ~~outstanding~~We ~~debt~~drew the initial $25.0 Inmillion ~~June~~under ~~2020,~~the weTerm ~~paid~~Loan ~~off~~on ~~substantially~~March ~~all~~29, 2021. After giving effect to payment of ~~our~~fees ~~debt~~and ~~with~~expenses ~~proceeds~~associated ~~from~~with the ~~private~~draw, ~~placement~~we received net proceeds of ~~our~~approximately ~~common~~$24.4 ~~stock~~million.

Other Expense, net

Other expense increased by $1.6 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily due to litigation costs.

Income Taxes

As of December 31, 2021, we had net operating loss carryforwards of approximately $166.2 million to offset future federal income taxes which expire in the years 2022 through 2037, and approximately $522.5 million that may offset future state income taxes which expire in the years 2028 through 2041. We also have federal net operating loss carryforwards generated in the years 2018 through 2021 of $346.9 million that have no expiration date as a result of the tax law changes signed into law on December 22, 2017. Current federal and state tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change. Even if the carryforwards are available, they may be subject to annual limitations, lack of future taxable income, or future ownership changes that could result in the expiration of the carryforwards before they are utilized. At December 31, 2021, we recorded a 100% valuation allowance against our deferred tax assets of approximately $150.6 million, as at that time our management believed it was uncertain that they would be fully realized. If we determine in the future that we will be able to realize all or a portion of our deferred tax assets, an adjustment to our valuation allowance would increase net income in the period in which we make such a determination.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through proceeds from the public offerings of our common stock, private placements of our common and preferred stock, debt financings, interest income earned on cash and cash equivalents, and marketable securities, and borrowings against lines of credit, and more recently, with the proceeds under the South Korea Agreement. Specifically, under the South Korea Agreement, we received a $6.0 million upfront payment (or $4.5 million, net of withholding taxes and other fees and royalties) in the fourth quarter of 2020 and the first milestone payment of $6.0 million (or $4.5 million, net of withholding taxes and other fees and royalties) which was met in the first quarter of 2021 and received in the second quarter of 2021. In the first quarter of 2021, we borrowed $25.0 million under the Term Loan. In the second quarter of 2021, we sold an aggregate of 5,427,017 shares of our common stock in connection with an underwritten public offering, raising net proceeds of approximately $94.2 million after deducting underwriting discounts and offering costs. In the year ended December 31, 2021, we sold an aggregate of 6,408,087 shares of our common stock in connection with our Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), raising net proceeds of approximately $65.7 million after deducting underwriting discounts and offering costs. At December 31, 2021, we had cash and cash equivalents of $70.0 million. Subsequent to December 31, 2021 and through the date of this filing, as disclosed in Note 13 to the Consolidated Financial Statements included in this Annual Report on Form 10-K, we issued and sold 1,301,548 shares of common stock pursuant to the Sales Agreement and raised net proceeds of approximately $3.7 million, after deducting fees and expenses.

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Other Income (Expense), net

Other income (expense), net increased by $2.1 million for the year ended December 31, 2022, primarily due to litigation settlement costs incurred in the year ended December 31, 2021.

Income Taxes

As of December 31, 2022, we had net operating loss carryforwards of approximately $166.2 million to offset future federal income taxes which expire in the years 2024 through 2037, and approximately $542.9 million that may offset future state income taxes which expire in the years 2028 through 2042. We also have federal net operating loss carryforwards generated in the years 2018 through 2022 of $375.3 million that have no expiration date. Current federal and state tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change. Even if the carryforwards are available, they may be subject to annual limitations, lack of future taxable income, or future ownership changes that could result in the expiration of the carryforwards before they are utilized. At December 31, 2022, we recorded a 100% valuation allowance against our deferred tax assets of approximately $171.4 million, as at that time our management believed it was uncertain that they would be fully realized. If we determine in the future that we will be able to realize all or a portion of our deferred tax assets, an adjustment to our valuation allowance would increase net income in the period in which we make such a determination.

Liquidity and Capital Resources

Primary Sources of and Uses of Cash

The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below ($000’s):

	Twelve Months Ended December 31,
(In thousands)	~~2021~~2022			~~2020~~2021
Net cash (used in) provided by:
Operating activities	$	(~~184~~76,~~045~~698	)	$	(69184,~~852~~045	)
Investing activities		-			(20	)
Financing activities		16,837			186,324
Financing activities		186,324			137,466
Net (decrease) increase in cash and cash equivalents	$	(59,861	)	$	2,279
Net increase in cash and cash equivalents	$	2,279		$	67,594

Net cash used in operating activities was $~~184~~76.07 million and $69184.90 million for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively. Cash used in operating activities of $~~184~~76.07 million for the year ended December 31, ~~2021~~2022, primarily related to our net loss of $~~236~~70.67 million, adjusted for non-cash items, such as $5.48 million in stock-based compensation, and a net ~~increase~~change in operating assets and liabilities of $4611.68 million, ~~and~~including ~~other~~a ~~non-cash~~$4.2 ~~items~~million ofdecrease in accounts payable, a $05.61 million decrease in accrued expenses and a $2.5 million decrease in deferred revenue. Cash used in operating activities inof ~~2020~~$184.0 million for the year ended December 31, 2021, primarily related to our net loss of $89236.56 million, adjusted for non-cash items, such as $25.14 million in stock-based compensation, ~~changes~~a net increase in operating assets and liabilities of $1646.56 million and other non-cash items of $1.0.6 million.

Net cash ~~used~~provided inby ~~investing~~financing activities was $~~0 and~~16.8 ~~$20~~million ~~thousand~~ for the ~~years~~year ended December 31, ~~2021~~2022 and ~~2020,~~consists ~~respectively.~~of ~~Cash~~net ~~used~~proceeds inof ~~investing~~$41.8 ~~activities~~million ~~for~~from the ~~year~~issuance ~~ended~~of ~~December 31,~~common ~~2020~~stock ~~consisted~~in ofconnection with the ~~purchase~~Sales ofAgreement ~~website~~with ~~domain~~Cantor, ~~names~~offset ~~for~~by ~~future~~the ~~use~~Hercules loan repayment of $25.0 million.

Net cash provided by financing activities was $186.3 million for the year ended December 31, 2021 and consisted primarily of net proceeds of approximately $94.2 million related to the sale of 5,427,017 shares of our common stock in connection with an underwritten public offering, $65.7 million received from the issuance of common stock in connection with the Sales Agreement, $24.4 million in net proceeds received from the Term Loan, and $2.0 million received from the exercise of stock options.

Net cash provided by financing activities was $137.5 million for the year ended December 31, 2020 and consisted primarily of $67.0 million received from the issuance of common stock in the 2020 Private Placement (as defined below) in June 2020, $72.7 million received from the issuance of common stock in the 2020 Underwritten Offering (as defined below) in September 2020, $0.5 million received from the issuance of the 2020 Convertible Notes, $0.6 million received from the exercise of stock options, $0.3 million received from the issuance of the 2020 Bridge Notes and $0.1 million received from the issuance of common stock under the equity line of credit with Lincoln Park Capital Fund, LLC (“Lincoln Park”), offset by $0.5 million for the payoff of the 2020 Convertible Notes, $2.4 million for the payoff of the 2019 and 2020 Bridge Notes and $0.8 million for the payoff of the Notes payable to vendors.59

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Recent Financings

Controlled Equity Offering

On December 31, 2020, we entered into the Sales Agreement with Cantor, under which we could issue and sell shares of our common stock, having an aggregate gross sales price of up to $100 million through Cantor, as sales agent. ~~During~~On April 14, 2022, we filed a prospectus in respect of the ~~period~~Sales Agreement which provides ~~from~~us ~~January~~with 1the ability to offer and sell shares of common stock having an aggregate offering price of up to an additional $75.0 million. As mentioned above, ~~2021~~for ~~through~~the year ended December 31, 2022, we issued and sold 55,052,506 shares of our common stock under the Sales Agreement, raising net proceeds of $41.8 million, and for the year ended December 31, 2021, we issued and sold 6,408,087 shares of our common stock under the Sales Agreement, raising net proceeds of $65.7 million. ~~See~~Our ~~Note~~ability 8to continue to utilize the ~~Consolidated~~Sales ~~Financial~~Agreement ~~Statements~~at ~~included~~terms acceptable to us and in ~~this~~sufficient quantities will be subject to the Baby Shelf Rule (as defined and described in ~~Annual~~“Risk ~~Report~~Factors” in Item 1A of Part I above), and also relies on ~~Form~~future ~~10-K~~market ~~for~~conditions ~~additional~~that ~~information~~are ~~related~~uncertain toand ~~the~~cannot ~~Sales~~be ~~Agreement~~relied upon. See “Risk Factors” in Item 1A of Part I above.

2021 Underwritten Public Offering

On March 30, 2021, we entered into an underwriting agreement with Jefferies LLC, Credit Suisse Securities (USA) LLC and Cantor, as representatives of the several underwriters, in connection with the public offering of 5,000,000 shares of our common stock. In addition, we granted the underwriters a 30-day option to purchase an additional 750,000 shares of our common stock. The initial offering closed on April 5, 2021. On May 3, 2021, we closed on the sale of an additional 427,017 shares of our common stock related to the exercise of the underwriters’ 30-day option. The aggregate gross proceeds from the sale of the 5,427,017 shares in the offering, inclusive of the additional shares purchased by the underwriters, were approximately $100.4 million. The net proceeds from this offering, after deducting underwriting discounts and offering costs, were approximately $94.2 million.

Term Loan with Hercules

On March 10, 2021, we entered into the Term Loan with Hercules which provided us with the ability to draw an initial amount of $25.0 million, which we drew on March 29, 2021. WeIn ~~may become~~July ~~entitled~~2022, towe ~~draw~~paid ~~another~~ $2026.07 million ~~under~~in ~~the~~full ~~Term~~settlement ~~Loan~~of ~~through June 15, 2022, at~~ the ~~discretion~~Term ofLoan ~~Hercules~~with ~~if we request additional funding in support of our strategic initiatives, although there can be no assurances that~~ Hercules ~~would agree to provide such additional funding~~. See Note 5 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on the Term Loan.

59Liquidity and Manufacturing Commitments

~~Table~~As of ~~Contents~~December 31, 2022, we had cash and cash equivalents of $10.2 million; combined accounts payable and accrued expenses of $55.3 million, certain of which were in dispute; and manufacturing commitments of $2.6 million for the remainder of 2023 with no significant commitments thereafter, as further described below (see “– Contracts”). We intend to seek to defer these disputed payment obligations, negotiate lower amounts or seek other courses of action, which may include legal recourse for the amounts in question.

~~2020~~Subsequent ~~Underwritten~~to ~~Public~~December ~~Offering~~31, 2022, as previously reported we paid $3.0 million to conditionally resolve previously reported disputes between the Company and Avid arising pursuant to the commercial agreements between the two parties. See Note 11 to the Consolidated Financial Statements for additional information. Our cash and cash equivalents were approximately $3 million as of March 30, 2023, after giving effect to this payment and other uses of funds in conducting our business and pursuing strategic alternatives. Our capital resources are not sufficient to fund our operations for the remainder of 2023.

OnOur ~~September~~ability ~~17,~~to ~~2020~~enter into a definitive agreement with the Partner Company for the strategic transaction described above is subject to numerous conditions, including (among others) that we ~~entered~~have ~~into~~received anbinding ~~underwriting~~commitments ~~agreement~~for ~~with~~investment ~~J.P.~~of ~~Morgan~~additional ~~Securities~~capital ~~LLC~~that ~~and~~will ~~Jefferies~~be ~~LLC,~~necessary asto ~~representatives~~enable us to fund the operations of the ~~several~~combined ~~underwriters, in~~company ~~connection~~going ~~with~~forward and enable the ~~public~~combined ~~offering~~company ofto ~~8,000,000~~maintain ~~million~~a ~~shares~~listing of ~~Humanigen’s~~its common stock (on the ~~“2020~~Nasdaq ~~Underwritten~~Capital Market ~~Offering”)~~or another national securities exchange. We cannot provide any assurance that we will be able to raise sufficient funds to permit Inus ~~addition,~~to effect the proposed business combination. If we ~~granted~~are unable to complete the ~~underwriters~~proposed atransactions ~~30-day~~or ~~option~~identify and complete another strategic or financing transaction in the first half of 2023, we may elect or be required to ~~purchase~~pursue ana ~~additional~~reorganization 1or seek other protection under the federal bankruptcy code. If the proposed business combination with the Partner Company and related financing is completed,~~200,000~~ we would expect to issue a significant number of shares of common stock~~, which option~~ ~~was~~and/or ~~exercised~~convertible inequity ~~full~~securities byto the ~~underwriters~~stockholders onof ~~September~~the 18Partner Company as discussed above and to new investors in the financing, ~~2020~~each of which would have a significant dilutive effect on our existing stockholders.

