{"url_path":"/sec/orka/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/907654/0001213900-26-055769-index.html","accession_number":"0001213900-26-055769","cik":"0000907654","ticker":"ORKA","issuer_name":"Oruka Therapeutics, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/907654/0001213900-26-055769-index.html","primary_entity_key":"0000907654","primary_entity_name":"Oruka Therapeutics, Inc."},"word_count":22972,"has_tables":true,"body_markdown":"**Item 1A. Risk Factors**\n\n \n\n**Risk Factors Summary**\n\n** **\n\nWe are subject to a number\nof risks that could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results\nto differ materially from those contained in forward-looking statements we have made in this Quarterly Report and those we may make from\ntime to time. The success of our product candidates will depend on a variety of factors. We do not have complete control over many of\nthese factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual\nproperty rights and the manufacturing, marketing, distribution and sales efforts of any current or future collaborator. In addition, some\nof the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations\nas to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to\nthe factors, events, or contingencies that could materially and adversely affect us in the future.\n\n \n\nThe summary below is not exhaustive and is qualified by reference to\nthe full set of risk factors set forth in Item 1A “Risk Factors” of this Quarterly Report. Please carefully consider all the\ninformation in this Quarterly Report, including the full set of risks set forth in the “Risk Factors” section, and in our\nother filings with the U.S. Securities and Exchange Commission (the “SEC”) before making an investment decision regarding\nthe Company.\n\n \n\n**Risks Related to Our Financial Condition and\nCapital Requirements**\n\n** **\n\n \n●\nWe are a clinical stage biopharmaceutical company with a limited operating history on which to assess our business. Our clinical trials remain ongoing and we have no products approved for commercial sale.\n\n \n \n \n\n \n●\nWe have historically incurred losses and we anticipate that we will continue to incur losses for the foreseeable future.\n\n \n \n \n\n \n●\nWe have never generated revenue from product sales and may never be profitable.\n\n \n \n \n\n \n●\nWe may not be able to raise the capital that we need to support our business plans.\n\n \n \n \n\n \n●\nRaising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.\n\n** **\n\n**Risks Related to Clinical Development, Regulatory\nApproval and Commercialization**\n\n** **\n\n \n●\nDrug development and obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain.\n\n \n \n \n\n \n●\nWe are substantially dependent on the success of our two most advanced programs, ORKA-001 and ORKA-002. We may not achieve our projected development goals in the time frames we announce and expect, or at all.\n\n \n \n \n\n \n●\nWe face competition from entities that have developed or may develop programs for the diseases addressed by our product candidates.\n\n** **\n\n34\n\n \n\n** **\n\n**Risks Related to Government\nRegulations**\n\n** **\n\n \n●\nWe may not be able to meet requirements for the chemistry, manufacturing and control of our programs.\n\n \n\n \n●\nThe U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory approval processes are lengthy and time consuming and we may not be able to obtain or may be delayed in obtaining regulatory approvals for our product candidates. Moreover, even if we obtain regulatory approval, we will be subject to ongoing regulatory obligations.\n\n** **\n\n**Risks Related to Our Intellectual Property**\n\n** **\n\n \n●\nOur ability to obtain and protect our patents and other proprietary rights is uncertain and we may fail in obtaining or maintaining necessary rights to our programs.\n\n \n \n \n\n \n●\nWe may become subject to claims challenging the inventorship or ownership of our intellectual property and may be subject to patent infringement claims or may need to file such claims.\n\n \n \n \n\n \n●\nOur technology licensed from third parties may be subject to retained rights.\n\n \n\n**Risks Related to Our Reliance on Third Parties**\n\n \n\n \n●\nWe currently rely on agreements with third parties to develop our product candidates. Our business could be negatively impacted if we are unable to maintain these arrangements or if these arrangements are not successful, for example, if such third parties fail to carry out their contractual duties.\n\n \n \n \n\n \n●\nOur third-party manufacturing partners and manufacturing sites may fail to perform adequately in their efforts to support the manufacture of our product candidates and we may need to switch or create third-party manufacturer redundancies. \n\n \n\n \n\n**Risks Related to Employee Matters, Managing\nGrowth, Other Risks Related to Our Business, and Risks Related to Owning Our Common Stock**\n\n** **\n\n \n●\nOur estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all.\n\n \n \n \n\n \n●\nOur business is dependent on key personnel, and we may be harmed if we cannot recruit and retain highly qualified personnel to successfully implement our business strategies.\n\n \n \n \n\n \n●\nOur business could be adversely affected by macroeconomic or geopolitical conditions.\n\n \n \n \n\n \n●\nFuture sales and issuances of equity and debt could result in additional dilution to our stockholders and could cause our stock price to decline.\n\n \n \n \n\n \n●\nFuture sales of shares, or the anticipation of such sales, by existing stockholders could cause our stock price to decline.\n\n \n\n35\n\n \n\n** **\n\n**Risk Factors**\n\n** **\n\n**Risks Related to Our Financial\nCondition and Capital Requirements**\n\n** **\n\n**We are a clinical stage\nbiopharmaceutical company with a limited operating history on which to assess our business; our clinical trials are ongoing, we have no\nproducts approved for commercial sale, we have historically incurred losses, and we anticipate that we will continue to incur significant\nlosses for the foreseeable future. Moreover, we have never generated revenue from product sales and may never be profitable.**\n\n \n\nWe are a clinical stage biopharmaceutical\ncompany with a limited operating history. We will need to raise substantial additional capital to continue to fund our operations in the\nfuture. We have based our estimates on assumptions that may prove to be wrong and we could exhaust our available financial resources sooner\nthan we currently anticipate. We have devoted substantially all of our financial resources to identifying, acquiring, and developing our\nproduct candidates, organizing and staffing our company, and providing general and administrative support for our operations.\n\n  \n\nAdditional capital may not\nbe available in sufficient amounts or on reasonable terms, if at all. The current market environment for small and midcap biotechnology\ncompanies and broader macroeconomic factors may preclude us from successfully raising additional capital on the timeline we require. For\nexample, escalating geopolitical tensions, elevated interest rates, and economic and regulatory uncertainty have caused market volatility.\nSuch volatility can have an adverse effect on the ability to raise capital, particularly in the biotechnology and biopharmaceutical industries.\nIn addition, it may be difficult for us to raise additional capital if we experience any issues that delay or prevent the regulatory approval\nor our ability to commercialize any of our product candidates.\n\n \n\nBiopharmaceutical product\ndevelopment is a highly speculative undertaking and involves a substantial degree of risk. We expect our losses to increase as our product\ncandidates enter advanced clinical trials. It may be several years, if ever, before we complete pivotal clinical trials or have a\nproduct candidate approved for commercialization. We expect to invest significant funds into the research and development of our programs\nto determine the potential to advance product candidates to regulatory approval. If we obtain regulatory approval to market a product\ncandidate, our future revenue will depend upon the size of approved markets, and our ability to achieve sufficient market acceptance,\npricing, coverage and adequate reimbursement from third-party payors, and adequate market share for our products. However, even if\nwe obtain adequate market share for our products, we may never become profitable despite obtaining such market share and acceptance of\nour products.\n\n \n\nWe expect to continue to\nincur significant expenses and increasing operating losses for the foreseeable future and our expenses will increase substantially if\nand as we:\n\n \n\n \n●\ncontinue the clinical development of our product candidates, including advancing our product candidates into larger, more expensive trials;\n\n \n \n \n\n \n●\nprogress our chemistry, manufacturing and control development, registration, and validation, including the manufacture of our product candidates by third parties, including increasing volumes manufactured by third parties;\n\n \n \n \n\n \n●\ncontinue efforts to discover and develop new product candidates, including initiating preclinical studies or clinical trials;\n\n \n \n \n\n \n●\nseek regulatory and marketing approvals and reimbursement for our product candidates;\n\n \n \n \n\n \n●\nestablish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval and market for ourselves;\n\n \n \n \n\n \n●\nmake milestone, royalty, or other payments under third-party license agreements;\n\n \n \n \n\n \n●\nseek to maintain, protect, and expand our intellectual property portfolio; and\n\n \n \n \n\n \n●\nexperience any delays or encounter issues with the development and potential regulatory approval of our product candidates such as safety issues, manufacturing delays, clinical trial delays, longer follow-up for planned studies or trials, additional major studies or trials, or supportive trials necessary to support marketing approval.\n\n \n\n36\n\n \n\n \n\nIf we are unable to raise\nadditional capital when required or on acceptable terms, we may be required to curtail our product development activities and other activities\ncommensurate with the magnitude of the shortfall and our product development activities may cease altogether, which could materially harm\nour business, financial condition, and results of operations. To the extent that the costs of our activities exceed our current estimates\nand we are unable to raise sufficient additional capital to cover such costs, we will need to reduce operating expenses, sell assets,\nenter into strategic transactions, or effect a combination of the above. No assurance can be given that we will be able to enter into\nany of such transactions on acceptable terms, if at all. Any of the following events could have a material adverse effect on our business,\noperating results, and prospects:\n\n \n\n \n●\na delay, scaling back, or discontinuation of the development or commercialization of our product candidates;\n\n \n\n \n●\nseeking strategic partnerships, or amending existing partnerships, for research and development programs at an earlier stage than otherwise would be desirable or that we otherwise would have sought to develop independently, or on terms that are less favorable than might otherwise be available in the future;\n\n \n\n \n●\ndisposal of technology assets, or the relinquishing or licensing of assets on unfavorable terms, of our rights to technologies or any of our product candidates that we otherwise would seek to develop or commercialize ourselves;\n\n \n\n \n●\npursuing the sale of the company to a third party at a price that may result in a loss on investment for our stockholders; or\n\n \n\n \n●\nfiling for bankruptcy or ceasing operations altogether.\n\n \n\nEven if we are successful\nin raising additional capital, the amount of capital we raise may be limited or restricted due to investor demand, market conditions,\nor other factors.\n\n \n\n**Raising additional\ncapital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights.**\n\n** **\n\nTo the extent that we raise additional capital through the sale of\nequity securities or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities\nmay include liquidation or other preferences that adversely affect the rights of holders of our common stock. Debt financing and preferred\nequity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions,\nsuch as incurring additional debt, making capital expenditures, or declaring dividends. For example, most recently, in April 2026, we\nentered into an underwriting agreement, pursuant to which we issued and sold 9,660,000 shares of common stock for a gross proceeds of\n$700.4 million before any underwriting discounts and commissions and related issuance expenses. We have granted the underwriters a 30-day\noption to purchase 1,449,000 additional shares at a price of $72.50 per share, less underwriting discounts and commissions. In addition,\nin October 2025, we entered into a sales agreement with TD Securities (USA) LLC acting as our sales agent pursuant to which we may issue\nand sell shares of our common stock from time to time through an at-the-market equity offering program, for aggregate gross proceeds of\nup to $200.0 million, under which we have sold shares of our common stock resulting in net proceeds of $38.9 million as of March 31, 2026.\nPreviously, in September 2025, we entered into a Securities Purchase Agreement whereby the investors purchased shares of our common stock\nand pre-funded warrants for aggregate net proceeds of approximately $169.6 million.\n\n \n\nMoreover, if we raise additional\nfunds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required\nto relinquish valuable rights to our research programs or product candidates or grant licenses on terms that may not be favorable to us.\n\n \n\n**Risks Related to Clinical\nDevelopment, Regulatory Approval and Commercialization **\n\n** **\n\n**We face competition\nfrom entities that have developed or may develop programs for the diseases addressed by our product candidates.**\n\n \n\nThe development and commercialization\nof drugs is highly competitive. If approved, our product candidates will face significant competition and our failure to effectively compete\nmay prevent us from achieving significant market penetration. Many of the companies with which we are currently competing or will compete\nagainst in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical\ntesting, clinical trials, regulatory approvals, and marketing than we do. Mergers and acquisitions in the pharmaceutical and biotechnology\nindustry may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies\nmay also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These\ncompetitors also compete with us in establishing clinical trial sites, recruiting participants for clinical trials, as well as in acquiring\ntechnologies complementary to, or necessary for, our product candidates.\n\n \n\n37\n\n \n\n \n\nOur competitors have developed,\nare developing, or may develop programs and processes that compete with ours. Our success will depend partially on our ability to develop\nand commercialize products that have a competitive safety, efficacy, dosing and/or presentation profile. Our commercial opportunity and\nsuccess may be reduced or eliminated if competing products are safer, more effective, have a more attractive dosing profile or presentation,\nor are less expensive than our products, or if biosimilars enter the market and achieve broader or more rapid market acceptance than our\nproducts.\n\n \n\n**Our product candidates\nmay fail in development or suffer delays. We depend on the successful initiation and completion of clinical trials for our product candidates\nto advance our product development plans.**\n\n** **\n\nWe expect it will be many years\nbefore we can obtain regulatory approval for and commercialize any product candidate, if ever. Clinical testing is expensive, difficult\nto design and implement, and can take years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials\ncan occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of\nlater clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical\ndata are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed\nsatisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.\n\n \n\nWe may experience a number\nof events affecting our product development timeline, including the following:\n\n \n\n \n●\nOur clinical trials may fail to show safety or efficacy, show meaningful improvement in efficacy or convenience compared to competitors, produce negative or inconclusive results, or our product candidates may have undesirable side effects or unexpected characteristics. We may decide, or regulators may require additional preclinical studies or clinical trials or we may decide to abandon a product development program altogether.\n\n \n\n \n●\nThe supply or quality of our clinical trial materials or other materials necessary to conduct clinical trials of our product candidates may be insufficient, unsafe or inadequate.\n\n \n\n \n●\nRegulators, Institutional Review Boards (“IRBs”), the FDA, or ethics committees may not authorize us or our investigators to commence or conduct a clinical trial at one or more prospective trial sites; or may require that we or our investigators materially modify, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks.\n\n \n\n \n●\nWe may fail to establish an appropriate safety profile for a product candidate based on clinical or preclinical data as well as data emerging from other therapies in the same class as our product candidates.\n\n \n\n \n●\nThe number of subjects required for clinical trials of any product candidates may be larger than we anticipate, especially if regulatory bodies require completion of non-inferiority or superiority trials.\n\n \n\n \n●\nEnrollment in our clinical trials may be slower than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate.\n\n \n\n \n●\nTrial conduct or data analysis errors may occur, including, but not limited to, failure by investigators or participants to adhere to the study protocol or data entry and/or labeling errors.\n\n \n\n \n●\nWe may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and/or contract research organizations.\n\n \n\n38\n\n \n\n \n\n \n●\nOur third-party contractors or clinical trial sites may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators and could potentially complicate the analysis of data or affect our product development timeline.\n\n \n\n \n●\nThe cost of clinical trials of any of our programs may be greater than we anticipate.\n\n \n\n \n●\nReports from clinical testing of other therapies may raise safety or efficacy concerns about our programs.\n\n \n\n \n●\nThe FDA or other regulatory authorities may require us to submit additional data or impose other requirements and our product development timeline may be adversely affected.\n\n \n \n \n\n \n●\nEven if we or an existing or future collaborator obtains regulatory approval, the approval may be for targets, disease indications or patient populations that are not as broad as we intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings.\n\n \n\nIf our clinical trials do\nnot produce favorable results, our ability to obtain regulatory approval for our product candidates will be adversely impacted. Moreover,\nthe combined data from our trials may be inconclusive or may not be sufficient to ultimately gain marketing approval from the FDA or other\nregulatory authorities. There are equivalent processes and risks applicable to clinical trial applications in other countries outside\nof the United States, including the European Union (“EU”).\n\n \n\nIn addition, in part due\nto the competitive landscape for immunology and inflammation (commonly referred to as “I&I”) indications, we may\nalso face increased competition for clinical trial enrollment. Clinical trial enrollment will depend on many factors, including if potential\nclinical trial participants choose to undergo treatment with approved products or enroll in competitors’ clinical trials for programs\nthat are under development for the same indications as our programs. An increase in the number of approved products for the indications\nwe are targeting with our programs may further exacerbate this competition. Our inability to enroll a sufficient number of participants\ncould, among other things, delay our development timeline, which may further harm our competitive position and have an adverse effect\non our business and operations.\n\n \n\n**We are substantially\ndependent on the success of our two most advanced programs, ORKA-001 and ORKA-002, and our clinical trials of such programs may not be\nsuccessful.**\n\n** **\n\nOur future success is substantially\ndependent on our ability to develop and timely obtain marketing approval for, and then successfully commercialize, our two most advanced\nprograms, ORKA-001 and ORKA-002. We are investing the majority of our efforts and financial resources into the research and development\nof these programs. Our Phase 1 clinical trial of ORKA-001 in healthy volunteers is fully enrolled and is ongoing for purposes of continued\npatient follow-up and data collection, and remains blinded. Our Phase 2a clinical trial of ORKA-001 in patients with moderate-to-severe\npsoriasis (“PsO”) remains ongoing and we commenced dosing in a dose-ranging Phase 2b trial of ORKA-001 in moderate-to-severe\nPsO in the fourth quarter of 2025.\n\n \n\nOur Phase 1 clinical trial\nof ORKA-002 in healthy volunteers is fully enrolled and remains ongoing for purposes of continued patient follow-up and data collection,\nand remains blinded. In addition, we commenced a Phase 2 clinical trial of ORKA-002 in patients with moderate-to-severe PsO in February\n2026 and plan to initiate a Phase 2 clinical trial of ORKA-002 in hidradenitis suppurativa (“HS”) in the second half of 2026.\n\n \n\nCurrently, we believe that\nthe success of our programs is dependent on our product candidates demonstrating a longer half-life in humans than monoclonal antibodies\ncurrently marketed and in development as we believe this longer half-life has the potential to result in a more favorable dosing\nschedule for our product candidates, assuming they successfully complete clinical development and obtain marketing approval. To the extent\nwe do not observe this extended half-life, it would significantly and adversely affect the clinical and commercial potential of our product\ncandidates.\n\n \n\n**If we do not achieve\nour projected development goals in the time frames we announce or expect, the development and potential commercialization of our product\ncandidates may be delayed and our expenses may increase and, as a result, our business may be materially harmed and our stock price may\ndecline.**\n\n** **\n\nFrom time to time, we announce\nthe timing of the anticipated accomplishment of various scientific, clinical, regulatory, or other product development goals, which we\nsometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials,\nsuch as the expected timing of our clinical trials in our target indications, anticipated data analysis, and the data results from our\nclinical trials, as well as the submission of regulatory filings. All of these milestones are and will be based on numerous assumptions.\nThe actual timing of these milestones can vary dramatically compared to our estimates, in some cases for reasons beyond our control. If\nwe do not meet these milestones or the timing of the milestones as publicly announced, the development and potential commercialization\nof our product candidates may be delayed or never achieved and, as a result, our business may be materially harmed and our stock price\nmay decline. Additionally, delays relative to our projected timelines are likely to cause overall expenses to increase, which may require\nus to raise additional capital sooner than expected and on terms less than desirable, and prior to achieving targeted development milestones. \n\n \n\n39\n\n \n\n \n\n**Any drug delivery device\nthat we may use to deliver our product candidates may have its own regulatory, development, supply and other risks.**\n\n** **\n\nWe are delivering and expect\nto continue to deliver, our product candidates via a drug delivery device, such as pre-filled syringe, an injector, or other delivery\nsystem. We currently expect to utilize drug delivery devices authorized for marketing under clearances of approvals held by third parties.\nWhere approval of a drug product and device is sought under a single application, the increased complexity of the review process may delay\napproval. Our product candidates may not be approved or may be substantially delayed in receiving approval if the devices that we choose\nto develop do not gain and/or maintain their own regulatory approvals or clearances. In addition, some drug delivery devices are provided\nby single-source third-party companies. We may be dependent on the sustained cooperation and effort of those third-party companies both\nto supply the devices and, in some cases, to conduct the studies required for approval or other regulatory clearance of the devices. Even\nif approval is obtained for our products, we may also be dependent on those third-party companies continuing to maintain such approvals\nor clearances, if required, for their drug delivery devices once they have been received. Moreover, there may be unforeseen technical\ncomplications related to the development activities required to bring such a product to market, including primary container compatibility\nand/or dose volume requirements. Failure of third-party companies to supply the devices on time and in accordance with the agreed-upon\nspecifications, to successfully complete studies on the devices in a timely manner, or to obtain or maintain required approvals or clearances\nof the devices could result in increased development costs, delays in or failure to obtain regulatory approval and delays in product candidates\nreaching patients.\n\n \n\n**Our approach to the\ndiscovery and development of our lead programs is unproven, and we may not be successful in our efforts to build a pipeline of programs\nwith commercial value.**\n\n \n\nWe have worked with Paragon\nto leverage clinically validated mechanisms of action and incorporate advanced antibody engineering to optimize half-life and other properties\ndesigned to overcome limitations of existing therapies. We have entered into antibody discovery and option agreements (the “Option\nAgreements”) with Paragon Therapeutics, Inc. (“Paragon”) and Paruka Holding LLC to facilitate the discovery and development\nof certain research programs with respect to which we have signed a license agreement with Paragon. Our two most advanced programs, ORKA-001\nand ORKA-002, are licensed from Paragon and are purposefully designed to improve upon existing product candidates and products while maintaining\nthe same, well-established mechanisms of action. However, the scientific research that forms the basis of our efforts to develop programs\nusing half-life extension technologies is ongoing and may not result in viable programs. There is limited clinical data available on product\ncandidates utilizing half-life extension technologies, especially in I&I indications, demonstrating whether they are safe or effective\nfor long-term treatment in humans. The long-term safety and efficacy of these technologies and the extended half-lives and exposure profiles\nof our programs compared to currently approved products are unknown.\n\n \n\nWe may ultimately discover\nthat utilizing half-life extension technologies for our specific targets and indications and any programs resulting therefrom does not\npossess certain properties required for therapeutic effectiveness. In addition, programs using half-life extension technologies may demonstrate\ndifferent chemical and pharmacological properties in human participants than they do in laboratory studies or preclinical studies, including\nthe inability to demonstrate the same chemical and pharmacological properties in humans or the potential interaction with human biological\nsystems in unforeseen, ineffective, or harmful ways.\n\n \n\nIf the products resulting\nfrom the research programs with respect to which we have signed license agreements with Paragon prove to be ineffective, unsafe or commercially\nunviable, such programs would have little, if any, value, which would have a material and adverse effect on our business, financial condition,\nresults of operations, and prospects.\n\n \n\nIn addition, we may in the\nfuture seek to discover and develop programs that are based on novel targets and in the technologies that are unproven. If our discovery\nactivities fail to identify novel targets or technologies for drug discovery, or such targets prove to be unsuitable for treating human\ndisease, we may not be able to develop viable additional programs.\n\n \n\n40\n\n \n\n \n\n**Preclinical and clinical\ndevelopment involves a lengthy and expensive process that is subject to delays and uncertain outcomes and results of earlier studies and\ntrials may not be predictive of future clinical trial results. Further, if our preclinical studies and clinical trials are not sufficient\nto support regulatory approval of any of our product candidates, we may incur additional costs or experience delays in completing, or\nultimately be unable to complete, the development of such product candidate.**\n\n \n\nWe do not know whether any\nclinical trials we may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market any of our product\ncandidates. Clinical testing can take many years to complete, and its outcome is inherently uncertain. Our clinical trials may not be\nconducted as planned or completed on schedule, if at all, and failure can occur at any time during the preclinical study or clinical trial\nprocess. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of\nlater-stage clinical trials and results in one indication may not be predictive of results to be expected for the same product candidate\nin another indication. We plan to use the data from our current trials of our ORKA-001 and ORKA-002 programs to support further trials\nin PsO, HS, and potentially other I&I indications. However, differences between early-stage clinical trials and later-stage clinical\ntrials, including differences in trial design, among other things, make it difficult to extrapolate the results of earlier clinical trials\nto later clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical\ntrials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in earlier trials. Moreover, clinical\ndata are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed\nsatisfactorily in clinical trials have nonetheless failed to obtain marketing approval of such product candidates. In addition, we rely\non clinical trial site staff to measure psoriasis area severity index scores (PASI scores) and participants to provide feedback on measures\nsuch as measures of quality of life, which may involve subjective interpretation and variability, although training and standardized measurements\nwill be provided to individuals in order to minimize subjectivity. Moreover, these measures can be influenced by factors outside of our\ncontrol, and can vary widely within a clinical trial.\n\n \n\nWe cannot be sure that the\nFDA, or comparable foreign regulatory authority, as applicable, will agree with our clinical development plan. We cannot assure that the\nsubmission of an Investigational New Drug (IND) application, clinical trial application, or similar application will result in the FDA\nor comparable foreign regulatory authorities, as applicable, allowing clinical trials to begin in a timely manner, if at all. If the FDA\nand/or comparable foreign regulatory authority requires us to materially modify our proposed trial designs, conduct additional trials\nor enroll additional participants, our development timelines may be delayed. Moreover, even if these trials begin, issues may arise that\ncould suspend or terminate such clinical trials, including but not limited to delays or difficulties recruiting trial patients, delays\nor difficulties obtaining required IRB or ethics committee approval at each clinical trial site, failure by third parties or us to adhere\nto clinical trial protocols or failure to perform in accordance with current Good Clinical Practice or applicable regulatory requirements,\nor delays in reaching a consensus with regulatory authorities on trial design or implementation of a clinical trial, or our third party\nvendors not satisfying their obligations to us.\n\n \n\nWe could also encounter delays\nif a clinical trial is required to be materially modified or suspended or terminated by us, the IRBs, by a Data Safety Monitoring Board,\nif any, or by the FDA or comparable foreign regulatory authorities. Such authorities may suspend, put on clinical hold, or terminate a\nclinical trial due to a number of factors, including not aligning with or supporting our clinical trial designs or our failure to conduct\nthe clinical trial in accordance with regulatory requirements or our clinical trial protocols, inspection of the clinical trial operations\nor trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety\nissues or adverse side effects, failure to demonstrate a benefit, changes in governmental regulations or administrative actions or lack\nof adequate funding to continue the clinical trial. If we are required to conduct additional clinical trials or other testing of our product\ncandidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates,\nif the results of these trials are not positive or are only moderately positive, or if there are safety concerns, our business and results\nof operations may be adversely affected and we may need to adjust or abandon our business plans and we may incur significant additional\ncosts.\n\n \n\n**Our clinical development\nactivities could be delayed or otherwise adversely affected if we encounter difficulties enrolling and maintaining participants in our\ncurrent and future clinical trials. We depend on the successful completion of clinical trials for our product candidates.**\n\n** **\n\nOur inability to enroll and\nmaintain a sufficient number of participants who remain in a trial until conclusion would result in significant delays in completing clinical\ntrials and increased development costs or may require us to abandon one or more clinical trials altogether. The enrollment of participants\nin current or future trials for any of our programs will depend on many factors, including if participants choose to enroll in our clinical\ntrials, rather than using approved products, or if our competitors have ongoing clinical trials for programs that are under development\nfor the same indications as our programs and participants instead enroll in such clinical trials. Even if we are able to enroll a sufficient\nnumber of participants for our clinical trials, we may have difficulty maintaining participants in such clinical trials.