Risk Factors

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the Meeting. The following risk factors apply to the business and operations of Xynomic and will also apply to the business and operations of the post-combination company following the completion of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone, or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition, and results of operations of the post-combination company. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risks Related to Xynomic

Risks Related to Xynomic’s Financial Position and Need for Additional Capital

Xynomic is a biopharmaceutical company with a limited operating history and has not yet generated any revenue from product sales. Xynomic has incurred operating losses since its inception and may never achieve or maintain profitability.

Xynomic is a clinical stage biopharmaceutical company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a drug candidate will fail to gain regulatory approval or become commercially viable. Xynomic commenced operations in August 2016. Its operations to date have been limited primarily to organizing and staffing the company, business planning, raising capital, in-licensing drug candidates, undertaking pre-clinical studies, and clinically developing drug candidates. Xynomic has never generated any revenue from drug sales, and has not obtained regulatory approvals for any of its drug candidates. For the year ended December 31, 2018, Xynomic reported a net loss of $28.6 million.

Xynomic expects to incur significantly higher expenses and operating losses over the next several years in connection with its ongoing activities, as Xynomic:

To become and remain profitable, Xynomic must develop and eventually commercialize drug candidates with significant market potential. This will require it to be successful in a range of challenging activities, including completing pre-clinical testing and clinical trials of its drug candidates, obtaining marketing approval for these drug candidates, manufacturing, marketing and selling those drug candidates for which it may obtain marketing approval, and satisfying any post-marketing requirements. It may never succeed in any or all of these activities and, even if it does, Xynomic may never generate revenues that are significant or large enough to achieve profitability. It may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect its business. The size of Xynomic’s future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue. Even if it achieves profitability in the future, it may not be able to sustain profitability in subsequent periods.

Xynomic must obtain additional funds to finance its operations and to remain a going concern.

Xynomic’s incurred recurring losses from operations since inception and the net current liabilities (current assets less current liabilities) as of December 31, 2018 raise substantial doubt about its ability to continue as a going concern. As a result, Xynomic has disclosed in Note 1 in its consolidated financial statements for the year ended December 31, 2018 with respect to this uncertainty. Xynomic’s ability to continue as a going concern will require it to obtain additional funding. The perception of Xynomic’s ability to continue as a going concern may make it more difficult to obtain financing for the continuation of Xynomic’s operations and could result in the loss of confidence by investors and employees. Additionally, volatility in the capital markets and general economic conditions in the United States may be a significant obstacle to raising the required funds.

Xynomic will need to raise substantial additional funding. If Xynomic is unable to raise capital when needed at favorable terms, it will be forced to delay, reduce, or eliminate some of its drug development programs or commercialization efforts.

Xynomic’s ability to continue as a going concern will require it to obtain additional funding. Furthermore, Xynomic’s future capital requirements will depend on and could increase significantly as a result of many factors, including:

Additional fundraising efforts may distract management from their day-to-day activities, which may adversely affect Xynomic’s ability to develop and commercialize its drug candidates. There is no guarantee that future financing will be available in sufficient amounts or on terms acceptable to Xynomic, if at all. Moreover, additional financing may adversely affect the holdings or the rights of stockholders, and the issuance of additional securities, whether equity or debt, by Xynomic, or the possibility of such issuance, may cause the market price of Xynomic’s shares to decline. The sale of additional equity or convertible securities would dilute all of Xynomic stockholders. The incurrence of indebtedness would result in increased interest payment obligations and Xynomic may be required to agree to certain restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely impact Xynomic’s ability to conduct its business. Xynomic could also be required to agree to terms unfavorable to it, any of which may have a material adverse effect on Xynomic’s business, operating results and prospects.

If Xynomic is unable to obtain funding on a timely basis, it will be required to significantly curtail, delay, or discontinue one or more of its research or development programs or the commercialization of any drug candidate or be unable to expand its operations or otherwise capitalize on its business opportunities, as desired, which could materially adversely affect its business, financial condition, and results of operations.

Raising additional capital may cause dilution to Xynomic stockholders, restrict Xynomic operations, or require Xynomic to relinquish rights to its technologies or drug candidates.

Identifying and acquiring rights to develop potential drug candidates and conducting pre-clinical testing and clinical trials is a time-consuming, expensive, and uncertain process that may take years to complete, and Xynomic’s commercial revenue, if any, will be derived from sales of drug candidates that it does not expect to be commercially available until Xynomic receives regulatory approval, if at all. Xynomic may never generate the necessary data or results required to obtain regulatory approval and achieve product sales, and even if one or more of its drug candidates are approved, they may not achieve commercial success. Accordingly, Xynomic may need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing may not be available to Xynomic on acceptable terms, or at all.

Xynomic may seek additional funding through a combination of equity offerings, debt financings, collaborations, licensing arrangements, strategic alliances, and marketing or distribution arrangements. To the extent that Xynomic raises additional capital through the sale of equity or convertible debt securities, the ownership interest of Xynomic stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights as a holder of its common stock. The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on Xynomic’s ability to incur additional debt or issue additional equity, limitations on Xynomic’s ability to acquire or license intellectual property rights, and other operating restrictions that could adversely impact Xynomic’s ability to conduct its business. In addition, issuance of additional equity securities, or the possibility of such issuance, may cause the market price of its common stock to decline. In the event that Xynomic enters into collaborations or licensing arrangements to raise capital, Xynomic may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms Xynomic’s rights to technologies or drug candidates that Xynomic otherwise would seek to develop or commercialize itself or potentially reserve for future potential arrangements when it might be able to achieve more favorable terms.

Xynomic has a very limited operating history, which may make it difficult for you to evaluate the success of Xynomic’s business to date and to assess its future viability.