AsSee aPart ~~result~~I, ofItem ~~the~~1A, ~~pricing of~~“Risk ~~the~~Factors” ~~public~~in ~~offering,~~this ~~our~~Form 10-K ~~common~~for ~~stock~~further ~~commenced~~discussion ~~trading~~of onthe risks surrounding the ~~Nasdaq~~proposed ~~Capital~~transaction ~~Market~~and our company.

The aggregate gross proceeds from the sale of the full 9,200,000 shares in the offering were approximately $78.2 million. We used the proceeds from the offering to support our manufacturing, production and commercial preparation activities relating to lenzilumab as a potential therapy for COVID-19 patients and for working capital and other general corporate purposes.

2020 Private Placement

On June 1, 2020, we entered into a securities purchase agreement with certain accredited investors to complete a private placement of our common stock (the “Private Placement”). The closing of the Private Placement occurred on June 2, 2020 (the “Closing Date”). At the closing, we issued and sold 16,505,743 shares of our common stock (the “Shares”) at a purchase price of $4.35 per share, for aggregate gross proceeds of approximately $71.8 million. We used a portion of the proceeds to retire the following indebtedness:

∙ the outstanding principal amount and accrued and unpaid interest on Humanigen’s convertible promissory notes issued in March 2020, which approximated $0.5 million, were repaid in full, and the notes were extinguished;

∙ the outstanding principal and accrued and unpaid interest, amounting to approximately $2.4 million, on short-term, secured bridge loans made to Humanigen in 2019 and 2020 were repaid in full and the related liens were released; and

∙ the remaining outstanding principal and accrued and unpaid interest, amounting to approximately $0.8 million, on certain notes payable to vendors in accordance with the bankruptcy plan.

We used the remaining proceeds from the Private Placement to fund our Phase 3 study of lenzilumab in COVID-19, to secure manufacturing capacity, to progress Chemistry, Manufacturing and Controls (“CMC”) work, to prepare for commercialization in the event of approval of lenzilumab for use in COVID-19 patients, our collaboration agreement with Kite Pharmaceuticals, Inc., and other development programs, as well as for working capital and other general corporate purposes. See Note 11 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for material information regarding two complaints filed against us in connection with the Private Placement.

Liquidity and Going Concern

We continue to advance our efforts in support of the development of lenzilumab as a therapy for hospitalized COVID-19 patients. As of December 31, 2021, we had cash and cash equivalents of $70.0 million. On September 8, 2021, FDA declined to approve our EUA for lenzilumab. As more fully described in this Annual Report on Form 10-K under “Item 1. Business—Manufacturing and Raw Materials”, we have entered into agreements with several CMOs to provide manufacturing, fill/finish and packaging services for lenzilumab. While we remain committed to our ongoing efforts seeking authorization or approval for commercial use of lenzilumab to treat hospitalized COVID-19 patients in the US, EU, UK and other territories, we have amended, and in some cases canceled, certain of these agreements, some of which were contingent on EUA, in an effort to reduce our future spending on lenzilumab production until and if authorization is received in the UK, EU, or U.S. (See Note 7 to the Consolidated Financial Statements included in this Annual Report on Form 10-K). These changes may limit future production of lenzilumab but because most of our manufacturing agreements required payment of upfront fees upon execution and payments against performance of the services to be provided, often over a lengthy performance period, the changes are expected to decrease our manufacturing costs beginning in 2022.

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Considering our current cash resources and our current and expected levels of operating expenses, which includes our combined accounts payable and accrued expenses as of December 31, 2021 of $64.6 million, and our capital commitments of $63.4 million during 2022 related to our manufacturing agreements, as further described below (see “–Capital Commitments and Capital Resources”),we expect to need additional capital to fund our planned operations and capital requirements for the next twelve months. We may seek to raise such additional capital through public or private equity offerings, including under the Sales Agreement with Cantor, grant financing and support from governmental agencies, convertible debt, additional borrowings under our Term Loan with Hercules at the discretion of Hercules, borrowings under other debt financings, collaborations, strategic alliances and marketing, supply, distribution, or licensing arrangements. Subsequent to December 31, 2021 and through the date of this filing, as disclosed in Note 13 to the Consolidated Financial Statements included in this Annual Report on Form 10-K, we issued and sold 1,301,548 shares of common stock pursuant to the Sales Agreement and raised net proceeds of approximately $3.7 million, after deducting fees and expenses. While we believe these plans to raise additional funds will alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, these plans are not entirely within our control and cannot be assessed as being probable of occurring. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay or reduce the scope of or eliminate one or more of our research or development programs, our commercialization efforts or our manufacturing commitments and capacity. In addition, if we raise additional funds through collaborations, strategic alliances or marketing, supply, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us.

We expect that the results of the ACTIV-5/BET-B trial will be important to potential investors in evaluating an investment in our company. Accordingly, our ability to raise capital on favorable terms in the future is linked closely to the success of that trial, which we cannot assure. Unfavorable results likely would have a material and adverse impact on our stock price and ability to obtain future financing.

If we are unsuccessful in our efforts to raise additional capital, based on our current and expected levels of operating expenses our current capital will not be sufficient to fund our operations for the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern.

Capital Commitments and Capital Resources

On September 8, 2021, FDA declined to approve our application for EUA for the use of lenzilumab for the treatment of COVID-19.

To support our development efforts for lenzilumab and potential commercialization upon approval under an EUA, CMA or MAA, we have entered into agreements with several organizations for contract manufacturing services, as more fully described in this Annual Report on Form 10-K under “Item 1. Business—Manufacturing and Raw Materials.”

While we remain committed to completing regulatory processes underway seeking marketing authorization for lenzilumab to treat hospitalized COVID-19 patients in the U.S., EU, UK and other territories, subsequent to FDA’s decision to decline to approve our application for EUA for the use of lenzilumab we amended, and in some cases terminated, certain of our manufacturing agreements, some of which were contingent on EUA, in an effort to reduce our future spending on lenzilumab production until and if authorization is received in the UK, EU, or U.S. These changes will significantly limit future production of lenzilumab but because most of our manufacturing agreements required payment of upfront fees upon execution and payments against performance of the services to be provided, often over a lengthy performance period, the changes are expected to decrease our manufacturing costs beginning in 2022. We intend to seek additional manufacturing capacity if authorization is obtained. As of December 31, 2021, we estimate that our commitments remaining to be incurred under these agreements will amount to approximately $63.4 million during 2022, $4.6 million during 2023, and $7.4 million thereafter. Certain of these commitments and amounts accrued at year-end are in dispute and we intend to defer these payments, negotiate lower amounts or seek legal recourse for the amounts in question. If marketing authorization or approval for lenzilumab were granted, we would expect to be able to satisfy certain of the cash requirements associated with our future manufacturing commitments from revenues from the commercial sale of lenzilumab, supplemented as necessary with proceeds from the sale of our equity securities; the incurrence of debt; upfront and milestone payments from licensees; and government funding or financial support, if offered.

See “Contracts” below for additional information.

Other significant contractual cash requirements as of December 31, 2021 include payments for principal and interest on the Term Loan. Our current and long-term obligations related to the Term Loan are outlined in Note 5 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Other Financings

See Note 5 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our other financings.

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Contracts

Eversana Agreement

On January 10, 2021, we announced that we had entered into a master services agreement (the “Eversana Agreement”) with Eversana Life Science Services, LLC (“Eversana”) pursuant to which Eversana will provide us with services in connection with the potential launch of lenzilumab.

On September 21, 2021, we notified Eversana that due to the EUA status in the ~~U.S.~~US, we were terminating the initial statement of work related to commercialization support of lenzilumab for the treatment of COVID-19 in the United States. Eversana is disputing the termination notice and has requested payment of approximately $4.05 million it has asserted we owe for services rendered from April 1, 2021 to September 30, 2021. We have disputed this assertion and ~~are~~Eversana ~~working~~has filed for arbitration to resolve this dispute. See Note 11 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information.

Manufacturing Agreements

We ~~have~~ entered into agreements with several CMOs to to manufacture ~~bulk drug substance (“~~BDS”) and fill/finish~~/drug~~ ~~product (“~~DP”) for our lenzilumab clinical trial activities ~~in COVID-19 as well as to manufacture BDS and DP for a potential launch of lenzilumab in anticipation of an EUA or CMA in 2021~~. We ~~have~~ also entered into agreements for packaging of the drug. These agreements ~~represent~~provided ~~large~~for ~~commitments, including~~ upfront amounts prior to commencement of manufacturing and progress payments through the course of the manufacturing process and ~~include~~ payments for technology transfer. Certain of these CMOs ~~have~~were ~~been~~ unsuccessful in their efforts to manufacture some batches of lenzilumab to our specifications for various reasons. We ~~are~~have ~~working~~amended, ~~with~~and ~~one~~in some cases canceled, certain of these ~~CMOs~~agreements. In toaddition, ~~determine~~we ifhave ~~batches~~sought ofto ~~BDS~~mitigate ~~manufactured~~our financial commitments by ~~them~~ceasing ~~will~~additional bemanufacturing ~~usable~~of lenzilumab in ~~the~~connection ~~future~~with orour realignment plan and, ifmore ~~not~~recently, ~~whether~~we ~~other~~have ~~financial~~settled ~~recompense~~our ~~will~~disputes bewith ~~offered~~two of our CMOs. See Note 11 to usthe Consolidated Financial Statements in this Annual Report on Form 10-K for more information on these settlement agreements.

~~Please~~We believe ~~see~~we ~~“Part~~have I,sufficient ~~Item~~supply 1Ato -conduct ~~Risk~~our ~~Factors—Risks Related~~contemplated toclinical ~~Our~~development ~~Efforts~~efforts. toWe ~~Develop~~have ~~Lenzilumab~~discontinued ~~for~~the ~~COVID-19—~~manufacturing ~~Manufacturing~~of lenzilumab, ~~efforts~~with ~~relating~~the toexception ~~our~~of ~~lenzilumab~~one ~~program~~batch in ~~COVID-19 have~~process ~~been~~at ~~extremely~~one ~~costly~~of ~~and~~our ~~inefficient~~CMOs, inCatalent ~~producing~~Pharma ~~treatments~~Solutions, LLC (“Catalent”). If we are unable to obtain regulatory approval for ~~use~~lenzilumab inprior ~~our~~to ~~clinical~~the ~~development~~expiration ~~program~~of orthe ~~potential~~shelf ~~sale~~life at that time, the remaining inventory will not be available for commercial use.”

There is significant drug product that was in production at one of our other CMOs, Thermo Fisher Scientific, Inc. (“Thermo”), for which material has not yet been released by us because the batches produced are out of specification. Nonetheless, Thermo has notified us that they have stopped production and have recently filed a lawsuit against us in Delaware Superior Court for $25.9 million. We have filed a countersuit against Thermo for breach of contract seeking more than $37.5 million. We deny Thermo’s claims and assertions and will vigorously defend against them. See Notes 7 and 11 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information.

License Agreements

We are obligated to make future payments to third parties under in-license agreements, including sublicense fees, royalties, and payments that become due and payable on the achievement of certain development and commercialization milestones.

We record upfront and milestone payments made to third parties under licensing arrangements as an expense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone has been achieved.

License with the Mayo Foundation for Medical Education and Research

On June 19, 2019, we entered into the Mayo Agreement with the Mayo Foundation. Under the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lacking GM-CSF expression through various gene-editing tools including CRISPR-Cas9. Pursuant to the Mayo Agreement, we were required to pay $0.2 million to the Mayo Foundation within six months of the effective date of the Mayo Agreement, or upon completion of a qualified financing, whichever is earlier. We paid the initial payment following completion of the Private Placement. The Mayo Agreement also requires the payment of milestones and royalties upon the achievement of certain regulatory and commercialization milestones.

License with the University of Zurich

On July 19, 2019, we entered into the Zurich Agreement with University of Zurich (“UZH”). Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent GvHD through GM-CSF neutralization. The Zurich Agreement required an initial one-time payment of $0.1 million, which we paid to UZH on July 29, 2019. The Zurich Agreement also requires the payment of annual license maintenance fees, as well as milestones and royalties upon the achievement of certain regulatory and commercialization milestones.

~~Outlicensing Agreements~~61

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Out-licensing Agreements

The South Korea Agreement

On November 3, 2020, we entered into a License Agreement (the “South Korea Agreement”) with KPM and Telcon (together, the “Licensee”). Pursuant to the South Korea Agreement, among other things, we granted the Licensee a license under certain patents and other intellectual property to develop and commercialize our lead product candidate, lenzilumab (the “Product”), for treatment of COVID-19 pneumonia, in South Korea and the Philippines (the “Territory”), subject to certain reservations and limitations. The Licensee will be responsible for gaining regulatory approval for, and subsequent commercialization of, lenzilumab in those territories.

