tm2036619-1_f4 - none - 68.1549608s
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As filed with the Securities and Exchange Commission on November 25, 2020
Registration No. 333-        
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
4D pharma plc
(Exact Name of Each Registrant as Specified in its Charter)
England and Wales
(State or other jurisdiction of Incorporation or organization)
2834
(Primary standard industrial
classification code number)
Not applicable
(I.R.S. Employer
Identification Number)
5th Floor, 9 Bond Court
Leeds
LS1 2JZ
United Kingdom
Tel: +44 (0) 113 895 0130
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Cogency Global Inc.
10 East 40th Street, 10th Floor
New York, N.Y. 10016
+1(800)221-0102
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Steven V. Bernard
Bradley L. Finkelstein
Melissa Rick
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto,
California 94304-1050
(650) 493-9300
Charles Waddell
Pinsent Masons LLP
30 Crown Place
Earl Street
London EC2A 4ES
United Kingdom
+44(0) 20 7418 7000
Duncan Peyton
Chief Executive Officer
4D pharma plc
5th Floor, 9 Bond Court
Leeds
LS1 2JZ
United Kingdom
+44(0) 113 895 0130
Matthew Chen
Longevity
Acquisition Corporation
Yongda International Tower No. 2277
Longyang Road, Pudong
District, Shanghai
People’s Republic of China
(86) 21-60832028
Arila Zhou
John Wu
Hunter Taubman
Fischer & Li LLC
800 Third Avenue,
Suite 2800
New York,
New York 10022
(212) 530-0000
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the transactions contemplated by the Agreement and Plan of Merger described in the included proxy statement/prospectus have been satisfied or waived.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

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If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company   ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
Title Of Each Class Of Security To Be Registered
Amount To Be
Registered(1)
Proposed Maximum
Offering Price
Per Security(2)
Proposed Maximum
Aggregate
Offering Price(2)
Amount of
Registration
Fee
Ordinary Shares, nominal value £0.0025 per
share(3)(4)
31,055,000 $ 1.4539 $ 45,150,865 $ 4,926
(1)
Based on the maximum number of ordinary shares of 4D pharma plc (“4D Pharma”), nominal value £0.0025 per share estimated to be issued in connection with the closing of the business combination (the “Merger”) with Longevity Acquisition Corporation (“Longevity”). Pursuant to the Merger, each ordinary share, no par value, of Longevity will be exchanged for 7.5315 4D Pharma ordinary shares.
(2)
Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to the aggregate market value of the approximate number of ordinary shares of Longevity to be exchanged for ordinary shares of 4D Pharma in the Merger based upon a market value of $10.95 per ordinary share of Longevity, the average of the high and low sale prices per ordinary share of Longevity on The Nasdaq Capital Market on November 19, 2020.
(3)
Includes ordinary shares of 4D Pharma issuable (i) upon exchange of ordinary shares of Longevity, and (ii) upon conversion of rights issued by Longevity in its initial public offering, each right entitling the holder to receive one-tenth (1/10) of one ordinary share of Longevity (to be exchanged for ordinary shares of 4D Pharma) upon the closing of the Merger.
(4)
ADSs issuable upon deposit of the ordinary shares registered hereby are being registered pursuant to a separate registration statement on Form F-6 (File No. 333-           ).
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2020
LONGEVITY ACQUISITION
CORPORATION
Yongda International Tower No. 2277
Longyang Road, Pudong District, Shanghai
People’s Republic of China
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON            , 2020
TO THE SHAREHOLDERS OF LONGEVITY ACQUISITION CORPORATION:
You are cordially invited to attend the special meeting (the “Longevity Special Meeting”) of shareholders of Longevity Acquisition Corporation (“Longevity”) to be held at      a.m. Eastern Time on           , 2020 at the offices of Longevity’s counsel, Hunter Taubman Fischer & Li LLC, 800 Third Avenue, Suite 2800, New York, New York 10022.
At the Longevity Special Meeting, Longevity Shareholders will be asked to consider and vote upon a proposal, which is referred to as the “Longevity Merger Proposal,” to approve the plan of merger (the “BVI Plan of Merger”) between Longevity and Merger Sub pursuant to the terms of section 170 of the BVI Business Companies Act of 2004 (the “BVI Companies Act”) pursuant to the agreement and plan of merger, dated as of October 21, 2020 (the “Merger Agreement”), by and among Longevity, 4D pharma plc (“4D Pharma”), a public limited company incorporated under the laws of England and Wales, and Dolphin Merger Sub Limited (“Merger Sub”), a British Virgin Islands company limited by shares and a wholly-owned subsidiary of 4D Pharma, providing for, among other things, and subject to the conditions therein, the combination of Longevity and 4D Pharma pursuant to the proposed statutory merger of Longevity with and into Merger Sub, pursuant to the BVI Companies Act (the “BVI Companies Act”), with Merger Sub continuing as the surviving company and wholly-owned subsidiary of 4D Pharma (the “Merger”).
The Merger will become effective at such time on the Closing Date as the articles of merger containing the plan of the merger and such other information as is required by the BVI Companies Act (the “Articles of Merger”) and the resolution amending Merger Sub’s memorandum and articles of association and their amendment are registered by the registrar of corporate affairs of the British Virgin Islands or at such other time subsequent thereto, but not exceeding 30 days from such registration, as mutually agreed between 4D Pharma and Longevity and specified in the Articles of Merger (the “Effective Time”).
At the Effective Time, each of Longevity’s ordinary shares (the “Longevity Shares”) issued and outstanding prior to the Effective Time (excluding shares held by 4D Pharma and Longevity and dissenting shares, if any) will be automatically converted into the right to receive the Per Share Merger Consideration (as defined below), and each warrant to purchase Longevity Shares and right to receive Longevity Shares that is outstanding immediately prior to the Effective Time will be assumed by 4D Pharma and automatically converted into a warrant to purchase ordinary shares of 4D Pharma and a right to receive ordinary shares of 4D Pharma (the “4D Pharma Shares”), payable in 4D Pharma ADSs (as defined below), respectively.
Pursuant to the Merger Agreement, the merger consideration payable upon the Effective Time consists of the Per Share Merger Consideration. The “Per Share Merger Consideration” means the right to receive 7.5315 4D Pharma Shares for each Longevity Share issued and outstanding immediately prior to the Effective Time.
4D Pharma shall (i) issue 4D Pharma Shares equal to the Per Share Merger Consideration multiplied by the number of Longevity Shares registered in the name of Longevity’s shareholders (“Longevity Shareholders”) immediately prior to the Effective Time (the “Share Merger Consideration”) and (ii) issue to such Longevity Shareholders the number of American Depositary Shares of 4D Pharma (“4D Pharma ADSs”) equal to the Share Merger Consideration multiplied by the exchange rate ratio of one (1) 4D Pharma ADS for every eight (8) shares of Per Share Merger Consideration (the “Merger Consideration”).
 

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Consummation of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver by the respective parties of a number of conditions, including the approval of the Merger Agreement and the transactions contemplated thereby by Longevity Shareholders. Other closing conditions include, among others: (i) the respective representations of the parties to each other being true and correct, except as would not have a material adverse effect; (ii) performance and compliance within all material respects of the respective covenants and agreements of each party; (iii) the execution of the Backstop Agreements (as defined below); (iv) Longevity having at least $11.8 million of net tangible assets and at least $14.6 million in cash, immediately prior to the Effective Time; (v) no material adverse effect with respect to 4D Pharma or Longevity having occurred since the date of the Merger Agreement; (vi) the approval for listing on Nasdaq (subject to official notice of issuance) of the 4D Pharma ADSs to be issued in connection with the Merger; and (vii) 4D Pharma’s board receiving authorization from its shareholders to (A) allot the Share Merger Consideration in accordance with section 551 of the U.K. Companies Act, via ordinary resolution requiring simple majority of votes cast at the meeting in person or by proxy, (B) dis-apply pre-emption rights in accordance with section 561 of the U.K. Companies Act, via special resolution requiring 75% of votes cast at the meeting in person or by proxy, and (C) amend 4D Pharma’s articles of association to provide for, inter alia, the creation of the 4D Pharma ADSs, via special resolution requiring 75% of votes cast at the meeting in person or by proxy (the “4D Pharma Shareholder Approvals”).
Whale Management Corporation, the sponsor (the “SPAC Sponsor”) of Longevity which holds approximately 47.6% of the issued and outstanding capital of Longevity, executed a voting and support agreement (“Sponsor Voting Agreement”) with 4D Pharma in favor of the Merger Agreement and transaction contemplated thereby.
It is anticipated that, upon closing of the Merger and prior to the issuance of shares as financial advisor fees and 4D Pharma Shares that may be issuable to the backstop investors after the closing of the Merger relating to exercise of existing Longevity warrants, Longevity Shareholders, including backstop investors in respect of Longevity Shares issued to them prior to closing of the Merger, are expected to own approximately 17.7%, and 4D Pharma existing shareholders immediately prior to the Effective Time are expected to own approximately 82.3%, of 4D Pharma. These percentages are calculated based on a number of assumptions (as described in the accompanying proxy statement/prospectus) and are subject to adjustment in accordance with the terms of the Merger Agreement. A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Appendix A.
Longevity Shareholders will also be asked to consider and vote upon the following proposals:
1)
The Longevity Merger Proposal — To approve the BVI Plan of Merger, the Merger Agreement and the Merger contemplated thereby.
2)
The Longevity Adjournment Proposal — To consider and vote upon a proposal to adjourn the Longevity Special Meeting to a later date or dates, if necessary to permit further solicitation and vote of proxies if it is determined by Longevity that more time is necessary or appropriate to approve one or more proposals presented at the Longevity Special Meeting. This proposal is referred to as the “Longevity Adjournment Proposal” and, together with the Longevity Merger Proposal, as the “Longevity Proposals.”
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which each Longevity Shareholder is encouraged to review carefully.
Longevity’s units, ordinary shares, rights, and warrants are currently listed on The Nasdaq Capital Market under the symbols “LOACU,” “LOAC,” “LOACR,” and “LOACW,” respectively. Longevity Shares will be delisted from The Nasdaq Capital Market upon the consummation of the Merger and will no longer be traded. 4D Pharma will apply to list the 4D Pharma ADSs on The Nasdaq Capital Market under the symbol “LBPS.” 4D Pharma ADSs received in exchange for Longevity Shares in the transaction will be freely transferable under United States federal securities laws.
Pursuant to the final prospectus filed with the Securities and Exchange Commission (Registration No. 333-226699) (the “Prospectus”) dated August 28, 2018, Longevity has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (collectively, with interest accrued from time to time
 

