Item 1A. Risk Factors.

Summary

of Risk Factors

Below

is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not

address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks

that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with

other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding

our common stock.

Risk

Factors

The

following factors should be reviewed carefully, in conjunction with the other information contained in this Annual Report on Form

10-K. As previously discussed, our actual results could differ materially from our forward-looking statements. Our business faces

a variety of risks. These risks include those described below and may include additional risks and uncertainties not presently

known to us or that we currently deem immaterial. If any of the events or circumstances described in the following risk factors

occur, our business operations, performance and financial condition could be adversely affected and the trading price of our common

stock could decline.

Risks

Related to Our Financial Position and Need for Additional Capital

have incurred significant operating losses since our inception, which have caused management to determine there is substantial

doubt regarding our ability to continue as a going concern. We expect to incur losses for the foreseeable future and may never

achieve or maintain profitability.

Since

inception, we have incurred significant operating losses. Our net loss was approximately $8.1 million for the year ended December

31, 2020, $7.1 million for the year ended December 31, 2019 and $108.3 million from the period of inception (December 26, 2004)

through December 31, 2020. To date, we have financed our operations primarily through private placements and public offerings

of our securities, and payments from our license agreements. We have devoted substantially all of our financial resources and

efforts to research and development, including preclinical studies and, beginning in 2008, clinical trials. We are still in the

development stage of our product candidates and we have not completed development of any drugs. We expect to continue to incur

significant expenses and operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter

to quarter and year to year. Our recurring losses from operations have caused management to determine there is substantial doubt

regarding our ability to continue as a going concern, and as a result, our independent registered public accounting firm included

an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2020 with respect

to this uncertainty.

anticipate that our expenses will continue to be significant with the clinical trials for the ongoing development of our PP-001

and OBG products.

Our

expenses will also increase if and as we:

• continue the research and development of any of our other product candidates;

• seek to develop additional product candidates;

• maintain, expand and protect our intellectual property portfolio;

Because

of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict

the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses will increase

if:

Our

ability to become and remain profitable depends on our ability to generate revenue. We do not expect to generate significant revenue

unless and until we obtain marketing approval for, and commercialize PP-001 and OBG, or other product candidates that we may develop,

which may never occur. This will require us to be successful in a range of challenging activities, including:

• achieving an adequate level of market acceptance of our product candidates;

• ensuring the manufacture of commercial quantities of PP-001 and OBG.

Even

if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure

to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our

business, maintain our research and development efforts, diversify our product offerings, or even continue our operations. A decline

in the value of our company could also cause you to lose all or part of your investment.

will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or

eliminate our product development programs or commercialization efforts.

expect to devote substantial financial resources to our ongoing and planned activities, particularly continuing the clinical development

of our PP-001 and OBG products. In the future, we expect to raise additional financial resources for the continued clinical development

of PP-001, OBG, and other product candidates we may develop. In addition, if we obtain regulatory approval for any of our product

candidates, we would need to devote substantial financial resources to commercialization efforts, including product manufacturing,

marketing, sales, and distribution. Accordingly, we will need to obtain substantial additional funding in connection with our

continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce,

or eliminate our research and development programs or any future commercialization efforts.

Our

future capital requirements will depend on many factors, including:

of December 31, 2020, we had cash and cash equivalents of $1.2 million. With the net proceeds of approximately $8.0 million received

from closing a private placement on January 6, 2021, we believe we will have sufficient cash to fund planned operations through

August 31, 2021, however, the acceleration or reduction of cash outflows by management can significantly impact the timing for

raising additional capital to complete development of its products. To continue development, we will need to raise additional

capital through debt and/or equity financing or access additional funding through U.S. or foreign grants. Although we completed

our initial public offering and subsequent public offerings, registered direct offerings and private placements, additional capital

may not be available on terms favorable to us, if at all. Accordingly, no assurances can be given that management will be successful

in these endeavors. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements

do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the

amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as

a going concern.

Identifying

potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain

process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval

and achieve product sales. Our commercial revenues, if any, will be derived from sales of PP-001, OBG, or any other products that

we successfully develop, none of which we expect to be commercially available for several years, if at all. In addition, if approved,

any product candidate that we develop or any product that we in-license may not achieve commercial success. Accordingly, we will

need to obtain substantial additional financing to achieve our business objectives. Adequate additional financing may not be available

to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic

considerations, even if we believe we have sufficient funds for our current or future operating plans.