\n\n \n\n41\n\n \n\n \n\n**Preliminary, “topline”,\nor interim data from our clinical trials may change and are subject to audit and verification procedures, and should be viewed with caution\nuntil the final data are available. Our interpretation of such data is based on assumptions that may evolve as additional data become\navailable, which could result in changes to conclusions regarding the safety, efficacy, timing, or likelihood of success of our clinical\ndevelopment programs.**\n\n \n\nFrom time to time, we may\npublicly disclose preliminary or topline data from our preclinical studies and clinical trials that are based on a preliminary analysis\nof then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review\nof the data. We may also make assumptions, estimations, calculations, and conclusions as part of our analyses of these data without the\nopportunity to fully and carefully evaluate complete data. As a result, the preliminary or topline results that we report may differ from\nfuture results of the same studies and our conclusions may change or be qualified as additional data are received, fully evaluated, and\nsubjected to audit and verification procedures.\n\n \n\nWe may also publicly disclose\ninterim data from our preclinical studies and clinical trials. Such interim data are inherently preliminary and subject to the risk that\none or more of the clinical outcomes may change as participant enrollment continues, additional data become available, as participants\nfrom our clinical trials pursue other treatments, or further analyses are conducted. In addition, third parties, including regulatory\nagencies, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses or may interpret or weigh the\nimportance of data differently, which could impact the perceived value of the particular product candidate, the approvability or commercialization\nof the particular product candidate, and our company and our business in general. In addition, others may not agree with what we determine\nis material or otherwise appropriate information to include in our public disclosure of a particular preclinical study or clinical trial.\n\n \n\nIf the preliminary, topline,\nor interim data that we report differ from actual results, or if final data or data from later stage clinical trials do not produce favorable\nresults, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating\nresults, prospects or financial condition.\n\n \n\n**Our clinical trials\nmay reveal significant adverse events, undesirable side effects, or patient intolerance not seen in our preclinical studies or earlier\nclinical trials, and may result in a safety profile that could halt clinical development, inhibit regulatory approval, or limit commercial\npotential or market acceptance of any of our product candidates. We do not know whether any clinical trials we may conduct will demonstrate\nadequate efficacy and safety to result in regulatory approval to market any of our product candidates.**\n\n \n\nResults of our clinical trials\ncould reveal an unacceptable severity and prevalence of side effects or patient intolerance, adverse events, or unexpected characteristics,\nand any of these occurrences could harm our business, financial condition, results of operations and prospects significantly. If significant\nadverse events or other side effects are observed in any of our clinical trials, we may have difficulty recruiting participants to such\ntrials, participants may drop out of the trials, or we may have to suspend, materially modify or abandon the trials or our development\nefforts of one or more programs altogether. We, the FDA or other applicable regulatory authorities, or an IRB, may suspend or require\nthe material modification of any clinical trials of any program or require that we repeat or conduct additional clinical trials at any\ntime for various reasons, including safety and health risks or exposure to adverse side effects.\n\n \n\nEven if side effects do not\npreclude the product candidate from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance\nof the approved product due to their tolerability versus other therapies. Potential side effects associated with our product candidates\nmay not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from our product candidates may\nnot be normally encountered in the general patient population and by medical personnel. In addition, an extended half-life could prolong\nthe duration of undesirable side effects, which could also affect our clinical trials or inhibit market acceptance.\n\n \n\nIn addition, even if we successfully\nadvance our product candidates through clinical trials, such trials will only include a limited number of participants and limited duration\nof exposure to our product candidates. As a result, we cannot be assured that adverse effects of our product candidates will not be uncovered\nwhen a significantly larger number of participants are exposed to the product candidate after approval and potentially over an extended\nperiod of use. Further, any clinical trials may not be sufficient to determine the effect and safety consequences of using our product\ncandidates over a multi-year period or longer.\n\n \n\nIf any of the foregoing events\noccur or if one or more of our product candidates prove to be unsafe, our pipeline could be affected, which would have a material adverse\neffect on our business, financial condition, results of operations, and prospects.\n\n \n\n42\n\n \n\n \n\n**We may expend our limited\nresources to pursue a particular program and fail to capitalize on programs that may be more profitable or for which there is a greater\nlikelihood of success. **\n\n** **\n\nWe are initially focused\non our most advanced programs, ORKA-001 and ORKA-002, and as a result, we may forgo or delay pursuit of opportunities with other\nprograms that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on\nviable commercial products or profitable market opportunities. Our spending on current and future research and development programs for\nspecific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential\nor target market for a particular product candidate, we may be in a position where we may have to relinquish valuable rights to that product\ncandidate through collaboration, licensing or other arrangements in cases in which we would have been more advantageous for us to retain\nsole development and commercialization rights to such product candidate. We may never receive approval to market and commercialize any\nproduct candidate.\n\n \n\n**Any approved products\nresulting from our programs may not achieve adequate market acceptance among clinicians, patients, healthcare third-party payors and others\nin the medical community necessary for commercial success and we may not generate any future revenue from the sale or licensing of such\nproducts. **\n\n** **\n\nEven if regulatory approval\nis obtained for a product candidate resulting from one of our current or future programs, it may not gain market acceptance among physicians,\npatients, third-party payors or others in the medical community. Market acceptance of our product candidates will depend on many factors,\nincluding factors that are not within our control. Market participants with influence over acceptance of new treatments, such as\nclinicians and third-party payors, may not adopt a biologic that incorporates half-life extension for our targeted indications,\nand we may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement\nfor, any programs developed by us or our existing or future collaborators. Moreover, an extended half-life may make it more difficult\nfor patients to change treatments and there may be a perception that half-life extension could exacerbate side effects, each of which\nmay adversely affect our ability to gain market acceptance. Further, we may not generate or derive sufficient revenue from a product candidate\nand may not become or remain profitable if such product candidate is approved, but does not achieve an adequate level of acceptance.\n\n \n\n**Certain of our programs\nmay compete with our other programs, which could negatively impact our business and reduce our future revenue.**\n\n** **\n\nWe are developing product\ncandidates for PsO, HS, and may in the future develop our programs for other I&I indications. Each such program targets a different\nmechanism of action. However, developing multiple programs for a single indication may negatively impact our business if the programs\ncompete with each other. For example, concurrent clinical trials across multiple programs may compete for the enrollment of participants.\nIn addition, the approval of multiple product candidates for the same indication could intensify market competition and limit our future\nrevenues.\n\n \n\n**We are conducting,\nand may conduct in the future, clinical trials for programs at sites outside the United States, subjecting us to additional risks that\nmay delay or adversely affect our product development timelines.**\n\n** **\n\nWe are currently conducting\nclinical trials outside the United States and may continue to do so in the future. Conducting clinical trials outside the United States\nmay expose us to additional operational and regulatory risks, including differing regulatory standards and review timelines and increased\ncomplexity in ensuring compliance with applicable laws and data protection requirements. Although the FDA may accept data from clinical\ntrials conducted outside the United States, acceptance of this data is subject to conditions imposed by the FDA. If the FDA does not accept\nthe data from any trial that we conduct outside the United States, it would likely result in the need for additional trials, which would\nbe costly and time-consuming and would delay or permanently halt our development of the applicable product candidates. Even if the FDA\naccepted such data, it could impose additional conditions, such as requiring us to modify our planned clinical trials to receive clearance\nto initiate such trials in the United States or to continue such trials once initiated.\n\n \n\nFurther, conducting clinical\ntrials outside of the United States presents additional risks that may delay completion of our clinical trials. These risks include requirements\nfor local ethics approvals, challenges in monitoring trial conduct and data integrity across jurisdictions, including the potential failure\nof investigators or enrolled participants in foreign countries to adhere to clinical protocol that could restrict or limit our ability\nto conduct our clinical trials, the administrative burdens of conducting clinical trials under multiple sets of foreign regulations, potential\nrestrictions, such as local privacy restrictions, on data generated from the clinical trial, and diminished protection of intellectual\nproperty in some countries. Operations in foreign jurisdictions are subject to additional risks, including dependence on third party manufacturers\nor suppliers outside of the United States, as well as political and economic risks relevant to foreign countries. \n\n \n\n43\n\n \n\n \n\n**Risks Related to Government\nand Regulatory Matters**\n\n** **\n\n**The regulatory approval\nprocesses of the FDA and other comparable foreign regulatory authorities are lengthy, time-consuming and unpredictable. We may not be\nable to commercialize, or may be delayed in commercializing, our product candidates, and our ability to generate revenue may be materially\nimpaired if we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates.**\n\n \n\nThe lengthy regulatory approval\nprocess as well as the unpredictability of clinical trial results may result in our failing to obtain or be delayed in obtaining approval\nto market our product candidates, which would significantly harm our business, results of operations and prospects. Before obtaining regulatory\napprovals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical studies\nand clinical trials that our product candidates are both safe and effective for each targeted indication. In addition, securing regulatory\napproval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities\nby, the relevant regulatory authority. Of the large number of drugs in development, only a small percentage successfully complete the\nFDA or foreign regulatory approval processes and are commercialized. Approval may never be obtained and the approval process can vary\nsubstantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. While there\nare several approved products and product candidates in later stages of development for the treatment of PsO and for the treatment of\nHS, our programs incorporate advanced antibody engineering to optimize the half-life and formulation of antibodies, and to date, no such\nantibody has been approved by the FDA for the treatment of PsO or for HS.\n\n \n\nThe FDA and comparable foreign\nregulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that\nour data are insufficient for approval and require additional preclinical, clinical, or other data. Our product candidates could be delayed\nin receiving, or fail to receive, regulatory approval for many reasons, including: the failure to demonstrate that a product candidate’s\nbenefits outweigh safety risks; regulatory authorities may disagree with our interpretation of clinical data or the data collected may\nnot be acceptable or sufficient to support submission; or the results may not meet the level of statistical significance required for\napproval by the relevant regulatory authorities or otherwise considered insufficient by the FDA or comparable foreign regulatory authorities.\nRegulatory authorities may require the addition of labeling statements, such as a black box warning or other warnings or contraindications\nthat could diminish the usage of the product or otherwise limit the commercial success of the affected product.\n\n \n\nMoreover, regulatory authorities\nmay approve any of our product candidates for fewer or more limited indications than we request, including failing to approve the most\ncommercially promising indications, may grant approval contingent on the performance of costly post-marketing clinical trials, or may\napprove a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization\nof that product candidate. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product\ncandidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates and our ability to generate\nrevenue may be materially impaired.\n\n \n\n**We may not be able\nto meet requirements for the chemistry, manufacturing, and control of our programs.**\n\n** **\n\nIn order to receive approval\nof our products by the FDA and comparable foreign regulatory authorities, we must show that we and our CMO partners are able to characterize,\ncontrol and manufacture our drug products safely and in accordance with regulatory requirements. This includes, among other things, manufacturing\nthe active ingredient, developing an acceptable formulation, manufacturing the drug product, performing tests to adequately characterize\nthe formulated product, documenting a repeatable manufacturing process in larger quantities as we move forward in our development programs,\nand demonstrating that our drug products meet stability requirements. As noted above, we may deliver our product candidates via a drug\ndelivery device, which also requires us to meet certain chemistry, manufacturing and control requirements set forth by the FDA and other\nforeign regulatory authorities. Meeting these chemistry, manufacturing and control requirements is a complex task that requires specialized\nexpertise. If we are not able to meet the chemistry, manufacturing, and control requirements, we may not be successful in our clinical\ntrials or getting our product candidates approved by regulatory authorities.\n\n \n\n**Our product candidates\nfor which we intend to seek approval as biologics may face competition sooner than anticipated.**\n\n** **\n\nThe Patient Protection and\nAffordable Care Act, as amended by the Healthcare and Education Reconciliation Act (the “ACA”), includes a subtitle called\nthe Biologics Price Competition and Innovation Act (the “BPCIA”), which created an abbreviated approval pathway for biological\nproducts that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application\nfor a highly similar or “biosimilar” product may not be submitted to the FDA until four years following the date that\nthe reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective\nby the FDA until 12 years from the date on which the reference product was first approved. During this 12-year period of\nexclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing\nproduct containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate\nthe safety, purity, and potency of their product.\n\n \n\n44\n\n \n\n \n\nWe believe that any of our\nproduct candidates approved as biologics under a BLA should qualify for the 12-year period of exclusivity. However, there is\na risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our product\ncandidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated.\nOther aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.\nMoreover, the extent to which a biosimilar, once approved, will be substituted for any reference products in a way that is similar to\ntraditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and\nregulatory factors that are still developing.