There is no assurance that all potentially
relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent
from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our product
candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed,
found unenforceable or invalidated, which could allow third parties to commercialize our technology or products and compete directly
with us, without payment to us, or result in our or our collaboration partners’ inability to manufacture or commercialize
products without infringing third party patent rights. Furthermore, even if they are unchallenged, our patents and patent applications
may not adequately protect our intellectual property, provide exclusivity for our product candidates, prevent others from designing
around our claims or provide us with a competitive advantage. Any of these outcomes could impair our ability to prevent competition
from third parties, which may have a material adverse effect on our business.
We may be subject to claims challenging the
inventorship of our patents and other intellectual property.
We may be subject to claims that former
employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or
co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are
involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging
inventorship or our ownership of our patents or other intellectual property. If we fail in defending any such claims, in addition
to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or the right to
use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful
in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Patent policy and rule changes could increase
the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued
patents, thereby impairing our ability to protect our technologies and products.
Changes in either the patent laws or interpretation
of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications
and the enforcement or defense of issued patents. Assuming the other requirements for patentability are met, in the United States
prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, while outside the United States, the
first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act,
or the Leahy-Smith Act, enacted on September 16, 2011, the United States has moved to a first-to-file system. Under a first-to-file
system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will
be entitled to the patent on an invention regardless of whether a third party was the first to invent the invention. The Leahy-Smith
Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect
patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional
procedures to attack the validity of a patent by the USPTO administered post grant proceedings, including reexamination proceedings,
inter partes review, post-grant review and derivation proceedings. The effects of these changes on the operation of our
business are currently unclear as, among other reasons, the USPTO must still implement various regulations and courts must interpret
these changes. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution
of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect
on our business, financial condition, results of operations and prospects.
In addition, the patent positions of companies
in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. Recent U.S. Supreme Court
rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners
in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents,
once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing
patents could change in unpredictable ways that could have a material adverse effect on our existing patent portfolio and our ability
to protect and enforce our intellectual property in the future.
If we are unable to maintain effective proprietary
rights for our technologies, product candidates or any future product candidates, we may not be able to compete effectively in