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thereon, the “Trust Fund”), for the benefit of Longevity’s public shareholders (individually a “Public Shareholder,” and collectively, the “Public Shareholders”) and Longevity may disburse monies from the Trust Fund only: (i) to the Public Shareholders if Longevity fails to consummate its initial business combination (as such term is used in the Prospectus) before May 29, 2021 (the “Outside Date”), (ii) to the Public Shareholders in the event that they elect to redeem their ordinary shares of Longevity in connection with the business combination, (iii) with respect to any interest income earned on the Trust Fund balance, to pay taxes payable, or (iv) to Longevity after or concurrently with the Closing. As of the Record Date, the amount of the Trust Fund was $      and the estimated redemption price was $      per share. On October 21, 2020, concurrently with the execution of the Merger Agreement, Longevity entered into certain Backstop Agreements (the “Backstop Agreements”) with 4D Pharma, the SPAC Sponsor and certain investors (the “Buyers”). Pursuant to the Backstop Agreements, the Buyers have committed to provide financial backing to Longevity immediately prior to the Effective Time, in the event of redemptions by Longevity Shareholders, in the aggregate amount of up to $14.6 million.
Pursuant to the amended and restated memorandum and articles of association of Longevity (the “Longevity Charter”), currently registered by the Registrar of Corporate Affairs in the British Virgin Islands, Longevity is providing its Public Shareholders with the opportunity to redeem, upon the closing of the Merger and other transaction contemplated under the Merger Agreement (the “Closing”), Longevity Shares then held by them for cash equal to the aggregate amount then on deposit in the Trust Account, including interest less taxes payable as permitted under the trust agreement, divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5 million upon the consummation of an initial business combination (which will be replaced by “prior to or upon the consummation of an initial business combination” by the interim charter). Furthermore, pursuant to the Merger Agreement, unless otherwise waived by 4D Pharma and Merger Sub, Longevity will not consummate the Merger unless Longevity has at least $11.8 million of net tangible assets and at least $14.6 million in cash, immediately prior to the Effective Time.
Longevity Public Shareholders may elect to redeem their public shares even if they vote for the Longevity Merger Proposal.
A Longevity Public Shareholder, together with any of his, her, or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her, or its shares or, if part of such a group, the group’s shares, of 20% or more of the outstanding Longevity Public Shares without Longevity’s prior written consent (the “20% threshold”). Holders of Longevity’s outstanding public warrants, rights, and units do not have redemption rights with respect to such securities in connection with the Merger. Holders of outstanding units must separate the underlying public shares, public rights, and public warrants prior to exercising Redemption Rights with respect to the Longevity Public Shares.
As the date hereof, the SPAC Sponsor owns approximately 47.6% of issued and outstanding Longevity Shares. Pursuant to the Sponsor Voting Agreement, the SPAC Sponsor has agreed to vote all of its Longevity Shares in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions and refrain from taking actions that would adversely affect the SPAC Sponsor’s ability to perform its obligations under the Sponsor Voting Agreement.
Longevity is providing this proxy statement/prospectus and accompanying proxy card to its shareholders in connection with the solicitation of proxies to be voted at the Longevity Special Meeting and at any adjournments or postponements of the Longevity Special Meeting. Regardless of whether you plan to attend the Longevity Special Meeting, Longevity urges you to read this proxy statement/prospectus carefully. Please pay particular attention to the section entitled “Risk Factors” commencing on page 38 of this proxy statement/prospectus.
After careful consideration, the Longevity Board has unanimously approved and adopted the Merger Agreement and unanimously recommends that Longevity Shareholders vote FOR adoption and approval of the Longevity Merger Proposal and FOR all other proposals presented to Longevity Shareholders in the accompanying proxy statement/prospectus. When you consider the board recommendation of these proposals,
 

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you should keep in mind that Longevity’s directors and officers have interests in the Merger that may conflict with your interests as a Longevity Shareholder. See “LONGEVITY PROPOSAL 1: THE MERGER — Interests of Directors and Officers of Longevity in the Merger.
Approval of the Longevity Merger Proposal and, if presented, the Longevity Adjournment Proposal requires the affirmative vote of a majority of the votes entitled to vote thereon which are cast by shareholders present in person or represented by proxy at the Longevity Special Meeting.
The boards of directors of Merger Sub and 4D Pharma have already approved the Merger and the Merger is subject to 4D Pharma obtaining the 4D Pharma Shareholder Approvals.
Each Redemption of Longevity Shares by Longevity Public Shareholders will (subject to the Backstop Agreements) decrease the amount in its Trust Account, which held $      of marketable securities at a redemption price of $      per share as of the Record Date.
Your vote is very important.   If you are a registered Longevity Shareholder, please vote your shares as soon as possible by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker, or other nominee, you will need to follow the instructions provided to you by your bank, broker, or other nominee to ensure that your shares are represented and voted at the Longevity Special Meeting. Once a valid quorum is established, a failure to vote your shares will have no effect on the outcome of any vote on the proposals to be considered at the Longevity Special Meeting. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the outcome of any vote on the proposals.
The transactions contemplated by the Merger Agreement will be consummated only if the Longevity Merger Proposal is approved at the Longevity Special Meeting. The Longevity Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the proxy statement/prospectus.
If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals described in the accompanying proxy statement/prospectus. If you fail to return your proxy card or fail to instruct your bank, broker, or other nominee how to vote, and do not attend the special meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and, if a quorum is present, will have no effect on the outcome of any vote on the proposals. If you are a shareholder of record and you attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person.
LONGEVITY PUBLIC SHAREHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST THE TRANSACTION IN ORDER TO REDEEM THEIR SHARES FOR CASH. THIS MEANS THAT LONGEVITY PUBLIC SHAREHOLDERS WHO HOLD PUBLIC SHARES OF LONGEVITY ACQUISITION CORPORATION ON OR BEFORE           (TWO (2) BUSINESS DAYS BEFORE THE LONGEVITY SPECIAL MEETING) MAY ELECT TO REDEEM THEIR SHARES WHETHER OR NOT THEY ARE HOLDERS AS OF THE RECORD DATE, AND WHETHER OR NOT THEY VOTE FOR THE LONGEVITY MERGER PROPOSAL. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO LONGEVITY’S TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE MERGER IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH AND ANY SHARE CERTIFICATES DELIVERED BY YOU TO LONGEVITY’S TRANSFER AGENT WILL BE RETURNED TO YOU. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
On behalf of the Longevity Board, the undersigned thanks you for your support and looks forward to the successful completion of the Merger.
Enclosed is the proxy statement/prospectus containing detailed information concerning the Longevity Merger Proposal, the Longevity Adjournment Proposal and the Longevity Special Meeting. Whether or not you plan to attend the Longevity Special Meeting, Longevity urges you to read this material carefully and vote your shares.
 

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Longevity looks forward to seeing you at the meeting.
           , 2020 By Order of the Longevity Board
/s/
Chairman of Longevity Board, Chief Financial Officer
Your vote is important. Please sign, date and return your proxy card as soon as possible to make sure that your shares are represented at the Longevity Special Meeting. If you are a Longevity Shareholder of record, you may also cast your vote in person at the Longevity Special Meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank how to vote your shares, or you may cast your vote in person at the Longevity Special Meeting by obtaining a proxy from your brokerage firm or bank.
Important Notice Regarding the Availability of Proxy Materials for the Longevity Special Meeting to be held on           , 2020: This notice of meeting, the accompanying proxy statement/prospectus and Longevity’s Annual Report on Form 10-K for the fiscal year ended February 29, 2020 are available at https://www.cstproxy.com/longevityacquisitioncorp/2020.
 

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The information in this proxy statement/prospectus is not complete and may be changed. Longevity Acquisition Corporation may not ask you to vote, and 4D Pharma may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where such offer, sale or solicitation is not permitted.
PRELIMINARY, SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2020
PROSPECTUS
[MISSING IMAGE: lg_4dlpharmaplc-4c.jpg]
4D PHARMA PLC
PROXY STATEMENT
[MISSING IMAGE: lg_longevity-4c.jpg]
LONGEVITY ACQUISITION CORPORATION
Neither the SEC nor any state securities commission has approved or disapproved of the merger or the securities to be issued in the merger or determined whether this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Please pay particular attention to the “Risk Factors” section beginning on page 38 of this proxy statement/prospectus.
This is not a prospectus made under the Prospectus Regulation (EU) 2019/1127 or Part VI of the United Kingdom Financial Services and Markets Act 2000 (as amended).
This proxy statement/prospectus is dated           , and is being first mailed to Longevity Shareholders on or about           .
REFERENCE TO ADDITIONAL INFORMATION
Longevity files annual, quarterly and other reports, proxy statements and other information with the SEC. 4D Pharma has filed a registration statement on Form F-4 with the SEC. You can obtain documents related to 4D Pharma and Longevity without charge, by requesting them in writing or by telephone from the appropriate company.
Yongda International Tower No. 2277
Longyang Road, Pudong District,
Shanghai People’s Republic of China
4D Pharma PLC
5th Floor, 9 Bond Court
Leeds, LS1 2JZ
United Kingdom
ir@4dpharmaplc.com
In order to receive timely delivery of requested documents in advance of the special meeting, you should make your request no later than           .
You may also obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov.
See “Where You Can Find More Information” beginning on page 270.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains or may contain “forward-looking statements” within the meaning of the Securities Act and the Exchange Act. Forward looking terms such as “may,” “will,” “could,” “should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “target,” “believe,” “estimate” or “expect” and other words, terms and phrases of similar nature are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are statements which are not historical fact and involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Such forward-looking statements may include, but are not limited to, statements related to:

the Merger and the expected timing and satisfaction of conditions precedent prior to the Closing Date, including among others, the approval of the Merger by shareholders of each Longevity and 4D Pharma, regulatory and governmental approvals and other customary closing conditions;

the impact of the Merger on 4D Pharma’s earnings, credit rating, market value and growth rate;

the expectation that 4D Pharma will become an SEC registrant and that 4D Pharma ADSs will be listed on the Nasdaq in connection with the Merger;

the future composition of 4D Pharma’s management team and directors and those of its subsidiaries;

the occurrence of a natural disaster, widespread health epidemic or pandemics, including the coronavirus (COVID-19) pandemic; and

the future growth opportunities, expected earnings, expected capital expenditures, future financing requirements and estimated future dividends or other distributions.
Forward-looking statements in this proxy statement/prospectus are based on current expectations and assumptions made by the management of 4D Pharma. Although the management of 4D Pharma believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements. We can give no assurance that they will prove to be correct. Additionally, forward-looking statements are subject to various risks and uncertainties which could cause actual results to differ materially from the anticipated results or expectations expressed in this proxy statement/prospectus. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements, or that could contribute to such differences, include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors.” Some of the key risks and uncertainties include statements related to, among others:

the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics and operating as an early clinical stage company;

4D Pharma’s ability to develop, initiate or complete preclinical studies and clinical trials for, obtain approvals for and commercialize any of its therapeutic candidates;

the timing, progress and results of preclinical studies and clinical trials for MRx0518, Blautix, Thetanix or MRx-4DP0004 or any other of 4D Pharma’s therapeutic candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work and the period during which the results of the trials will become available;

changes in 4D Pharma’s plans to develop and commercialize its therapeutic candidates;

the potential for clinical trials of MRx0518, Blautix, Thetanix or MRx-4DP0004 or any other of 4D Pharma’s therapeutic candidates to differ from preclinical, preliminary or expected results;

4D Pharma’s ability to enroll patients and volunteers in clinical trials, timely and successfully completion of those trials and receipt of necessary regulatory approvals;

4D Pharma’s ability to continue to manufacture sufficient quantity of its therapeutic candidates and to scale manufacturing to clinical-scale and small-to-mid -scale commercial supply; negative impacts of the COVID-19 pandemic on 4D Pharma’s operations, including clinical trials;
 
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the risk of the occurrence of any event, change or other circumstance that could give rise to the termination of the strategic collaboration agreement with the University of Texas MD Anderson Cancer Center or the research collaboration and option to license agreement with Merck Sharp & Dohme Corp.;

4D Pharma’s ability to raise any additional funding it will need to continue to pursue its business and product development plans;

regulatory developments in the United Kingdom, the United States and other countries;

4D Pharma’s reliance on third parties, including contract research organizations;

4D Pharma’s ability to claim UK Research and Development tax credits would impact on cash requirements;

4D Pharma’s ability to obtain and maintain intellectual property protection for its therapeutic candidates; and

competition in the industry in which 4D Pharma operates.
The forward-looking statements in this proxy statement/prospectus are qualified by the “Risk Factors” beginning on page 38. Each statement speaks only as of the date of this proxy statement/prospectus (or any earlier date indicated in this proxy statement/prospectus) and neither Longevity nor 4D Pharma undertakes any obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, unless required by law. Investors, potential investors and others should give careful consideration to these risks and uncertainties.
The foregoing list is not intended to be exhaustive, and there may be other key risks that are not listed above that are not presently known to us or that we currently deem immaterial. Should one or more of these or other risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by the forward-looking statements made by us contained in this proxy statement/prospectus. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this proxy statement/prospectus. The forward-looking statements contained in this proxy statement/prospectus are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon information available as of the date of this proxy statement/prospectus or other specified date and speak only as of such date. 4D Pharma disclaims any intention or obligation to update or revise any forward-looking statements in this proxy statement/prospectus as a result of new information or future events, except as may be required under applicable securities law.
Please see “Frequently Used Terms” for definitions of certain terms and references used in this proxy statement/prospectus.
 