62As consideration for the license, the Licensee has agreed to pay us (i) an up-front license fee of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties), payable promptly following the execution of the License Agreement, which was received in the fourth quarter of 2020, (ii) up to an aggregate of $14.0 million in two payments based on our achievement of two specified milestones in the US, of which the first milestone was met in the first quarter of 2021 and $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties) was received in the second quarter of 2021,and (iii) subsequent to the receipt by the Licensee of the requisite regulatory approvals, double-digit royalties on the net sales of lenzilumab in South Korea and the Philippines. The Licensee has agreed to certain development and commercial performance obligations. It is expected that we will supply lenzilumab to the Licensee for a minimum of 7.5 years at a cost-plus basis from an existing or future manufacturer. The Licensee has agreed to certain minimum purchases of lenzilumab on an annual basis.

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As consideration for the license, the Licensee has agreed to pay us (i) an up-front license fee of $6.0 million(or $4.5 million net of withholding taxes and other fees and royalties), payable promptly following the execution of the License Agreement, which was received in the fourth quarter of 2020, (ii) up to an aggregate of $14.0 million in two payments based on our achievement of two specified milestones in the U.S., of which the first milestone was met in the first quarter of 2021 and $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties) was received in the second quarter of 2021,and (iii) subsequent to the receipt by the Licensee of the requisite regulatory approvals, double-digit royalties on the net sales of lenzilumab in South Korea and the Philippines. The Licensee has agreed to certain development and commercial performance obligations. It is expected that we will supply lenzilumab to the Licensee for a minimum of 7.5 years at a cost-plus basis from an existing or future manufacturer. The Licensee has agreed to certain minimum purchases of lenzilumab on an annual basis.

Indemnification

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

Litigation

Eversana Arbitration

On May 19, 2022, Eversana filed a Demand for Arbitration claiming approximately $4.5 million in damages against the Company with the American Arbitration Association entitled Eversana Life Sciences, LLC v. Humanigen, Inc. (AAA Case No. 01-22-0002-1591). The Demand contains two breach of contract claims related to the Eversana Agreement between the parties and a related agreement between the companies’ European subsidiaries, and a claim for unjust enrichment. Eversana asserts that the Company failed to pay it amounts due for work preparing for the potential commercializing of lenzilumab performed between April 1, 2021 and September 30, 2021. To date, requests for production and objections thereto have been exchanged. The arbitration hearing is currently set for August 2023. The Company denies Eversana’s claims and assertions and will continue to vigorously defend against them.

Avid Settlement

On February 21, 2023, the Company and Avid Bioservices, Inc. (“Avid”) entered into a Settlement Agreement (the “Settlement Agreement”) providing for a conditional resolution of certain previously reported disputes between the Company and Avid arising pursuant to the commercial agreements between the two parties (collectively, the “Lenzilumab Disputes”).

Pursuant to the Settlement Agreement, the Company made a one-time payment of $3.0 million to Avid (the “Settlement Payment”). In addition, the parties mutually agreed that, effective upon the expiration of 120 days from the date of the Settlement Agreement and only if Humanigen has not by such date filed for or been placed into bankruptcy or commenced an assignment for the benefit of creditors or other insolvency proceeding, the parties will dismiss the pending Lenzilumab Disputes and release and discharge each other from all existing claims, demands, causes of actions, charges and grievances of any kind arising out of, or relating to, the Lenzilumab Disputes and the commercial agreements between the parties, which were terminated in accordance with their respective terms.

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Catalent Settlement

On December 16, 2022, the Company and Catalent entered into a Settlement Agreement (the “Settlement Agreement”) resolving certain previously reported disputes between the Company and Catalent that had arisen under the Multiple Facility Clinical Supply and Services Agreement (the “MSA”) dated July 31, 2020, by and between Catalent and the Company, pursuant to which Catalent had agreed to perform certain services relating to the manufacturing of lenzilumab, the Company’s lead product candidate.

Pursuant to the Settlement Agreement, the Company agreed to make a one-time payment of $12 million (the “Settlement Payment”) to Catalent in full satisfaction of all of the Company’s payment obligations under the MSA for products and prior services, as well as cancellation fees Catalent claimed to be owed. In consideration of its receipt of the Settlement Payment, which the Company made on December 22, 2022, Catalent waived and released Catalent’s rights to pursue all payments, claims, or invoices for such products and services and cancellation fees, as well as for some limited additional work to be performed by Catalent, quantified at approximately $23.5 million in the aggregate.

The terms and conditions of the MSA generally will remain in full force and effect with respect to any ongoing activities and additional work to be performed by Catalent.

Savant Litigation

The Company was previously involved in litigation against Savant Neglected Diseases, LLC (“Savant”). In March 2022, the Company and Savant reached a confidential settlement. Accordingly, the litigation involving Savant was dismissed on March 31, 2022.

Thermo Litigation

Thermo has notified the Company that they have stopped production and have issued a demand for payment for unreleased batches of product. There is significant drug product that was in production at Thermo for which material has not yet been released by the Company because the batches produced are out of specification. On October 24, 2022, Thermo filed a lawsuit against the Company in Delaware Superior Court (Patheon Biologics, Inc. v. Humanigen, Inc., Case No. N22C-10-185 MMJ) for $25.9 million. The Company has filed a countersuit against Thermo for breach of contract seeking more than $37.5 million. The Company denies Thermo’s claims and assertions and will vigorously defend against them.

Securities Class Action Litigation

On August 26, 2022, a putative securities class action complaint captioned Pieroni v. Humanigen Inc., et al., Case No. 22-cv-05258, was filed in the United States District Court for the District of New Jersey against the Company, its Chief Executive Officer, Dr. Cameron Durrant, and its former Chief Financial Officer, Timothy Morris. On October 17, 2022, a second putative securities class action complaint captioned Greenbaum v. Humanigen Inc., et al., Case No. 22-cv-06118, was filed in the United States District Court for the District of New Jersey against the Company, Dr. Durrant, Mr. Morris, and the Company’s Chief Scientific Officer, Dale Chappell. The complaints assert claims and seek damages for alleged violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The two actions have been consolidated and a single lead plaintiff and co-lead law firms have been appointed. The Company anticipates filing a Motion to Dismiss in late May 2023. The Company believes that the allegations in the putative complaints are without merit and will vigorously defend against them.

Shareholder Derivative Litigation

On January 19, 2023, a derivative lawsuit captioned Chul Yang derivatively on behalf of Humanigen, Inc. v. Durrant, et al., Case No. 2:23-cv-00235, was filed in the United States District Court for the District of New Jersey against the company’s Chief Executive Officer, Dr. Cameron Durrant, its former Chief Financial Officer, Timothy Morris, and each of its Directors. The complaint asserts claims and seeks damages against all of the defendants for alleged violations of section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder, breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and against Dr. Durrant and Mr. Morris for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Company anticipates this matter being stayed pending initial rulings in the consolidated securities class action matter. The Company believes that the allegations in the derivative action are without merit and will vigorously defend against them.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our Consolidated Financial Statements and The Report of Independent Registered Public Accounting Firm are included in this Annual Report on Form 10-K on pages F-1 through F-29.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, ~~and~~who is also acting as our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2021~~2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, ~~and~~who is also acting as our Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer, ~~and~~who is also acting as our Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of December 31, ~~2021~~2022.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our Chief Executive Officer, ~~and~~who is also acting as our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2021~~2022. In making this assessment, our Chief Executive Officer, ~~and~~who ~~our~~is also acting as our Chief Financial Officer, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control—Integrated Framework. Based on that assessment and using the COSO criteria, our Chief Executive Officer, who ~~and~~is also acting as our Chief Financial Officer, concluded that, as of December 31, ~~2021~~2022, our internal control over financial reporting was effective.

~~The~~This ~~Company’s~~Annual ~~independent~~Report does not include an attestation report of our registered public accounting firm, ~~HORNE~~regarding ~~LLP,~~internal ~~has~~control ~~issued~~over anfinancial ~~audit~~reporting. Management's report onwas not subject to attestation by our registered public accounting firm pursuant to the ~~Company’s~~rules ~~internal~~of ~~control~~the ~~over~~Securities ~~financial~~and ~~reporting,~~Exchange Commission ~~which~~applicable ~~appears~~to onsmaller ~~page~~reporting ~~F-4~~companies ofthat permit us to provide only management's report in this ~~Form~~Annual ~~10-K~~Report.

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Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Inherent Limitations of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information contained in our definitive ~~proxy~~ proxy statement for our ~~2022~~2023 annual meeting of stockholders under the captions “ELECTION OF DIRECTORS”, “INFORMATION ABOUT OUR EXECUTIVE OFFICERS” and “INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE” is hereby incorporated by reference., or if the 2023 definitive proxy statement is not filed within 120 days after December 31, 2022, then we will include such information in a Form 10-K/A we will file with the SEC within such timeframe. Certain other information relating to our Executive Officers appears in Part I of this Annual Report on Form 10-K under the heading “Information ~~about~~ about our Executive Officers.”

ITEM 11. EXECUTIVE COMPENSATION

The information contained in our definitive proxy statement for our ~~2022~~2023 annual meeting of stockholders under the caption “EXECUTIVE COMPENSATION” is hereby incorporated by reference, or if the 2023 definitive proxy statement is not filed within 120 days after December 31, 2022, then we will include such information in a Form 10-K/A we will file with the SEC within such timeframe.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained in our definitive proxy statement for our ~~2022~~2023 annual meeting of stockholders under the caption “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” is hereby incorporated by reference, or if the 2023 definitive proxy statement is not filed within 120 days after December 31, 2022, then we will include such information in a Form 10-K/A we will file with the SEC within such timeframe.

The information contained in our definitive proxy statement for ~~our~~ ~~2022~~our 2023 annual meeting of stockholders under the captions “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” and “DIRECTOR INDEPENDENCE” is hereby incorporated by reference, or if the 2023 definitive proxy statement is not filed within 120 days after December 31, 2022, then we will include such information in a Form 10-K/A we will file with the SEC within such timeframe.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information contained in our definitive proxy statement for ~~our~~ ~~2022~~our 2023 annual meeting of stockholders under the caption “RATIFICATION OF HORNE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM” is hereby incorporated by reference, or if the 2023 definitive proxy statement is not filed within 120 days after December 31, 2022, then we will include such information in a Form 10-K/A we will file with the SEC within such timeframe.

6566

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

(a)	The following documents are filed as part of this report:

	(1)	Financial Statements—See Index to Consolidated Financial Statements at Part I, Item 8 on page F-1 of this Annual Report on Form 10-K.

(1) Financial Statements—See Index to Consolidated Financial Statements at Part I, Item 8 on page F-1 of this Annual Report on Form 10-K.

(2)

All financial statement schedules have been omitted because they are not applicable or not required or because the information is included elsewhere in the financial statements or the Notes thereto.

(3)

See exhibits listed under Part (b) below.

(b)	Exhibits:

		Incorporated by Reference			Filed or
Exhibit No.	Exhibit Description	Form+	Date	Number	Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of the Registrant.	8-K	July 6, 2016	3.1
3.1.1	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant.	8-K	August 7, 2017	3.1
3.1.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, as amended.	8-K	February 28, 2018	3.1
3.1.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, as amended	8-K	September 11, 2020	3.1
3.2	Second Amended and Restated Bylaws of the Registrant.	8-K	August 7, 2017	3.2
4.1	Warrant to Purchase Stock, by and between the Registrant and MidCap Financial SBIC, LP, dated as of June 19, 2013.	8-K	June 24, 2013	10.2
4.2†	Common Stock Purchase Warrant, dated June 30, 2016, by and between the Registrant and Savant Neglected Diseases, LLC.	10-Q	September 23, 2016	4.1
4.2	Registration Rights Agreement, dated as of February 27, 2018, by and among the Registrant and Black Horse Capital Master Fund, Black Horse Capital, Cheval Holdings, Ltd., and Nomis Bay LTD.	10-Q	May 8, 2018	4.6
4.3	Registration Rights Agreement, dated as of ~~February~~June 272, ~~2018~~2020, by and among the Registrant and ~~Black~~the ~~Horse~~investors ~~Capital~~party ~~Master Fund, Black Horse Capital, Cheval Holdings, Ltd~~thereto.~~, and Nomis Bay LTD.~~	10S-Q1	~~May~~June 815, ~~2018~~2020	410.621
4.4	~~Registration~~Description ~~Rights Agreement, dated as~~ of ~~June 2, 2020, by and among the Registrant and the investors party thereto~~Securities.	S10-1K	~~June~~March 1510, ~~2020~~2021	104.215
4.5	Description of Securities.	10-K	March 10, 2021	4.5
10.1**	2012 Equity Incentive Plan, as amended and restated.	10-Q	August 10, 2015	10.2
10.1**	2012 Equity Incentive Plan, as amended and restated.	10-Q	August 10, 2015	10.2
10.1.1**	Amendment to the 2012 Equity Incentive Plan, dated as of September 13, 2016.	S-8 (File No. 333-214110)	October 14, 2016	10.2
10.1.1**	Amendment to the 2012 Equity Incentive Plan, dated as of September 13, 2016.	S-8 (File No. 333-214110)	October 14, 2016	10.2
10.1.2**	Amendment to the 2012 Equity Incentive Plan, effective March 9, 2018.	10-Q	May 8, 2018	10.2
10.1.2**	Amendment to the 2012 Equity Incentive Plan, effective March 9, 2018.	10-Q	May 8, 2018	10.2
10.2**	Form of Notice of Grant and Stock Option Agreement under the 2012 Equity Incentive Plan.	10-12G (File No. 000-54735)	June 12, 2012	10.8
10.2**	Form of Notice of Grant and Stock Option Agreement under the 2012 Equity Incentive Plan.	10-12G (File No. 000-54735)	June 12, 2012	10.8
10.3**	Form of Notice of Grant and Stock Option Agreement under the 2012 Equity Incentive Plan (Outside Directors).	10-K	March 13, 2014	10.37
10.3**	Form of Notice of Grant and Stock Option Agreement under the 2012 Equity Incentive Plan (Outside Directors).	10-K	March 13, 2014	10.37
10.4**	Form of Notice of Stock Unit Award under the 2012 Equity Incentive Plan.	8-K	April 24, 2015	10.1
10.4**	Form of Notice of Stock Unit Award under the 2012 Equity Incentive Plan.	8-K	April 24, 2015	10.1