Xynomic commenced its operations in August 2016. Its operations to date have been limited to organizing and staffing the company, identifying potential partnerships and drug candidates, acquiring product and technology rights, and conducting research and development activities for its drug candidates. Xynomic has not yet demonstrated the ability to successfully complete large-scale, pivotal clinical trials. Xynomic has also not yet obtained regulatory approval for, or demonstrated an ability to manufacture or commercialize, any of its drug candidates. Consequently, any predictions about Xynomic’s future success, performance, or viability may not be as accurate as they could be if it had a longer operating history or approved products on the market.

Xynomic’s limited operating history, particularly in light of the rapidly evolving drug research and development industry in which it operates, may make it difficult to evaluate Xynomic’s current business and prospects for future performance. Its short history makes any assessment of its future performance or viability subject to significant uncertainty. Xynomic will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields as it seeks to transition to a company capable of supporting commercial activities. In addition, as a new business, it may be more likely to encounter unforeseen expenses, difficulties, complications, and delays due to limited experience. If Xynomic does not address these risks and difficulties successfully, its business will suffer.

Risks Related to Xynomic’s Business

All of Xynomic’s drug candidates are still in development. If Xynomic is unable to obtain regulatory approval and ultimately commercialize its drug candidates or experiences significant delays in doing so, its business, financial condition, results of operations, and prospects will be materially and adversely affected.

All of Xynomic’s drug candidates are still in development. One of its drug candidates is in clinical development and various others are in pre-clinical development. Xynomic’s ability to generate revenues from its drug candidates is dependent on its receipt of regulatory approval and successfully commercializing such products, which may never occur. Each of Xynomic’s drug candidates will require additional pre-clinical and/or clinical development, regulatory approval in multiple jurisdictions, development of manufacturing supply and capacity, substantial investment, and significant marketing efforts before it generates any revenue from product sales. The success of Xynomic’s drug candidates will depend on several factors, including the following:

The success of Xynomic’s business is dependent upon its ability to develop and commercialize its clinical-stage drug candidates, particularly abexinostat, which has three clinical trials currently on-going As a result, Xynomic’s business is substantially dependent on its ability to complete the development of, obtain regulatory approval for, and successfully commercialize abexinostat and its other drug candidates in a timely manner.

Xynomic cannot commercialize drug candidates in the United States or another jurisdiction outside of China without obtaining regulatory approval from the FDA or comparable foreign regulatory authorities. Similarly, Xynomic cannot commercialize drug candidates in China without first obtaining regulatory approval from the NMPA. The process to develop, obtain regulatory approval for, and commercialize drug candidates is long, complex, and costly and approval may not be granted. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and obtaining regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Even if Xynomic’s drug candidates were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, Xynomic would still need to seek approval in China and any other jurisdictions where it plans to market the product. Any safety issues, product recalls, or other incidents related to products approved and marketed in one jurisdictions may impact approval of those products by another jurisdiction. If Xynomic is unable to obtain regulatory approval for its drug candidates in one or more jurisdictions, or any approval contains significant limitations imposed on certain drug candidates, it may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of its drug candidates or any other drug candidate that Xynomic may in-license, acquire, or develop in the future.

Xynomic may be unable to obtain regulatory approval under applicable regulatory requirements.

To gain approval to market a drug product, regardless of whether it is through Accelerated Approval or the conventional pathway, Xynomic must provide the FDA and foreign regulatory agencies with clinical data that adequately demonstrates the safety and efficacy of the product for the intended indication applied for in the New Drug Application, or “ NDA ,” or other respective regulatory filing. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in clinical trials even after promising results in earlier nonclinical or clinical studies and trials. These setbacks have been caused by, among other things, nonclinical findings made while clinical trials were underway and safety or efficacy observations made in clinical trials, including previously unreported Adverse Events (“ AEs ”). Success in nonclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and the results of clinical trials by other parties may not be indicative of the results in trials we may conduct.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Failure can occur at any stage of clinical development.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of nonclinical and clinical studies and trials of Xynomic’s drug candidate may not be predictive of the results of later-stage clinical trials. Drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical and clinical studies and trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies and trials, and Xynomic cannot be certain that it will not face similar setbacks. Based upon negative or inconclusive results, Xynomic or any potential future collaborator may decide, or regulators may require Xynomic, to conduct additional nonclinical and clinical studies and trials. In addition, data obtained from trials and studies are susceptible to varying interpretations, and regulators may not interpret Xynomic’s data as favorably as it does, which may delay, limit, or prevent regulatory approval. Furthermore, Xynomic relies on contract research organizations (“ CROs ”) and clinical trial sites to ensure the proper and timely conduct of its clinical trials and, while Xynomic has agreements governing their committed activities, it has limited influence over their actual performance.

In addition, Xynomic does not know whether future clinical trials, if any, will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. Clinical trials can be delayed or aborted for a variety of reasons, including delay or failure to:

Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications Xynomic is investigating.

Xynomic could also encounter delays if a clinical trial is suspended or terminated by it, by the ethics committees or IRBs of the institutions in which such trials are being conducted, by an independent Safety Review Board, for such trial or by the FDA or other regulatory agencies. Such parties may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or Xynomic’s clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory agencies resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

Further, conducting clinical trials in foreign countries presents additional risks that may delay completion of Xynomic’s clinical trials. These risks include the failure of physicians or enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries. In addition, the FDA may determine that clinical trial results obtained in foreign subjects do not represent the safety and efficacy of a product when administered in U.S. patients and are thus not supportive of an NDA approval in the United States.

If Xynomic experiences delays in the start or completion of, or termination of, any clinical trial of its drug candidates, the commercial prospects of its drug candidates may be harmed, and Xynomic’s ability to generate product revenues will be delayed. In addition, any delays in completing its clinical trials will increase Xynomic’s costs, slow down its drug candidates’ development and approval process and jeopardize Xynomic’s ability to commence product sales and generate revenues. Any of these occurrences may significantly harm Xynomic’s business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of its drug candidates.