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Financial Statements
The consolidated financial information presented in this proxy statement/prospectus has been derived from the following:
4D Pharma

4D Pharma’s unaudited interim consolidated financial statements as of June 30, 2020 and for the six months ended June 30, 2020 and 2019 and the related notes thereto, included in this proxy statement/prospectus; and

4D Pharma’s audited consolidated financial statements as of December 31, 2019 and 2018 and for the years then ended and the related notes thereto, included in this proxy statement/prospectus
The audited financial statements of 4D Pharma are prepared in accordance with GAAP (as defined below) and are presented in U.S. dollars. The unaudited interim consolidated financial statements of 4D Pharma are prepared in accordance with GAAP for interim financial information and in accordance with Article 10 of Regulation S-X of the SEC and are presented in U.S. dollars.
Longevity

Longevity’s unaudited interim condensed financial statements as of August 31, 2020 and for the three and six months ended August 31, 2020 and 2019 and the related notes thereto, included in this proxy statement/prospectus; and

Longevity’s audited financial statements as of February 29, 2020 and for the year ended February 29, 2020 and the related notes thereto, included in this proxy statement/prospectus.
The audited financial statements of Longevity are prepared in accordance with GAAP and are presented in U.S. dollars. The unaudited condensed interim financial statements of Longevity are prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC and are presented U.S. dollars.
Currencies and Exchange Rates
References in this proxy statement/prospectus to “USD,” “U.S. dollars,” “dollars,” “$” or “cents” are to the currency of the United States and references to “GBP,” “pounds sterling,” “pounds,” “£,” “pence” or “p” are to the currency of the United Kingdom. There are 100 pence to each pound.
In this proxy statement/prospectus, unless otherwise stated, pounds sterling have been translated into U.S. dollars at the noon buying rate in New York City for cable transfers in pounds sterling as certified for custom purposes by the Federal Reserve Bank of New York, on the date indicated. On      , the latest practicable date for which exchange rate information was available before the printing of this proxy statement/prospectus, the noon buying rate in New York City for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York was $      per £1.00 and the exchange rate reported on the Daily Official List of the London Stock Exchange was $      per £1.00. These translations should not be construed as a representation that the U.S. dollar amounts actually represent, or could be converted into, pounds sterling at the rates indicated.
The tables set forth below, for the periods and dates indicated, contain information concerning the noon buying rates for pounds sterling expressed in U.S. dollars per pound sterling.
High and low exchange rates of the U.S. dollars per pound sterling for each month during the previous six months:
 
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Month
High
Low
November (through November 24), 2020
1.3299 1.2904
October 2020
1.3143 1.2890
September 2020
1.3416 1.2706
August 2020
1.3375 1.3043
July 2020
1.3133 1.2469
June 2020
1.2758 1.2279
Average exchange rates of the U.S. dollars per pound sterling for the past five years:
Year
Average
Rate(1)
2019
1.2803
2018
1.3309
2017
1.3016
2016
1.3444
2015
1.5250
(1)
The average of the noon buying rates on the last day of each month during the period.
Rounding
We have made rounding adjustments to reach some of the figures included in this proxy statement/prospectus. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.
Market Data
We obtained market and competitive position data used throughout this proxy statement/prospectus from publicly available information and data providers, as well as internal surveys. We include data obtained from Globaldata Service (found at https://www.globaldata.com/).
We believe that all market data in this proxy statement/prospectus is reliable, accurate and complete.
 
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FREQUENTLY USED TERMS
Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:
4D Pharma” means 4D pharma plc and its subsidiaries, except where it is clear from the context that such term means only the parent company and excludes subsidiaries.
4D Pharma Board” means the board of directors of 4D Pharma.
4D Pharma Financial Statements” means the consolidated financial statements of 4D Pharma.
4D Pharma Shareholder Approvals” means the authority given by 4D Pharma shareholders to the 4D Pharma Board to: (i) allot the Share Merger Consideration in accordance with section 551 of the U.K. Companies Act 2006, via ordinary resolution requiring simple majority of votes cast at the meeting in person or by proxy; (ii) dis-apply pre-emption rights in accordance with section 561 of the U.K. Companies Act 2006, via special resolution requiring 75% of votes cast at the meeting in person or by proxy; and (iii) amend 4D Pharma’s articles of association to provide for, inter alia, the creation of the 4D Pharma ADSs, via special resolution requiring 75% of votes cast at the meeting in person or by proxy.
4D Pharma Shares” means the ordinary shares with a nominal value of £0.0025 each in 4D Pharma.
Addleshaw” means Addleshaw Goddard LLP, counsel to Longevity as to UK law.
ADR” means American Depository Receipt
ADS” means American Depositary Shares.
“Advantage Proxy” means Advantage Proxy, Inc.
ADSs Exchange Rate” means 1 4D Pharma ADS for every 8 4D Pharma Shares issuable pursuant to the Merger Agreement.
Articles of Merger” means the articles of merger containing the BVI Plan of Merger and such other information as is required by the BVI Companies Act.
BVI” means the British Virgin Islands.
BVI Companies Act” means the British Virgin Islands Business Companies Act 2004, as amended.
BVI Plan of Merger” means the plan of merger between Longevity and Merger Sub in accordance with the BVI Companies Act.
Chardan” means Chardan Capital Markets LLC.
Closing” means the closing of the Merger.
Closing Date” means the date of the Closing.
CMS” Centers for Medicare & Medicaid Services.
CNS” means the central nervous system.
Code” means the United States Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.
Combined Company” refers to Longevity and 4D Pharma together following the Closing.
Company” means 4D Pharma.
CROs” means contract research organizations.
Donohoe” means Donohoe Advisory Associates LLC.
 
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DSMB” means the data safety monitoring board.
DTC” means the Depository Trust Company.
DWAC” means the depository trust company’s deposit/withdrawal at custodian system.
Effective Time” means the Merger having become effective pursuant to its terms upon the Closing.
EMA” means the European Medicines Agency.
Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
Extension Meetings” means, together, (i) a special meeting of shareholders of Longevity held on May 22, 2020, at which its shareholders approved the May 2020 Extension; and (ii) a special meeting of Longevity Shareholders held on November 20, 2020, at which the Longevity Shareholders approved the November 2020 Extension.
fair market value” shall mean the average reported last sale price of Longevity’s ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Longevity’s warrants.
FDA” means the U.S. Food and Drug Administration.
finnCap” means finnCap Limited, a UK financial advisory firm retained by Longevity.
GAAP” means U.S. generally accepted accounting principles.
HHS” means U.S. Department of Health and Human Services.
HNSCC” means head and neck squamous cell carcinoma.
HTFL” means Hunter Taubman Fischer & Li LLC.
IBD” means inflammatory bowel disease.
IBS” means irritable bowel syndrome.
ICI” means immune checkpoint inhibitor.
IPO” means Longevity’s initial public offering of its units, ordinary shares, rights and warrants pursuant to a registration statement on Form S-1 declared effective by the SEC on August 28, 2018 (SEC File No. 333-226699).
Keytruda” means ICI Keytruda (pembrolizumab) made by MSD.
LBPs” means live biotherapeutic products.
LOI” means letter of intent.
Longevity” means Longevity Acquisition Corporation.
Longevity Adjournment Proposal” means the proposal for Longevity Shareholders to approve any decision by Longevity or its representatives to adjourn the Longevity Special Meeting to a later date or dates to permit further solicitation and vote of proxies if there are insufficient votes at the time of the Longevity Special Meeting to approve the Longevity Merger Proposal.
Longevity Board” means the board of directors of Longevity.
Longevity Merger Proposal” means the proposal to be considered at the special meeting for the shareholders of Longevity to approve the Merger.
Longevity Charter” means the amended and restated memorandum and articles of association of Longevity that is currently in effect.
 
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Longevity Initial Insiders” means the former and existing directors and officers of Longevity at the consummation of the IPO.
Longevity Proposals” means (i) the Longevity Merger Proposal, and (ii) the Longevity Adjournment Proposal, if presented.
Longevity Public Shareholders” means the holders of Longevity Shares that were sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).
Longevity Public Shares” means Longevity Shares sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).
Longevity Record Date” means the close of business on           Eastern Time.
Longevity Shareholders” means the holders of Longevity Shares immediately prior to the Effective Time.
Longevity Shares” means the ordinary shares, no par value, of Longevity.
Longevity Special Meeting” means the special meeting of the shareholders of Longevity, to be held at                 on           at           , and any adjournments or postponements thereof.
Marcum” means Marcum LLP, Longevity’s auditors.
May 2020 Extension” means the amendment to Longevity’s then current memorandum and articles of association, extending the date by which Longevity must consummate its initial business combination from May 29, 2020 to November 30, 2020 or such earlier date as determined by the Longevity Board.
MCBs” means master cell banks.
Merck” means Merck Sharp & Dohme Corp.
Merger” means the merger of Longevity and Merger Sub pursuant to the proposed statutory merger of Longevity with and into Merger Sub under the applicable provisions of the BVI Companies Act,with Merger Sub continuing as the surviving company and wholly-owned subsidiary of 4D Pharma.
Merger Agreement” means the agreement and plan of merger, dated as of October 21, 2020, by and among Longevity, Merger Sub and 4D Pharma, as it may be amended and supplemented from time to time.
Merger Consideration” means number of 4D Pharma ADSs equal to the Share Merger Consideration multiplied by the ADS Exchange Rate.
Merger Sub” means Dolphin Merger Sub Limited, a British Virgin Islands company and a wholly-owned subsidiary of 4D Pharma.
Minimum Public Holders Rule” means Nasdaq Listing Rule 5550(a)(3).
MHRA” means the United Kingdom’s Medicines and Healthcare Products Regulatory Agency.
MS” means multiple sclerosis.
MSD” means Merck & Co.
MSI-H” means microsatellite instable.
Nasdaq” means The Nasdaq Stock Market, LLC.
Notes” means, each individual and collectively, unsecured promissory notes in the aggregate amount of $1,860,000 issued by Longevity to certain investors on October 22, 2020.
Notice” means a written notice received by Longevity from the Listing Qualifications Department of Nasdaq indicating that Longevity was not in compliance with the Minimum Public Holders Rule.
 