Raising

additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies

or product candidates.

Until

such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination

of equity offerings, debt financings, government or other third-party funding, collaborations, strategic alliances, licensing

arrangements and marketing and distribution arrangements. We do not have any committed external source of funds. To the extent

that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted,

and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting

our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If

we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.

we raise additional funds through government or other third-party funding, collaborations, strategic alliances, licensing arrangements

or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams,

research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise

additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product

development or future commercialization efforts or grant rights to develop and market products or product candidates that we would

otherwise prefer to develop and market ourselves.

Our

limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future

viability.

are a clinical-stage company with a limited operating history. Our operations to date have been limited to organizing and staffing

our company, acquiring rights to intellectual property, business planning, raising capital, developing our technology, identifying

potential product candidates, undertaking preclinical studies, and conducting clinical trials of PP-001 and OBG. We have not yet

demonstrated our ability to successfully complete development of a product candidate, obtain marketing approvals, manufacture

at commercial scale, or arrange for a third party to do so on our behalf, or conduct sales, marketing and distribution activities

necessary for successful product commercialization.

addition, as a pre-revenue business, we may encounter unforeseen expenses, difficulties, complications, delays and other known

and unknown factors. We will need to transition at some point from a company with a research and development focus to a company

capable of supporting commercial activities. We may not be successful in such a transition.

expect our financial condition and operating results to continue to fluctuate significantly from quarter-to-quarter and year-to-year

due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly

or annual periods as indications of future operating performance.

Foreign

currency exchange rate fluctuations may have a negative impact on our financial results.

are subject to the risks of fluctuating foreign currency exchange rates, which could have an adverse effect on the costs and expenses

of our foreign subsidiary. As a result, currency fluctuations among the United States dollar, euro and the other currencies in

which we do business have caused and will continue to cause foreign currency translation and transaction gains and losses. We

have not used forward exchange contracts to hedge our foreign currency exposures. In the future, we may undertake to manage foreign

currency risk through hedging methods, including foreign currency contracts. We recognize foreign currency gains or losses arising

from our operations in the period incurred. We cannot guarantee that we will be successful in managing foreign currency risk or

in predicting the effects of exchange rate fluctuations upon our future operating results because of the number of currencies

involved, the variability of currency exposure and the potential volatility of currency exchange rates. We cannot predict with

any certainty changes in foreign currency exchange rates or the degree to which we can address these risks.

Risks

Related to the Discovery and Development of Our Product Candidates

depend heavily on the success of PP-001 and OBG. If we are unable to successfully obtain marketing approval for PP-001 and OBG,

or experience significant delays in doing so, or if after obtaining marketing approvals, we fail to commercialize PP-001 and OBG,

our business will be materially harmed.

have invested a significant portion of our efforts and financial resources in the development of OBG, and we expect to invest

a significant portion of our efforts and financial resources in the development of PP-001 in the future. There remains a significant

risk that we will fail to successfully develop either product candidate.

cannot accurately predict when or if PP-001 or OBG will prove effective or safe in humans or whether it will receive marketing

approval. Our ability to generate product revenues, which may never occur, will depend heavily on our obtaining marketing approval

for and commercializing PP-001 and OBG.

The

success of PP-001 and OBG will depend on several factors, including the following:

• obtaining favorable results from clinical trials;

we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability

to successfully commercialize PP-001 and OBG, which would materially harm our business.

clinical trials of PP-001, OBG or any other product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction

of the FDA or foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience

delays in completing, or ultimately be delayed or unable to complete, the development and commercialization of PP-001, OBG, or

any other product candidate.

Before

obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development

and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome.

A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and

early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do

not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations

and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and

clinical trials have nonetheless failed to obtain marketing approval of their products.

we experience any of a number of possible unforeseen events in connection with our clinical trials, potential marketing approval

or commercialization of our product candidates could be delayed or prevented.

may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to

receive marketing approval or commercialize PP-001, OBG or any other product candidates that we may develop, including:

we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently

contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results

of these trials or tests are not favorable or are only modestly favorable or if there are safety concerns, we may:

• be delayed in obtaining marketing approval for our product candidates;

• not obtain marketing approval at all;

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

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

Our

product development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether

any of our pre-clinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on

schedule, or at all. Significant preclinical or clinical trial delays also could shorten any periods during which we may have

the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do

and impair our ability to successfully commercialize our product candidates.

we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals

could be delayed or prevented.

may not be able to initiate or continue clinical trials for PP-001 and OBG, or our other product candidates that we may develop

if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the

FDA or similar regulatory authorities outside the U.S. In addition, some of our competitors may have ongoing clinical trials for

product candidates that treat the same indications as PP-001 and OBG, and patients who would otherwise be eligible for our clinical

trials may instead enroll in clinical trials of our competitors’ product candidates.