Xynomic may allocate its limited resources to pursue a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may later prove to be more profitable or for which there is a greater likelihood of success.

Because Xynomic has limited financial and managerial resources, it must limit its licensing, research, and development programs to specific drug candidates that it identifies for specific indications. As a result, it may forego or delay pursuit of opportunities with other drug candidates or for other indications that later prove to have greater commercial potential. Xynomic’s resource allocation decisions may cause it to fail to capitalize on viable commercial drugs or profitable market opportunities. In addition, if it does not accurately evaluate the commercial potential or target market for a particular drug candidate, it may relinquish valuable rights to that drug candidate through collaboration, licensing, or other royalty arrangements when it would have been more advantageous for Xynomic to retain sole development and commercialization rights to such drug candidate.

Xynomic may attempt to secure approval of abexinostat from the FDA through the use of the Accelerated Approval Program, but such mechanism may not actually lead to a faster development or regulatory review or approval process. If Xynomic is unable to obtain approval of abexinostat through the Accelerated Approval Program in the United States, it may be required to conduct additional nonclinical and clinical studies and trials beyond those that it currently contemplates, which could increase the expense of obtaining, reduce the likelihood of obtaining, and/or delay the timing of obtaining, necessary marketing approval. Even if Xynomic receives approval from the FDA under the Accelerated Approval Program, if its confirmatory post-marketing trial does not verify clinical benefit, or if it does not comply with rigorous post-marketing requirements, the FDA may seek to withdraw the approval.

Xynomic currently plans to seek U.S. approval for its lead drug candidate, abexinostat, through the FDA’s Accelerated Approval Program. For any approval to market a drug product, Xynomic must provide the FDA and foreign regulatory agencies with clinical data that adequately demonstrate the safety and efficacy of the product for the indication applied for in the NDA or other respective regulatory filings. As described in the section titled “Information about Xynomic—United States Regulation”, the Accelerated Approval Program is one of several approaches used by the FDA to make prescription drugs more rapidly available for the treatment of serious or life-threatening diseases. Section 506(c) of the Federal Food, Drug and Cosmetic Act, or the “ FFDCA ,” provides that the FDA may grant accelerated approval to “a product for a serious or life-threatening condition upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.” Approval under the Accelerated Approval Program is subject, however, to the requirement that the applicant conduct additional post-marketing clinical trials to verify and describe the drug’s clinical benefit, where there is uncertainty as to the relationship of the surrogate endpoint to the clinical benefit, or of the observed clinical endpoint to ultimate outcome. Typically, clinical benefit is verified when post-marketing clinical trials show that the drug provides a clinically meaningful positive therapeutic effect, that is, an effect on how a patient feels, functions, or survives. The FDA may require that any confirmatory post-marketing trial be initiated or substantially underway prior to the submission of an application under the Accelerated Approval Program. And, if such confirmatory post-marketing trial fails to confirm the drug’s clinical profile or risks and benefits, the FDA may withdraw its approval of the drug.

The FDA has broad discretion with regard to approval under the Accelerated Approval Program, and even if Xynomic believes that the Accelerated Approval Program is appropriate for abexinostat, it cannot assure you that the FDA will ultimately agree. Furthermore, even if Xynomic does obtain approval under the Accelerated Approval Program, it may not experience a faster development process, review or approval compared to conventional FDA procedures.

Even if Xynomic receives approval for abexinostat under the Accelerated Approval Program, Xynomic will be subject to rigorous post-marketing requirements, including the completion of one or more confirmatory post-marketing trials to verify the clinical benefit of the product, and submission to the FDA of all promotional materials prior to their dissemination. The FDA could seek to withdraw an accelerated approval for multiple reasons, including if Xynomic fails to conduct any required confirmatory post-marketing trial with due diligence, a confirmatory post-marketing trial does not confirm the predicted clinical benefit, other evidence shows that the product is not safe or effective under the conditions of use, or Xynomic disseminates promotional materials that are found by the FDA to be false and misleading.

Any delay in obtaining, or inability to obtain, approval under the Accelerated Approval Program would delay or prevent commercialization of abexinostat and would materially adversely affect Xynomic’s business, financial condition, results of operations, cash flows, and prospects.

If Xynomic is unable to obtain NMPA approval for its drug candidates to be eligible for an expedited registration pathway as Category 1 drug candidates, the time and cost Xynomic would incur to obtain regulatory approvals may increase. Even if Xynomic receives such Category 1 designation, it may not lead to a faster development, review or approval process.

The NMPA categorizes domestically-manufactured innovative drug applications as Category 1, provided such drug has a new and clearly defined structure, pharmacological property and apparent clinical value and has not been marketed anywhere in the world. Domestically developed and manufactured innovative drugs will be attributed to Category 1 for their CTA and NDA applications. Xynomic’s clinical stage drug candidates are eligible for Category 1 designation. A Category 1 designation by the NMPA may not be granted for any of its drug candidates or may not lead to faster development or regulatory review or approval process. Moreover, a Category 1 designation does not increase the likelihood that its drug candidates will receive regulatory approval.

The regulatory process in China is evolving and subject to change. Any future policies, or changes to current polices, that the NMPA approves might require Xynomic to change its planned clinical study design or otherwise spend additional resources and effort to obtain approval of its drug candidates. In addition, policy changes may contain significant limitations related to use restrictions for certain age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If Xynomic is unable to obtain regulatory approval for its drug candidates in one or more jurisdictions, or any approval contains significant limitations, Xynomic may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of its drug candidates or any other drug candidate that Xynomic may in-license, acquire or develop in the future.