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November 2020 Extension” means an amendment to Longevity’s then current memorandum and articles of association, extending the date by which Longevity must consummate its initial business combination from November 30, 2020 to May 29, 2021 or such earlier date as determined by the Longevity Board.
NSCLC” means non-small cell lung cancer.
Outside Date” means May 29, 2021.
Per Share Merger Consideration” means the right to receive 7.5315 4D Pharma Shares for each Longevity Share issued and outstanding immediately prior to the Effective Time.
Pinsent Masons” means Pinsent Masons LLP, counsel to 4D Pharma as to English Law.
RCC” means renal cell carcinoma.
Record Date” means, in the case of Longevity, only holders of record of ordinary shares of Longevity at the Longevity Record Date and, in the case of 4D Pharma, only holders of record of ordinary shares of 4D Pharma on
Redemption” means the right of the holders of Longevity Public Shares to have their shares redeemed in accordance with the procedures set forth in this joint proxy statement/prospectus.
Redemption Price” means an amount equal to price at which each Longevity Public Share is redeemed pursuant to the Redemption Rights (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing). The Redemption Price will be calculated two days prior to the consummation of the Merger in accordance with Longevity’s current charter.
Redemption Rights” means rights to demand Redemption of the Longevity Public Shares into cash.
Restricted Securities” means the Merger Consideration received in the Merger.
RSM” means RSM US LLP, 4D Phama’s auditor.
Sarbanes Oxley Act” means the Sarbanes-Oxley Act of 2002.
SEC” means the United States Securities and Exchange Commission.
Securities Act” means the Securities Act of 1933, as amended.
Share Merger Consideration” means the number of 4D Pharma Shares equal to the Per Share Merger Consideration multiplied by the number of Longevity Shares registered in the name of the Longevity Shareholders immediately prior to the Effective Time.
SPAC Sponsor” means Whale Management Corporation, a company incorporated in the British Virgin Islands.
Sponsor Notes” means the convertible notes issued to the SPAC Sponsor by Longevity in the aggregate amount of $2,360,000, under which the current outstanding balance is $500,000. The Sponsor Notes bear no interest and are repayable in full upon the consummation of Longevity’s initial business combination.
Sponsor Voting Agreement” means the Voting Agreement delivered by Longevity to 4D Pharma and executed by the SPAC Sponsor.
Successor” means the Merger Sub and its direct and indirect subsidiaries.
TNBC” means triple negative breast cancer.
Trust Account” means the trust account of Longevity, which holds the net proceeds of The IPO and the sale of the Longevity private units, together with interest earned thereon, less amounts released to pay income or other tax obligations and to meet working capital requirements.
UC” means urothelial carcinoma.
 
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U.K. Companies Act” means the U.K. Companies Act 2006.
U.K. Takeover Code” means the U.K. City Code on Takeovers and Mergers.
U.S. Holder” means any beneficial owner of Longevity Shares that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control the trust or (B) it has a valid election in place to be treated as a U.S. person.
USPTO” means the United States Patent and Trademark Office.
Voting Agreement” means that certain voting and support agreement entered into by and among the SPAC Sponsor and 4D Pharma.
WSGR” means Wilson Sonsini Goodrich & Rosati, Professional Corporation.
 
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TRADEMARKS, TRADE NAMES AND SERVICE MARKS
4D Pharma, Longevity and their respective subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable ®, ™ and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
 
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QUESTIONS AND ANSWERS
The following are some of the questions that you, as a shareholder of Longevity, may have regarding the proposed merger and the other matters being considered at the shareholders’ meeting and the answers to those questions. Longevity urges you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the proposed merger and the other matters being considered at the shareholders’ meeting. Additional important information is also contained in the appendices to this proxy statement/prospectus.
Questions about the Merger
What is the proposed transaction on which I am being asked to vote?
You are being asked to vote to approve the BVI Plan of Merger pursuant to the Merger Agreement entered into by and among Longevity, 4D Pharma and Dolphin Merger Sub Limited, a wholly owned subsidiary of 4D Pharma, pursuant to which Longevity will merge with and into Dolphin Merger Sub Limited, with Dolphin Merger Sub Limited surviving the Merger and continuing to be a wholly owned subsidiary of 4D Pharma. 4D Pharma and its subsidiaries following the merger are referred to as the “Combined Company.”
Longevity, 4D Pharma and Dolphin Merger Sub Limited entered into a Merger Agreement as of October 21, 2020, which is referred to herein as the “Merger Agreement.”
What will the Longevity Shareholders receive in the Merger?
If the Merger is completed, you will have the right to receive 0.94144 of 4D Pharma ADSs as consideration for each Longevity Share you hold at the Effective Time of the Merger. Each 4D Pharma ADS represents eight 4D Pharma ordinary shares, so 0.125 of a 4D Pharma ADS is equivalent to one 4D Pharma ordinary share. 4D Pharma will not issue fractional 4D Pharma ADSs in the Merger.
The transaction implies a value of $10.77 per Longevity Share, or an equity value for Longevity of approximately $28.3 million for all outstanding shares, based on a deal price for 4D Pharma Ordinary Shares of £1.10 as of October 21, 2020, converted to a price of $1.43 using a U.S. dollar/GBP exchange rate of $1.30 per £1.00 as of that date, which was the latest practicable business day before the publication of the Merger Agreement.
What is a 4D Pharma ADS?
An American Depositary Share, or ADS, is a security that allows persons in the United States to more easily hold and trade interests in companies incorporated or organized in a non-U.S. country. 4D Pharma is a company organized under the laws of England and Wales that issues ordinary shares that are equivalent in many respects to ordinary shares of a BVI company. Each 4D Pharma ADS represents eight 4D Pharma ordinary shares. 4D Pharma has applied to list the 4D Pharma ADSs on The Nasdaq Capital Market under the symbol “LBPS.” J.P. Morgan Chase Bank, N.A. is the depositary of the 4D Pharma Shares underlying the 4D Pharma ADSs and will be responsible for issuing 4D Pharma ADSs to Longevity Shareholders.
Will Longevity Shareholders be able to trade the 4D Pharma ADSs that they receive in the transaction?
Yes. 4D Pharma will apply to list the 4D Pharma ADSs on The Nasdaq Capital Market under the symbol “LBPS.” 4D Pharma ADSs received in exchange for Longevity Shares in the transaction will be freely transferable under United States federal securities laws by persons other than affiliates of the Combined Company.
Can I receive 4D Pharma Shares in the Merger instead of 4D Pharma ADSs?
No. However, following the Closing, and your receipt of 4D Pharma ADSs, you may turn in your 4D Pharma ADSs at the depositary’s corporate trust office or by providing appropriate instructions to your
 
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broker. Upon payment of the fees provided in the deposit agreement and any applicable taxes, the depositary will deliver the 4D Pharma Shares underlying the 4D Pharma ADSs to you.
When and where is the Longevity Special Meeting?
The Longevity Special Meeting will be held on           at           , Eastern Standard Time at the offices of Longevity’s counsel, Hunter Taubman Fischer & Li LLC, 800 Third Avenue, Suite 2800, New York, New York 10022.
Why is Longevity providing Longevity Shareholders with the opportunity to vote on the Longevity Merger Proposal?
Under the Longevity Charter, Longevity must provide all holders of Longevity Public Shares with the opportunity to have their Longevity Public Shares redeemed upon the consummation of Longevity’s initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. Longevity is seeking to obtain the approval of its shareholders of the Longevity Merger Proposal, which allows Longevity Public Shareholders to effectuate Redemptions of their Longevity Public Shares in connection with the Closing.
How will the Longevity Initial Insiders vote in connection with the Longevity Proposals?
In connection with the execution of the Merger Agreement, the SPAC Sponsor, representing 47.6% of the voting rights of Longevity immediately prior to the Merger, entered into the Sponsor Voting Agreement dated October 21, 2020 with 4D Pharma pursuant to which it agreed to vote all of its Longevity Shares in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions and refrain from taking actions that would adversely affect its ability to perform its obligations under the Sponsor Voting Agreement.
In connection with the consummation of the IPO, the Longevity Initial Insiders and the SPAC Sponsor have entered into the Longevity Insider Letter Agreement dated August 28, 2018 with Longevity pursuant to which they agreed to vote all Longevity Shares owned by them, whether acquired before, in or after the IPO, in favor of a business combination if Longevity solicits approval of its shareholders for a business combination.
May Longevity’s directors, executive officers, advisors or their affiliates purchase shares in connection with the Merger?
Longevity’s directors, executive officers, advisors or their affiliates may purchase Longevity Shares in privately negotiated transactions or in the open market prior to the closing of the Merger, including from Longevity Shareholders who would have otherwise elected to have their Longevity Shares redeemed. However, they have no current commitments or plans to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, any such purchases shall be subject to limitations regarding possession of any material nonpublic information not disclosed to the seller and they will not make any such purchases if such purchases are prohibited by Regulation M under the Exchange Act. Any such purchase would include a contractual acknowledgement that the selling shareholder, although still the record holder of Longevity Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event the Longevity’s directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Longevity Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Longevity Shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the Trust Account.
What will happen in the Merger?
At the Closing, Longevity will be merged with and into Merger Sub, following which Longevity shall cease existence and Merger Sub shall continue as the surviving entity as a direct wholly-owned subsidiary of 4D Pharma. The Merger shall have the effects specified in the BVI Companies Act. As the consideration
 
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for the Merger, all the issued and outstanding Longevity Shares immediately prior to the Effective Time will be automatically converted into the right to receive the Merger Consideration and all the issued and outstanding warrants to purchase Longevity Shares and rights to receive Longevity Shares immediately prior to the Effective Time will be automatically converted into warrants to purchase 4D Pharma Shares and rights to receive 4D Pharma Shares, payable in 4D Pharma ADSs, respectively.
Pursuant to the Merger Agreement, the Merger Consideration consists of the Per Share Merger Consideration, which is the right to receive 7.5315 4D Pharma Shares, payable in 4D Pharma ADS, for each Longevity Share issued and outstanding immediately prior to the Effective Time.
What vote is required by Longevity Shareholders to approve and adopt the Longevity Merger Proposal and Longevity Adjournment Proposal?
The Longevity Merger Proposal and the Longevity Adjournment Proposal, if presented as necessary or appropriate, must be approved and adopted by the holders of more than 50% of the votes of Longevity Shares entitled to vote at and present at the Longevity Special Meeting. You are entitled to vote if you held Longevity Shares at the close of business on the Longevity Record Date, which is           . On the Longevity Record Date,      of Longevity Shares were outstanding and entitled to vote.
How does the Longevity Board recommend that I vote my Longevity Shares?
The Longevity Board recommends that you vote “FOR” the Longevity Merger Proposal and, if presented, “FOR” the Longevity Adjournment Proposal.
Do I have Redemption Rights?
If you are a holder of Longevity Public Shares, you have the right to demand that Longevity redeem such shares for a pro rata portion of the cash held in Longevity’s Trust Account. Longevity sometimes refers to these rights to demand Redemption of the Longevity Public Shares as “Redemption Rights.”
Notwithstanding the foregoing, a holder of Longevity Public Shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act) will be restricted from seeking Redemption with respect to more than 15% of the Longevity Public Shares. Accordingly, all Longevity Public Shares in excess of 15% held by a public shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.
Under the Longevity Charter, the Merger may be consummated only if Longevity has at least $5.0 million of net tangible assets after giving effect to all Longevity Public Shareholders that properly demand Redemption of their shares for cash. Additionally, pursuant to the Merger Agreement, unless otherwise waived by 4D Pharma, the consummation of the Merger is conditioned on Longevity having at least $11.8 million of net tangible assets and at least $14.6 million in cash, immediately prior to the Effective Time.
How do I exercise my Redemption Rights?
In order to exercise your Redemption Rights, you must, prior to 5:00 p.m. Eastern Daylight Time on           (two business days before the Longevity Special Meeting), (x) submit a written request to Longevity’s transfer agent stating that you would like to redeem your Longevity Public Shares for cash, and (y) deliver your stock to Longevity’s transfer agent physically or electronically through DTC. The address of Continental Stock Transfer & Trust Company, Longevity’s transfer agent, is listed under the question “Who can help answer my questions?” below. Any demand for Redemption, once made, may be withdrawn at any time until the deadline for exercising Redemption requests and thereafter, with Longevity’s consent, until the vote is taken with respect to the Merger. If you delivered your Longevity Public Shares for Redemption to Longevity’s transfer agent and decide within the required timeframe not to exercise your Redemption Rights, you may request that Longevity’s transfer agent return the shares (physically or electronically). You may make such request by contacting Longevity’s transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.
 