Table of Contents

		Incorporated by Reference			Filed or
Exhibit No.	Exhibit Description	Form+	Date	Number	Furnished Herewith
10.5**	Form of Director and Officer Indemnification Agreement.	10-K	March 10, 2021	10.5
10.6	Development and License Agreement, dated May 11, 2004, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-12G/A (File No. 000-54735)	August 7, 2012	10.13
10.7	License Agreement, dated April 7, 2006, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-12G/A (File No. 000-54735)	August 7, 2012	10.14
10.7.1	Amendment to License Agreement, dated October 9, 2008, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-Q	May 8, 2014	10.8
10.7.2	Amendment to License Agreement, dated June 8, 2011, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-Q	May 8, 2014	10.9
10.8†	Non-Exclusive License Agreement, dated October 15, 2010, by and between the Registrant, BioWa, Inc. and Lonza Sales AG.	10-12G/A (File No. 000-54735)	September 12, 2012	10.16
10.9	Clinical Trial Agreement, dated as of July 24, 2020, by and between the Registrant and The National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), as represented by the Division of Microbiology and Infectious Diseases (DMID).	8-K	July 30, 2020	10.1
10.10**	Humanigen, Inc. 2020 Omnibus Incentive Compensation Plan, effective September 11, 2020.	8-K	September 11, 2020	10.1
10.11**	Form of Incentive Stock Option Award Agreement under 2020 Omnibus Incentive Plan	10-Q	August 12, 2021	10.1
10.12**	Form of Non-qualified Stock Option Award Agreement under 2020 Omnibus Incentive Plan.	10-Q	August 12, 2021	10.2
10.13**	Amended and Restated Employment Agreement, dated as of October 29, 2020, by and between the Registrant and Dr. Cameron Durrant.	10-K	March 10, 2021	10.14
10.14**	Employment Agreement dated as of August 1, 2020, by and between the Registrant and Timothy Morris.	10-K	March 10, 2021	10.15
10.15**	Amended and Restated Employment Agreement, dated as of September 24, 2020, by and between the Registrant and Dr. Dale Chappell.	10-K	March 10, 2021	10.17
10.16††	License Agreement, dated as of November 3, 2020, by and among the Registrant, KPM Tech Co., Ltd and Telcon RF Pharmaceutical, Inc.	10-K	March 10, 2021	10.18
10.17	Amended and Restated Cooperative Research and Development Agreement, dated as of January 21, 2021, by and among the Registrant, Joint Program Executive Office for Chemical, Biological, Radiological, and Nuclear Defense and Nuclear Defense and Biomedical Advanced Research and Development Authority, Office of the Assistant Secretary for Preparedness and Response	10-K	March 10, 2021	10.19
10.18††	Master Services Agreement effective as of January 8, 2021 between the Registrant and EVERSANA Life Science Services, LLC	8-K	January 14, 2021	10.1

Table of Contents

		Incorporated by Reference			Filed or
Exhibit No.	Exhibit Description	Form+	Date	Number	Furnished Herewith
10.19§	Loan and Security Agreement, dated March 10, 2021, by and between the Registrant and Hercules Capital, Inc.	10-Q	May 13, 2021	10.3
10.5**	Form of Director and Officer Indemnification Agreement.	10-K	March 10, 2021	10.5
10.20**	Description of Registrant’s Director Compensation Policy				X
10.6	Development and License Agreement, dated May 11, 2004, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-12G/A (File No. 000-54735)	August 7, 2012	10.13
21.1	List of Subsidiaries.				X
10.7	License Agreement, dated April 7, 2006, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-12G/A (File No. 000-54735)	August 7, 2012	10.14
23.1	Consent of Horne LLP.				X
10.7.1	Amendment to License Agreement, dated October 9, 2008, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-Q	May 8, 2014	10.8
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
10.7.2	Amendment to License Agreement, dated June 8, 2011, by and between the Registrant and the Ludwig Institute for Cancer Research.	10-Q	May 8, 2014	10.9
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
10.8†	Non-Exclusive License Agreement, dated October 15, 2010, by and between the Registrant, BioWa, Inc. and Lonza Sales AG.	10-12G/A (File No. 000-54735)	September 12, 2012	10.16
32.1***	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350.				X
10.9	Clinical Trial Agreement, dated as of July 24, 2020, by and between the Registrant and The National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), as represented by the Division of Microbiology and Infectious Diseases (DMID).	8-K	July 30, 2020	10.1
32.2***	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350.				X
10.10**	Humanigen, Inc. 2020 Omnibus Incentive. Compensation Plan, effective September 11, 2020.	8-K	September 11, 2020	10.1
10.11**	Form of Incentive Stock Option Award Agreement under 2020 Omnibus Incentive Plan.	10-Q	August 12, 2021	10.1
10.12**	Form of Non-qualified Stock Option Award. Agreement under 2020 Omnibus Incentive Plan.	10-Q	August 12, 2021	10.2
10.13**	Amended and Restated Employment Agreement, dated as of October 29, 2020, by and between the Registrant and Dr. Cameron Durrant.	10-K	March 10, 2021	10.14
10.14**	Amended and Restated Employment Agreement, dated as of September 24, 2020, by and between the Registrant and Dr. Dale Chappell.	10-K	March 10, 2021	10.17
10.15††	License Agreement, dated as of November 3, 2020, by and among the Registrant, KPM Tech Co., Ltd and Telcon RF Pharmaceutical, Inc.	10-K	March 10, 2021	10.18
10.16††	Master Services Agreement effective as of January 8, 2021 between the Registrant and EVERSANA Life Science Services, LLC.	8-K	January 14, 2021	10.1

Table of Contents

		Incorporated by Reference			Filed or
Exhibit No.	Exhibit Description	Form⁺	Date	Number	Furnished Herewith
10.17§	Loan and Security Agreement, dated March 10, 2021, by and between the Registrant and Hercules Capital, Inc.	10-Q	May 13, 2021	10.3
10.18§	First amendment to Loan and Security Agreement, dated as of April 23, 2022, by and between the Registrant and Hercules Capital, Inc.	10-Q	May 5, 2022	10.1
10.19**	Description of Registrant’s Director Compensation Policy.
10.20††	Settlement Agreement dated as of December 16, 2022, by and between the Registrant and Catalent Pharma Solutions, LLC				X
21.1	List of Subsidiaries.				X
23.1	Consent of Horne LLP.				X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
32.1***	Certification of Chief Executive Officer pursuant to 18 USC. §1350.				X
32.2***	Certification of Chief Financial Officer pursuant to 18 USC. §1350.				X

101.INS		XBRL Instance Document—The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

**Indicates management contract or compensatory plan.

***The certifications attached as Exhibits 32.1 and 32.2 that accompanies this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

†Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

††Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company will furnish supplementally an unredacted copy of such exhibit to the Securities and Exchange Commission or its staff upon request.

§ Schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule upon request by the SEC.

6869

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ITEM 16. FORM 10-K SUMMARY.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~February~~March 2830, ~~2022~~2023.

	Humanigen, Inc.

	By:	/s/ Cameron Durrant, M.D., MBA
		Cameron Durrant, M.D., MBA Chief Executive Officer and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Cameron Durrant
Cameron Durrant, M.D., MBA	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	~~February~~March 2830, ~~2022~~2023
/s/ Timothy Morris
/s/ Cameron Durrant
Timothy Morris, CPA	Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)	February 28, 2022
Cameron Durrant, M.D., MBA	Acting Chief Financial Officer (Principal Financial and Accounting Officer)	March 30, 2023
/s/ Ronald Barliant
Ronald Barliant, JD	Director	~~February~~March 2830, ~~2022~~2023
/s/ Rainer Boehm
Rainer Boehm, M.D.	Director	~~February~~March 2830, ~~2022~~2023
/s/ Cheryl Buxton
Cheryl Buxton	Director	~~February~~March 2830, ~~2022~~2023
/s/ Dale Chappell
Dale Chappell, M.D., MBA	Director	~~February~~March 2830, ~~2022~~2023
/s/ John Hohneker
John Hohneker, M.D.	Director	~~February~~March 2830, ~~2022~~2023
/s/ Kevin Xie, Ph.D.
Kevin Xie, Ph.D.	Director	~~February~~March 2830, ~~2022~~2023

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Index to Consolidated Financial Statements

Humanigen, Inc.

Contents

Reports of Independent Registered Public Accounting Firm F-2

Reports of Independent Registered Public Accounting Firm	F-2
(PCAOB ID 171)
Consolidated Balance Sheets as of December 31, 2022 and 2021	F-4
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021	F-5
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021	F-7
Notes to Consolidated Financial Statements	F-8

(PCAOB ID 171)

Consolidated Balance Sheets as of December 31, 2021 and 2020	F-5
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020	F-6
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2021 and 2020	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020	F-8
Notes to Consolidated Financial Statements	F-9

F-1

Table of Contents

~~REPORTS~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Humanigen, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Humanigen, Inc. and its subsidiaries (the “Company”) as of December 31, ~~2021~~2022 and ~~2020~~2021, the related consolidated statements of operations, stockholders'’ equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, 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, ~~2021~~2022 and ~~2020~~2021, 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.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 28, 2022 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 ~~U.S.~~US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits 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~~The ~~audits~~Company ~~included~~is ~~performing~~not ~~procedures~~required to ~~assess~~have, ~~the~~nor ~~risks~~were ofwe ~~material~~engaged ~~misstatement~~to ofperform, ~~the~~an audit ~~financial~~of ~~statements,~~its ~~whether~~internal ~~due~~control toover ~~error~~financial orreporting ~~fraud,~~as ~~and~~of ~~performing~~December ~~procedures~~31, ~~that~~2022. ~~respond~~As topart ~~those~~of ~~risks.~~our ~~Such~~audit, ~~procedures~~we ~~included~~are ~~examining,~~required onto aobtain ~~test~~an ~~basis,~~understanding of ~~evidence~~internal ~~regarding~~control ~~the~~over ~~amounts~~financial ~~and~~reporting ~~disclosures~~but innot for the ~~financial~~purpose ~~statements.~~of ~~Our~~expressing ~~audits~~an ~~also~~opinion ~~included~~on ~~evaluating~~ the ~~accounting~~effectiveness ~~principles~~of ~~used~~the ~~and~~Company's ~~significant~~internal control ~~estimates~~over ~~made~~financial byreporting. ~~management~~Accordingly, aswe ~~well~~express asno ~~evaluating~~such ~~the~~opinion ~~overall~~on ~~presentation~~the effectiveness of the ~~financial~~Company’s ~~statements.~~internal Wecontrol over ~~believe~~financial ~~that~~reporting ~~our~~as ~~audits~~of ~~provide~~December a31, ~~reasonable basis for our opinion~~2022.

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Completeness of Accrual for Contract Manufacturing Costs

As disclosed in ~~note~~Note 4 to the financial statements, the Company has accrued contract manufacturing costs of $1613.23 million as of December 31, ~~2021~~2022. The Company’'s consolidated statement of operations includes contract manufacturing costs within research and development expenses of $~~188~~46.81 million for the year ended December 31, ~~2021~~2022. The Company’'s determination of accrued contract manufacturing costs at each reporting period requires significant judgment by management, as estimates are based on a number of factors, including management’'s knowledge of the contracts and associated timelines, invoicing to date from third party vendors, and the provisions in the contracts, including cancellation and termination charges and charges for product that ~~does~~do not meet specifications. The completeness of the contract manufacturing cost accrual is subject to risk of estimation uncertainty for services provided for which invoices are not received from third party vendors prior to the time the consolidated financial statements are issued as well as the uncertainty related to the outcome of any contracts with contract manufacturing organizations ("CMOs") currently in litigation or arbitration as described in Note 11 to the financial statements.