The research and development projects under its internal discovery programs are at an early stage of development. As a result, Xynomic is unable to predict if or when Xynomic will successfully develop or commercialize any drug candidates under such programs.

Xynomic’s internal discovery programs are at an early stage of development and will require significant investment and regulatory approvals prior to commercialization. Xynomic currently has no drug candidates beyond pre-clinical trials under its internal discovery programs. Each of its drug candidates will require additional clinical and pre-clinical development, management of clinical, pre-clinical and manufacturing activities, obtaining regulatory approval, obtaining manufacturing supply, building of a commercial organization, substantial investment, and significant marketing efforts before they generate any revenue from product sales. Xynomic is not permitted to market or promote any of its drug candidates before Xynomic’s receive regulatory approval from the FDA, NMPA, or comparable regulatory authorities, and Xynomic may never receive such regulatory approval for any such drug candidates.

Xynomic cannot be certain that clinical development of any drug candidates from its internal discovery programs will be successful or that Xynomic will obtain regulatory approval or be able to successfully commercialize any of its drug candidates and generate revenue. Success in pre-clinical testing does not ensure that clinical trials will be successful, and the clinical trial process may fail to demonstrate that its drug candidates are safe and effective for their proposed uses. Any such failure could cause Xynomic to abandon further development of any one or more of its drug candidates and may delay development of other drug candidates. Any delay in, or termination of, its clinical trials will delay and possibly preclude the filing of any NDAs, with the FDA, NMPA, or comparable regulatory authorities and, ultimately, its ability to commercialize its drug candidates and generate product revenue.

If Xynomic encounters difficulties enrolling patients in its clinical trials, its clinical development activities could be delayed or otherwise adversely affected.

Xynomic commenced three clinical trials involving abexinostat and timely completion of those clinical trials in accordance with their protocols depends, among other things, on its ability to enroll a sufficient number of patients who meet the trial criteria and remain in the trial until its conclusion. Xynomic may experience difficulties enrolling and retaining appropriate patients in its clinical trials for a variety of reasons, including but not limited to:

Even if Xynomic is able to enroll a sufficient number of patients in its clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect its ability to advance the development of Xynomic’s drug candidates.

Xynomic has limited experience in conducting clinical trials and results of earlier studies and trials may not be reproduced in future clinical trials.

For Xynomic’s drug candidates, clinical testing is expensive and can take many years to complete, while failure can occur at any time during the clinical trial process. The results of studies in animals and early clinical trials of its drug candidates may not predict the results of later-stage clinical trials. Drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through studies in animals and initial clinical trials. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same drug candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations (including genetic differences), patient adherence to the dosing regimen and the patient dropout rate. Results in later trials may also differ from earlier trials due to a larger number of clinical trial sites and additional countries and languages involved in such trials. In addition, the design of a clinical trial can determine whether its results will support approval of a drug candidate, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced and significant expense has been incurred.

A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials due to lack of demonstrated efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Clinical trials of potential products often reveal that it is not practical or feasible to continue development efforts. Furthermore, if the trials Xynomic conducts fail to meet their primary statistical and clinical endpoints, they will not support the approval from the FDA, NMPA, EMA or other comparable regulatory authorities for its drug candidates. If this occurs, Xynomic would need to replace the failed study with new trials, which would require significant additional expense, cause substantial delays in commercialization and materially adversely affect Xynomic’s business, financial condition, cash flows and results of operations.

Results from completed human clinical trials may not be representative of the results that are obtained after approval, if obtained, and product launch.

Human clinical trials are very complicated undertakings. If Xynomic obtains FDA approval under the Accelerated Approval Program, safety risks not identified in Xynomic’s prior clinical trials may first appear after it obtains approval and commercializes its drug candidates. Any new post-marketing AEs may significantly impact Xynomic’s ability to market its drug candidates and may require that Xynomic recall and discontinue commercialization of its drug candidates. Furthermore, if any confirmatory post-marketing trial fails to confirm a drug candidate’s clinical profile or clinical benefits, the FDA may withdraw its approval. Any of these events would materially harm Xynomic’s business.

Xynomic’s drug candidates may cause undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any.

Undesirable side effects caused by Xynomic’s drug candidates could cause it to interrupt, delay, or halt clinical trials or could cause regulatory authorities to interrupt, delay, or halt its clinical trials or could result in a more restrictive label or the delay or denial of regulatory approval by the NMPA, FDA, or other regulatory authorities. In particular, as is the case with all oncology drugs, it is likely that there may be side effects, such as fatigue, nausea, and low blood cell levels, associated with the use of certain of Xynomic’s oncology drug candidates. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm Xynomic’s business, financial condition, and prospects significantly.

Clinical trials assess a sample of the potential patient population. With a limited number of patients and duration of exposure, rare and severe side effects of Xynomic’s drug candidates may only be uncovered with a significantly larger number of patients exposed to the drug candidate. If Xynomic’s drug candidates receive regulatory approval and Xynomic, its partners, or others identify undesirable side effects caused by such drug candidates (or any other similar drugs) after such approval, a number of potentially significant negative consequences could result, including:

Any of these events could prevent Xynomic from achieving or maintaining market acceptance of the affected drug candidates and could substantially increase the costs of commercializing its drug candidates, if approved, and significantly impact its ability to successfully commercialize its drug candidates and generate revenue.

Xynomic’s clinical development program may not uncover all possible AEs that patients may experience. The number of subjects exposed to its drug candidates and the average exposure time in the clinical development program may be inadequate to detect AEs, or chance findings, that may only be detected once Xynomic’s drug candidates are administered to more patients and for greater periods of time.

Clinical trials by their nature utilize a sample of the potential patient population. With a limited number of subjects and limited duration of exposure, however, Xynomic cannot be fully assured that any of its drug candidates has no serious or severe side effects, and any such side effects may only be uncovered with a significantly larger number of patients exposed to the drug candidate. It is possible that ongoing and future clinical trials, as well as reports received from commercial use, if any of its drug candidates are approved, may identify safety concerns.