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Are Longevity Shareholders entitled to Appraisal Rights?
Record holders of Longevity Shares who do not vote in favor of the Longevity Merger Proposal and otherwise comply with the requirements and procedures of Section 179 of the BVI Companies Act are entitled to exercise their rights of appraisal, which generally entitle stockholders to receive a cash payment equal to the fair value of their Longevity Shares in connection with the Merger. A detailed description of the appraisal rights and procedures available to Longevity Shareholders is included in “The Merger — Appraisal Rights” beginning on page 119. The full text of Section 179 of the BVI Companies Act is attached as Appendix B to this proxy statement/prospectus.
What happens to the funds deposited in the Trust Account after consummation of the Merger?
After consummation of the Merger, the funds in the Trust Account will be used to pay holders of the Longevity Public Shares who exercise their Redemption Rights, to pay transaction expenses incurred in connection with the Merger, including approximately $      million for working capital of the Successor and its subsidiaries and general corporate purposes of the Successor and its subsidiaries. Such funds may also be used to reduce the indebtedness and certain other liabilities of the Successor and its subsidiaries. As of the date hereof, there were cash and marketable securities held in the Trust Account of approximately $14.6 million. These funds will not be released until the earlier of the completion of Longevity’s initial business combination or the Redemption of Longevity Public Shares if Longevity is unable to complete an initial business combination by May 29, 2021.
What happens if a substantial number of Longevity Public Shareholders vote in favor of the Longevity Merger Proposal and exercise their Redemption Rights?
Longevity Public Shareholders may vote in favor of the Merger and still exercise their Redemption Rights; provided, however, that in the event that the any closing condition provided in the Merger Agreement is not satisfied or otherwise waived, then the Merger will not be consummated. Subject to the foregoing, the Merger may be consummated, with the consent of 4D Pharma even though the funds available from the Trust Account and the number of Longevity Public Shareholders are reduced. Notwithstanding the foregoing, pursuant to the Backstop Agreement, certain investors have committed to provide financial backing to the Longevity immediately prior to the Closing, in the event of redemptions by Longevity Public Shares, in the aggregate amount of up to $14.6 million. Such backstop commitment, if executed, may prevent substantial redemption, or at least reduce the number of redeemed Longevity Public Shares. If shares are redeemed that are not replaced by the backstop commitment, the trading market for 4D Pharma’s securities following the Closing and 4D Pharma’s financial position may be impacted by the redemption.
What interests do Longevity’s current officers, directors and SPAC Sponsor have in the Merger?
The directors and executive officers of Longevity have interests in the Merger that are different from or in addition to (and which may conflict with) your interests. These interests include, among other things:
(i)
the fact that the Longevity Initial Insiders have purchased an aggregate of 1,150,000 ordinary shares for an aggregate purchase price of $25.0 thousand, or approximately $0.022 per share (the “Longevity Founder Shares”), which would have a value of approximately $        million based on the closing price of Longevity Shares at the Record Date as reported by Nasdaq and that are not subject to Redemption. Such Longevity Founder Shares will have no value if Longevity does not complete an initial business combination by the Outside Date; as a result, Longevity Initial Insiders have a financial incentive to see the Merger consummated rather than losing whatever value is attributable to the Longevity Founder Shares;
(ii)
the fact that the SPAC Sponsor holds 250,000 private units and will continue to hold 1,080,000 Longevity Shares (assuming the transfer of 200,000 Longevity Shares pursuant to the Backstop Agreement, conversion of $0.5 million of the working capital loan into 50,000 units and forfeiture of 50,000 Longevity Shares as set forth in (iv) below) following the separation of such private units upon the consummation of the Merger, subject to certain lock-up agreements. Those private units and securities underlying those private units are not subject to Redemption and will be worthless if Longevity does not complete an initial business combination by the Outside Date;
 
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(iii)
if Longevity is unable to complete a business combination by the Outside Date, the SPAC Sponsor will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Longevity for services rendered or contracted for or products sold to Longevity, but only if such a vendor or target business has not executed a waiver of claims against the Trust Account and except as to any claims under Longevity’s indemnity of the underwriters; and
(iv)
the fact that (A) Longevity issued Sponsor Notes in the aggregated amount of $2.4 million, under which the current outstanding balance is $0.5 million, and the sole director and member of which is Mr. Matthew Chen, Longevity’s Chief Financial Officer. The Sponsor Notes are non-interest bearing and payable on the consummation of Longevity’s initial business combination; and (B) as provided in the Merger Agreement, the SPAC Sponsor has agreed to provide additional up to $0.5 million working capital loan to pay for Longevity's expenses incurred in connection with the Merger which shall be convertible into Longevity units immediately prior to the Closing at a conversion price of $10.00 per unit; in connection with such conversion, the SPAC Sponsor will forfeit 50,000 Longevity Shares.
These interests may influence the directors of Longevity in making their recommendation that you vote in favor of the Merger and the transactions contemplated thereby. These interests were considered by the Longevity Board when they approved the Merger.
What conditions must be satisfied to complete the Merger?
There are a number of closing conditions in the Merger Agreement, including the approval of the Merger Agreement and the transactions contemplated thereby by the Longevity Shareholders. Other closing conditions include, among others: (i) the respective representations of the parties to each other being true and correct, except as would not have a material adverse effect; (ii) performance and compliance with, in all material respects, the respective covenants and agreements of each party; (iii) the execution of the Backstop Agreements; (iv) Longevity having at least $11.8 million of net tangible assets and at least $14.6 million in cash, immediately prior to the Effective Time; (v) no material adverse effect with respect to 4D Pharma or Longevity having occurred since the date of the Merger Agreement; (vi) the approval for listing on Nasdaq (subject to official notice of issuance) of the 4D Pharma ADSs to be issued in connection with the Merger; and (vii) 4D Pharma obtaining the 4D Pharma Shareholder Approvals. For a summary of the conditions that must be satisfied or waived prior to completion of the Merger, see “The Merger Agreement — Conditions to the Closing of the Merger.”
What happens if the Merger is not consummated?
If Longevity has not consummated a business combination by May 29, 2021, it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than five business days thereafter, subject to lawfully available funds therefore, redeem 100% of the outstanding Longevity Public Shares, at a per-share price, payable in cash, equal to the amount then on deposit in the Trust Account, including interest earned thereon not previously released to Longevity for the payment of taxes (less up to $50.0 thousand of interest to pay liquidation expenses), divided by the number of then outstanding Longevity Public Shares, which Redemption will completely extinguish rights of holders of Longevity Public Shares as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such Redemption, subject to the approval of Longevity’s remaining shareholders and the Longevity Board, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Longevity’s obligations to provide for claims of creditors and the requirements of other applicable law.
The Longevity Initial Insiders have waived their rights to participate in any liquidation distribution with respect to their founder shares or the ordinary shares included in the private placement units. There will be no distribution from the Trust Account with respect to Longevity’s warrants or rights, which will expire worthless in the event Longevity winds up.
As of the Longevity Record Date, the Longevity Initial Insiders own 47.6% of the outstanding Longevity Shares and agreed to vote all of their shares in favor of the Merger.
 
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Can the value of the transaction change between now and the time the Merger is consummated?
Yes, the value of the Merger Consideration can change. The exchange ratio is a fixed exchange ratio, meaning that Longevity Shareholders will receive 0.94144 of a 4D Pharma ADS (which is equivalent to 7.5315 4D Pharma Shares) for each Longevity Share owned immediately prior to the Effective Time of the Merger (other than shares held by Longevity, 4D Pharma or any of their respective wholly-owned subsidiaries, or shares for which appraisal rights are properly exercised) regardless of the trading price of 4D Pharma Shares on the AIM market operated by the London Stock Exchange plc on the effective date of the Merger. However, the implied market value of the 4D Pharma ADSs that Longevity Shareholders will receive in the Merger will increase or decrease as the trading price of 4D Pharma Shares increases or decreases, and may be different at the time the Merger is consummated than it was as of the last trading day before the Merger Agreement was signed or will be at the time of the Longevity Special Meeting. The market price of 4D Pharma Shares could be higher or lower at any time prior to the consummation of the Merger. Longevity Shareholders are urged to obtain current trading prices for 4D Pharma Shares from the London Stock Exchange website.
After the Merger, how much equity interest of 4D Pharma will Longevity Shareholders own?
Upon closing of the Merger and prior to the issuance of shares as financial advisor fees and 4D Pharma Shares that may be issuable to the backstop investors after the closing of the Merger, Longevity Shareholders relating to exercise of existing Longevity warrants, including backstop investors in respect of Longevity Shares issued to them prior to closing of the Merger, are expected to own approximately 17.7%, and 4D Pharma existing shareholders immediately prior to the Effective Time are expected to own approximately 82.3%, of 4D Pharma.
If I am a Longevity warrant or right holder, can I exercise Redemption Rights with respect to my warrants or rights?
No. The holders of Longevity warrants or rights have no Redemption Rights with respect to Longevity’s warrants or rights.
If I am a Longevity unit holder, can I exercise Redemption Rights with respect to my units?
No. You can only exercise Redemption Rights with respect to your Longevity Public Shares (excluding the Longevity Shares issued upon the automatic conversion of the rights included in the units). Holders of outstanding units must separate the underlying public shares, public rights, and public warrants prior to exercising Redemption Rights with respect to the Longevity Public Shares.
If you hold units registered in your own name, you must deliver the certificate for such units to Continental Stock Transfer & Trust Company, Longevity’s transfer agent, with written instructions to separate such units into public shares, public rights, and public warrants. This must be completed far enough in advance to permit the mailing of the public share certificates back to you so that you may then exercise your Redemption Rights upon the separation of the public shares from the units. See “How do I exercise my Redemption Rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below.
If a broker, dealer, commercial bank, trust company, or other nominee holds your units, you must instruct such nominee to separate your units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, Longevity’s transfer agent. Such written instructions must include the number of units to be separated and the nominee holding such units. Your nominee must also initiate electronically, using DTC’s deposit DWAC, a withdrawal of the relevant units and a deposit of an equal number of public shares, public rights, and public warrants. This must be completed far enough in advance to permit your nominee to exercise your Redemption Rights upon the separation of the public shares from the units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your public shares to be separated in a timely manner, you will likely not be able to exercise your Redemption Rights.
 
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What will happen to Longevity’s outstanding warrants in the Merger?
Upon consummation of the Merger, each issued and outstanding warrant to acquire Longevity Shares will be assumed by 4D Pharma and automatically converted into a warrant to purchase ordinary shares of 4D Pharma, payable in 4D Pharma ADSs. The number of 4D Pharma ADSs (i) shall be a number equal to (in each case, as rounded down to the nearest whole number) the product of (A) the Per Share Merger Consideration, multiplied by (B) the number of Longevity Shares subject to the unexercised portion of such outstanding warrant, multiplied by (C) the ADS Exchange Rate and (ii) have an exercise price per 4D Pharma ADS equal to (in each case, as rounded up to the nearest whole cent) the quotient of (A) the exercise price per share of such outstanding warrant prior to its assumption, divided by (B) the Per Share Merger Consideration, divided by (C) the ADS Exchange Rate.
See “The Merger Agreement — Treatment of Longevity Warrants, Rights and Options” of this proxy statement/prospectus.
What are the material U.S. federal income tax consequences of the Merger for me?
The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code (a “Reorganization”), but its qualification as such is subject to uncertainty. If the Merger qualifies as a Reorganization, and subject to the discussion in the section of this proxy statement/prospectus titled “Material Tax Consequences — Material U.S. Federal Income Tax Consequences — Material U.S. Federal Income Tax Consequences of the Merger — Application of the PFIC Rules to the Merger,” a holder who exchanges Longevity Shares for 4D Pharma ADSs pursuant to the Merger generally will not recognize gain or loss for U.S. federal income tax purposes. If the Merger does not qualify as a Reorganization, the Merger will be a taxable transaction for U.S. Holders (as defined in the section of this proxy statement/prospectus titled “Material Tax Consequences — Material U.S. Federal Income Tax Consequences”). The foregoing tax description does not apply to a holder of Longevity Shares who exercises Redemption Rights.
For additional information, including regarding the treatment of Longevity warrants and rights, see “Material Tax Consequences — Material U.S. Federal Income Tax Consequences of the Merger.” The tax consequences of the Merger to you will depend on the facts of your own situation. You should consult your tax advisor in this regard.
You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the Merger to you.
For a more detailed description of the material U.S. federal income tax consequences of the Merger, please see “Material Tax Consequences — Material U.S. Federal Income Tax Consequences of the Merger.”
What are the material U.K. tax consequences of owning 4D Pharma ADSs for me?
We would not expect material UK tax consequences to arise to a Longevity Shareholder as a result of owning the 4D Pharma ADSs. In particular we note that:

We would not expect U.K. stamp duty or stamp duty reserve tax to arise on either (i) the receipt of 4D Pharma ADSs by Longevity Shareholders or (ii) the transfer of 4D Pharma ADSs by Longevity Shareholders in the ordinary course; and

The U.K. does not operate a withholding tax on the payment of dividends by U.K. tax resident companies.
You are urged to consult with your own tax advisor for a full understanding of the U.K. tax consequences for you of owning 4D Pharma ADSs.
What are the material British Virgin Islands tax consequences of the Merger?
Under the BVI Companies Act:

Longevity is exempt from all forms of BVI tax;
 
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all dividends, interest, royalties and other amounts payable by Longevity, and any gain realised on any shares, debt obligations or other securities of Longevity, are exempt from BVI tax; and

no estate, inheritance, succession or gift tax any shares, debt obligations or other securities of Longevity, are exempt from BVI tax.
Consequently, the Merger will not give rise to any material BVI tax consequences for Longevity or the holders of its ordinary shares, warrants or rights.
You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you, including the consequences under any applicable, state, local, foreign or other tax laws.
Why is Longevity proposing the Merger to its shareholders?
Longevity was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. 4D Pharma is a pharmaceutical company developing Live Biotherapeutic Products (LBPs), a novel class of drug derived from the human microbiome. 4D Pharma’s LBPs are orally delivered single strains of bacteria that are naturally found in the healthy human gut. 4D Pharma currently has five clinical trials ongoing, namely a Phase I/II study of MRx0518 in combination with Keytruda in solid tumors, a Phase I study of MRx0518 in a neoadjuvant setting for patients with solid tumors, a Phase I study of MRx0518 in patients with potentially resectable pancreatic cancer in combination with hypofractionated radiotherapy, a Phase I/II study of MRx-4DP0004 in patients with partly controlled asthma and a Phase II study of MRx-4DP0004 to prevent or reduce the hyperinflammatory response in patients hospitalized with COVID-19. 4D Pharma also successfully completed a Phase II clinical trial of Blautix in patients with Irritable Bowel Syndrome (IBS)-C (constipation predominant) and IBS-D (diarrhea-predominant) and a Phase Ib clinical trial of Thetanix in pediatric Crohn’s disease patients. Preclinical-stage programs include candidates for CNS disease such as Parkinson’s disease and other neurodegenerative conditions and autoimmune diseases. 4D Pharma has a research collaboration with MSD, a tradename of Merck & Co., Inc., Kenilworth, NJ, USA, to discover and develop LBPs for vaccines. Based on its due diligence investigations of 4D Pharma and the industry in which it operates, including the financial and other information provided by 4D Pharma, Longevity believes that a business combination with 4D Pharma presents a unique business combination opportunity. The Longevity Board believes that, in light of the foregoing, the Merger with 4D Pharma presents an opportunity to increase shareholder value. However, there is no assurance of this.
When is the Merger expected to be completed?
4D Pharma and Longevity expect to complete the Merger promptly after they receive Longevity’s Shareholder approval at the Longevity Special Meeting and 4D Pharma’s shareholder approval at the 4D Pharma shareholder meeting provided that the closing conditions as provided in the Merger Agreement are either satisfied or otherwise waived. 4D Pharma and Longevity currently anticipate the Merger will occur in early 2021.
If the Merger is completed, when can I expect to receive the Merger Consideration for my Longevity Shares?
If you hold shares in registered form, promptly after the Effective Time of the Merger, 4D Pharma will cause the exchange agent to mail to you a letter of transmittal and instructions to effect your exchange of Longevity Shares for the Merger Consideration. After receiving the proper documentation from you, the exchange agent will cause the 4D Pharma ADSs to which you are entitled under the Merger Agreement to be issued to you in uncertificated book-entry form to the account specified in your completed letter of transmittal (unless you have specifically requested to receive the 4D Pharma ADSs in physical form, in which case the exchange agent will forward to you an American Depositary Receipt representing such 4D Pharma ADSs). If you hold shares in “street name” through a bank or broker, your position will be converted in your bank or brokerage account, automatically following the Closing. More information on the documentation you are required to deliver to the exchange agent may be found under the section entitled “The Merger Agreement — Conversion of Shares; Exchange of Certificates.”
 
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Has 4D Pharma’s board of directors approved the Merger?
Yes. The 4D Pharma Board has unanimously determined that the Merger will promote the success of 4D Pharma for the benefit of its shareholders as a whole and therefore unanimously approved the Merger Agreement and the transactions contemplated by it and will unanimously recommend that its shareholders vote in favor of the 4D Pharma Shareholder Approvals.
What vote is required by 4D Pharma’s shareholders?
Once this Form F-4 has become effective, the 4D Pharma Board will mail a circular to the 4D Pharma shareholders which will, among other things, explain the Merger to 4D Pharma shareholders and convene a meeting of 4D Pharma shareholders at which the 4D Pharma shareholders will be asked to give the 4D Pharma Board authority to: (i) allot the Share Merger Consideration in accordance with section 551 of the U.K. Companies Act; (ii) dis-apply pre-emption rights in accordance with section 561 of the U.K. Companies Act; and (iii) amend 4D Pharma’s articles of association to provide for, inter alia, the creation of the 4D Pharma ADSs. The resolution to authorize the allotment of the Share Merger Consideration will be an ordinary resolution requiring a simple majority of votes in favor from 4D Pharma shareholders present at the meeting in person or by proxy. The resolutions to dis-apply pre-emption rights and to amend the 4D Pharma articles of association will be special resolutions requiring 75% of votes in favor from 4D Pharma shareholders present at the meeting in person or by proxy.
Where are 4D Pharma Shares and 4D Pharma ADSs listed?
4D Pharma Shares are admitted to trading under the symbol “DDDD” on AIM, a market operated by London Stock Exchange plc. 4D Pharma will apply to list the 4D Pharma ADSs on The Nasdaq Capital Market under the symbol “LBPS.”
How will trading in Longevity Shares be affected by the completion of the Merger?
Longevity will be owned entirely by 4D Pharma as a result of the Merger. Longevity Shares will be delisted from The Nasdaq Capital Market upon the consummation of the Merger and will no longer be traded. Upon the consummation of the Merger, your interest in Longevity Shares will only represent the right to receive the Merger Consideration issuable to you in the Merger.
Will I receive dividends from 4D Pharma on 4D Pharma Shares underlying the 4D Pharma ADSs?
4D Pharma does not currently anticipate paying dividends on its ordinary shares following the Merger. However, if 4D Pharma declares and pays a dividend on the ordinary shares underlying the 4D Pharma ADSs after completion of the Merger, the depositary has agreed that it will pay to you the cash dividends or other distributions it receives from 4D Pharma on such underlying shares, after converting any cash received into U.S. dollars and making any necessary deductions provided for in the deposit agreement. See “Description of 4D Pharma American Depositary Shares — Share Dividends and Other Distributions.”
Who will manage the Combined Company?
The current 4D Pharma Board and 4D Pharma management team will continue to manage the Combined Company following completion of the Merger. For information on the members of the 4D Pharma Board and 4D Pharma management team, see “Management and Compensation of 4D Pharma — Executive Officers and Directors.”
Questions about the Longevity Special Meeting
If my Longevity Shares are held in “street name” by my broker, will my broker vote my Longevity Shares for me?
No. If you do not give instructions to your broker, your broker can vote your Longevity Shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Longevity believes that each of the Longevity Proposals are “non-discretionary” items.
 
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Your broker can vote your Longevity Shares with respect to “non-discretionary items” only if you provide instructions on how to vote. You should instruct your broker to vote your Longevity Shares. Your broker can tell you how to provide these instructions.
Because the Longevity Merger Proposal in this proxy statement/prospectus submitted to Longevity Shareholders requires an affirmative vote of the holders of more than 50% of all Longevity Shares entitled to vote at and present at the Longevity Special Meeting for adoption, failure to instruct your broker to vote for Longevity Merger Proposal will not have an effect on the Longevity Merger Proposal, assuming a quorum is present at the Longevity Special Meeting.
What do I need to do now?
You are urged to read this proxy statement/prospectus carefully, including its appendices and the documents incorporated by reference herein. You may also want to review the documents referenced under “Where You Can Find More Information” beginning on pages 270, and consult with your accounting, legal and tax advisors.
After carefully reading and considering the information contained in this proxy statement/prospectus, if you do not hold your shares in “street name,” please fill out and sign the proxy card, and then mail your signed proxy card in the enclosed prepaid envelope as soon as possible so that your shares may be voted at the Longevity Special Meeting. If you hold your shares in “street name,” follow the instructions in the previous question. The Longevity Board recommends that you vote “FOR” the Longevity Merger Proposal and if presented, “FOR” the Longevity Adjournment Proposal. You may also submit your proxy by telephone or through the Internet (for telephone and Internet voting instructions, see “The Special Meeting of Longevity Acquisition Corporation Shareholders — Proxies; Board Solicitation”). Your proxy card will instruct the persons named on the card to vote your shares at the Longevity Special Meeting as you direct on the proxy card. If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be voted as the Longevity Board recommends. If you do not vote or if you abstain, it will not have any effect on the vote for the approval of the Longevity Merger Proposal, assuming a quorum is present at the Longevity Special Meeting.
May I change my vote after I have mailed my signed proxy card?
Yes. You may change your vote by sending a later-dated, signed proxy card to Longevity’s acting secretary for the Merger or its proxy solicitor so that it is received by Longevity prior to the Longevity Special Meeting or attend the Longevity Special Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Longevity’s acting secretary or proxy solicitor, which must be received by them prior to the Longevity Special Meeting. You can find the address of Longevity’s acting secretary and proxy solicitor in “Who can help answer my questions?” If your shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other nominee that you wish to change your vote by following the procedures on the voting instruction form provided to you by the broker, bank or other nominee. If your shares are held in street name, and you wish to attend the Longevity Special Meeting and vote at the Longevity Special Meeting, you must bring to the Longevity Special Meeting a legal proxy from the broker, bank or other nominee holding your shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares.
What should I do if I receive more than one set of voting materials for the Longevity Special Meeting?
You may receive more than one set of voting materials for the Longevity Special Meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. Please complete, sign, date and return each proxy card and voting instruction card that you receive. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card.
Who pays for this solicitation?
The expense of filing, printing and mailing this proxy statement/prospectus and the accompanying material will be shared equally by Longevity and 4D Pharma.
 