\n\n \n\n**Even if our product\ncandidates receive regulatory approval, we will remain subject to extensive ongoing regulatory obligations and continued regulatory review,\nwhich could result in restrictions on the use of the products, significant additional expenses, and penalties if we fail to comply with\nregulatory requirements or experience unanticipated issues with our product candidates.**\n\n** **\n\nIf any of our product candidates\nreceive regulatory approval, we will remain subject to ongoing regulatory requirements imposed by the FDA and comparable foreign authorities.\nThese requirements may include post-approval safety and pharmacovigilance reporting, product labeling restrictions or warnings, risk management\nrequirements such as a Risk Evaluation and Mitigation Strategy (“REMS”), post-marketing commitments or additional studies\nto further assess safety, efficacy, or real-world use, as well as compliance with applicable manufacturing and quality system regulations.\n\n \n\nRegulatory authorities may\nalso conduct periodic inspections of our manufacturing facilities or those of our third-party manufacturers and may take enforcement action\nif we or such third parties fail to comply with applicable regulatory requirements or if safety, quality, or manufacturing issues arise.\nSuch actions could include labeling changes, restrictions on use or distribution, clinical holds, recalls or withdrawal of products, warning\nor untitled letters, fines, penalties, or other enforcement measures. Failure to comply with these ongoing obligations, or the emergence\nof unexpected safety or quality issues after commercialization, could result in significant additional costs, limit our ability to commercialize,\nand may materially harm our business.\n\n \n\n**Disruptions or changes\nat the FDA, the SEC and other government agencies and regulatory authorities could hinder their ability to hire and retain key leadership\nand other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent\nthose agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact\nour business.**\n\n** **\n\nThe ability of the FDA to\nreview regulatory filings and our ability to commence clinical trials can be affected by a variety of factors, including government budget\nand funding levels, ability to hire and retain key personnel and accept the payment of user fees, statutory, regulatory and policy changes,\ndisruptions caused by government shutdowns and public health crises. There have been mass layoffs of federal government employees since\nthe start of the Trump administration in January 2025, the full impact of which is unclear at this time. Average review times at the agency\nhave fluctuated in recent years as a result. In addition, government funding of the SEC, and other government agencies on which our operations\nmay rely, including those that fund research and development activities is subject to the political process, which is inherently fluid\nand unpredictable. Furthermore, the Trump administration has made and is expected to continue to make changes in the leadership of various\nU.S. federal regulatory agencies and changes to U.S. federal government policy that have led to, in some cases, legal challenges and uncertainty\naround the funding, functioning and policy priorities of the U.S. federal regulatory agencies, including the FDA.\n\n \n\nDisruptions at the FDA and\nother agencies or comparable foreign regulatory authorities, may also slow the time necessary for the review and approval of applications\nfor clinical trial or marketing authorization, which would adversely affect our business. For example, in recent years, the U.S. government\nhas experienced shut downs and funding lapses, during which time certain regulatory agencies, such as the FDA and the SEC, furloughed\ncritical employees and stopped critical activities. Additionally, action by the Trump administration to limit federal agency budgets or\npersonnel may result in reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer\nreview periods, potentially affecting our ability to progress development of our product candidates or obtain regulatory approval for\nour product candidates. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review\nand process our regulatory submissions, which could have a material adverse effect on our business. Further, government shutdowns could\nimpact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.\n\n \n\n45\n\n \n\n \n\nWe are unable to predict\nthe extent to which the Trump administration may impose or seek to impose leadership or policy changes at the FDA or changes to rules\nand policies impacting our business and operations. It is unclear how these executive actions or other potential actions by the federal\ngovernment will impact the FDA or other regulatory authorities that oversee our business. Government proposals to reduce or eliminate\nbudgetary deficits may include reduced allocations to the FDA and other related government agencies. These budgetary pressures may reduce\nthe FDA’s ability to perform its responsibilities, which could result in delays in our clinical trial timelines. If a significant\nreduction in the FDA’s workforce occurs, the FDA’s budget is significantly reduced or a prolonged government shutdown occurs,\nit could significantly impact the ability of the FDA to timely review and process our regulatory submissions or take other actions critical\nto the development or manufacturing of our product candidates, which could have a material adverse effect on our business.\n\n \n\nIf a prolonged government\nshutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections,\nreviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely\nreview and process our regulatory submissions, which could have a material adverse effect on our business.\n\n \n\n**We may face difficulties\nfrom legislative or regulatory reform measures.**\n\n** **\n\nWe may be faced with additional\nor changing regulatory and governmental regulations that could prevent, limit or delay regulatory approval of our product candidates.\nWe cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or\nexecutive action, either in the United States or abroad. For example, the Trump administration has discussed several changes to the\nreach and oversight of the FDA, which could affect its relationship with the pharmaceutical industry, transparency in decision making\nand ultimately the cost and availability of prescription drugs. If we are slow or unable to adapt to changes in existing requirements\nor the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval\nthat we may have obtained and we may not achieve or sustain profitability. \n\n \n\nThe price of pharmaceuticals\nhas been a topic of considerable public discussion that could lead to price controls or other price-limiting strategies by third-party\npayors that have the effect of lowering payment and reimbursement rates for drugs or otherwise making the commercialization of pharmaceuticals\nless profitable. Many federal and state legislatures have considered, and adopted, healthcare policies intended to curb rising healthcare\ncosts, such as the Inflation Reduction Act (“IRA”). These cost-containment measures may include, among other measures: requirements\nfor pharmaceutical companies to negotiate prescription drug prices with government healthcare programs; controls on government-funded\nreimbursement for drugs; new or increased requirements to pay prescription drug rebates to government healthcare programs, including if\ndrug prices increase at a higher rate than inflation; controls on healthcare providers; challenges to or limits on the pricing of drugs,\nincluding pricing controls or limits or prohibitions on reimbursement for specific products through other means; requirements to try less\nexpensive products or generics before a more expensive branded product; and public funding for cost effectiveness research, which may\nbe used by government and private third-party payors to make coverage and payment decisions. Political, economic and regulatory developments\nmay further complicate developments in healthcare systems and pharmaceutical drug pricing. These developments could, for example, impact\nour potential licensing agreements as commercial and collaborative partners may also consider the impact of these pressures on their licensing\nstrategies.\n\n \n\nAny new laws or regulations\nthat have the effect of imposing additional costs or regulatory burden on pharmaceutical manufacturers, or otherwise negatively affect\nthe industry, could adversely affect our ability to successfully commercialize our product candidates. The implementation of any price\ncontrols, caps on prescription drugs or price transparency requirements could adversely affect our business, operating results and financial\ncondition.\n\n \n\n**Our business operations\nand current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations\nand customers will be subject to applicable healthcare regulatory laws, including conflicts of interest rules, which could expose us to\npenalties. **\n\n** **\n\nOur business operations and\ncurrent and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations\nand customers may expose us to broadly applicable healthcare laws and regulations, including conflict of interest laws. These laws may\nconstrain the business or financial arrangements and relationships through which we conduct our operations.\n\n \n\nPrincipal investigators for\nour clinical trials may serve as scientific advisors or consultants to us or may be affiliated with our other service providers, including\nCROs or site management organizations, and from time to time may receive cash compensation in connection with such services. If these\nrelationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at\nthe applicable clinical trial site or in the applicable trial may be questioned or jeopardized.\n\n \n\nEnsuring that our internal\noperations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve costs\nand management attention. If our operations are found to be in violation of any of these laws or any other governmental laws and regulations\nthat may apply to it, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines,\nexclusion from government-funded healthcare programs, integrity oversight, and reporting obligations to resolve allegations of non-compliance, disgorgement,\nindividual imprisonment, contractual damages, reputational harm, diminished profits, and the curtailment or restructuring of our operations.\nFurther, defending against any such actions can be costly and time-consuming and may require significant personnel resources. Therefore,\neven if we are successful in defending against any such actions that may be brought against us, our business may be impaired.\n\n \n\n46\n\n \n\n \n\n**Even if we are able\nto commercialize any product candidates, we may be subject to unfavorable pricing regulations and/or third-party coverage and reimbursement\npolicies, and we may not be able to offer such product candidates at competitive prices, which could seriously harm our business.**\n\n** **\n\nWe intend to seek approval\nto market our product candidates in the United States and in selected foreign jurisdictions, and we will be subject to rules and\nregulations in those jurisdictions where we obtain approval. Our ability to successfully commercialize any product candidates that we\nmay develop will depend in part on the extent to which reimbursement for these product candidates and related treatments will be available\nfrom government health administration authorities, private health insurers, and other organizations. In some jurisdictions, government\nauthorities and other third-party payors decide which medications they will pay for and establish reimbursement levels, and have\nattempted to control costs by limiting coverage and the amount of reimbursement for particular medications. These entities may create\npreferential access policies for a competitor’s product, including a branded or generic/biosimilar product, over our products in\nan attempt to reduce their costs, which may reduce our commercial opportunity. Additionally, if any of our product candidates are approved\nand we are found to have improperly promoted off-label uses of those product candidates, we may become subject to significant liability,\nwhich could materially adversely affect our business and financial condition.\n\n \n\n**We are subject to U.S. and\ncertain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations.\nWe can face criminal liability and other serious consequences for violations, which can harm our business.**\n\n** **\n\nWe are subject to export\ncontrol and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various\neconomic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls,\nthe U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C.\n§ 201, the U.S. Travel Act, the USA PATRIOT Act, the U.S. Physician Payments Sunshine Act, and other state and national anti-bribery and\nanti-money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and\nprohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing,\ndirectly or indirectly, improper payments or anything else of value to or from recipients in the public or private sector. We may engage\nthird parties to sell our products outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses,\npatent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and employees of government\nagencies or government-affiliated hospitals, universities, and other organizations. We can be held liable for the corrupt or other\nillegal activities of our employees, agents, contractors, and other collaborators, even if we do not explicitly authorize or have actual\nknowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal\nfines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud\nlitigation, reputational harm, and other consequences.\n\n \n\n**Governments outside\nthe United States tend to impose strict price controls, which may adversely affect our revenue, if any.**\n\n** **\n\nIn some countries, particularly\nmember states of the EU (“EU Member States”), the pricing of prescription drugs is subject to governmental control. In these\ncountries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a therapeutic.\nIn addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as\npart of cost containment measures. Political, economic, and regulatory developments may further complicate pricing negotiations, and pricing\nnegotiations may continue after reimbursement has been obtained. Reference pricing used by various EU Member States and parallel distribution,\nor arbitrage between low-priced and high-priced EU Member States, can further reduce prices. To obtain coverage and reimbursement\nor pricing approvals in some countries, we or current or future collaborators may be required to conduct a clinical trial or other studies\nthat compare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement\nor pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or\nreimbursement levels within the country of publication and other countries. If reimbursement of any product candidate approved for marketing\nis unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business, financial condition, results\nof operations, or prospects could be materially and adversely affected. If the UK or EU Member States were to significantly alter their\nregulations affecting the pricing of prescription pharmaceuticals, we could face significant new costs.\n\n \n\n47\n\n \n\n \n\n**Risks Related to Our Intellectual\nProperty**\n\n** **\n\n**Our ability to obtain,\nmaintain, and protect our patents and other proprietary rights is uncertain, exposing us to the possible loss of competitive advantage.**\n\n** **\n\nWe rely upon a combination\nof patents, trademarks, trade secret protection, confidentiality agreements, and the Option and License Agreements with Paragon to protect\nthe intellectual property related to our programs and technologies and to prevent third parties from competing unfairly with it. Our success\ndepends in large part on our ability to obtain and maintain patent protection for our programs and our product candidates and their uses,\nas well as our ability to operate without infringing on or violating the proprietary rights of others. We and Paragon have filed, and\nmay continue to file, provisional and non-provisional patent applications directed to antibodies that target IL-23, including applications\ncovering composition of matter, pharmaceutical formulations, and methods of use, including ORKA-001. In addition, we and Paragon have\nfiled, and may continue to file, provisional and non-provisional patent applications directed to antibodies that target IL-17, including\napplications covering composition of matter, pharmaceutical formulations, and methods of use, including ORKA-002. However, we may not\nbe able to protect our intellectual property rights throughout the world and the legal systems in certain countries may not favor enforcement\nor protection of patents, trade secrets, and other intellectual property. Filing, prosecuting and defending patents on programs worldwide\nis expensive and our intellectual property rights in some foreign jurisdictions can be less extensive than those in the United States;\nthe reverse may also occur. As such, we may not have patents in all countries or all major markets and may not be able to obtain patents\nin all jurisdictions even if we apply for them. Our competitors may operate in countries where we do not have patent protection and can\nfreely use our technologies and discoveries in such countries to the extent such technologies and discoveries are publicly known or disclosed\nin countries where we do have patent protection or pending patent applications.