Although Xynomic has monitored the subjects in its trials for certain safety concerns and it has not seen evidence of significant safety concerns in its clinical trials to date, patients treated with any of its drug candidates may experience adverse reactions. If safety problems occur or are identified after a product candidate reaches the market, the FDA may require that Xynomic amend the labeling or conduct recall. The FDA could also request that Xynomic withdraw a product form the market, or seek to withdraw its approval of a product.

The incidence and prevalence for target patient populations of Xynomic’s drug candidates are based on estimates and third-party sources. If the market opportunities for Xynomic’s drug candidates are smaller than it estimates or if any approval that Xynomic obtains is based on a narrower definition of the patient population, its revenue and ability to achieve profitability might be materially and adversely affected.

Periodically, Xynomic make estimates regarding the incidence and prevalence of target patient populations for particular diseases based on various third-party sources and internally generated analysis and use such estimates in making decisions regarding its drug development strategy, including acquiring or in-licensing drug candidates and determining indications on which to focus in pre-clinical or clinical trials.

These estimates may be inaccurate or based on imprecise data. The total addressable market opportunity for abexinostat and Xynomic’s other drug candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of Xynomic’s drug candidates, acceptance by the medical community and patient access, drug pricing and reimbursement. The number of patients in the major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with Xynomic’s drugs, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect Xynomic’s business, results of operations, and prospects.

Xynomic faces substantial competition, which may result in its competitors discovering, developing, or commercializing drugs before or more successfully than Xynomic does, or develop therapies that are more advanced or effective than those of Xynomic.

The development and commercialization of new drugs are highly competitive. Xynomic faces competition with respect to its current drug candidates, and will face competition with respect to any drug candidates that it may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies worldwide. For example, there are a number of large pharmaceutical and biotechnology companies that are currently marketing drugs or are pursuing the development of therapies in the field of HDAC inhibition to treat cancer. Some of these competitive drugs and therapies are based on scientific approaches that are the same as or similar to that of Xynomic’s drug 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.

Specifically, there are a large number of companies developing or marketing treatments for cancer. If abexinostat receives marketing approval for renal cell carcinoma (“ RCC ”), follicular lymphoma (“ FL ”), and/or diffuse large B-cell lymphoma (“ DLBCL ”), it may face competition from approved drugs marketed by Bayer AG, Bristol-Myers Squibb Company, Gilead Sciences, Inc., Merck & Co., Inc., Novartis AG, and Pfizer Inc. If XP-102 receives marketing approval for patients with colorectal cancer or melanoma, it will face competition from Merck & Co., Inc., Novartis AG, Roche AG, and potentially other companies.

Many of the companies against which Xynomic is competing or against which it may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved drugs than Xynomic. Mergers and acquisitions in the pharmaceutical, biotechnology, and diagnostic industries may result in even more resources being concentrated among a smaller number of its competitors. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with Xynomic in recruiting and retaining qualified scientific and management personnel and in establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, its programs.

Xynomic’s commercial opportunities could be reduced or eliminated if its competitors develop and commercialize drugs that are safer, more effective, with fewer or less severe side effects, more convenient, or less expensive than drugs that it may develop. Xynomic’s competitors also may obtain FDA, NMPA or other regulatory approval for their drugs more rapidly than it may obtain approval for its drugs, which could result in Xynomic’s competitors establishing a strong market position before Xynomic is able to enter the market. Additionally, technologies developed by its competitors may render its potential drug candidates uneconomical or obsolete, and Xynomic may not be successful in marketing its drug candidates against competitors.

Even if its drug candidates obtain regulatory approval, they may never achieve market acceptance or commercial success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, health care payors, and the medical community.

Even if Xynomic obtains FDA or other regulatory approvals, its drug candidates may not achieve market acceptance among physicians, patients, patient advocacy groups, health care payors, or the medical community, and may not be commercially successful. If approved, market acceptance of its drug candidates depends on a number of factors, including:

Any failure by Xynomic’s drug candidates, if they obtain regulatory approval, to achieve market acceptance or commercial success would adversely affect Xynomic’s results of operations.

If any of Xynomic’s drug candidates are approved for marketing and commercialization and Xynomic is unable to develop sales, marketing and distribution capabilities on its own or enter into agreements with third parties to perform these functions on acceptable terms, Xynomic will be unable to successfully commercialize any such future therapeutics.

Xynomic currently has no sales, marketing, or distribution capabilities or experience. In order to commercialize its drug candidates, if approved, Xynomic must build marketing and sales capabilities or make arrangements with third parties to perform these services, and it may not be successful in doing so. Building the requisite sales, marketing or distribution capabilities will be expensive and time-consuming and will require significant attention of Xynomic’s leadership team to manage. Any failure or delay in the development of Xynomic’s sales, marketing or distribution capabilities would adversely impact the commercialization of its products. The competition for talented individuals experienced in selling and marketing pharmaceutical products is intense, and Xynomic cannot assure you that it can assemble an effective team. Additionally, Xynomic may choose to collaborate, either globally or on a territory-by-territory basis, with third parties on the commercialization of its drug candidates. If it is unable to enter into such arrangements on acceptable terms or at all, Xynomic may not be able to successfully commercialize its drug candidates if and when it receives regulatory approval or any such commercialization may experience delays or limitations.

Xynomic may be subject to additional risks related to operating in foreign countries either itself or through a third-party, including:

If Xynomic fails to obtain and sustain an adequate level of coverage and reimbursement for its drug candidates by third-party payors, sales would be adversely affected.