Our

inability to enroll a sufficient number of patients for our clinical trials would result in significant delays, could require

us to abandon one or more clinical trials altogether and could delay or prevent our receipt of necessary regulatory approvals.

Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause

the value of our company to decline and limit our ability to obtain additional financing.

serious adverse or unacceptable side effects are identified during the development of our product candidates, we may need to abandon

or limit our development of such product candidates.

PP-001, OBG, or any of our other product candidates are associated with serious adverse events or undesirable side effects in

clinical trials or have characteristics that are unexpected, we may need to abandon their development or limit development to

more narrow uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are

less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in

clinical or early stage testing for treating ophthalmic disease have later been found to cause side effects that prevented further

development of the compound.

may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates

or indications that may be more profitable or for which there is a greater likelihood of success.

Because

we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for

specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other

indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize

on viable commercial products or profitable market opportunities. Our spending on current and future research and development

programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately

evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that

product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous

for us to retain sole development and commercialization rights to such product candidate. To the extent our contemplated trials

are unsuccessful, we may not be able to raise additional funds for subsequent trials or pursuing other indications.

Risks

Related to the Commercialization of Our Product Candidates

Even

if PP-001, OBG, or any other product candidate that we develop receives marketing approval, it may fail to achieve the degree

of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial

success and the market opportunity for our product candidates may be smaller than we estimate.

PP-001, OBG, or any other product candidate that we develop receives marketing approval, it may nonetheless fail to gain sufficient

market acceptance by physicians, patients, third-party payors, and others in the medical community.

Our

assessment of the potential market opportunity for PP-001 and OBG is based on industry and market data that we obtained from industry

publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys

and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do

not guarantee the accuracy or completeness of such information. If the actual market for PP-001 and OBG is smaller than we expect,

our product revenue may be limited, and it may be more difficult for us to achieve or maintain profitability.

we are unable to establish sales, marketing and distribution capabilities, we may not be successful in PP-001, OBG, or any other

product candidates that we may develop if and when they are approved.

do not have a sales or marketing infrastructure. To achieve commercial success for any product for which we have obtained marketing

approval and have not licensed the commercialization rights, we will need to establish sales, marketing, and distribution capabilities,

either ourselves or through collaborations or other arrangements with third parties.

the future, we plan to build sales and marketing infrastructure to market or co-promote PP-001 and OBG products and possibly other

product candidates that we develop, if and when they are approved. There are risks involved with establishing our own sales, marketing,

and distribution capabilities. For example, recruiting and training a sales force is expensive and time consuming and could delay

any product launch. If the commercial launch of PP-001, OBG, or any other product candidate for which we recruit a sales force

and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred

these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales

and marketing personnel.

Factors

that may inhibit our efforts to commercialize product candidates on our own include:

expect to enter into arrangements with third parties to perform consulting, sales, marketing, and distribution services in markets

outside the U.S. We may also enter into arrangements with third parties to perform these services in the U.S. if we do not establish

our own sales, marketing, and distribution capabilities in the U.S. or if we determine that such third-party arrangements are

otherwise beneficial. Our product revenues and our profitability, if any, under any such third-party sales, marketing or distribution

arrangements are likely to be lower than if we were to market, sell and distribute our product candidates. In addition, we may

not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may

be unable to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of them

may fail to devote the necessary resources and attention to sell and market our product candidates effectively. If we do not establish

sales, marketing, and distribution capabilities successfully, either on our own or in collaboration with third parties, we will

not be successful in commercializing PP-001, OBG, or any other product candidates that we may develop.

face substantial competition, which may result in others discovering, developing, or commercializing products before or more successfully

than we do.

The

development and commercialization of new drug products is highly competitive. We face competition with respect to PP-001, OBG,

and our other current product candidates and will face competition with respect to any product candidates that we may seek to

develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology

companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products

or are pursuing the development of products for the treatment of the disease indications for which we are developing our product

candidates. Potential competitors also include academic institutions, government agencies and other public and private research

organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development,

manufacturing, and commercialization.