\n\n \n\nOur pending and future patent\napplications may not result in patents being issued. Any issued patents may not afford sufficient protection of our programs or their\nintended uses against competitors, nor can there be any assurance that the patents issued will not be infringed, designed around, or invalidated\nby third parties, or will effectively prevent others from commercializing competitive technologies, products, or programs. Even if these\npatents are granted, they may be difficult to enforce. Further, any issued patents that we may license or own covering our programs could\nbe narrowed or found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad, including\nthe United States Patent and Trademark Office (“USPTO”). Further, if we encounter delays in our clinical trials or delays\nin obtaining regulatory approval, the period of time during which we could market our product candidates under patent protection would\nbe reduced. Thus, the patents that we may own and license may not afford us any meaningful competitive advantage.\n\n \n\nIn addition to seeking patents\nfor some of our technology and programs, we may also rely on trade secrets, including unpatented know-how, technology and other proprietary\ninformation, to maintain our competitive position. Any disclosure, either intentional or unintentional, by our employees, the personnel\nof third parties with whom we share our facilities, or third-party consultants and vendors that we engage to perform research, clinical\ntrials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity breach) of our trade secrets\nor proprietary information could enable competitors to duplicate or surpass our technological achievements, thus eroding our competitive\nposition in our market. In order to protect our proprietary technology and processes, we rely in part on agreements, such as confidentiality\nagreements, with our vendors, collaborators, employees, consultants, outside scientific collaborators and sponsored researchers and other\nadvisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in\nthe event of unauthorized disclosure of confidential information. We may need to share our proprietary information, including trade secrets,\nwith future business partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets,\nincluding through direct intrusion by private parties or state actors and those affiliated with or controlled by state actors. In addition,\nwhile we undertake efforts to protect our trade secrets and other confidential information from disclosure, others may independently discover\ntrade secrets and proprietary information, and in such cases, we may not be able to assert any trade secret rights against such party.\nEnforcing a claim that a party illegally obtained and is using our trade secrets is challenging and the outcome is unpredictable. In addition,\ncourts outside of the U.S. may be less willing to protect trade secrets. Costly and time-consuming litigation could be necessary to enforce\nand determine the scope of our proprietary rights and failure to obtain or maintain trade secret protection could adversely affect our\ncompetitive business position.\n\n \n\nLastly, if our trademarks\nand trade names are not registered or adequately protected, then we may not be able to build name recognition in our markets of interest\nand our business may be adversely affected.\n\n \n\n48\n\n \n\n \n\n**We may not be successful\nin obtaining or maintaining necessary rights to our programs through acquisitions and in-licenses. **\n\n** **\n\nBecause our development programs\ncurrently do and may in the future require the use of proprietary rights held by third parties, the growth of our business may depend\nin part on our ability to acquire, in-license, or use these third-party proprietary rights. It is possible that we may\nbe unable to obtain licenses at a reasonable cost or on reasonable terms, if at all. Even if we are able to obtain a license, it may be\nnon-exclusive, thereby giving our competitors access to the same technologies licensed to us. We may be unable to acquire or in-license any\ncompositions, methods of use, processes or other intellectual property rights from third parties that we identify as necessary for our\nprograms. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established\ncompanies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or\nnecessary. These established companies may have a competitive advantage over us due to their size, capital resources, and greater clinical\ndevelopment and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign\nor license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would\nallow us to make an appropriate return on our investment or at all. If we are unable to successfully obtain rights to required third-party intellectual\nproperty or maintain the existing intellectual property rights we do obtain, we may have to abandon the development of the relevant program,\nwhich could have a material adverse effect on our business, financial condition, results of operations, and prospects.\n\n \n\nWhile we plan to obtain the\nright to control patent prosecution, maintenance, and enforcement of the patents relating to our programs, there may be times when the\nfiling and prosecution activities for patents and patent applications relating to our programs are controlled by our current and future\nlicensors or collaboration partners. If any of our current and future licensors or collaboration partners fail to prosecute, maintain,\nand enforce such patents and patent applications in a manner consistent with the best interests of our business, we could lose our rights\nto the intellectual property or our exclusivity with respect to those rights, our ability to develop and commercialize those product candidates\nmay be adversely affected and we may not be able to prevent competitors from making, using, and selling competing products. In addition,\neven where we have the right to control prosecution of patents and patent applications we have licensed to and from third parties, we\nmay still be adversely affected or prejudiced by actions or inactions of our licensees, our future licensors, and our counsel that took\nplace prior to the date upon which we assumed control over patent prosecution. Moreover, if other third parties have ownership rights\nto our future in-licensed patents, they may be able to license such patents to our competitors, and our competitors could market competing\nproducts and technology.\n\n \n\nFailure to obtain licenses\nat a reasonable cost or on reasonable terms may require us to expend significant time and resources to redesign our technology, programs,\nor the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical\nor commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates. This could\nhave a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.\n\n \n\nDisputes may arise between\nus and our future licensors regarding intellectual property subject to a license agreement, including without limitation: the scope of\nrights granted under the license agreement and other interpretation-related issues; whether and the extent to which our technology\nand processes may infringe on intellectual property of the licensor that is not subject to the licensing agreement; our right to sublicense\npatents and other rights to third parties; our right to transfer or assign the license; the inventorship and ownership of inventions and know-how resulting\nfrom the joint creation or use of intellectual property by our future licensors and us and our partners; and the priority of invention\nof patented technology.\n\n \n\n**We may be subject to\npatent infringement claims or may need to file claims to protect our intellectual property, which could result in substantial costs and\nliability and prevent us from commercializing our potential products. **\n\n** **\n\nBecause the intellectual\nproperty landscape in the biopharmaceutical industry is rapidly evolving and interdisciplinary, it is difficult to conclusively assess\nour freedom to operate and guarantee that we can operate without infringing on or violating third-party rights. Third-party patent\nrights, if found to be valid and enforceable, could be alleged to render one or more of our product candidates infringing. If a third\nparty successfully brings a claim against us, we may be required to pay substantial damages, be forced to abandon or delay the development\nof any affected product candidate, and/or seek a license from the patent holder. Any intellectual property claims brought against us,\nwhether or not successful, may cause us to incur significant legal expenses and divert the attention of our management and key personnel\nfrom other business concerns. We cannot be certain that patents owned or licensed by us will not be challenged by others in litigation.\nSome of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because\nthey may have substantially greater resources. In addition, any litigation could have a material adverse effect on our business and operations,\nincluding our ability to raise funds.\n\n \n\n49\n\n \n\n \n\nCompetitors may infringe\nor otherwise violate our patents, trademarks, copyrights, or other intellectual property. To counter infringement or other violations,\nwe may be required to file claims, which can be expensive and time-consuming, and any such claims could provoke these parties to assert\ncounterclaims against us. In addition, in a patent infringement proceeding, a court or administrative body may decide that one or more\nof the patents we assert is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to prevent\nthe other party from using the technology at issue on the grounds that our patents do not cover the technology. Similarly, if we assert\ntrademark (“marks”) infringement claims, a court or administrative body may determine that the marks we have asserted are\ninvalid or unenforceable or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.\nIn such a case, we could ultimately be forced to cease use of such marks. In any intellectual property litigation, even if we are successful,\nany award of monetary damages or other remedy we receive may not be commercially valuable.\n\n \n\nFurther, we may be required\nto protect our patents through procedures created to attack the validity of a patent at the USPTO. An adverse determination in any\nsuch submission or proceeding could reduce the scope of, affect the enforceability of, or invalidate, our patent rights, which could adversely\naffect our competitive position. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in\nU.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding\nsufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first\npresented in a district court action.\n\n \n\nIn addition, if our programs\nare found to infringe the intellectual property rights of third parties, these third parties may assert infringement claims against our\nfuture licensees and other parties with whom we have business relationships and we may be required to indemnify those parties for any\ndamages they suffer as a result of these claims, which may require us to initiate or defend protracted and costly litigation on behalf\nof licensees and other parties regardless of the merits of such claims. If any of these claims succeed, we may be forced to pay damages\non behalf of those parties or may be required to obtain licenses for the products they use.\n\n \n\nFurthermore, because of the\nsubstantial amount of discovery required in connection with intellectual property litigation or other legal proceedings relating to our\nintellectual property rights, there is a risk that some of our confidential information could be compromised by disclosure during this\ntype of litigation or other proceedings.\n\n \n\n**Changes to patent laws\nin the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.**\n\n** **\n\nChanges in either the patent\nlaws or interpretation of patent laws in the U.S. and foreign jurisdictions could increase the uncertainties and costs surrounding the\nprosecution of our owned and in-licensed patent applications and the maintenance, enforcement or defense of our owned and in-licensed issued\npatents. Additionally, there have been proposals for additional changes to the patent laws of the U.S. and other countries that, if adopted,\ncould impact our ability to enforce our proprietary technology. This combination of events has created uncertainty with respect to the\nvalidity and enforceability of patents once obtained. Depending on future actions by the U.S. Congress, the federal courts, the USPTO,\nand the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that\ncould have a material adverse effect on our patent rights and our ability to protect, defend, and enforce our patent rights in the future.\nIn addition, geopolitical instability could increase the uncertainties and costs surrounding the prosecution or maintenance of patent\napplications and the maintenance, enforcement, or defense of issued patents.\n\n \n\nThe patent positions of companies\nin the development and commercialization of biologics and pharmaceuticals are particularly uncertain. U.S. Supreme Court and U.S. Court\nof Appeals for the Federal Circuit rulings have narrowed the scope of patent protection available in certain circumstances and weakened\nthe rights of patent owners in certain situations, including in the antibody arts. For example, the U.S. Supreme Court in Amgen,\nInc. v. Sanofi (Amgen) stated that if patent claims are directed to an entire class of compositions of matter, then the patent specification\nmust enable a person skilled in the art to make and use the entire class of compositions. This decision makes it unlikely that we will\nbe granted U.S. patents with composition of matter claims directed to antibodies functionally defined by their ability to bind a\nparticular antigen. Even if we are granted claims directed to functionally defined antibodies, it is possible that a third party may challenge\nour patents, when issued, relying on the reasoning in Amgen or other recent precedential court decisions.\n\n \n\n50\n\n \n\n \n\nIn addition, a European Unified\nPatent Court (“UPC”) entered into force on June 1, 2023. The UPC is a common patent court that hears patent infringement\nand revocation proceedings effective for EU Member States. This could enable third parties to seek revocation of a European patent in\na single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated.\n\n \n\nAlthough we do not currently\nown any European patents or applications, if we obtain such patents and applications in the future, any such revocation and loss of patent\nprotection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.\nMoreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce or defend\nthe validity of any European patents we may obtain. We may decide to opt out from the UPC any future European patent applications that\nwe may file and any patents we may obtain. If certain formalities and requirements are not met, however, such European patents and patent\napplications could be challenged for non-compliance and brought under the jurisdiction of the UPC. We cannot be certain\nthat future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of\nthe UPC.\n\n \n\n**Obtaining and maintaining\npatent protection depends on compliance with various procedural, document submissions, fee payment, and other requirements imposed by\ngovernmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.**\n\n** **\n\nPeriodic maintenance fees,\nrenewal fees, annuities fees, and various other governmental fees on patents and/or patent applications are due to be paid to the USPTO\nand foreign patent agencies in several stages over the lifetime of the patent and/or patent application. The USPTO and various foreign\ngovernmental patent agencies also require compliance with a number of procedural, documentary, fee payment, and other similar provisions\nduring the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means\nin accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent\nor patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events\nthat could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official\nactions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. If\nwe fail to maintain the patents and patent applications covering our programs, our competitive position would be adversely affected.\n\n \n\n**We may not identify\nrelevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely\naffect our ability to develop and market our products.**\n\n** **\n\nWe cannot guarantee that\nany of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration\nof relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and\npending application in the U.S. and abroad that is relevant to or necessary for the commercialization of our product candidates in any\njurisdiction. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent, and the patent’s\nprosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect. For example,\nwe may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a third-party’s\npending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the U.S. or abroad\nthat we consider relevant may be incorrect. Our failure to identify and correctly interpret relevant patents may negatively impact our\nability to develop and market our products.