Xynomic expects patients who have cancer to need chronic treatment but it anticipates that most patients will rely on coverage and reimbursement by a third-party payor, such as Medicare, Medicaid or a private health insurer, to pay for such treatment. There will be no commercially viable market for Xynomic’s drug candidates without coverage and reimbursement from third-party payors. Additionally, even if Xynomic obtains third-party payor coverage and reimbursement for its drug candidates, if the level of coverage and reimbursement is below Xynomic’s expectations, its revenue and gross margins will be adversely affected.

Obtaining coverage and reimbursement approval for a product from a government or other third-party payor can be an expensive and time-consuming process that could require Xynomic to provide supporting scientific, clinical and cost effectiveness data for the use of its products to the payor. Xynomic cannot be certain if and when it will obtain formulary approval to allow it to sell its drug candidates, if approved, into its target markets. Even if Xynomic does obtain formulary approval, third-party payors, carefully review and increasingly question the coverage of, and challenge the prices charged for, drugs. Reimbursement rates from third-party payors vary depending on the payor, the insurance plan and other factors. A current trend in the United States health care industry is toward cost containment. Large public and private payors, managed care organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding the use of, and reimbursement levels for, particular treatments. Such third-party payors, including Medicare, are questioning the coverage of, and challenging the prices charged for medical products and services, and many third-party payors limit coverage of, or reimbursement for, newly approved health care products.

In addition, there may be significant delays in obtaining such coverage and reimbursement for newly approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers Xynomic’s costs, including research, development, intellectual property, manufacture, sale and distribution expenses.

Xynomic cannot be sure that reimbursement will be available for its drug candidates and, if coverage and reimbursement are available, what the level of reimbursement will be. Xynomic’s inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that it develops could have a material adverse effect on its operating results, its ability to raise capital needed to commercialize products and its overall financial condition.

Reimbursement may impact the demand for, and the price of, Xynomic’s drug candidates, if approved. Assuming Xynomic obtains coverage for its drug candidates by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with those medications. Patients are unlikely to use Xynomic’s drug candidates unless coverage is provided and reimbursement is adequate to cover all or a significant portion of the cost of such drug candidates. Therefore, coverage and adequate reimbursement is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new products when more established or lower cost therapeutic alternatives are already available or subsequently become available.

Outside the United States, international operations are generally subject to extensive governmental price controls and market regulations, and Xynomic believes the increasing emphasis on cost-containment initiatives in Europe, Canada, China and other countries will put pressure on the pricing and usage of its drug candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that Xynomic is able to charge for its drug candidates, if approved. Accordingly, in markets outside the United States, the reimbursement for Xynomic’s drug candidates compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

Xynomic’s future success depends on its ability to retain key executives and to attract, retain, and motivate qualified personnel.  

Xynomic is highly dependent on the research, clinical and business development expertise of Yinglin Mark Xu, its Chairman, Chief Executive Officer, and President; Wentao Jason Wu, its Chief Operating Officer; Yong Cui, its Vice President of Chemistry, Manufacturing, and Controls; as well as the other principal members of its management, scientific, and clinical team. Xynomic has not entered into employment letter agreements with all of its executive officers. Under the employment letter agreements it has entered with its executive officers, any of them may terminate his or her employment with it at any time. Xynomic does not maintain key person insurance for any of its executives or other employees. In addition, Xynomic relies on consultants and advisors, including scientific and clinical advisors, to assist it in formulating its research, development, and commercialization strategy. Xynomic’s consultants and advisors may have commitments under consulting or advisory contracts with other entities that may limit their availability to Xynomic. If Xynomic is unable to continue to attract and retain high-quality personnel, its ability to pursue its growth strategy will be limited. While Xynomic is working on rectifying its failure to put proper employment arrangements in place in the past for certain senior management positions, it is uncertain that such failure could be retroactively rectified completely.

Recruiting and retaining qualified management, scientific, clinical, manufacturing, and sales and marketing personnel will also be critical to Xynomic’s success. The loss of the services of its executive officers or other key employees could impede the achievement of Xynomic’s research, development, and commercialization objectives and seriously harm its ability to successfully implement its business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in Xynomic’s industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of, and commercialize drugs. Competition to hire from this limited pool is intense, and Xynomic may be unable to hire, train, retain, or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. Xynomic also experiences competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, even though Dr. James Jiayuan Tong, the current Bison Chief Executive Officer, will remain as a Chief Strategy Officer at the combined entity, Xynomic’s management will be required to devote significant time to new compliance initiatives from its status as a U.S. public company, which may require it to recruit more management personnel. Failure to succeed in clinical trials may make it more challenging to recruit and retain qualified scientific personnel.  

Xynomic will need to develop and expand its business, and Xynomic may encounter difficulties in managing this development and expansion, which could disrupt its operations.

As of March 28, 2019, there were 25 full-time and 10 part-time employees and consultants in Xynomic’s total staff headcount of 35, and in connection with becoming a public company, it expects to increase its number of employees and the scope of its operations. To manage its anticipated development and expansion, Xynomic must continue to implement and improve its managerial, operational, and financial systems, expand its facilities and continue to recruit and train additional qualified personnel. Also, Xynomic’s management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these development activities. Due to its limited resources, Xynomic may not be able to effectively manage the expansion of its operations or recruit and train additional qualified personnel. If Xynomic’s management is unable to effectively manage its expected development and expansion, Xynomic’s expenses may increase more than expected, its ability to generate or increase its revenue could be reduced and Xynomic may not be able to implement its business strategy. Xynomic’s future financial performance and its ability to commercialize its drug candidates, if approved, and compete effectively will depend, in part, on its ability to effectively manage the future development and expansion of its company.  

Product liability claims or lawsuits could cause Xynomic to incur substantial liabilities.  