Our

commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more

effective, have fewer or less severe side effects, are more convenient or are less expensive than our product candidates. Our

competitors also may obtain FDA or foreign regulatory approval for their products more rapidly than we may obtain approval for

ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

addition, our ability to compete may be affected in many cases by insurers or other third-party payors, particularly Medicare,

seeking to encourage the use of generic products. Generic products are currently being used for the indications that we are pursuing,

and additional products are expected to become available on a generic basis over the coming years. If PP-001, OBG, or any other

product candidate that we may develop achieves marketing approval, we expect that it will be priced at a premium over competitive

products.

Many

of the companies against which we are competing or against which we may compete in the future have significantly greater financial

resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining

regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology

industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage

companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established

companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing

clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary

for, our programs.

Even

if we are able to commercialize PP-001, OBG, or any other product candidate that we may develop, the products may become subject

to unfavorable pricing regulations, third-party coverage or reimbursement practices or healthcare reform initiatives, which could

harm our business.

Our

ability to commercialize PP-001, OBG, or any other product candidates that we may develop successfully will depend, in part, on

the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government

healthcare programs, private health insurers, managed care plans and other organizations. Government authorities and third-party

payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish

reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities

and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices

and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for our product candidates

and, even if they are available, the level of reimbursement may not be satisfactory.

Inadequate

reimbursement may adversely affect the demand for, or the price of, any product candidate for which we obtain marketing approval.

Obtaining and maintaining adequate reimbursement for our products may be difficult. We may be required to conduct expensive pharmacoeconomic

studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate

reimbursement are not available or reimbursement is available only to limited levels, we may not be able to successfully commercialize

any product candidate for which we obtain marketing approval.

There

may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than

the indications for which the drug is approved by the FDA or similar regulatory authorities outside the U.S. Moreover, eligibility

for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our costs, including

research, development, manufacture, sale, and distribution expenses. Interim reimbursement levels for new drugs, if applicable,

may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use

of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs

and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts

or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict

imports of drugs from countries where they may be sold at lower prices than in the U.S. Third-party payors often rely upon Medicare

coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage

and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop would

compromise our ability to generate revenues and become profitable.

The

regulations that govern marketing approvals, pricing, coverage, and reimbursement for new drug products vary widely from country

to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional

costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed.

In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign

markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is

granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations

that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are

able to generate from the sale of the product in that country. To obtain reimbursement or pricing approval in some countries,

we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available

therapies. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even

if our product candidates obtain marketing approval.

There

can be no assurance that our product candidates or any products that we may in-license, if they are approved for sale in the U.S.

or in other countries, will be considered medically reasonable and necessary for a specific indication, that they will be considered

cost-effective by third-party payors, that coverage and an adequate level of reimbursement will be available, or that third-party

payors’ reimbursement policies will not adversely affect our ability to sell our product candidates profitably.

Our

strategy of obtaining rights to product candidates and approved products through in-licenses and acquisitions may not be successful.

may expand our product pipeline through opportunistically in-licensing or acquiring the rights to other products, product candidates

or technologies. The future growth of our business may depend in part on our ability to in-license or acquire the rights to approved

products, additional product candidates or technologies. However, we may be unable to in-license or acquire the rights to any

such products, product candidates or technologies from third parties. The in-licensing and acquisition of pharmaceutical products

is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire products,

product candidates or technologies that we may consider attractive. These established companies may have a competitive advantage

over us due to their size, cash resources and greater clinical development and commercialization capabilities.

addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable

to in-license or acquire the rights to the relevant product, product candidate or technology on terms that would allow us to make

an appropriate return on our investment. Furthermore, we may be unable to identify suitable products, product candidates or technologies

within our area of focus. If we are unable to successfully obtain rights to suitable products, product candidates or technologies,

our ability to pursue this element of our strategy could be impaired.

Product

liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that

we develop.

face an inherent risk of product liability exposure related to the use of the product candidates that we develop in human clinical

trials and will face an even greater risk if we commercially sell any products that we develop. If we cannot successfully defend

ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless

of merit or eventual outcome, liability claims may result in:

• decreased demand for any product candidates or products that we develop;

• injury to our reputation and significant negative media attention;

• withdrawal of clinical trial participants;

• significant costs to defend the related litigation;

• substantial monetary awards to trial participants or patients;

• loss of revenue;

• the inability to commercialize any products that we develop.