\n\n \n\nIn addition, because some\npatent applications in the U.S. may be maintained in secrecy until the patents are issued, and because patent applications in the U.S.\nand many foreign jurisdictions are typically not published until 18 months after filing, and publications in the scientific literature\noften lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our\nissued patents or our pending applications, or that we were the first to invent the technology. Our competitors may have filed, and may\nin the future file, patent applications covering products or technology similar to ours. Any such patent application may have priority\nover our patent applications or patents, which could require us to obtain rights to issued patents covering such technologies.\n\n \n\n51\n\n \n\n \n\n**We may become subject\nto claims challenging the inventorship or ownership of our patents and other intellectual property.**\n\n** **\n\nWe may be subject to claims\nthat former employees, collaborators, or other third parties have an interest in our patents or other intellectual property as an inventor\nor co-inventor. The failure to name the proper inventors on a patent application can impact the validity of the patents issuing\nthereon. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors,\nthe effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations\nof third parties involved in developing our programs, or as a result of questions regarding co-ownership of potential joint\ninventions. Litigation may be necessary to resolve these and other claims challenging inventorship and/or ownership. Alternatively, or\nadditionally, we may enter into agreements to clarify the scope of our rights in such intellectual property. If we fail in defending any\nsuch claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of,\nor right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are\nsuccessful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other\nemployees.\n\n \n\n**Patent terms may be\ninadequate to protect the competitive position of our product candidates for an adequate amount of time. **\n\n** **\n\nPatents have a limited lifespan.\nIn the U.S., if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest\nU.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords,\nis time limited. Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to competition\nfrom competitive products, including generics or biosimilars. Given the amount of time required for the development, testing, and regulatory\nreview of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates\nare commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from\ncommercializing products similar or identical to ours.\n\n \n\n**Our technology licensed\nfrom various third parties may be subject to retained rights.**\n\n** **\n\nOur future licensors may\nretain certain rights under the relevant agreements with us, including the right to use the underlying technology for noncommercial academic\nand research use, to publish general scientific findings from research related to the technology, and to make customary scientific and\nscholarly disclosures of information relating to the technology. It is difficult to monitor whether our licensors limit their use of the\ntechnology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.\n\n \n\nIn addition, our future licensors\nmay rely on third-party consultants or collaborators or on funds from third parties, such as the U.S. government, such that\nour licensors would not be the sole and exclusive owners of any patents we in-license. If other third parties have ownership\nrights or other rights to our in-licensed patents, they may be able to license such patents to our competitors, and our competitors\ncould market competing products and technology. This could have a material adverse effect on our competitive position, business, financial\nconditions, results of operations, and prospects.\n\n \n\n**Risks Related to Our Reliance\non Third Parties**\n\n** **\n\n**We currently rely on\nlicensing arrangements for a substantial portion of our product portfolio, including with Paragon for ORKA-001 and ORKA-002. If we are\nunable to maintain collaborations or licensing arrangements, or if our collaborations or licensing arrangements are not successful, our\nbusiness could be negatively impacted.**\n\n** **\n\nCollaborations or licensing\narrangements that we enter into may not be successful, and any success will depend heavily on the efforts and activities of such collaborators\nor licensors. If any of our current or future collaborators or licensors experience delays in performance of, or fails to perform, their\nobligations under their agreement with us, disagrees with our interpretation of the terms of such agreement or terminates their agreement\nwith us, our development timeline could be adversely affected. We currently rely on our licensing agreements with Paragon for a substantial\nportion of our product portfolio, including for ORKA-001 and ORKA-002. If we fail to comply with any of the obligations under our collaborations\nor license agreements, including payment terms and diligence terms, our collaborators or licensors may have the right to terminate such\nagreements, in which event we may lose intellectual property rights and may not be able to develop, manufacture, market, or sell the products\ncovered by our agreements or may face other penalties under our agreements. Our collaborators and licensors may also fail to properly\nmaintain or defend the intellectual property we have licensed from them, if required by our agreement with them, or even infringe upon,\nour intellectual property rights, leading to the potential invalidation of our intellectual property or subjecting us to litigation or\narbitration, any of which would be time-consuming and expensive and could harm our ability to commercialize our product candidates. In\naddition, collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with\nour programs and products if the collaborators believe that the competitive products are more likely to be successfully developed or can\nbe commercialized under terms that are more economically attractive than ours.\n\n \n\n52\n\n \n\n \n\nAs part of our strategy,\nwe plan to evaluate additional opportunities to enhance our capabilities and expand our development pipeline or provide development or\ncommercialization capabilities that complement ours. We may not realize the benefits of such collaborations, partnerships, or licensing\narrangements. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures,\nissue securities that dilute our existing stockholders or disrupt our management and business.\n\n \n\nWe may face significant competition\nin attracting appropriate collaborators, and more established companies may also be pursuing strategies to license or acquire third-party\nintellectual property rights that we consider attractive. These companies may have a competitive advantage over us due to their size,\nfinancial resources, and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be\na competitor may be unwilling to assign or license rights to us. Whether we reach a definitive agreement for a collaboration will depend\nupon, among other things, our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed\ncollaboration and the proposed collaborator’s evaluation of a number of factors. Collaborations are complex and time-consuming to\nnegotiate, document, and execute. In addition, consolidation among large pharmaceutical and biotechnology companies has reduced the number\nof potential future collaborators. We may not be able to negotiate collaborations on a timely basis, on acceptable terms or at all. If\nwe fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization\nactivities, we may not be able to further develop our product candidates or bring them to market.\n\n \n\n**We currently rely,\nand plan to rely in the future, on third parties to conduct and support our preclinical studies and clinical trials. If these third parties\ndo not properly and successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory\napproval of or commercialize our product candidates. **\n\n** **\n\nWe have utilized and plan\nto continue to utilize and depend upon independent investigators and collaborators, such as institutions, CROs, contract testing labs,\nCMOs and strategic partners, to supply, conduct, and support our preclinical studies and clinical trials pursuant to agreements with us.\nWe will rely heavily on these third parties over the course of our preclinical studies and clinical trials, and we control only certain\naspects of their activities. As a result, we will have less direct control over the conduct, timing, and completion of these preclinical\nstudies and clinical trials and the management of data developed through preclinical studies and clinical trials than would be the case\nif we were relying entirely upon our own staff. Nevertheless, we are responsible for ensuring that each of our studies and trials is conducted\nin accordance with the applicable protocol, legal, regulatory, and scientific standards, and our reliance on these third parties does\nnot relieve us of our regulatory responsibilities. We and our third-party contractors and CROs are required to comply with GCP regulations,\nwhich are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our programs in clinical\ndevelopment. If we or any of these third parties fail to comply with applicable GCP regulations, the clinical data generated in our clinical\ntrials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical\ntrials before approving our marketing applications or refuse to approve our marketing applications. We cannot assure you that upon inspection\nby a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations.\nMoreover, our business may be implicated if any of these third parties violate federal or state fraud and abuse or false claims laws and\nregulations or healthcare privacy and security laws.\n\n \n\nAlthough we have remedies\navailable to us under our agreements, any third parties conducting our preclinical studies or clinical trials will not be our employees\nand we cannot control whether they devote sufficient time and resources to our programs. These third parties may have relationships with\nother commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development\nactivities, which could negatively affect their performance on our behalf and the timing thereof and could lead to products that compete\ndirectly or indirectly with our product candidates. If these third parties do not successfully carry out their contractual duties or obligations\nor meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised\ndue to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended,\ndelayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our\nproduct candidates.\n\n** **\n\n53\n\n \n\n \n\n**We rely on the use\nof manufacturing suites in third-party facilities or on third parties to manufacture our product candidates, and we may rely on third\nparties to produce and process our products, if approved. Our business could be adversely affected if we are unable to use third-party\nmanufacturing suites or if the third-party manufacturers encounter difficulties in production.**\n\n \n\nWe do not currently own any\nfacility that may be used as our clinical or commercial manufacturing and processing facility and must currently rely on CMOs to manufacture\nour product candidates. We have not yet caused any product candidates to be manufactured on a commercial scale and may not be able to\ndo so for any of our product candidates, if approved. We currently have a sole source relationship for our supply of the ORKA-001 and\nORKA-002 programs. If there should be any disruption in such supply arrangement, including any adverse events affecting our sole\nsupplier, it could have a negative effect on the clinical development of our programs and other operations while we work to identify and\nqualify an alternate supply source. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing\npartners for compliance with cGMP requirements and any other regulatory requirements of the FDA or comparable foreign regulatory authorities\nfor the manufacture of our product candidates. Beyond periodic audits, we have limited control over the ability of our CMOs to maintain\nadequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not\napprove these facilities for the manufacture of our product candidates or if it withdraws any approval in the future, we may need to find\nalternative manufacturing facilities, which would require the incurrence of significant additional costs, delays, and materially adversely\naffect our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Similarly, our failure, or\nthe failure of our CMOs, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions,\ncivil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs,\noperating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates\nor drugs and harm our business and results of operations.\n\n \n\nMoreover, our CMOs may experience\nmanufacturing difficulties due to resource constraints, supply chain issues, proposed or actual legislative changes or requirements, or\nas a result of labor disputes or unstable political environments. If any CMOs on which we will rely fail to manufacture quantities of\nour product candidates at quality levels necessary to meet regulatory requirements and at a scale sufficient to meet anticipated demand\nat a cost that allows us to achieve profitability, our business, financial condition, and prospects could be materially and adversely\naffected. In addition, our CMOs are responsible for transporting temperature-controlled materials that can be inadvertently\ndegraded during transport due to several factors, rendering certain batches unsuitable for trial use for failure to meet, among others,\nour integrity and purity specifications. We and any of our CMOs may also face product seizure or detention or refusal to permit the import\nor export of products. Our business could be materially adversely affected by business disruptions to our third-party providers that\ncould materially adversely affect our anticipated timelines, potential future revenue and financial condition, and increase our costs\nand expenses. Each of these risks could delay or prevent the completion of our preclinical studies and clinical trials or the approval\nof any of our product candidates by the FDA, result in higher costs, or adversely impact commercialization of our product candidates. \n\n \n\nForeign CMOs may be subject\nto U.S. legislation, including the BIOSECURE Act, trade restrictions, and other foreign regulatory requirements, which could increase\ncosts, reduce the availability of materials, delay procurement or supply, or otherwise adversely affect our operations. We currently rely\non foreign CROs and CMOs, including WuXi Biologics (Hong Kong) Limited and its affiliates (“WuXi Biologics”), and we expect\nto continue to rely on foreign CROs and CMOs in the future.\n\n \n\nThe BIOSECURE Act was enacted\ninto U.S. law in December 2025 and restricts U.S. federal agencies, as well as recipients of certain federal funding, from procuring,\nusing, or contracting for biotechnology equipment or services from entities designated as “biotechnology companies of concern”.\nThe law contemplates a designation process to identify such biotechnology companies of concern, and the timing, scope, and implementation\nof the Act, including the criteria for designation and the application of any transition or grandfathering provisions, remain subject\nto ongoing rulemaking and agency interpretation.\n\n \n\nWuXi Biologics has been identified\nin prior legislative proposals and public discourse as a potential biotechnology company of concern; however, it has not been automatically\ndesignated as such under the enacted statute. If WuXi Biologics or other third-party providers we rely on were to be designated as biotechnology\ncompanies of concern in the future, or if the BIOSECURE Act were otherwise interpreted or implemented in a manner that restricts our ability\nto use their services, we could be required to transition to alternative providers, experience supply disruptions or increased costs,\nor be limited in our ability to access U.S. federal government contracts, grants, or other funding opportunities, which could materially\nadversely affect our business, financial condition, or results of operations.\n\n \n\nFurthermore, our operations\nand financial condition may be negatively impacted as a result of any delays or increased costs arising from the trade restrictions and\nother foreign regulatory requirements affecting such collaborators. In addition, while we have established relationships with CROs and\nCMOs outside of China, moving to those suppliers in the event of geopolitical instability affecting our collaborators in China could introduce\ndelays into the development program. For example, in April 2025, the United States government imposed significant tariffs on imports from\nChina and other countries and may impose more restrictions on goods, including biologically derived substances, manufactured in or imported\nfrom China or other countries, or impose other restrictions on companies’ ability to work with Chinese or other foreign counterparties.\nTo the extent these or future tariffs are applicable to the material we import from China and other countries or if we are not able to\nsecure supply of our product candidates as a result of applicable legislation, our business and financial condition could be adversely\naffected.