Xynomic will face an inherent risk of product liability exposure related to the testing of its drug candidates in human clinical trials and will face an even greater risk if it commercially sells any drug candidates that it may develop. If Xynomic cannot successfully defend itself against claims that its drug candidates caused injuries, Xynomic could incur substantial liabilities. 

Although Xynomic maintains product liability insurance coverage, it may not be adequate to cover all liabilities that it may incur. Insurance coverage is increasingly expensive. Xynomic may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.  

Our Proposed Amended and Restated Charter provides for an exclusive forum for any derivative action or proceeding brought on our behalf, which may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for such disputes and may discourage lawsuits with respect to such claims. 

Our amended and restated certificate of incorporation that will become effective upon the Closing specifies that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees or agents to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or amended and restated bylaws; or (iv) any action asserting a claim against us governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or rules and regulations thereunder. We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, these provisions may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our restated certificate of incorporation to be inapplicable or unenforceable in such action.

Xynomic’s internal IT systems, or those of Xynomic’s third-party CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of its drug candidates’ development programs.

Despite the implementation of security measures, Xynomic’s internal IT systems and those of its third-party CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. While Xynomic has not experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in its operations, it could result in a material disruption of Xynomic’s programs. For example, the loss of clinical trial data for its drug candidates could result in delays in Xynomic’s regulatory approval efforts and significantly increase Xynomic’s costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to its data or applications or other data or applications relating to its technology or drug candidates, or inappropriate disclosure of confidential or proprietary information, including health information collected through clinical trials, Xynomic could incur liabilities and the further development of its drug candidates could be delayed.

Risks Related to Government Regulation

The regulatory approval process is highly uncertain and Xynomic may not obtain approval under the Accelerated Approval Program or the conventional pathway, as required for the commercialization.

The research, testing, manufacturing, labeling, approval, selling, import, export, pricing and reimbursement, marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory agencies in the United States and other countries, which regulations differ from country to country. Neither Xynomic nor any future collaboration partner is permitted to market a drug product in the United States until it receives approval of an NDA from the FDA. Xynomic has not submitted an application or obtained marketing approval for any drug candidate anywhere in the world. Obtaining regulatory approval of an NDA, even under the Accelerated Approval Program, can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions or other actions, including:

Prior to obtaining approval to commercialize a drug candidate in the United States or abroad, Xynomic or its collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or other foreign regulatory agencies, that such drug candidates are safe and effective for their intended uses. The number of nonclinical and clinical studies and trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable to any particular drug candidate. Xynomic may seek approval for one or more drug candidates under the FDA’s Accelerated Approval Program, which would allow it to demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, but it will be subject to rigorous post-marketing requirements, including the completion of one or more confirmatory post-marketing trials to verify the clinical benefit of the product candidate. If unable to obtain approval under the Accelerated Approval Program, Xynomic will have to pursue a conventional approval pathway. In addition, in such case, the FDA could determine that any pivotal Phase 3 clinical trials Xynomic has conducted are not sufficient to support approval under the conventional pathway. Results from nonclinical and clinical trials and studies can be interpreted in different ways. Even if Xynomic believes the nonclinical or clinical data for its drug candidate is promising, such data may not be sufficient to support approval by the FDA and other regulatory agencies. Administering drug candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials and result in the FDA or other regulatory agencies denying approval of a drug candidate for any or all targeted indications.

Both accelerated and conventional regulatory approval pathways of an NDA or NDA supplement are not guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial discretion in the approval process and Xynomic may encounter matters with the FDA that require it to expend additional time and resources and delay or prevent the approval of its drug candidates. For example, the FDA may require Xynomic to conduct additional studies or trials either prior to approval or post-marketing, such as additional drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of Xynomic’s clinical development program such as the number of subjects enrolled in its current clinical trials from the United States. Despite the time and expense exerted, failure can occur at any stage. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including, but not limited to, the following:

If Xynomic fails to demonstrate safety and efficacy in clinical trials or do not gain regulatory approval, its business and results of operations will be materially and adversely harmed. Additionally, if the FDA requires that Xynomic conduct additional clinical trials, places limitations on product use in its FDA-approved labeling, delays approval to market or limits the use of any drug candidate, Xynomic’s business and results of operations may be harmed.

Xynomic is conducting and may in the future conduct clinical trials for its drug candidates outside the United States and the FDA may not accept data from such trials.

Although the FDA may accept data from clinical trials conducted outside the United States in support of safety and efficacy claims, this is subject to certain conditions. For example, such foreign clinical trials should be conducted in accordance with GCPs, including review and approval by an independent ethics committee and obtaining the informed consent from subjects of the clinical trials. The foreign clinical data should also be applicable to the U.S. population and U.S. medical practice. Other factors that may affect the acceptance of foreign clinical data include differences in clinical conditions, study populations or regulatory requirements between the United States and the foreign country. To the extent that Xynomic has conducted, is conducting, and will conduct trials with majority enrollment outside the United States, the FDA may not accept its foreign clinical data, and in such event, Xynomic may be required to re-conduct the relevant clinical trials within the United States, which would be costly and time-consuming, and which could have a material and adverse effect on its ability to carry out its business plans.

Even if Xynomic receives regulatory approval for any of its drug candidates, Xynomic will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, Xynomic’s drug candidates, if approved, could be subject to labeling and other restrictions and market withdrawal, and Xynomic may be subject to penalties if it fails to comply with regulatory requirements or experiences unanticipated problems.