F-2

Table of Contents

~~The~~Auditing the completeness of the ~~contract~~Company's ~~manufacturing cost~~ accrual isfor ~~subject~~contract tomanufacturing costs ~~risk~~requires ofsignificant ~~estimation~~auditor ~~uncertainty~~judgment, ~~related~~subjectivity toand ~~services~~effort ~~having~~in ~~been~~performing ~~provided~~appropriate ~~where~~procedures ~~invoices~~to ~~are~~evaluate ~~not~~the ~~received~~completeness and ~~from~~accuracy ~~third~~of ~~party vendors prior to~~ the ~~time~~audit ~~the~~evidence ~~consolidated~~management ~~financial~~utilizes ~~statements~~in ~~are~~these ~~issued~~estimates.

~~Auditing~~To evaluate the completeness of the accrual, our audit procedures included, among others, inspecting the contracts with CMOs and evaluating the underlying data used in the estimates of the services provided. We also verified the progress of the contracts with the Company’'s ~~accrual~~management ~~for~~and ~~contract~~with ~~manufacturing~~confirmations ~~costs~~obtained ~~requires~~directly ~~significant~~from ~~auditor judgment~~CMOs, ~~subjectivity~~as well as tested invoices received from vendors throughout the Company's fiscal year and ~~effort~~subsequent to the balance sheet date. For any contracts with CMOs that are in ~~performing~~litigation ~~appropriate~~or arbitration, our audit procedures toalso ~~evaluate~~included ~~the~~obtaining ~~completeness~~and evaluating letters of audit inquiry with external legal counsel and ~~accuracy~~notices of ~~the~~arbitration ~~audit~~and ~~evidence~~litigation to corroborate our inquiries with management ~~utilizes~~and inthe ~~these~~related ~~estimates~~accruals recorded.

To evaluate the completeness of the accrual, our audit procedures included, among others, inspecting the contracts with contract manufacturing organizations (“CMOs”) and evaluating the underlying data used in the estimates of the services provided. We also corroborated the progress of the contracts with the Company’s contract monitors and with confirmations obtained directly from CMOs, as well as tested invoices received from vendors throughout the Company’s fiscal year and subsequent to the balance sheet date.

/s/ HORNE LLP

We have served as the Company's auditor since 2016.

Ridgeland, Mississippi

~~February~~March 2830, ~~2022~~ 2023

F-3

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To Shareholders and the Board of Directors of Humanigen, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited Humanigen, Inc. and its subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes and our report dated February 28, 2022 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ HORNE LLP

Ridgeland, Mississippi

February 28, 2022

F-4

Table of Contents

Humanigen, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

	December 31, 2021			December 31, 2020
	December 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	7010,~~016~~155		$	6770,~~737~~016
Prepaid expenses and other current assets		~~955~~950			~~475~~955
Total current assets		7011,~~971~~105			6870,~~212~~971
Other assets		90			90
Total assets	$	7111,~~061~~195		$	6871,~~302~~061
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	4440,~~698~~520		$	1544,~~366~~698
Accrued expenses		1914,~~882~~791			319,~~175~~882
Deferred revenue		~~4,145~~883			14,~~874~~145
Total current liabilities		6856,~~725~~194			2068,~~415~~725
Non-current liabilities:
Deferred revenue		1,~~018~~766			21,~~342~~018
Long-term debt		~~25,006~~-			-25,006
Total liabilities		9457,~~749~~960			2294,~~757~~749
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit):
Common stock, $0.001 par value: 225,000,000 shares authorized at December 31, 2021 and December 31, 2020; 64,027,629 and 51,626,508 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		64			52
Common stock, $0.001 par value: 225,000,000 shares authorized at December 31, 2022 and December 31, 2021; 119,080,135 and 64,027,629 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively		119			64
Additional paid-in capital		~~587~~634,~~327~~925			~~419~~587,~~923~~327
Accumulated deficit		(~~611~~681,~~079~~809	)		(~~374~~611,~~430~~079	)
Total stockholders’ equity (deficit)		(23,688	)		45,545
Total stockholders’ deficit		(46,765	)		(23,688	)
Total liabilities and stockholders’ equity (deficit)	$	71,061		$	68,302
Total liabilities and stockholders’ deficit	$	11,195		$	71,061

See accompanying notes.

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Humanigen, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Twelve Months Ended December 31,
	2021			2020
	2022			2021
Revenue:
License revenue	$	32,~~595~~514		$	~~312~~3,595
Total revenue		32,~~595~~514			~~312~~3,595
Operating expenses:
Research and development		~~213~~55,~~115~~210			72213,~~713~~115
General and administrative		2315,~~252~~608			1523,~~797~~252
Total operating expenses		~~236~~70,~~367~~818			88236,~~510~~367
Loss from operations		(~~232~~68,~~772~~304	)		(88232,~~198~~772	)
Other expense:
Other income (expense):
Interest expense		(2,~~264~~918	)		(12,~~336~~264	)
Other expense, net		(1,613	)		(1	)
Other income (expense), net		492			(1,613	)
Net loss	$	(~~236~~70,~~649~~730	)	$	(89236,~~535~~649	)
Basic and diluted net loss per common share	$	(40.0479	)	$	(24.4204	)
Weighted average common shares outstanding used to calculate basic and diluted net loss per common share		5889,~~533~~236,~~637~~429			3658,~~963~~533,~~030~~637

See accompanying notes.

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Humanigen, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share data)

										Total
					Additional					Stockholders’
	Common Stock				Paid-In		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balances at January 1, 2020		22,806,890	$	22	$	270,555	$	(284,895	)	$	(14,318	)
Balances at January 1, 2021		51,626,508	$	52	$	419,923	$	(374,430	)	$	45,545
Issuance of common stock, net of expenses		25,745,744		27		139,733		-			139,760
Issuance of common stock for conversion of debt		2,397,916		3		4,313		-			4,316
Issuance of common stock in exchange for services		45,064		-		302		-			302
Issuance of stock options for payment of compensation		-		-		180		-			180
Issuance of common stock for payment of compensation		17,317		-		78		-			78
Issuance of warrant for services		-		-		2,070		-			2,070
Issuance of common stock upon option exercise		390,668		-		572		-			572
Issuance of common stock upon warrant exercise		222,909		-		10		-			10
Stock-based compensation expense		-		-		2,110		-			2,110
Net loss		-		-		-		(89,535	)		(89,535	)
Balances at December 31, 2020		51,626,508		52		419,923		(374,430	)		45,545
Issuance of common stock, net of expenses		11,835,104		12		159,903		-			159,915
Issuance of stock options for payment of compensation		-		-		168		-			168
Issuance of common stock upon option exercise		566,017		-		1,965		-			1,965
Stock-based compensation expense		-		-		5,368		-			5,368
Net loss		-		-		-		(236,649	)		(236,649	)
Balances at December 31, 2021		64,027,629	$	64	$	587,327	$	(611,079	)	$	(23,688	)
Issuance of common stock, net of expenses		55,052,506		55		41,788		-			41,843
Stock-based compensation expense		-		-		5,810		-			5,810
Net loss		-		-		-		(70,730	)		(70,730	)
Balances at December 31, 2022		119,080,135	$	119	$	634,925	$	(681,809	)	$	(46,765	)

See accompanying notes.

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Humanigen, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Twelve Months Ended December 31,
	2021			2020
	2022			2021
Operating activities:
Net loss	$	(~~236~~70,~~649~~730	)	$	(89236,~~535~~649	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation expense		5,~~368~~810			25,~~110~~368
Non-cash interest expense related to debt financing		~~562~~-			~~706~~562
Issuance of common stock for payment of compensation		-			78
Issuance of common stock in exchange for services		-			302
Changes in operating assets and liabilities:
Prepaid expenses and other assets		~~(480~~5	)		(~~166~~480	)
Accounts payable		29(4,~~332~~178	)		829,~~032~~332
Accrued expenses		16(5,~~875~~091	)		416,~~405~~875
Deferred revenue		~~947~~(2,514	)		~~4,216~~947
Net cash used in operating activities		(~~184~~76,~~045~~698	)		(69184,~~852~~045	)
Investing activities:
Purchase of intangible assets		-			(20	)
Net cash used in investing activities		-			(20	)
Financing activities:
Net proceeds from issuance of common stock		~~159~~41,~~915~~843			~~139~~159,~~760~~915
Proceeds from exercise of stock options		~~1,965~~-			~~572~~1,965
Net proceeds from issuance of long-term debt		~~24,444~~-			1024,444
Net proceeds from issuance of convertible notes		-			467
Principal payments on long-term debt		(25,006	)		-
Net proceeds from issuance of PPP loan		-			83
Net cash provided by financing activities		16,837			186,324
Net proceeds from issuance of bridge notes		-			350
Net increase (decrease) in cash and cash equivalents		(59,861	)		2,279
Payments on PPP loan		-			(83	)
Cash and cash equivalents, beginning of period		70,016			67,737
Payments on bridge notes		-			(2,400	)
Cash and cash equivalents, end of period	$	10,155		$	70,016
Payments on convertible notes		-			(518	)
Payments on notes payable to vendors		-			(775	)
Net cash provided by financing activities		186,324			137,466
Net increase in cash and cash equivalents		2,279			67,594
Cash and cash equivalents, beginning of period		67,737			143
Cash and cash equivalents, end of period	$	70,016		$	67,737
Supplemental cash flow disclosure:
Cash paid for interest	$	1,~~519~~319		$	~~672~~1,519
Supplemental disclosure of non-cash investing and financing activities:
Issuance of stock options in lieu of cash compensation	$	~~168~~-		$	~~180~~168
Issuance of warrants for services	$	-		$	2,070
Conversion of notes payable and related accrued interest and fees to common stock	$	-		$	4,316

See accompanying notes.

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Notes to Consolidated Financial Statements

(in thousands unless otherwise indicated, except share and per share data)

1. Organization and Description of Business

Description of the Business

Humanigen, Inc. (the “Company” or “Humanigen”) was incorporated on March 15, 2000 in California and reincorporated as a Delaware corporation in September 2001. Effective August 7, 2017, the Company changed its legal name to Humanigen, Inc.

The Company is a clinical stage biopharmaceutical company, developing its portfolio of proprietary Humaneered® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. The Company’s proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. Humanigen has developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied its Humaneered technology to optimize them. The Company’s lead product candidate, lenzilumab, (“LENZ®”), and its other ~~two~~ product ~~candidates~~candidate, ifabotuzumab (“iFab”) ~~and HGEN005~~, are Humaneered monoclonal antibodies. The Company’s Humaneered antibodies are closer to human antibodies than chimeric or conventionally humanized antibodies and have a high affinity for their target. In addition, the Company believes its Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related ~~reaction~~reactions.

ItIn isJuly ~~focusing~~2022, ~~its~~topline ~~efforts~~results onfrom the ~~development~~Accelerating COVID-19 ofTherapeutic ~~its~~Interventions ~~lead~~and ~~product~~Vaccines-5 ~~candidate,~~(“ACTIV-5”) ~~lenzilumab.~~and ~~Lenzilumab~~Big isEffect aTrial, ~~monoclonal~~in ~~antibody~~the ~~that~~“B” ~~has~~arm ~~been~~of ~~demonstrated~~the ~~to neutralize GM~~trial (“BET-~~CSF~~B”), areferred ~~cytokine~~to ~~that~~as the ~~Company~~ACTIV-5/BET-B ~~believes~~trial, iswere ofreleased. ~~critical~~The ~~importance~~study inwas ~~the~~sponsored ~~hyperinflammatory~~and ~~cascade,~~funded ~~sometimes~~by ~~referred~~the toNational asInstitutes of ~~cytokine~~Health ~~release syndrome~~ (“~~CRS~~NIH”) orand ~~cytokine~~evaluated ~~storm,~~lenzilumab ~~associated~~in combination with ~~COVID-19~~remdesivir, ~~chimeric~~compared ~~antigen~~to ~~receptor~~placebo ~~T-cell~~and ~~(“CAR-T”)~~remdesivir, ~~therapy~~in ~~and~~hospitalized COVID-19 ~~acute~~patients. ~~Graft~~The ~~versus~~topline ~~Host~~results ~~Disease~~showed ~~(“aGvHD”)~~the ~~associated~~trial ~~with~~did ~~bone~~not ~~marrow~~achieve ~~transplants.~~statistical ~~The~~significance ~~Company’s~~on ~~development~~the ~~programs~~primary ~~in COVID-19~~endpoint, ~~CAR-T~~although ~~and~~the topline ~~aGvHD~~results ~~are~~did ~~complementary~~indicate in that ~~all~~lenzilumab ~~are~~demonstrated ~~focused~~a onpositive ~~preventing~~trend orin ~~reducing~~mortality. ~~cytokine~~A ~~storm~~global ingroup ~~those~~of ~~disease~~leading ~~states.~~institutions Itand isresearch networks ~~possible~~has ~~that~~indicated ~~results~~interest ~~observed~~in ~~from~~including ~~the~~lenzilumab ~~Phase~~in 3their ~~trials~~large-scale, inmultinational studies of COVID-19, ~~described~~pending ~~below~~an ~~may~~uptick bein ICU ~~predictive~~admissions. ofTocilizumab ~~results~~and baricitinib demonstrated mortality benefit following inclusion in ~~these~~REMAP-CAP ~~other~~and ~~settings~~RECOVERY, ~~which~~despite ~~are~~having failed ~~also~~to ~~characterized~~do byso ~~cytokine~~in ~~storm~~smaller studies.