\n\n \n\n54\n\n \n\n \n\n**Risks Related to Employee\nMatters, Managing Growth and Other Risks Related to Our Business**\n\n** **\n\n**In order to successfully\nimplement our plans and strategies, we will need to grow the size of our organization and we may experience difficulties in managing this\ngrowth.**\n\n \n\nWe expect to grow the size\nof our organization, including an increase in the number of our employees and the scope of our operations, particularly in the areas of\npreclinical and clinical drug development, technical operations, clinical operations, regulatory affairs and, potentially, sales and marketing.\nTo manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial personnel\nand systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited financial resources\nand the limited experience of our management team working together in managing a company with such anticipated growth, we may not be able\nto effectively manage the expansion of our operations or recruit and train additional qualified personnel.\n\n** **\n\n**We are highly dependent\non our key personnel and anticipate hiring new key personnel. If we are not successful in attracting and retaining highly qualified personnel,\nwe may not be able to successfully implement our business strategy.**\n\n \n\nOur ability to pursue our\ngrowth strategy will be limited if we are unable to continue to attract and retain high quality personnel. We have been and will continue\nto be highly dependent on the research and development, clinical, and business development expertise of our executive officers, as well\nas the other principal members of our management, scientific, and clinical team. Any of our management team members may terminate their\nemployment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.\n\n \n\nAttracting and retaining\nqualified personnel will also be critical to our success, including with respect to any strategic transaction that we may pursue. The\nloss of our executive officers or other key employees could impede the achievement of our research, development, and commercialization\nobjectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and\nkey employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with\nthe breadth of skills and experience required to successfully develop, facilitate regulatory approval of, and commercialize product candidates.\nCompetition to hire from this limited pool is intense, and we may be unable to hire, train, retain, or motivate these key personnel on\nacceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel, as well as from\nuniversities and research institutions.\n\n \n\nIn addition, we rely on consultants\nand advisors to assist us in formulating our discovery and nonclinical and clinical development and commercialization strategy. Our consultants\nand advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities\nthat may limit their availability to us.\n\n** **\n\n**We may be subject to\nclaims that we have wrongfully hired an employee from a competitor or that our employees, consultants or independent contractors have\nwrongfully used or disclosed confidential information of third parties.**\n\n** **\n\nAs is common in the biopharmaceutical\nindustry, in addition to our employees, we engage the services of consultants and independent contractors to assist us in the development\nof our programs. Many of these consultants, independent contractors, and our employees, may have been previously employed at, or may have\npreviously provided or may be currently providing consulting services to, other biotechnology or pharmaceutical companies including our\ncompetitors or potential competitors. Although we try to ensure that our employees, consultants, and independent contractors do not use\nthe intellectual property, proprietary information, know-how, or trade secrets of others in their work for us, we may become subject to\nclaims that we caused an individual to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these\nindividuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former\nemployer or competitor.\n\n \n\nWhile we may litigate to\ndefend ourselves against these claims, even if we are successful, litigation could result in substantial costs and could be a distraction\nto management. If our defenses to these claims fail, in addition to requiring us to pay monetary damages, a court could prohibit us from\nusing technologies or features that are essential to our programs, if such technologies or features are found to incorporate or be derived\nfrom the trade secrets or other proprietary information of the former employers. Moreover, any such litigation or the threat thereof may\nadversely affect our reputation or our ability to form strategic alliances or sublicense our rights to collaborators, engage with scientific\nadvisors or hire employees, consultants or independent contractors, each of which would have an adverse effect on our business, results\nof operations, and financial condition.\n\n** **\n\n**Our future growth may\ndepend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks\nand uncertainties. **\n\n \n\nOur future growth may depend,\nin part, on our ability to develop and commercialize our product candidates in foreign markets for which we may rely on collaboration\nwith third parties. If we fail to comply with the regulatory requirements in foreign markets and receive applicable marketing approvals,\nour target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our\nbusiness will be adversely affected. Moreover, even if we obtain approval of our product candidates and ultimately commercialize our product\ncandidates in foreign markets, we would be subject to the risks and uncertainties, including the burden of complying with complex and\nchanging foreign regulatory, tax, accounting and legal requirements, and reduced protection of intellectual property rights in some foreign\ncountries.\n\n \n\n55\n\n \n\n \n\n**Our employees, independent\ncontractors, consultants, advisors, commercial collaborators, principal investigators, CROs, CMOs, suppliers, and vendors may engage in\nmisconduct or other improper activities, including noncompliance with regulatory standards and requirements.**\n\n** **\n\nWe are exposed to the risk\nthat our employees, independent contractors, consultants, advisors, commercial collaborators, principal investigators, CROs, CMOs, suppliers,\nand vendors acting for or on our behalf may engage in misconduct or other improper activities. We have adopted a code of conduct and ethics,\nbut it is not always possible to identify and deter misconduct by these parties and the precautions we take to detect and prevent this\nactivity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations\nor other actions or lawsuits stemming from a failure to comply with these laws or regulations.\n\n** **\n\n**Our internal information\ntechnology systems, or those of any of our third-party service providers, or potential future collaborators, may fail or suffer security\nor data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data,\nemployee data or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to our brand and\nmaterial disruption of our operations.**\n\n** **\n\nIn the ordinary course of\nour business, we and the third parties upon which we rely collect, receive, store, process, generate, use, transfer, disclose, make accessible,\nprotect, secure, dispose of, transmit, and share (collectively, process) proprietary, confidential, and sensitive data, including personal\ndata, intellectual property, trade secrets, and other sensitive data (collectively, sensitive information). If we (or a third party upon\nwhom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.\nWhile we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures\nwill be effective. Further, cybersecurity breaches or other cybersecurity incidents may allow hackers access to our preclinical compounds,\nstrategies, discoveries, trade secrets, and/or other confidential information. Additionally, sensitive data could be leaked, disclosed,\nor revealed as a result of or in connection with our employees’, personnel’s, vendors’ or partners’ use of generative\nAI technologies. Our ability to monitor third parties’ information security practices is limited, and these third parties may not\nhave adequate security measures in place. We may be unable in the future to detect vulnerabilities in our information technology systems\nbecause such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security\nincident has occurred. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified\nvulnerabilities. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.\nSuch disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. Moreover,\nwhile we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations\nto us, any award may be insufficient or we may be unable to recover such award. Security incidents and attendant consequences may negatively\nimpact our ability to grow and operate our business. The risk of a cybersecurity incident or other information technology disruption,\nparticularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions\nfrom around the world have increased.\n\n \n\nTo the extent that any disruption\nor security breach were to result in loss, destruction, unavailability, alteration or dissemination of, or damage to, our data (including\nclinical trial data) or applications, or for it to be believed or reported that any of these occurred, we could incur liability, including\nunder laws and regulations governing the protection of protected health information and other personal data, and reputational damage and\nthe development and commercialization of our product candidates could be delayed. Further, our insurance policies may not be adequate\nto compensate us for the potential losses arising from any such disruption in, or failure or security breach of, our systems or third-party systems\nwhere information important to our business operations or commercial development is stored.\n\n \n\nDespite the implementation\nof security measures in an effort to protect systems that store our information, given their size and complexity and the increasing amounts\nof information maintained on our internal information technology systems and those of our third-party CROs, contractors, sites performing\nour clinical trials, third-party service providers and supply chain companies, and consultants, these systems are potentially vulnerable\nto breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication\nand electrical failures, as well as security breaches from inadvertent or intentional actions or from cyber-attacks by malicious\nthird parties, or ransomware attacks, which, in each case, may compromise our system infrastructure or lead to the loss, destruction,\nalteration or dissemination of, or damage to, our data.\n\n \n\nOur hybrid-remote workforce\nmay create additional risks for our information technology systems and data because our employees work remotely and utilize network connections,\ncomputers, and devices working at home, while in transit and in public locations.\n\n \n\n56\n\n \n\n \n\nOur contracts may not contain\nlimitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient\nto protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance\ncoverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices,\nthat such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.\n\n** **\n\n**We are subject to stringent\nand changing laws, regulations and standards, and contractual obligations relating to privacy, data protection, and data security. The\nactual or perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or\ncriminal penalties), fines and sanctions, private litigation and/or adverse publicity and could negatively affect our operating results\nand business. **\n\n** **\n\nWe and third parties who\nwe work with are or may become subject to numerous domestic and foreign laws, regulations, and standards relating to privacy, data protection,\ndata transfer, and data security, the scope of which is changing, subject to differing applications and interpretations, and may be inconsistent\namong countries, or conflict with other rules. We are or may become subject to the terms of contractual obligations related to privacy,\ndata protection and data security. Our obligations may also change or expand as our business grows. The actual or perceived failure by\nus or third parties related to us to comply with such laws, regulations and obligations could increase our compliance and operational\ncosts, expose us to regulatory scrutiny, actions, fines and penalties, result in reputational harm, lead to a loss of customers, result\nin litigation and liability, and otherwise cause a material adverse effect on our business, financial condition, and results of operations.\n\n** **\n\n**If we fail to comply\nwith environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have\na material adverse effect on the success of our business.**\n\n** **\n\nWe are subject to numerous\nenvironmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage,\ntreatment, and disposal of hazardous materials and wastes. Our operations may involve the use of hazardous and flammable materials, including\nchemicals and biological and radioactive materials. In addition, we may incur substantial costs in order to comply with current or future\nenvironmental, health, and safety laws and regulations. These current or future laws and regulations may impair our research, development,\nor commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties, or other\nsanctions.\n\n** **\n\n**We may be subject to\nadverse U.S. legislative or regulatory tax changes that could negatively impact our financial condition.**\n\n \n\nThe rules dealing with U.S. federal,\nstate, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue\nService and the U.S. Treasury Department. Changes to tax laws (which may have retroactive application) could adversely affect our\nstockholders or us. We continue to assess the impact of various tax reform proposals and modifications to existing tax treaties in all\njurisdictions where we have operations or employees to determine the potential effect on our business and any assumptions we make about\nour future taxable income. We cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect,\nif any, such proposals would have on our business if they were to be enacted. For example, the United States enacted the IRA, which\nimplements, among other changes, a 1% excise tax on certain stock buybacks. In addition, beginning in 2022, the Tax Cuts and Jobs\nAct eliminated the previously available option to deduct research and development expenditures and requires taxpayers to amortize\nthem generally over five years for research activities conducted in the United States and over 15 years for research activities\nconducted outside the United States. Such changes, among others, may adversely affect our effective tax rate, results of operation\nand general business condition.\n\n** **\n\n**We may acquire businesses\nor products, or form strategic alliances, in the future, and may not realize the benefits of such acquisitions.**\n\n** **\n\nWe may acquire additional\nbusinesses or products, form strategic alliances, or create joint ventures with third parties that we believe will complement or augment\nour existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring\nsuch businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous\ndifficulties in developing, manufacturing, and marketing any new product candidates or products resulting from a strategic alliance or\nacquisition that delay or prevent us from realizing their expected benefits or enhancing our business. There is no assurance that, following\nany such acquisition, we will achieve the synergies expected in order to justify the transaction, which could result in a material adverse\neffect on our business and prospects.\n\n** **\n\n57\n\n \n\n \n\n**We maintain our cash\nat financial institutions, often in balances that exceed federally-insured limits. The failure of financial institutions could adversely\naffect our ability to pay our operational expenses or make other payments.**\n\n** **\n\nOur cash held in non-interest-bearing and\ninterest-bearing accounts exceeds the Federal Deposit Insurance Corporation insurance limits. If such banking institutions were to\nfail, we could lose all or a portion of those amounts held in excess of such insurance limitations. In addition, even if account holders\nare ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their\naccounts may be substantially delayed. Any material loss that we may experience in the future or inability for a material time period\nto access our cash and cash equivalents could have an adverse effect on our ability to pay our operational expenses or make other payments,\nwhich could adversely affect our business. \n\n \n\n**General Risk Factors **\n\n** **\n\n**Our estimates of\nmarket opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in\nwhich we compete achieve the forecasted growth, our business may not grow at similar rates, or at all. **\n\n \n\nOur market opportunity estimates\nand growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate.\nEven if the markets in which we compete meet our size estimates and growth forecasts, our business may not grow at similar rates, or at\nall. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks\nand uncertainties.