While

we obtain insurance for each clinical trial we perform, we may not be adequately insured to cover all liabilities that we may

incur. We will need to increase our insurance coverage as we expand our clinical trials. We will need to further increase our

insurance coverage if we commence commercialization of any product candidate that receives marketing approval. Insurance coverage

is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to

satisfy any liability that may arise.

Risks

Related to Our Dependence on Third Parties

may enter into collaborations with other third parties for the development or commercialization of our product candidates. If

our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

expect to utilize a variety of types of collaboration, distribution, and other marketing arrangements with third parties to commercialize

PP-001 and OBG in markets outside the U.S. We also may enter into arrangements with third parties to perform these services in

the U.S. if we do not establish our own sales, marketing and distribution capabilities in the U.S. or if we determine that such

third-party arrangements are otherwise beneficial. We also may seek third-party collaborators for development and commercialization

of other product candidates. Our likely collaborators for any sales, marketing, distribution, development, licensing, or broader

collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies

and biotechnology companies. To date, the only agreements we entered into were our Licensing Agreements with BHC, which were terminated

effective March 14, 2019. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities

and efforts to successfully perform the functions assigned to them in these arrangements.

Collaboration

agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. If

we do not receive the funding we expect under collaboration agreements, our development of our product candidates could be delayed

and we may need additional resources to develop our product candidates. All of the risks relating to product development, regulatory

approval and commercialization described in this Annual Report on Form 10-K also apply to the activities of our collaborators.

Additionally,

subject to its contractual obligations to us, if a collaborator of ours were to be involved in a business combination, it might

deemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators

terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business

and financial communities could be harmed.

we are not able to establish additional collaborations, we may have to alter our development and commercialization plans and our

business could be adversely affected.

For

some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development

and potential commercialization of therapeutic products. We face significant competition in seeking appropriate collaborators.

Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s

resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation

of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the

FDA or similar regulatory authorities outside the U.S., the potential market for the subject product candidate, the costs and

complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence

of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without

regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative

product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration

could be more attractive than the one with us for our product candidate. We may also be restricted under future license agreements

from entering into agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to

negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical

companies that have resulted in a reduced number of potential future collaborators.

we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to

curtail the development of a product candidate, reduce or delay its development program or one or more of our other development

programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures

and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or

commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available

to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to

undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates

or bring them to market or continue to develop our product platform.

rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform

satisfactorily, including failing to meet deadlines for the completion of such trials.

have relied on third parties, such as contract research organizations (“CROs”) to conduct our completed trials of

our product candidates, and do not plan to independently conduct clinical trials of our product candidates. We expect to continue

to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators,

to conduct our clinical trials. These agreements might terminate for a variety of reasons, including a failure to perform by the

third parties. If we need to enter into alternative arrangements, that would delay our product development activities.

Our

reliance on these third parties for research and development activities will reduce our control over these activities but will

not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials

is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to

comply with standards, commonly referred to as Good Clinical Practices for conducting, recording, and reporting the results of

clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality

of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed

clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result

in fines, adverse publicity, and civil and criminal sanctions.

Furthermore,

these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties

do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with

regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals

for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product

candidates.

contract with third parties for the manufacture of PP-001 and OBG for clinical trials and expect to continue to do so in connection

with the commercialization of PP-001, OBG, and for clinical trials and commercialization of any other product candidates that

we may develop. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates

or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization

efforts.

do not currently own or operate manufacturing facilities for the production of clinical or commercial quantities of PP-001, OBG

or any other of our product candidates. We rely, and expect to continue to rely, on third parties to manufacture clinical and

commercial supplies of PP-001 and OBG, preclinical and clinical supplies of our other product candidates that we may develop,

and commercial supplies of products if and when any of our product candidates receives marketing approval. Our current and anticipated

future dependence upon others for the manufacture of PP-001, OBG, and any other product candidate or product that we develop may

adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a

timely and competitive basis. In addition, any performance failure on the part of our existing or future manufacturers could delay

clinical development or marketing approval.