~~The~~Pursuant to the Company’s ~~has~~previously ~~completed~~reported strategic arealignment ~~Phase~~plan, 3the ~~registrational~~Company ~~trial~~is ~~with~~developing lenzilumab in ~~newly~~chronic ~~hospitalized~~myelomonocytic ~~COVID~~leukemia (“CMML”), a rare blood cancer, for which the PREACH-19M ~~patients~~study is already underway, and ~~announced~~is ~~positive~~continuing ~~topline~~its ~~data~~plans ~~from~~for the RATinG study ~~known~~in asacute graft versus host disease (“~~LIVE-AIR~~aGvHD”) that occurs in ~~March~~patients ~~2021~~undergoing bone marrow transplant, as these studies are majority funded by its partners. The ~~Following~~Company ~~completion~~anticipates ofthe first patient dosing in the ~~LIVE-AIR~~RATinG study, to occur in the second quarter of 2023. These studies are majority funded by the Company’s ~~commenced~~partners. aA ~~series~~leading network of ~~efforts~~centers, toThe ~~attain~~Mayo ~~authorization~~Clinics, tois ~~commercialize~~currently progressing with an investigator-initiated trial (“IIT”) of lenzilumab ~~for~~in ~~use~~combination with CAR-T therapies. The Company is also developing iFab, an EpAh-3 targeted monoclonal antibody, currently in ~~hospitalized~~Phase 1 development, as part of an antibody drug conjugate (“ADC”), for certain solid tumors. Under the realignment plan, the Company has deemphasized the deployment of resources for the development of lenzilumab for COVID-19 ~~patients~~and currently does not plan to pursue regulatory pathways, unless further data from ACTIV-5/BET-B or a future large-scale study merit such an approach. The Named Patient program in ~~the~~select ~~United~~European ~~States~~Countries ~~and~~has ~~other~~been ~~territories~~terminated. ~~The~~With the exception of the one lenzilumab batch in process, the Company’s ~~regulatory~~has ~~initiatives~~discontinued ~~have~~the ~~not~~manufacturing ~~yet~~of ~~resulted~~lenzilumab and is consolidating the remaining inventory of lenzilumab bulk drug substance and drug product in ~~any~~a ~~commercial~~central ~~authorization~~location for potential future use.

The next anticipated step in the Company’s development program for lenzilumab in COVID-19 is the release of results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, which is sponsored and funded by the National Institutes of Health (“NIH”). This study is evaluating lenzilumab in combination with remdesivir, compared to placebo and remdesivir, in hospitalized COVID-19 patients, as more fully described below.

A retrospective analysis of the LIVE-AIR study suggested that patients under the age of 85 and with a baseline C-reactive protein level (“CRP”) below 150 mg/L (the “CRP subgroup”) appeared to derive the greatest benefit from lenzilumab; therefore, the ACTIV-5/BET-B study protocol was modified to include baseline CRP below 150 mg/L as the primary analysis population. The ACTIV-5/BET-B study has reached its target enrollment with over 400 patients enrolled that met this criterion. Topline results from ACTIV-5/BET-B are expected to be released late in the first quarter or early in the second quarter of 2022. If confirmatory of the findings of the CRP subgroup from the Company’s LIVE-AIR study, the Company plans to include the results from ACTIV-5/BET-B in an amendment to its Emergency Use Authorization (“EUA”) submission, and to include these results in a responsive submission to Medicines and Healthcare products Regulatory Agency (“MHRA”) of the United Kingdom along with certain performance process qualification (“PPQ”) data around drug product batches, in the second quarter of 2022. In addition, as a result of feedback received from representatives of European Medicines Agency (“EMA”), if the ACTIV-5/BET-B data are confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, the Company intends to submit a Conditional Marketing Authorization (“CMA”) for lenzilumab with an Accelerated Approval request to EMA later in 2022.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Annual Report on Form 10-K for additional information regarding the business.

Liquidity and Going Concern

The Consolidated Financial Statements for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. However, the Company has incurred net losses since its inception, and has negative operating cash flows and its total liabilities exceed total assets. These conditions raised substantial doubt about the Company’s ability to continue as a going concern.

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~~The Company continues to advance its efforts in support of the development of lenzilumab as a therapy for hospitalized COVID-19 patients.~~ As of December 31, ~~2021~~2022, the Company had cash and cash equivalents of $7010.02 million. OnConsidering ~~September 8, 2021, U.S. Food and Drug Administration (“FDA”) declined to approve~~ the Company’s ~~EUA~~current ~~for~~cash ~~lenzilumab.~~resources Asand ~~more~~its ~~fully~~current ~~described under “Item 1. Business—Manufacturing~~ and ~~Raw~~expected ~~Materials.”~~levels inof ~~this~~operating expenses ~~Annual~~for ~~Report~~the onnext ~~Form~~twelve ~~10-K~~months, ~~the~~which ~~Company~~includes ~~has~~combined ~~entered~~accounts ~~into~~payable ~~agreements with several contract manufacturing organizations (“CMOs”) to provide manufacturing, fill/finish~~ and ~~packaging~~accrued ~~services~~expenses ~~for~~recorded ~~lenzilumab.~~in ~~While~~ the Company’s ~~remains~~consolidated balance ~~committed~~sheets toas ~~its~~of ~~ongoing~~December ~~efforts~~31, ~~seeking~~2022 ~~marketing~~of ~~authorization~~$55.3 ~~for~~million, ~~lenzilumab~~certain toof ~~treat~~which ~~hospitalized~~are ~~COVID-19 patients~~ in ~~the U.S.~~dispute, UK and ~~other~~manufacturing ~~territories,~~commitments ~~the~~of ~~Company~~$2.6 ~~has~~million for ~~amended~~2023, ~~and~~with inno ~~some~~significant ~~cases~~commitments ~~canceled,~~thereafter ~~certain~~(see ofNote ~~these~~7 ~~agreements~~below), ~~some~~the ofCompany ~~which~~requires ~~were~~additional ~~contingent~~capital ~~on EUA, in an effort~~ to ~~reduce~~fund ~~its~~the ~~future~~Company’s planned ~~spending~~operations. onThe ~~lenzilumab~~Company ~~production~~intends ~~until~~to ~~and~~seek ifto ~~authorization~~defer ~~is received in the UK~~payments, ~~European~~negotiate ~~Union~~lower ~~(“EU”),~~amounts or ~~U.S.~~pursue ~~(See~~other ~~Note~~courses ~~7 below). These changes may limit future production~~ of ~~lenzilumab~~action ~~but~~for ~~because~~certain amounts ~~most~~owed ofto ~~the Company’s~~ manufacturing ~~agreements~~and ~~required~~other ~~payment~~partners ofat ~~upfront~~December ~~fees~~31, ~~upon~~2022. ~~execution~~In ~~and~~order ~~payments against performance of the services~~ to beremain ~~provided, often over~~ a ~~lengthy~~going ~~performance~~concern ~~period,~~and ~~the~~execute ~~changes~~its ~~are~~strategic ~~expected~~realignment plan, ~~to decrease~~ the Company’s ~~manufacturing~~must ~~costs~~successfully ~~beginning~~renegotiate inthese ~~2022~~amounts ~~Considering~~owed, ~~the~~and ~~Company’s~~settle ~~current~~disputes, ~~cash~~including ~~resources~~current and ~~its~~potential ~~current~~future arbitration and ~~expected~~litigation. ~~levels~~The ofCompany ~~operating~~recently ~~expenses,~~engaged ~~which~~SC&H ~~includes~~Capital, ~~combined~~an ~~accounts~~affiliate ~~payable~~of ~~and~~SC&H ~~accrued~~Group, ~~expenses~~(“SC&H”), ~~recorded~~to inadvise the Company’s ~~consolidated~~on ~~balance~~exploration ~~sheets~~of asstrategic ofoptions ~~December~~to ~~31,~~maximize ~~2021~~value ofaround ~~$64.6~~its ~~million,~~development ~~and~~pipeline. ~~its~~The ~~capital~~Company ~~commitments~~has ofnot ~~$63.4~~set ~~million~~a ~~during~~timetable ~~2022~~for the ~~(see~~conclusion ~~Note~~of 7its ~~below),management~~review ~~expects~~of tostrategic ~~need~~alternatives, ~~additional~~and ~~capital~~there tocan ~~fund~~be ~~the~~no ~~Company’s~~assurance ~~planned~~that ~~operations~~this ~~for~~process ~~the~~will ~~next~~result ~~twelve~~in ~~months~~any transaction. The ~~Management~~Company also may seek to raise such additional capital through public or private equity offerings, including under the Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), grant financing ~~and support from governmental agencies~~, convertible ~~debt, borrowings under its Loan~~ and ~~Security Agreement with Hercules Capital and~~ other debt financings, collaborations, strategic alliances ~~and marketing~~, ~~supply, distribution,~~ or licensing arrangements. ~~Subsequent~~involving ~~to December 31, 2021~~ LENZ and through the date of this filing, as disclosed in Note 13 below, the Company issued and sold 1,301,548 shares of common stock pursuant to the Sales Agreement and received net proceeds of approximately $3iFab.7 million, after deducting fees and expenses. While management believes its plans to raise additional funds will alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not entirely within the Company’s control and cannot be assessed as being probable of occurring. Additional funds may not be available when the Company needs them on terms that are acceptable to the Company, or at all. If adequate funds are not available, the Company may be required to delay or reduce the scope of or eliminate one or more of its research or development programs, ~~its~~and ~~commercialization~~may ~~efforts~~not orbe ~~its~~able ~~manufacturing~~to ~~commitments~~continue ~~and~~as ~~capacity~~a going concern. In addition, if the Company raises additional funds through collaborations, strategic alliances ~~or marketing~~, ~~supply, distribution,~~ or licensing arrangements with third parties, the Company may have to relinquish ~~valuable~~ rights to its technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to the Company. ~~The~~While ~~Company~~management believes ~~expects~~its ~~that~~realignment ~~the~~plans ~~results~~and ofits ~~the~~plans ~~ACTIV-5/BET-B~~to ~~trial~~raise additional funds will bealleviate ~~important~~the toconditions ~~potential~~that ~~investors.~~raise ~~Accordingly,~~substantial ~~its~~doubt about the Company’s ability to ~~raise~~continue ~~capital~~as ona ~~favorable~~going ~~terms~~concern, inthese ~~the~~plans ~~future~~are isnot ~~linked~~entirely ~~closely~~within to the ~~success~~Company’s ofcontrol ~~that~~and ~~trial,~~cannot be ~~which~~assessed ~~cannot~~as bebeing ~~assured.~~probable of occurring.

2. Summary of Significant Accounting Policies

Reclassifications

Certain prior year amounts in the Consolidated Financial Statements have been reclassified to conform to the current year's presentation. Such reclassifications had no effect on prior years’ net loss or stockholders’ equity (deficit).

Basis of Presentation and Use of Estimates

The accompanying Consolidated Financial Statements have been prepared in accordance with ~~U.S.~~US generally accepted accounting principles (“US GAAP”) and include all adjustments necessary for the presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The Company believes judgment is involved in accounting for the determination of revenue recognition, the fair value-based measurement of stock-based compensation and accruals. The Company evaluates its estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Consolidated Financial Statements.

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Table of Contents

Concentration of Credit Risk

Cash, cash equivalents, and marketable securities consist of financial instruments that potentially subject the Company to a concentration of credit risk in the event of a default by the related financial institution holding the securities, to the extent of the value recorded in the consolidated balance sheet. The Company invests cash that is not required for immediate operating needs primarily in highly liquid instruments with lower credit risk. The Company has established guidelines relating to the quality, diversification, and maturities of securities to enable the Company to manage its credit risk.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking, interest-bearing and demand money market accounts.