\n\n \n\nOur revenue will be dependent,\nin part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the\nability to obtain coverage and reimbursement, and whether we own the commercial rights for that territory. If the number of our addressable\npatients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect or the treatment\npopulation is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of\nsuch products, even if approved.\n\n** **\n\n**We may become exposed\nto costly and damaging product liability claims and our insurance may not cover all damages from such claims.**\n\n** **\n\nWe are exposed to potential\nproduct liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing, and use of\npharmaceutical products. The use of a product candidate in clinical trials and the sale of any approved products in the future may expose\nus to liability claims. An individual or group of individuals may bring a liability claim against us if one of our product candidates\ncauses, or merely appears to have caused, an injury, either at the clinical or commercial stage. Any claims against us, regardless of\ntheir merit, could be difficult and costly to defend and could materially and adversely affect our business. While we carry product liability\ninsurance for our clinical trials, it is possible that any liabilities could exceed our insurance coverage or that in the future we may\nnot be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability\nthat may arise. On occasion, large judgments have been awarded in class action or individual lawsuits. A successful product liability\nclaim or series of claims brought against us could cause our stock price to decline and, if judgments exceed our insurance coverage, could\ndecrease our cash and our business operations could be impaired.\n\n** **\n\n**Litigation costs and\nthe outcome of litigation could have a material adverse effect on our business. **\n\n \n\nFrom time to time, we may be subject to litigation claims\nthrough the ordinary course of our business operations regarding, but not limited to, employment matters, security of patient and employee\npersonal information, contractual relations with collaborators, and intellectual property rights. Litigation to defend ourselves against\nclaims by third parties, or to enforce any rights that we may have against third parties, may continue to be necessary, which could result\nin substantial costs and diversion of our resources, causing a material adverse effect on our business, financial condition, results of\noperations, or cash flows.\n\n** **\n\n58\n\n \n\n* *\n\n**Our business could\nbe adversely affected by economic downturns, inflation, fluctuation in interest rates, natural disasters, public health crises, political\ncrises, geopolitical events or other macroeconomic conditions, which could have a material and adverse effect on our results of operations\nand financial condition.**\n\n \n\nThe global economy, including\ncredit and financial markets, has experienced and may experience in the future extreme volatility and disruptions, including, among other\nthings, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages,\nnew or increased tariffs, and other barriers to trade, especially in light of recent executive orders made by the Trump administration,\ntrade and other international disputes, increases in inflation rates, fluctuation in interest rates, slower growth or recession, tighter\ncredit, volatility in financial markets, high unemployment, labor availability constraints, public health crises, significant natural\ndisasters, changes to fiscal and monetary policy, or government budget dynamics (particularly in the pharmaceutical and biotechnology\nareas), political and military conflict, and uncertainty about economic stability. Recently, the U.S. has announced tariffs on imports\nfrom most countries, including significant tariffs on imports from China. Historically, tariffs have led to increased trade and political\ntensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of\ntrade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international\neconomies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. There is\nsubstantial uncertainty about the duration of existing tariffs and whether additional tariffs may be imposed, modified or suspended. Fluctuation\nin interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and\naffect consumer spending. Similarly, the ongoing military conflict between Russia and Ukraine and in the Middle East and rising tensions\nwith China have created extreme volatility in the global capital markets and may have further global economic consequences, including\ndisruptions of the global supply chain. Any such volatility and disruptions may adversely affect our business or the third parties on\nwhom we rely. If the equity and credit markets deteriorate, including as a result of economic or political uncertainty, political unrest\nor war, it may make any necessary debt or equity financing more costly, more dilutive, or more difficult to obtain in a timely manner\nor on favorable terms, if at all. Increased inflation rates can adversely affect us by increasing our costs, including materials, operational,\nlabor and employee benefit costs.\n\n \n\nWe may in the future experience\ndisruptions as a result of such macroeconomic conditions, including delays or difficulties in initiating or expanding clinical trials\nand manufacturing sufficient quantities of materials. Any one or a combination of these events could have a material and adverse effect\non our results of operations and financial condition.\n\n \n\nGeopolitical events and global\neconomic conditions may also affect the ability of the FDA and other regulatory authorities to perform routine functions. If such concerns\nprevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it\ncould significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions,\nwhich could have a material adverse effect on our business.\n\n \n\n**Risks Related to Owning\nOur Stock**\n\n** **\n\n**The market price of\nour common stock has been, and may continue to be, volatile.**\n\n** **\n\nThe market price of our common\nstock has been and is likely to be highly volatile and is subject to significant fluctuations. Moreover, the stock markets in general\nhave experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad\nmarket fluctuations may also adversely affect the trading price of our common stock. For example, escalating trade tensions, elevated\ninterest rates, and regulatory uncertainty have caused significant market volatility recently, and particularly in the biotechnology and\nbiopharmaceutical industries. In addition, a recession, depression, or other sustained adverse market event could materially and adversely\naffect our business and the value of our common stock. In the past, following periods of volatility in the market price of a company’s\nsecurities, stockholders have often instituted class action securities litigation against such companies. \n\n \n\n59\n\n \n\n \n\nFurthermore, market volatility\nmay lead to securities litigation or increased stockholder activism if we experience a market valuation that activists believe is not\nreflective of our intrinsic value. Activist campaigns that contest or conflict with our strategic direction or seek changes in the composition\nof our board of directors could have an adverse effect on our operating results, financial condition and cash flows. Class action securities\nlitigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly\nharm our profitability and reputation.\n\n \n\nSome of the factors that\nmay cause the market price of our common stock to fluctuate include:\n\n \n\n \n●\nTiming and results of clinical trials and preclinical studies of our product candidates, or those of our competitors or our existing or future collaborators;\n\n \n\n \n●\nFailure to meet or exceed financial and development projections that we may provide to the public;\n\n \n\n \n●\nAnnouncements of significant or potential equity or debt sales by us;\n\n \n\n \n●\nActions taken by regulatory agencies with respect to our product candidates, clinical studies, manufacturing process, or sales and marketing terms;\n\n \n\n \n●\nFailure to meet or exceed the financial and development projections of the investment community or if securities or industry analysts do not publish research or reports about our business, or if they issue adverse or misleading opinions regarding our business and stock;\n\n \n\n \n●\nGeneral market, macroeconomic, geopolitical conditions, or market conditions in the pharmaceutical and biotechnology sectors;\n\n \n\n \n●\nAnnouncements of significant acquisitions, strategic collaborations, joint ventures, or capital commitments by us or our competitors;\n\n \n\n \n●\nDisputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;\n\n \n\n \n●\nAdditions or departures of key personnel, including scientific or management personnel;\n\n \n\n \n●\nSignificant lawsuits, including patent or stockholder litigation;\n\n \n\n \n●\nChanges in the market valuations of similar companies;\n\n \n\n \n●\nSales of securities by us or our securityholders in the future, or the anticipation of such events;\n\n \n\n \n●\nFailure to raise an adequate amount of capital to fund our operations or continued development of our product candidates;\n\n \n\n \n●\nTrading volume of our common stock;\n\n \n\n \n●\nAnnouncements by competitors of new products, clinical progress or lack thereof, significant contracts, commercial relationships, or capital commitments;\n\n \n\n \n●\nThe introduction of technological innovations or new therapies that compete with our products; and\n\n \n\n \n●\nPeriod-to-period fluctuations in our financial results.\n\n \n\n60\n\n \n\n \n\n**Our certificate of\nincorporation and bylaws, as well as provisions under Delaware law, could make an acquisition of the company more difficult and may prevent\nattempts by our stockholders to replace or remove management.**\n\n \n\nProvisions in our certificate\nof incorporation and bylaws may discourage, delay, or prevent a merger, acquisition or other change in control of the company that stockholders\nmay consider favorable, including transactions in which our common stockholders might otherwise receive a premium price for their shares.\nThese provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby\ndepressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members\nof our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove current management\nby making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:\n\n \n\n \n●\nEstablish a classified board of directors such that all members of the board are not elected at one time;\n\n \n\n \n●\nAllow the authorized number of our directors to be changed only by resolution of our board of directors;\n\n \n\n \n●\nLimit the manner in which stockholders can remove directors from the board;\n\n \n\n \n●\nEstablish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on at stockholder meetings;\n\n \n\n \n●\nRequire that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;\n\n \n\n \n●\nLimit who may call a special meeting of stockholders;\n\n \n\n \n●\nAuthorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and\n\n \n\n \n●\nRequire the approval of the holders of at least 66 2/3% of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.\n\n \n\nMoreover, because we are\nincorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”),\nwhich prohibits stockholders owning more than 15% of our outstanding voting stock from merging or combining with us. Although we believe\nthese provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with\nour board of directors, they would apply even if the offer may be considered beneficial by some stockholders.\n\n** **\n\n**Our governing documents\nprovide that, unless we consent in writing to the selection of an alternative forum, certain designated courts will be the sole and exclusive\nforum for certain legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable\njudicial forum for disputes with us or our directors, officers, employees or agents.**\n\n \n\nOur governing documents provide\nthat, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum\nfor state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of or based\non a breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees or our stockholders, (iii)\nany action asserting a claim arising pursuant to any provision of the DGCL, the certificate of incorporation or the bylaws, (iv) any action\nto interpret, apply, enforce or determine the validity of the certificate of incorporation or bylaws, or (v) any action asserting a claim\nthat is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the\nindispensable parties named as defendants therein, which for purposes of this risk factor refers to herein as the “Delaware Forum\nProvision”. Our governing documents further provide that, unless we consent in writing to an alternative forum, the federal district\ncourts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities\nAct, which for purposes of this risk factor refers to herein as the “Federal Forum Provision”. Neither the Delaware Forum\nProvision nor the Federal Forum Provision will apply to any causes of action arising under the Exchange Act. In addition, any person or\nentity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and consented to\nthe foregoing Delaware Forum Provision and Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed\nto have waived our compliance with the U.S. federal securities laws and the rules and regulations thereunder.\n\n \n\n61\n\n \n\n** **\n\nThe Delaware Forum Provision\nand the Federal Forum Provision may impose additional litigation costs on our stockholders in pursuing any such claims, particularly if\nsuch stockholders do not reside in or near the State of Delaware. Additionally, these forum selection clauses may limit our stockholders’\nability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers or employees, which\nmay discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit\nour stockholders.\n\n** **\n\n**Future sales of shares\nby existing stockholders, or the anticipation of such events, could cause our stock price to decline.**\n\n \n\nIf our stockholders sell,\nor indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock\ncould decline. In October 2025 we filed a registration statement on Form S-3 covering the resale of 39,425,806 shares of our common stock\n(including shares of common stock issuable upon the conversion of outstanding Series B Preferred Stock, or issuable upon the exercise\nof outstanding pre-funded warrants to purchase shares of common stock). The sale of these shares in the public market or the perception\nthat holders of a large number of the securities intend to sell their securities could significantly reduce the price of our common stock.\nWe cannot predict if and when the selling stockholders listed in the registration statement may sell such shares in the public markets.\nIn addition, shares of our common stock that are subject to our outstanding options will become eligible for sale in the public market\nto the extent permitted by the provisions of various vesting agreements and Rules 144 and 701 under the Securities Act. Furthermore, in\nthe future, we may issue additional shares of common stock or other equity or debt securities convertible into shares of common stock.\n\n** **\n\n**We do not anticipate\nthat we will pay any cash dividends in the foreseeable future.**\n\n \n\nWe do not anticipate that\nwe will pay any cash dividends in the foreseeable future. The current expectation is that we will retain our future earnings, if any,\nto fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be your sole source\nof gain, if any, for the foreseeable future.\n\n** **\n\n**Our executive officers,\ndirectors, and principal stockholders have the ability to control or significantly influence all matters submitted to our stockholders\nfor approval.**\n\n \n\nOur executive officers, directors,\nand principal stockholders beneficially own a significant percentage of our outstanding common stock. As a result, if these stockholders\nwere to choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for\napproval, as well as our management and affairs. For example, these stockholders, if they choose to act together, would control or significantly\ninfluence the election of directors and approval of any merger, consolidation, or sale of all or substantially all of our assets. This\nconcentration of voting power could delay or prevent our acquisition on terms that other stockholders may desire.\n\n** **\n\n**If equity research\nanalysts do not publish research or reports, or publish unfavorable research or reports about us, our business or our market, our stock\nprice and trading volume could decline.**\n\n \n\nThe trading market for our\ncommon stock will be influenced by the research and reports that equity research analysts publish about us and our business. Equity research\nanalysts may elect to not provide research coverage of our common stock, and such lack of research coverage may adversely affect the market\nprice of our common stock. If we do have equity research analyst coverage, we will not have any control over the analysts or the content\nand opinions included in their reports. The price of our common stock could decline if one or more equity research analysts downgrade\nour stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of us or fails to\npublish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume\nto decline."}