Even if a drug is approved by the FDA and/or foreign regulatory agencies, regulatory agencies may still impose significant restrictions on a product’s indicated uses or marketing or impose various ongoing requirements. Furthermore, any new legislation addressing drug safety issues could result in delays or increased costs to assure compliance. In addition, if a drug receives approval under the FDA’s Accelerated Approval Program, it will be subject to special post-marketing requirements, including the completion of confirmatory post-marketing clinical trials to verify the clinical benefit of the product, and submission to the FDA of all promotional materials prior to their dissemination. The FDA could seek to withdraw the approval for multiple reasons, including if we fail to conduct any required confirmatory post-marketing trial with due diligence, a confirmatory post-marketing trial does not confirm the predicted clinical benefit, other evidence shows that the product is not safe or effective under the conditions of use, or we disseminate promotional materials that are found by the FDA to be false and misleading.

If any of Xynomic’s drug candidates receives approval under the Accelerated Approval Program, it will be subject to ongoing regulatory requirements for conducting post-marketing clinical studies and trials, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information, including both federal and state requirements in the United States. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to the current Good Manufacturing Practices, or “ cGMP ”. As such, Xynomic and its contract manufacturers are subject to continual review and periodic inspections to assess compliance with cGMP. Accordingly, Xynomic must conduct the confirmatory post-marketing trial in a diligent manner and we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control. We will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not promote any product, if approved, for indications or uses for which it does not have FDA approval.

If any of our product candidates receives approval under the Accelerated Approval Program but we fail to conduct the required confirmatory post-marketing trials with due diligence or such post-marketing trials fail to confirm the clinical profile or risks and benefits, the FDA may withdraw its approval. If a regulatory agency discovers previously unknown problems with a product, if approved, such as AEs of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing, or labeling of a product, the regulatory agency may impose restrictions on the product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenues. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected. Additionally, if we are unable to generate revenues from the sale of any of product candidates, if approved, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased.

The regulatory requirements and policies may change, and additional government regulations may be enacted for which we may also be required to comply. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries. If we or any future collaboration partner are not able to maintain regulatory compliance, we or such collaboration partner, as applicable, may face government enforcement action and our business will suffer.

Xynomic may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act, or FCPA, and Chinese anti-corruption laws, and any determination that Xynomic has violated these laws could have a material adverse effect on its business or its reputation.

Xynomic is subject to the FCPA. The FCPA generally prohibits it from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Xynomic is also subject to the anti-bribery laws of other jurisdictions, particularly China. As its business expands, the applicability of the FCPA and other anti-bribery laws to its operations will increase. Its procedures and controls to monitor anti-bribery compliance may fail to protect the combined company from reckless or criminal acts committed by its employees or agents. If Xynomic, due to either its own deliberate or inadvertent acts or those of others, fails to comply with applicable anti-bribery laws, its reputation could be harmed and Xynomic could incur criminal or civil penalties, other sanctions and/or significant expenses, which could have a material adverse effect on its business, including its financial condition, results of operations, cash flows and prospects.

Xynomic’s business may be affected by litigation and government investigations.

Xynomic may from time to time receive inquiries and subpoenas and other types of information requests from government authorities and others and it may become subject to claims and other actions related to its business activities. While the ultimate outcome of investigations, inquiries, information requests and legal proceedings is difficult to predict, defense of litigation claims can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of Xynomic’s business practices, costs and significant payments, any of which could have a material adverse effect on its business, financial condition, results of operations and prospects.

If Xynomic or its current or future collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, Xynomic or they could be subject to enforcement actions, which could affect Xynomic’s ability to develop, market and sell its therapeutics and may harm its reputation.

Although Xynomic does not currently have any products on the market, once its therapeutic candidates or clinical trials are covered by federal health care programs, Xynomic will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal, state and foreign governments of the jurisdictions in which Xynomic conduct its business. Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any therapeutic candidates for which Xynomic obtains marketing approval. Xynomic’s arrangements with third-party payors and customers may expose it to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Xynomic would market, sell or distribute its therapeutic candidates for which Xynomic obtains marketing approval. Restrictions under applicable federal and state healthcare laws and regulations, include, but are not limited to, the following:

Ensuring that Xynomic’s future business arrangements with third-parties comply with applicable healthcare laws and regulations could involve substantial costs. If its operations are found to be in violation of any such requirements, Xynomic may be subject to penalties, including civil or criminal penalties, monetary damages, the curtailment or restructuring of its operations, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely affect its financial results. Although an effective compliance program can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against Xynomic for an alleged or suspected violation could cause it to incur significant legal expenses and could divert Xynomic’s management’s attention from the operation of its business, even if its defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to Xynomic in terms of money, time and resources.

If Xynomic or its current or future collaborators, manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, Xynomic could be subject to enforcement actions, which could affect its ability to develop, market and sell its therapeutics successfully and could harm its reputation and lead to reduced acceptance of its therapeutics by the market. These enforcement actions include, among others:

The healthcare industry is heavily regulated in the U.S. at the federal, state, and local levels, and Xynomic’s failure to comply with applicable requirements may subject it to penalties and negatively affect its financial condition.

As a healthcare company, Xynomic’s operations, clinical trial activities and interactions with healthcare providers may be subject to extensive regulation in the U.S., particularly if the company receives FDA approval for any of its therapeutics in the future. For example, if Xynomic receives FDA approval for a therapeutic for which reimbursement is available under a federal healthcare program (e.g., Medicare, Medicaid), it would be subject to a variety of federal laws and regulations, including those that prohibit the filing of false or improper claims for payment by federal healthcare programs (e.g., the False Claims Act), prohibit unlawful inducements for the referral of business reimbursable by federal healthcare programs (e.g., the federal Anti-Kickback Statute), and require disclosure of certain payments or other transfers of value made to U.S.-licensed physicians and teaching hospitals, or Open Payments. Xynomic is not able to predict how third parties will interpret these laws and apply applicable governmental guidance and may challenge its practices and activities under one or more of these laws. If Xynomic’s past or present operations are found to be in violation of any of these laws, it could be subject to civil and criminal penalties, which could hurt Xynomic’s business, its operations and financial condition.