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented on the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts and are amortized to interest expense over the term of the related debt using the effective interest method.

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Table of Contents

Research and Development Expenses

Development costs incurred in the research and development of new product candidates are expensed as incurred, including expenses that may or may not be reimbursed under research and development collaboration arrangements. Research and development costs include, but are not limited to, salaries, benefits, stock-based compensation, laboratory supplies, allocated overhead, fees for professional service providers and costs associated with product development efforts, including the cost of consultants and contract manufacturing organizations (“CMOs”) that manufacture drug products for use in our preclinical studies and clinical trials as well as all other expenses associated with preclinical studies and clinical trials.

The Company estimates preclinical study and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered.

The Company records upfront and milestone payments made to third parties under licensing arrangements as an expense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone has been achieved.

Revenue Recognition

The Company’s revenue to date has been generated primarily through license agreements and research and development collaboration agreements. The Company recorded $32.65 million and $0.3 .6 million in revenue for the years ~~ending~~ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, related to the November 3, 2020 License Agreement (the “South Korea Agreement”) with KPM Tech Co., Ltd. (“KPM”) and its affiliate, Telcon RF Pharmaceutical, Inc. (“Telcon”), as further described in Note 3. ~~Commencing~~The ~~January 1, 2018, the~~ Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods and/or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and/or services. To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following steps: (i) identify the contract(s) with the 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) each performance obligation is satisfied.

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The Company recognizes upfront license payments as revenue upon delivery of the license only if the license has standalone value from any undelivered performance obligations and that value can be determined. The undelivered performance obligations typically include manufacturing or development services or research and/or steering committee services. If the fair value of the undelivered performance obligations can be determined, then these obligations would be accounted for separately. If the license is not considered to have standalone value, then the license and other undelivered performance obligations would be accounted for as a single unit of accounting. In this case, the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed or deferred indefinitely until the undelivered performance obligation is determined.

Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the period over which the performance obligations will be performed, and revenue will be recognized. Revenue is recognized using a proportional performance or straight-line method. The proportional performance method is used when the level of effort required to complete performance obligations under an arrangement can be reasonably estimated. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of the level of effort performed to date to the estimated total level of effort required to complete performance obligations under the arrangement. If the Company cannot reasonably estimate the level of effort to complete performance obligations under an arrangement, the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement.

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The Company’s collaboration agreements typically entitle the Company to additional payments upon the achievement of development, regulatory and sales performance-based milestones. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in the Company’s revenue calculation. Typically, these milestones are not considered probable at the inception of the collaboration. As such, milestones will typically be recognized in one of two ways depending on the timing of when the milestone is achieved. If the milestone is achieved during the performance period, then the Company will only recognize revenue to the extent of the proportional performance achieved at that date, or the proportion of the straight-line basis achieved at that date, and the remainder will be recorded as deferred revenue to be amortized over the remaining performance period. If the milestone is achieved after the performance period has completed and all performance obligations have been delivered, then the Company will recognize the milestone payment as revenue in its entirety in the period the milestone was achieved. See Note 3 for information on the South Korea Agreement.

Leases

The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset'’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its operating right-of-use asset and operating lease liability at the lease commencement date and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term.

In addition to rent, the leases may require the Company to pay additional amounts for taxes, insurance, maintenance, and other expenses, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Rent expense is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the consolidated statements of operations.

The Company has made an accounting policy election to not recognize short-term leases, or leases that have a lease term of 12 months or less at commencement date, within its consolidated balance sheets and to recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

Stock-Based Compensation Expense

The Company measures stock-based compensation expense for stock awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of stock options using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.

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Income Taxes

The Company accounts for income taxes under an asset-and-liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for tax and financial reporting purposes measured by applying enacted tax rates and laws that will be in effect when the differences are expected to reverse, net operating loss carryforwards and tax credits. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the Company’s provision for income taxes.

Net Loss Per Common Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, stock options, common stock warrants and convertible debt are considered to be potentially dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented.

The Company’s potential dilutive securities, which include stock options, warrants and convertible debt have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per common share and be antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.F-11

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The Company’s potentially dilutive securities, which include stock options, warrants and convertible debt have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per common share and be antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.

The following shares subject to outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share as the effect of including such securities would be antidilutive:

	As of December 31,
	2021		2020
	2022		2021
Options to purchase common stock		47,~~429~~472,~~906~~056		34,~~728~~429,~~149~~906
Warrants to purchase common stock		31,238		5131,238
Convertible debt		~~510,986~~-		-510,986
		4,972,130		3,779,387
		7,503,294		4,972,130

Segment Reporting

The Company determines its segment reporting based upon the way the business is organized for making operating decisions and assessing performance. The Company operates in only one segment, which is related to the development of pharmaceutical products.

Recent Accounting Pronouncements

InRecent ~~December~~accounting ~~2019,~~pronouncements ~~the~~issued by the Financial Accounting Standards Board (“FASB”), ~~issued~~including ~~Accounting~~its ~~Standards~~Emerging ~~Update~~Issues ~~(“ASU”)~~Task ~~No. 2019-12~~Force, ~~Simplifying~~ the ~~Accounting~~American ~~for~~Institute ~~Income~~of ~~Taxes.~~Certified Public ~~ASU No. 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation~~Accountants, ~~the methodology for calculating income taxes in an interim period~~ and the ~~recognition~~Securities ~~of deferred tax liabilities for outside basis differences. It also clarifies~~ and ~~simplifies~~Exchange ~~other~~Commission ~~aspects of~~ (the ~~accounting~~“SEC”) ~~for~~did ~~income~~not ~~taxes.~~or ~~ASU~~are ~~2019-12~~not isbelieved ~~effective~~by ~~for~~management ~~fiscal~~to ~~years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted ASU No. 2019-12 on January 1, 2021, which did not~~ have a ~~any~~material impact toon the Company’'s ~~Consolidated~~present ~~Financial~~or ~~Statements~~future financial statements.

In August 2020, the FASB issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from U.S. GAAP, separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for the Company’s financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company early adopted the new guidance on January 1, 2021, using the modified retrospective approach. The adoption did not have any impact to the Company’s Consolidated Financial Statements.

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3. License Revenue

On November 3, 2020, the Company entered into the South Korea Agreement with KPM and Telcon (together, the “Licensee”). Pursuant to the South Korea Agreement, among other things, the Company granted the Licensee a license under certain patents and other intellectual property to develop and commercialize the Company’s lead product candidate, lenzilumab, for treatment of COVID-19 pneumonia, in South Korea and the Philippines (the “Territory”), subject to certain reservations and limitations. The Licensee will be responsible for gaining regulatory approval for, and subsequent commercialization of, lenzilumab in the Territory.

As consideration for the license, the Licensee has agreed to pay the Company (i) an up-front license fee of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties), payable promptly following the execution of the License Agreement, which was received in the fourth quarter of 2020, (ii) up to an aggregate of $14.0 million in two payments based on achievement by the Company of two specified milestones in the ~~U.S.~~US, of which the first milestone was met in the first quarter of 2021 and $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties) was received in the second quarter of 2021, and (iii) subsequent to the receipt by the Licensee of the requisite regulatory approvals, double-digit royalties on the net sales of lenzilumab in South Korea and the Philippines. The Licensee has agreed to certain development and commercial performance obligations. It is expected that the Company will supply lenzilumab to the Licensee for a minimum of 7.5 years at a cost-plus basis from an existing or future manufacturer. The Licensee has agreed to certain minimum purchases of lenzilumab on an annual basis.

The Company assessed the South Korea Agreement in accordance with ASC 606 and ASC 808 – Collaborative Arrangements and determined that its performance obligations under the South Korea agreement include (i) the exclusive, royalty-bearing, sublicensable license to lenzilumab, (ii) the manufacturing supply services to be provided by the Company, (iii) cooperation and assistance to be provided by the Company to the Licensee with regulatory authorities in the Territory and (iv) its obligation to serve on a joint steering committee (Items iii and iv above collectively, the “Research and Development Services” or the “Services”). The Company concluded that in the initial period leading up to regulatory approval in the Territory (the “Initial Period”), the license was not distinct since it was of no benefit to Licensee without the aforementioned Services and that, as such, the license and the Services should be bundled as a single performance obligation.

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The Company has concluded that the nature of its promise is to stand ready to provide Research and Development Services as needed during the Performance Period (as defined below). The Company has further concluded that for all of the increments of time during the Performance Period its promise of standing ready to provide the Services is substantially the same. While the specific tasks performed during each increment of time will vary, the nature of the overall promise to provide the Services remains the same throughout the Performance Period.

Since the provision of the license and the Services are considered a single performance obligation, the $4.5 million upfront payment ($6.0 million net of withholding taxes and other fees and royalties) iswas initially being recognized as revenue ratably over the 29-month period through March of 2023 (the “Performance Period”), the expected period over which the Company conservatively ~~expects~~expected the Services to be performed with approval in the Territory originally expected by the end of March 2023. In addition, since the milestone was achieved during the ~~performance~~Performance ~~period~~Period, the Company recognized revenue to the extent of the proportion of the straight-line basis achieved as of the first quarter of 2021, with the remainder recorded as deferred revenue to be amortized over the remaining Performance Period. ~~Therefore~~During the quarter ended September 30, 2022, the performance period was reevaluated, and the estimated end date of the performance period was adjusted to December 31, 2025. The change in estimate resulted in a decrease of $0.8 million in quarterly license revenue as compared to amounts that would have been recorded under the previous timeline. In the years ended December 21, ~~2021~~2022 and ~~2020~~2021, the Company has recognized license revenue totaling approximately $32.65 million and $0.3.6 million, respectively. Prospective periods will reflect the impact of this change in estimate.

Licensee’s purchases of lenzilumab for development purposes or for commercial requirements, represent options under the agreement and revenues will therefore be recognized when control of the product is transferred to Licensee.

Contract Liabilities

A contract liability of $5.2.6 million, $0.9 million of which represented the current portion, was recorded on the Consolidated Balance Sheets as deferred revenue as of December 31, ~~2021~~ 2022 related to the South Korea agreement. There were no contract asset or deferred contract acquisition costs as of December 31, ~~2021~~2022 associated with the South Korea agreement.

~~F-14~~The following table presents changes in the Company’s contract liability for the years ended December 31, 2022 and 2021 (in thousands):

Balance at January 1, 2021	$	4,216
Additions⁽¹⁾		4,542
Deductions for performance obligations satisfied:
In current period		(1,721	)
In prior period		(1,874	)
Balance at December 31, 2021		5,163
Deductions for performance obligations satisfied:
In current period		(2,514	)
Balance at December 31, 2022	$	2,649
⁽¹⁾ Milestone payment of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties).

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The following table presents changes in the Company’s contract liability for the years ended December 31, 2021 and 2020 (in thousands):

Balance at January 1, 2020	$	-
Additions(1)		4,528
Deductions for performance obligations satisfied:
In current period		(312	)
Balance at December 31, 2020		4,216
Additions(2)		4,542
Deductions for performance obligations satisfied:
In current period		(1,721	)
In prior period		(1,874	)
Balance at December 31, 2021	$	5,163
_______________
(1) Up-front license fee of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties).
(2) Milestone payment of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties).

4. Accrued Expenses

Accrued expenses consist of the following (in thousands):

	As of December 31,
	2021		2020
	2022		2021
Accrued contract manufacturing-related	$	1613,~~174~~325	$	-16,174
Accrued milestone and royalties		2,736		2,~~368~~736
Accrued clinical trial-related		~~160~~205		-160
Accrued compensation-related		44106		~~530~~44
Accrued other		~~768~~419		~~277~~768
	$	1914,~~882~~791	$	319,~~175~~882

5. Debt

Secured Term Loan Facility

On March 10, 2021, the Company executed athe Loan and Security Agreement with Hercules Capital as agent for its affiliates serving as lenders thereunder (the “Term Loan”). ~~The~~which ~~Term~~provided ~~Loan provides~~ a loan in the aggregate principal amount of up to $80.0 million, in three tranches. On March 29, 2021, the Company drew the initial $25.0 million tranche under the Term Loan. After giving effect to payment of fees and expenses associated with the draw, the Company received net proceeds of approximately $24.4 million. The ~~Company~~Term isLoan nobore ~~longer~~interest ~~entitled~~at toa ~~draw~~floating rate equal to the ~~second~~greater ~~tranche,~~of ~~which~~either ~~was~~(i) to8.75% beplus the prime rate as reported in ~~the~~The ~~amount~~Wall ofStreet ~~$35.0~~Journal ~~million~~minus 3.25%, or ~~$25~~(ii) 8.075%. ~~million,~~The asCompany was itinitially ~~did~~obligated ~~not~~to ~~receive~~make ~~EUA~~monthly ~~for~~payments ~~lenzilumab~~of ~~for~~accrued interest under the ~~treatment~~Term ofLoan ~~hospitalized~~commencing ~~patients~~on ~~with~~the ~~COVID-19~~initial ~~pneumonia~~borrowing date and continuing to April 1, 2023, followed by ~~September~~monthly 15installments of principal and interest until March 1, ~~2021~~2025. ~~The~~In July 2022, the Company prepaid ~~may~~$25.0 million ~~become~~of ~~entitled~~outstanding toprincipal, ~~draw~~together ~~another~~with approximately $201.0 7 million of accrued interest, fees and other amounts, due under the Term Loan. ~~through~~In ~~June~~connection ~~15,~~with ~~2022~~the prepayment, at the ~~discretion~~Term ofLoan with Hercules ifwas ~~the~~terminated, ~~Company~~and ~~requests~~all ~~additional~~obligations, liens ~~funding~~and insecurity ~~support~~interests ofunder the ~~Company’s~~Term ~~strategic~~Loan ~~initiatives~~were released, ~~although~~discharged ~~there~~and ~~can~~satisfied. By beretiring nothe ~~assurances~~Term ~~that~~Loan, ~~Hercules~~the ~~would~~Company reduced ~~agree~~future tocash ~~provide~~payments ~~such~~for interest and enhanced its ability to generate additional ~~funding~~liquidity from its intellectual property by removing the loan’s collateral requirements.