currently rely exclusively on third-party manufacturers to assemble and prepare PP-001 and OBG on a purchase order basis. We do

not currently have any contractual commitments for commercial supply of bulk drug substance for PP-001 and OBG, or fill-finish

services. We also do not currently have arrangements in place for redundant supply or a second source for bulk drug substance

for PP-001 and OBG, or for fill-finish services. The prices at which we are able to obtain supplies of PP-001, OBG and fill-finish

services may vary substantially over time and adversely affect our financial results.

our third-party manufacturers for PP-001 or OBG fail to fulfill our purchase orders or should become unavailable to us for any

reason, we believe that there are a limited number of potential replacement manufacturers, and we likely would incur added costs

and delays in identifying or qualifying such replacements. We could also incur additional costs and delays in identifying or qualifying

a replacement manufacturer for fill-finish services if our existing third-party manufacturer should become unavailable for any

reason. We may be unable to establish any agreements with such replacement manufacturers or to do so on acceptable terms. Even

if we could transfer manufacturing to a different third party, the shift would likely be expensive and time consuming, particularly

since the new facility would need to comply with the necessary regulatory requirements and we would need FDA approval before using

or selling any products manufactured at that facility.

connection with our application for a license to market PP-001, OBG or other product candidates in the U.S., we may be required

to conduct a comparability study if the product we intend to market is supplied by a manufacturer different from the one who supplied

the product evaluated in our clinical studies. Delays in designing and completing this study to the satisfaction of the FDA could

delay or preclude our development and commercialization plans and thereby limit our revenues and growth.

Reliance

on third-party manufacturers entails additional risks, including:

• reliance on the third party for regulatory compliance and quality assurance;

• the possible breach of the manufacturing agreement by the third party;

Third-party

manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the U.S. Our failure,

or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed

on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation,

seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly

and adversely affect supplies of our products.

Risks

Related to Our Intellectual Property

we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection

obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical

to ours, and our ability to successfully commercialize our technology and products may be impaired.

Our

success depends in large part on our ability to obtain and maintain patent protection in the U.S. and other countries with respect

to our proprietary technology and products. We and our licensors have sought to protect our proprietary position by filing patent

applications in the U.S. and abroad related to our novel technologies and product candidates. The patent prosecution process is

expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a

reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and

development output before it is too late to obtain patent protection. Maintaining patents in the U.S. is an expensive process

and it is even more expensive to maintain patents and patent applications in foreign countries. As a result, it is possible that

we and our licensors will fail to maintain such patents thereby reducing the rights of our portfolio.

The

patent position of pharmaceutical, biotechnology and medical device companies generally is highly uncertain, involves complex

legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity,

enforceability and commercial value of our and our licensors’ patent rights are highly uncertain. Our and our licensors’

pending and future patent applications may not result in patents being issued which protect our technology or products or which

effectively prevent others from commercializing competitive technologies and products. In addition, the laws of foreign countries

may not protect our rights to the same extent as the laws of the U.S. Publications of discoveries in the scientific literature

often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published

until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we or our licensors

were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our

licensors were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability,

and commercial value of our owned or licensed patent rights are highly uncertain. We currently have 43 pending patents. Our pending

and future patent applications may not result in patents being issued which protect our technology or products, in whole or in

part, or which effectively prevent others from commercializing competitive technologies and products. In particular, during prosecution

of any patent application, the issuance of any patents based on the application may depend upon our ability to generate additional

preclinical or clinical data that support the patentability of our proposed claims. We may not be able to generate sufficient

additional data on a timely basis, or at all. Moreover, changes in either the patent laws or interpretation of the patent laws

in the U.S. and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Moreover,

we may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office, or become involved

in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging

our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could

reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete

directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing

third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications

is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product

candidates.

Even

if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful

protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors

may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing

manner.

The

issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents

may be challenged in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or

freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit

our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of

the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory

review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are

commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others

from commercializing products similar or identical to ours.

may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time

consuming and unsuccessful.

Competitors

may infringe our issued patents or other intellectual property. To counter infringement or unauthorized use, we may be required

to file infringement claims, which can be expensive and time consuming. Any claims we assert against perceived infringers could

provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement

proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s

claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover

the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being

invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual

property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this

KPRX US Equity

KPRX · 10-K · period ended 2020-12-31

Item 1A. Risk Factors.

KPRX US Equity☆

KPRX · 10-K · period ended 2020-12-31

Item 1A. Risk Factors.

KPRX US Equity