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Longevity has retained Advantage Proxy to assist in soliciting proxies for a fee not to exceed $8,500, along with customary charges for shareholder contact, reimbursement of reasonable out-of-pocket expenses and indemnification against certain losses, costs and expenses. Longevity will pay the costs related to the solicitation of proxies in connection with the Longevity Special Meeting. Longevity may use the services of its directors, officer and employees, who will not be specially compensated, to solicit proxies from Longevity Shareholders, either personally or by telephone, facsimile, letter or electronic means. If you have questions about how to vote or direct a vote in respect of your shares, you may contact Advantage Proxy at (877) 870-8565 (toll free), at (206) 870-8565 (collect) or by email at ksmith@advantageproxy.com. Longevity has agreed to pay Advantage Proxy a fee of $8,500 and expenses, for its services in connection with the Longevity Special Meeting.
Questions about Risks and How to Get More Information
Are there any risks related to owning 4D Pharma ADSs?
Yes. You should carefully review the sections entitled “Risk Factors,” “Description of 4D Pharma Ordinary Shares,” “Description of 4D Pharma American Depositary Shares” and “Comparison of Rights of Longevity Shareholders and 4D Pharma Shareholders.”
Where can I find more information about the companies?
You can find more information about 4D Pharma and Longevity in the documents described under “Where You Can Find More Information” beginning on page 270.
Who can help answer my questions?
If you have any questions about the Merger or Longevity Proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy, you should contact Longevity’s proxy solicitor or investor relations department:
Advantage Proxy, Inc.
P.O. Box 13581
Des Moines, WA 98198
Attn: Karen Smith
Toll Free: (877) 870-8565
Collect: (206) 870-8565
or
Longevity
Acquisition Corporation
Yongda International Tower No. 2277
Longyang Road, Pudong District, Shanghai
People’s Republic of China
(86) 21-60832028
 
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SUMMARY
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Longevity Special Meeting, and for a more complete description of the Merger, the Merger Agreement and the transactions contemplated thereby, we encourage you to read carefully this entire proxy statement/prospectus, including the exhibits to the registration statement of which this proxy statement/prospectus is a part, the Merger Agreement attached as Annex A to this proxy statement/prospectus and the sections of this prospectus entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of 4D Pharma,” “Business,” and 4D Pharma’s consolidated financial statements and the related notes, in each case contained elsewhere in this proxy statement/prospectus. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information.”
Information about the Companies
4D Pharma
4D Pharma is a pharmaceutical company developing Live Biotherapeutic Products (LBPs), a novel class of drug derived from the human microbiome. 4D Pharma’s differentiated approach focuses on understanding mechanism of action and the interactions of its LBPs with host biology. 4D Pharma’s pipeline of therapeutic candidates includes single strain LBPs targeting major diseases in multiple therapeutic areas with the potential to have significant impacts on unmet patient need.
4D Pharma’s headquarters and principal executive offices are located at 5th Floor, 9 Bond Court, Leeds, LS1 2JZ, United Kingdom, telephone: +44 (0) 113 895 0130. 4D Pharma’s website address is: www.4dpharmaplc.com.
Longevity
Longevity is a blank check company incorporated in the British Virgin Islands as a business company with limited liability (meaning that its shareholders have no liability, as members of Longevity, for the liabilities of Longevity over and above the amount already paid for their shares) and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities, which is referred to throughout this proxy statement/prospectus as an initial business combination.
Longevity units trade on The Nasdaq Capital Market under the symbol “LOACU.” Commencing on October 15, 2018, the securities comprising the units began separate trading. The units, ordinary shares, warrants and rights are trading on The Nasdaq Capital Market under the symbols “LOACU,” “LOAC,” “LOACW” and “LOACR,” respectively.
Longevity’s address is Yongda International Tower No. 2277, Longyang Road, Pudong District, Shanghai, People’s Republic of China; and phone number (86) 21-60832028.
Dolphin Merger Sub Limited
Dolphin Merger Sub Limited, a British Virgin Islands company and a wholly-owned subsidiary of 4D Pharma.
Risk Factors
The Merger involves risks, some of which are related to the Merger itself and others of which are related to 4D Pharma’s business and to investing in and ownership of 4D Pharma Shares and 4D Pharma ADSs following the Merger, assuming the Merger is completed. In considering the Merger, you should carefully consider the information about these risks set forth under the section entitled “Risk Factors,” together with the other information included in or incorporated by reference into this prospectus.
 
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The BVI Plan of Merger and the Merger Agreement
Merger Agreement
On October 21, 2020, Longevity entered into the Merger Agreement with 4D Pharma and Merger Sub, pursuant to which, among other things, Longevity will merge with and into Merger Sub, with Merger Sub continuing as the surviving entity and a wholly-owned subsidiary of 4D Pharma. The Merger will become effective at such time on the Closing Date as the articles containing the plan of the merger and such other items and the resolution amending Merger Sub’s memorandum or articles of association and their amendment are registered by the registrar of corporate affairs of the British Virgin Islands or at such other time subsequent thereto, but not exceeding 30 days from such registration, as mutually agreed between 4D Pharma and Longevity and specified in the Articles of Merger.
At the Effective Time, each Longevity Share issued and outstanding prior to the Effective Time (excluding shares held by 4D Pharma and Longevity and dissenting shares, if any) will be automatically converted into the right to receive the Per Share Merger Consideration, and each warrant to purchase the Longevity Shares and right to receive Longevity Shares that is outstanding immediately prior to the Effective Time will be assumed by 4D Pharma and automatically converted into a warrant to purchase ordinary shares of 4D Pharma and a right to receive ordinary shares of 4D Pharma, payable in 4D Pharma ADSs, respectively.
Shareholders are urged to read additional information and details of Merger Agreement in the section entitled “The Merger Agreement” on page 121 and the Merger Agreement in its entirety, a copy of which is attached hereto as an appendix.
Related Agreements
In conjunction with the execution of the Merger Agreement, the parties entered into certain related agreements pursuant to the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, copies of each of which are attached hereto as Appendix C. Shareholders are urged to read additional information and details of such Related Agreement in the section entitled “The Ancillary Agreements” on page 134 and such Related Agreements in their entirety.
Voting Agreement
SPAC Sponsor entered into the Voting Agreement with 4D Pharma under which the SPAC Sponsor generally agreed to vote all of its capital shares in Longevity in favor of the Merger Agreement and the transactions contemplated thereby, each other Longevity Proposal and any other proposal included in this proxy statement/prospectus related to the Merger for which the Longevity Board has recommended that the Longevity Shareholders vote in favor and against any competing transaction. The Voting Agreement prevents transfers of the Longevity shares held by the SPAC Sponsor between the date of the Voting Agreement and the termination of the Voting Agreement, subject to certain limited exceptions.
Lock-Up Agreement
The Merger Agreement contemplates that, at the Effective Time, 4D Pharma will enter into a lock-up agreement with the SPAC Sponsor and certain shareholders of 4D Pharma immediately prior to the Effective Time, in substantially the form attached to the Merger Agreement, with respect to the Restricted Securities. In such Lock-Up Agreement, each holder will agree that, subject to certain exceptions, during the period ending twelve months after the Effective Time, it will not (i) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Restricted Securities, (ii) enter into any swap, short sale, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, or (iii) publicly disclose the intention to effect any transaction specified in clause (i) or (ii), or (iv) make any demand for or exercise any right with respect to the registration of any Longevity Shares.
 
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Backstop Agreement
Longevity entered into certain Backstop Agreements with 4D Pharma, SPAC Sponsor and the Buyers. Under the Backstop Agreements, the Buyers have committed to provide financial backing to Longevity immediately prior to the Effective Time, in the event of redemptions by Longevity Shareholders, in the aggregate amount of up to the Backstop Amount, $14.6 million.
Redemption Rights for Holders of Public Shares
Longevity is providing Longevity Public Shareholders with the opportunity to redeem Longevity Public Shares for cash equal to a pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but net of taxes payable and amounts released to Longevity for working capital purposes, divided by the number of then outstanding Longevity Public Shares, upon the Closing, subject to the limitations described herein.
Holders of outstanding units must separate the underlying Longevity Public Shares and public warrants prior to exercising Redemption Rights with respect to the Longevity Public Shares.
Limitation on Redemption Rights
Notwithstanding the foregoing, the Longevity Charter provides that a Longevity Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking Redemptions with respect to more than an aggregate of 15% of the Longevity Shares sold in the IPO without Longevity’s prior written consent.
Conditions to Closing the Merger
As more fully described in this proxy statement/prospectus and as set forth in the Merger Agreement, the obligation of each of 4D Pharma and Longevity to complete the Merger depends on the satisfaction (or, to the extent permitted by applicable law, waiver) of the following conditions, among others:

the registration statement of which this prospectus forms a part shall have been declared effective by the SEC;

approvals of the Merger by all requisite regulatory authorities;

the Backstop Agreements are executed and remain in full force and effect;

the Merger and other transactions contemplated by the Merger Agreement are approved by 4D Pharma shareholders and Longevity Shareholders;

absence of any law enacted, or any judicial or regulatory order issued, by a competent governmental authority or judicial authority or arbitral tribunal that impedes the completion of the Merger;

absence of a Material Adverse Effect (as defined below), which has not been appropriately cured;

compliance by each of Longevity and 4D Pharma with their respective material obligations set forth in the Merger Agreement; and

the representations and warranties made by Longevity and 4D Pharma in the Merger Agreement being true and accurate, in all material aspects, as of the Closing Date.
Termination of the Merger Agreement
As more fully described in this proxy statement/prospectus and as set forth in the Merger Agreement, the Merger Agreement may be terminated by mutual written consent of Longevity or 4D Pharma. If the Merger is not consummated by May 29, 2021, or such other date as the Longevity Shareholders have extended the date by which Longevity must enter into a business combination, the Merger Agreement will be terminated. If the non-consummation is due to a breach of the obligations provided in the Merger Agreement by Longevity or 4D Pharma, the non-defaulting party may consider the Merger terminated and file a claim for possible losses and damages.
 
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The Longevity Special Meeting
Date, Time and Place of the Longevity Special Meeting
The Longevity Special Meeting will be held on         at        , Eastern Standard Time at the offices of Longevity’s counsel, Hunter Taubman Fischer & Li LLC, 800 Third Avenue, Suite 2800, New York, New York 10022.
Purpose of the Longevity Special Meeting
The purpose of the Longevity Special Meeting is to consider and vote upon adoption of the BVI Plan of Merger and the Merger Agreement, dated as of October 21, 2020, by and among 4D Pharma, Longevity and Merger Sub, providing for the merger of Longevity with and into Merger Sub. Merger Sub will survive the Merger as a wholly owned subsidiary of 4D Pharma. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Appendix A. A copy of the BVI Plan of Merger is attached to this proxy statement/prospectus as Appendix D.
The Longevity Board recommends approval of the Longevity Merger Proposal. On October 21, 2020, the Longevity Board:

determined that it is in the best interests of Longevity and Longevity Shareholders that Longevity enter into the Merger Agreement;

approved and declared advisable the BVI Plan of Merger and the Merger Agreement and the transactions contemplated by the Merger Agreement; and

resolved to recommend that Longevity Shareholders adopt the Merger Agreement and the BVI Plan of Merger.
Voting Power; Record Date
You will be entitled to vote or direct votes to be cast at the Longevity Special Meeting, if you owned Longevity Shares at the close of business on           , 2020, the Record Date for the Longevity Special Meeting. You will have one vote per proposal for each Longevity Share you owned at that time. Longevity rights and warrants do not carry voting rights.
Quorum and Required Votes
The holders of a majority of the votes of the Longevity Shares outstanding as of the close of business on the Longevity Record Date must be present, either in person or by proxy, at the Longevity Special Meeting to constitute a quorum. The affirmative vote of the holders of more than 50% of Longevity Shares entitled to vote which are present (in person or by proxy) and are voted at the Longevity Special Meeting on the Longevity Merger Proposal and the Longevity Adjournment Proposal, if presented, will be required to approve the Longevity Merger Proposal and the Longevity Adjournment Proposal. Abstentions, which are not votes cast, will have no effect with respect to approval of these proposals. As these proposals are not “routine” matters, brokers will not be permitted to exercise discretionary voting on these proposals.
At the close of business on the Longevity Record Date, there were         outstanding Longevity Shares each of which entitles its holder to cast one vote per proposal.
Listing of 4D Pharma ADSs
4D Pharma will apply to list the 4D Pharma ADSs on The Nasdaq Capital Market, effective as of the Closing Date, but such listing is subject to 4D Pharma fulfilling all of the listing requirements of The Nasdaq Capital Market. There can be no assurance that the 4D Pharma ADSs will be accepted for trading on The Nasdaq Capital Market.
Delisting and Deregistration of Longevity Shares
Conditioned on the approval for listing on The Nasdaq Capital Market of the 4D Pharma ADSs, in exchange of existing Longevity Shares and warrants, holders of Longevity Shares will receive ordinary
 