~~The~~Interest ~~Company~~expense ~~will~~related ~~be required~~ to ~~repay~~the ~~amounts~~Term ~~borrowed by March 1~~Loan, ~~2025,~~for the ~~subject~~years toended aDecember ~~one-year~~31, ~~extension~~2022 ~~option~~and ~~that~~2021 itwas ~~may~~approximately ~~exercise~~$2.9 ifmillion itand ~~has~~$2.3 ~~received~~million, ~~FDA approval of a BLA for the use of lenzilumab for the treatment of hospitalized patients with COVID-19 pneumonia~~respectively, and the ~~FDA-authorized~~effective ~~label~~interest ~~for~~rate was ~~lenzilumab~~9.3% isand ~~generally~~9.0%, ~~consistent~~respectively. ~~with~~Interest ~~that~~expense ~~sought~~ in the ~~Company’s~~year ~~BLA~~ended ~~filing~~December 31, ~~and~~2022 ~~the~~included ~~Company~~$1.2 ~~has~~million ~~paid~~in ~~Hercules~~unamortized ~~certain~~loan fees ~~and~~recognized in ~~expenses~~connection ~~associated~~ with the ~~extension~~loan payoff.

Amounts drawn bear interest at a floating rate equal to the greater of either (i) 8.75% plus the prime rate as reported in The Wall Street Journal minus 3.25%, or (ii) 8.75% (such greater amount, the “Base Interest Rate”). Subject to there not having occurred any default or event of default under the loan agreement, the Base Interest Rate will be reduced by 25 basis points upon the occurrence of each of the first three of the four following events to occur:

•

if the Company achieves the protocol-specified primary efficacy endpoint for the pivotal Phase 3 study of lenzilumab for COVID-19, (clinicaltrials.gov identifier NCT04351152), and receives EUA for the use of lenzilumab for the treatment of hospitalized patients with COVID-19 pneumonia;

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•

if the Company achieves product revenue from lenzilumab that is invoiced and/or recognized as revenue (as determined in accordance with GAAP) solely from the sale of lenzilumab (“Net Lenzilumab Product Revenue”) of at least $100.0 million;

•

if the Company achieves Net Lenzilumab Product Revenue of at least $250.0 million; and

•

if the Company achieves Net Lenzilumab Product Revenue of at least $350.0 million.

No principal payments will be due during an interest-only period, commencing on the initial borrowing date and continuing to April 1, 2023, subject to extension to April 1, 2024, and potentially October 1, 2024, under certain conditions. Following the interest-only period, the outstanding balance of the loan will be required to be repaid monthly, continuing through the maturity date.

The Company may prepay amounts drawn under the agreement in full prior to the maturity date then in effect, subject to payment of prepayment charges equal to:

•

2.0% of the amounts borrowed, if the prepayment occurs on or prior to March 29, 2022;

•

1.5% of the amounts borrowed, if the prepayment occurs after March 29, 2022 and before March 29, 2023; and

•

1.0% of the amounts borrowed, if the prepayment occurs after March 29, 2023 and before March 29, 2024.

In addition, on the earliest to occur of (i) the maturity date, (ii) the date the Company prepays the outstanding principal amount of the Term Loan, or (iii) the date the outstanding principal amount of the Term Loan otherwise becomes due, the Company will owe Hercules an end of term (“EOT”) charge equal to 6.75% of the aggregate amount of the Term Loan funded by Hercules.

As a condition to obtaining the Term Loan, the Company granted Hercules a security interest in substantially all of its assets and personal property not otherwise subject to existing or permitted liens. In addition, the Term Loan contains customary representations and warranties and events of default for a term loan facility of this size and type. Under the Term Loan, the Company also agreed to comply with certain customary affirmative and negative covenants that become effective upon the initial draw of the first tranche, including covenants to:

•

maintain $10.0 million unrestricted cash;

•

comply with certain requirements to provide Hercules with financial information and other rights to inspect the Company’s books and records and the collateral for the Term Loan;

•

refrain from incurring debt that is not expressly subordinated to the Term Loan; “Rule 144A-style” convertible notes in aggregate principal amount up to $250.0 million; and other permitted indebtedness;

•

refrain from granting (or permitting to exist) liens on the Company’s assets and properties, other than certain permitted liens, including in respect of its patents and other intellectual property;

•

refrain from making certain investments, other than permitted acquisitions and certain other permitted investments;

•

refrain from repurchasing the Company’s stock or paying dividends, subject to limited exceptions;

•

refrain from transferring any material portion of its assets; and

•

refrain from entering into any merger or consolidation in which the Company is not the surviving entity.

All of these covenants will not apply upon repayment of any borrowings under the Term Loan.

Certain of the baskets for permitted investments and other exceptions to the covenants described above have increased because the Company has raised more than $100.0 million in unrestricted net cash proceeds from one or more bona fide equity financings prior to March 31, 2022. (See Note 8 below for information relating to the Company’s equity financings in 2021 in this regard.) Further, the covenants in the Term Loan will not prohibit the Company from pursuing its strategy of entering into out-bound license agreements for lenzilumab that may be exclusive as to specific geographic regions outside the U.S., nor will the covenants prohibit the Company from entering into co-development or co-promotion or commercialization agreements relating to lenzilumab, so long as such agreements generally are negotiated on arm’s length and commercially reasonable terms.

While the Term Loan is outstanding, the lenders will have the right to convert a portion of the principal amount outstanding under the Term Loan (ranging from $5.0 million to $10.0 million in the aggregate) into shares of the Company’s common stock at a conversion price equal to $19.57 per share, subject to customary anti-dilution adjustments.

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The following table summarizes the outstanding future payments of principal and interest associated with the Company’s Term Loan as of December 31, 2021 (in thousands):

2022	$	2,218
2023		10,800
2024		13,671
2025		5,153
Total payments		31,842
Less amount representing interest		(5,155	)
Notes payable, gross		26,687
Less: Unamortized portion of EOT charge		(1,264	)
Less: Unamortized discount on notes payable		(159	)
Less: Unamortized debt issuance costs		(258	)
Long-term debt		25,006
Less current portion		-
Long-term debt, net of current portion	$	25,006

Interest expense related to the Term Loan, for the year ended December 31, 2021 was approximately $2.3 million and the effective interest rate was 9.0%.

Notes Payable to Vendors

On June 30, 2016, the Company issued promissory notes in an aggregate principal amount of approximately $1.2 million to certain claimants in accordance with the Company’s Plan of Reorganization (the “Plan”) filed with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) (Case No. 15-12628 (LSS) (the “Bankruptcy Case”) which became effective June 30, 2016, at which time the Company emerged from its Chapter 11 bankruptcy proceedings. The notes were unsecured, accrued interest at 10% per annum and became due and payable in full, including principal and accrued interest on June 30, 2019. In July and August, 2019, following the receipt of proceeds from the 2019 Bridge Notes, the Company used approximately $0.5 million of the proceeds to retire a portion of these notes, including accrued interest. In June and July 2020, the Company used the proceeds from the Private Placement (as defined below) to repay the remaining outstanding principal including accrued and unpaid interest on these notes and the notes were extinguished. As of December 31, 2020, all the notes had been repaid.

Convertible Notes

2018 Convertible Notes

Commencing September 19, 2018, the Company delivered a series of convertible promissory notes (the “2018 Notes”) evidencing an aggregate of $2.5 million of loans made to the Company by six different lenders, including an affiliate of Black Horse Capital, L.P. (“BHC”), the Company’s controlling stockholder at the time. The 2018 Notes accrued interest at a rate of 7% per annum and, in general, were set to mature twenty-four months from the date the 2018 Notes were signed. The Company used the proceeds from the 2018 Notes for working capital.

The 2018 Notes were convertible into equity securities of the Company in three different scenarios, including if the Company sold its equity securities on or before the date of repayment of the 2018 Notes in any financing transaction that resulted in gross proceeds to the Company of less than $10.0 million (a “Non-Qualified Financing”). In connection with a Non-Qualified Financing, the noteholders were able to convert their remaining 2018 Notes into either (i) such equity securities as the noteholder would acquire if the principal and accrued but unpaid interest thereon (the “Conversion Amount”) were invested directly in the financing on the same terms and conditions as given to the financing investors in the Non-Qualified Financing, or (ii) common stock at a conversion price equal to $2.25 per share (subject to ratable adjustment for any stock split, stock dividend, stock combination or other recapitalization occurring subsequent to the date of the Notes).

The Company’s sales of shares pursuant to the ELOC Purchase Agreement with Lincoln Park constituted a Non-Qualified Financing. Commencing on April 2, 2020, the holders of the 2018 Notes notified the Company of their exercise of their conversion rights under the 2018 Notes. See “2019 Convertible Notes” for additional information regarding the conversion of 2018 Notes by the holders.

Interest expense recorded during the year ended December 31, 2020 related to the 2018 Notes was approximately $0.8 million.

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2019 Convertible Notes

Commencing on April 23, 2019, the Company delivered a series of convertible promissory notes (the “2019 Notes” and together with the 2018 Notes, the “Convertible Notes”) evidencing an aggregate of $1.3 million of loans made to the Company. The 2019 Notes accrued interest at a rate of 7.5% per annum and, in general, were set to mature twenty-four months from the date the 2019 Notes were signed. The Company used the proceeds from the 2019 Notes for working capital.

The 2019 Notes were convertible into equity securities of the Company in four different scenarios, including if the Company sold its equity securities on or before the date of repayment of the 2019 Notes in any financing transaction that resulted in gross proceeds to the Company of less than $10.0 million (a “Non-Qualified Financing”). In connection with a Non-Qualified Financing, the noteholders were able to convert their remaining 2019 Notes into either (i) such equity securities as the noteholder would acquire if the Conversion Amount were invested directly in the financing on the same terms and conditions as given to the financing investors in the Non-Qualified Financing, or (ii) common stock at a conversion price equal to $6.25 per share (subject to ratable adjustment for any stock split, stock dividend, stock combination or other recapitalization occurring subsequent to the date of the 2019 Notes).

The Company’s sales of shares pursuant to the ELOC Purchase Agreement with LPC constituted a Non-Qualified Financing. Commencing on April 2, 2020, holders of the Convertible Notes, including Cheval, an affiliate of BHC, the Company’s controlling stockholder at the time, notified the Company of their exercise of their conversion rights under the Convertible Notes. Pursuant to the exemption from registration afforded by Section 3(a)(9) under the Securities Act, the Company issued an aggregate of 2,397,916 shares of its common stock upon the conversion of $4.3 million in aggregate principal and interest on the Convertible Notes that were converted, which obligations were retired. Of these, the Company issued 316,666 shares to Cheval. Dr. Dale Chappell, who was serving as the Company’s ex-officio chief scientific officer at the time and currently serves as its Chief Scientific Officer, controls BHC and reports beneficial ownership of all shares held by it and its affiliates, including Cheval. After giving effect to the shares issued upon such conversions, no convertible notes issued in 2018 or 2019 were outstanding as of December 31, 2020.

Interest expense related to the 2019 Notes, recorded during the year ended December 31, 2020, was approximately $0.2 million.

The Advance Notes, the 2018 Notes and the 2019 Notes had an optional voluntary conversion feature in which the holder could convert the notes in the Company’s common stock at maturity at a conversion rate of $2.25 per share for the Advance Notes and the 2018 Notes and at a conversion rate of $6.25 for the 2019 Notes. The intrinsic value of this beneficial conversion feature was $1.8 million upon the issuance of the Advance Notes, the 2018 Notes and

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