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shares of 4D Pharma, payable in ADSs, commencing on trading on The Nasdaq Capital Market immediately following the Closing, and holders of Longevity warrants will receive warrants of 4D Pharma to purchase ordinary shares of 4D Pharma, that will commence trading on The Nasdaq Capital Market immediately following the Closing. As a result, Longevity Shares will be delisted from The Nasdaq Capital Market and deregistered with the SEC.
Notice of Listing Compliance Deficiency of Longevity Shares
On August 28, 2020, Longevity received the Notice from the Listing Qualifications Department of Nasdaq indicating that Longevity was not in compliance with the Minimum Public Holders Rule, which requires Longevity to have at least 300 public holders for continued listing on The Nasdaq Capital Market. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of Longevity’s securities on The Nasdaq Capital Market.
The Notice states that Longevity has 45 calendar days to submit a plan to regain compliance with the Minimum Public Holders Rule. Longevity submitted its plan of compliance on October 12, 2020 and subsequently amended its plan of compliance on October 27, 2020. Longevity was granted additional time until November 30, 2020 to further supplement its plan of compliance to regain compliance with Minimum Public Holders Rule.
Material U.S. Tax Considerations
For more information on U.S. taxation considerations, see “Material Tax Consequences — Material U.S. Federal Income Tax Consequences.”
Accounting Treatment
The Merger will be accounted for as a recapitalization through an asset acquisition and not a business combination as Longevity does not meet the definition of a business in accordance with GAAP. For more information, see “The Merger — Accounting Treatment.”
Comparison of Rights of Longevity Shareholders and 4D Pharma Shareholders
As a result of the Merger, Longevity Shareholders will have the right to receive 4D Pharma Shares, payable in 4D Pharma ADSs, in consideration for their Longevity Shares. Former Longevity Shareholders will have different rights as holders of 4D Pharma ADSs than they did as Longevity Shareholders. For a summary of the material differences between the rights as holders of 4D Pharma ADSs rather than as Longevity Shareholders, see entitled “Comparison of Rights of Longevity Shareholders and 4D Pharma Shareholders.”
Selected Financial Data of Longevity
For information on selected financial data of Longevity, see “Selected Financial Data of Longevity.”
Selected Historic Financial Data of 4D Pharma
For information on selected financial data of 4D Pharma, see “Selected Historic Financial Data of 4D Pharma.”
Unaudited Pro Forma Condensed Combined Financial Information
For information on selected Unaudited Pro Forma Condensed Combined Financial Information, see “Unaudited Pro Forma Condensed Combined Financial Information.”
 
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COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
Market Prices
The primary trading market for 4D Pharma Shares is AIM, a market operated by London Stock Exchange plc, where 4D Pharma Shares trade under the ticker symbol “DDDD.” As of November 12, 2020, there were 131,467,935 4D Pharma Shares issued and outstanding. 4D Pharma will apply to list the 4D Pharma ADSs on The Nasdaq Capital Market under the symbol “LBPS.”
Longevity Shares trade on The Nasdaq Capital Market under the ticker symbol “LOAC.” As of November 12, 2020, there were 2,625,622 Longevity Shares outstanding.
The following table shows the closing sales price for 4D Pharma Shares from the Daily Official List of the London Stock Exchange in pounds sterling and as converted into U.S. dollars, the closing sales price for Longevity ordinary shares as reported by The Nasdaq Capital Market, and the market value (in U.S. dollars) of the Merger consideration per share, in each case on (i) October 21, 2020, the last trading day prior to the announcement of the original Merger Agreement, and (ii)      , the last practicable trading day before the printing of this proxy statement/prospectus:
Closing Sales
Price of
4D Pharma
Ordinary
Shares
Closing Sales
Price of Longevity
Ordinary Shares
Longevity
Ordinary Share
Price
Equivalent
Value
October 21, 2020
£ 0.93 $ 1.23 $$ 10.70 $ 1.42(1)
£ $ $ $ (2 )
(1)
Consists of the closing sales price of 4D Pharma Shares on October 21, 2020 of £0.932 multiplied by 7.5315, and converted into U.S. dollars at an exchange rate of £1 = $1.3149 (the prevailing exchange rate on such date).
(2)
Consists of the closing sales price of 4D Pharma Shares on           of £      multiplied by      , and converted into U.S. dollars at an exchange rate of £1 = $ (the prevailing exchange rate on such date).
The trading price of 4D Pharma Shares is denominated in pounds sterling and the pound-U.S. dollar exchange rate fluctuates continuously. You are urged to obtain current market quotations for 4D Pharma Shares and Longevity Shares and to assess pound/dollar exchange rates before making a decision with respect to the Merger Agreement.
 
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COMPARATIVE PER SHARE INFORMATION
The following table shows per share data regarding book value per share and earnings (loss) per share from continuing operations for Longevity and 4D Pharma on a historical and on a pro forma basis extracted from the data as presented in this proxy statement/prospectus in the section entitled “Unaudited Pro Forma Financial Information.” The pro forma combined book value per share information was computed as if the Merger had been completed on June 30, 2020. The Longevity pro forma combined equivalent information was calculated by multiplying the corresponding pro forma combined data by the exchange ratio of 7.5315 4D Pharma Shares, equivalent to, and payable in, 0.9414 of a 4D Pharma ADS, for each ordinary share of Longevity held. This information is intended to illustrate how each Longevity Share would have participated in the Combined Company’s earnings per share and book value per share if the Merger had been completed on the relevant dates. These amounts are provided for illustrative purposes only and do not necessarily reflect future amounts of earnings per share and book value per share of 4D Pharma.
The following comparative per share information is derived from the historical consolidated financial statements of each of Longevity and 4D Pharma. The information below should be read in conjunction with the sections entitled “Selected Historical Consolidated Financial Information of 4D Pharma” beginning on page 96, “Selected Historical Consolidated Financial Information of Longevity” beginning on page 95 and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 97 of this proxy statement/prospectus. See also “Where You Can Find More Information” on page 270.
Longevity’s 2020 fiscal year began on March 1, 2019 and ended on February 29, 2020; and 4D Pharma’s 2019 fiscal year began on January 1, 2019 and ended on December 31, 2019. For purposes of the following table, book value per share information is as at June 30, 2020, and earnings per share (basic and diluted) is for the six months ended June 30, 2020.
($)
Book Value Per Share(1)
4D Pharma historical
$ 0.37
Longevity historical
$ 1.90
Pro forma combined
$ 0.36
Basic Loss Per Share
4D Pharma historical
$ (0.15)
Longevity historical
$ (0.17)
Pro forma combined
$ (0.10)
Diluted Loss Per Share
4D Pharma historical
$ (0.15)
Longevity historical
$ (0.17)
Pro forma combined
$ (0.10)
(1)
Book Value Per Share is defined as total equity divided by issued shares less treasury shares held as of the balance sheet date.
 
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RISK FACTORS
Unless the context otherwise requires, all references in this section to “we,” “us,” or “our” refer to 4D Pharma and its subsidiaries prior to the Closing.
You should carefully consider the following information to understand the risks associated with the Merger and an investment in 4D Pharma ADSs, which you will receive pursuant to the Merger, before deciding whether to vote in favor of the Longevity Merger Proposal. You should also consider the other information in this proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus, including the Merger Agreement, which is filed as an exhibit to the registration statement of which this proxy statement/prospectus is a part. See “Where You Can Find More Information.”
Investing in 4D Pharma Shares or 4D Pharma ADSs involves risks, some of which are related to the merger. In considering the proposed merger, you should carefully consider the following information about these risks, as well as the other information included in or incorporated by reference into this proxy statement/prospectus, including 4D Pharma’s consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Results of Operations and Financial Condition.” The risks and uncertainties described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment in the ADSs. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm us and adversely affect the ADSs.
You are also encouraged to read and consider the risk factors specific to Longevity’s businesses (that may also affect 4D Pharma) described in Longevity’s annual report on Form 10-K for the year ended February 28, 2019 because, as a result of the Merger, they will become our risks.
Please see “Where You Can Find More Information” on page 270, for information on where you can find the periodic reports and other documents we and Longevity have filed with or furnished to the SEC.
SUMMARY RISK FACTORS
The below summary risks provide an overview of the material risks we are exposed to in the normal course of our business activities. The below summary risks do not contain all of the information that may be important to you, and you should read the summary risks below together with the more detailed discussion of risks set forth following this section under the heading “Risk Factors,” as well as elsewhere in this proxy/prospectus. The summary risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that it currently deems less significant may also affect our business operations or financial results. Consistent with the foregoing, we are exposed to a variety of risks, including those associated with the following:

We are a development-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern.

We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts. Such capital raises may cause dilution to our holders, including holders of our ADSs.

We are very early in our development efforts and may not be successful in our efforts to use our platform to build a pipeline of therapeutic candidates and develop marketable drugs. We may encounter substantial delays in the design, manufacture, regulatory approval, and launch of any of our therapeutic candidates, which could prevent us from commercializing any products we develop on a timely basis, if at all.

We have a limited operating history, have not initiated or completed any pivotal clinical trials, and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and likelihood of success and current and future viability.
 
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We have limited experience manufacturing our therapeutic candidates at commercial scale, and if we decide to expand our own manufacturing facility, we cannot assure you that we can manufacture our therapeutic candidates in compliance with regulations at a cost or in quantities necessary to make them commercially viable.

Our therapeutic candidates are Live Biotherapeutics Products, which are an unproven approach to therapeutic intervention.

There may be immunotoxicity associated with the fundamental pharmacology of our therapeutic candidates or our therapeutic candidates may cause undesirable side effects, toxicities or other undesirable side effects when used alone or in combination with other approved products or investigational new drugs.

Companies with differing microbiome or microbial products may produce negative clinical data which will adversely affect public perception of microbiome-derived therapies, and may negatively impact regulatory approval of, or demand for, our potential products.

The clinical trials of our therapeutic candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, EMA or other comparable foreign regulatory authorities or otherwise produce positive results and the outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA, EMA or other comparable foreign regulatory authorities.

If we experience delays or difficulties in the enrollment of patients in clinical trials or data from our clinical trials may changes as more patient data become available, our regulatory submissions or receipt of necessary regulatory approvals could be delayed or prevented.

We have begun developing and expect to continue to develop MRx0518 and potentially other therapeutic candidates in combination with other therapies, which exposes us to additional risks.

We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the products we develop, our commercial opportunities will be negatively impacted.

We expect to depend on collaborations with third parties for the research, development, and commercialization of certain of the therapeutic candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those therapeutic candidates.

If we are unable to obtain and maintain patent and other intellectual property protection for any therapeutic candidates we develop, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize any therapeutic candidates we may develop may be adversely affected.

We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause it to incur substantial costs.

Our operations and financial results could be adversely impacted by the COVID-19 pandemic in the United Kingdom, United States and the rest of the world.

The withdrawal of the United Kingdom from the EU, commonly referred to as “Brexit,” may adversely impact our ability to obtain regulatory approvals of our therapeutic candidates in the EU, result in restrictions or imposition of taxes and duties for importing our therapeutic candidates into the EU, and may require us to incur additional expenses in order to develop, manufacture and commercialize our therapeutic candidates in the EU.

Our ability to claim UK Research and Development tax credits would impact our cash requirements and the amount of additional capital required.
 
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Risks Related to the Merger
The completion of the Merger is subject to a number of important conditions, and the Merger Agreement may be terminated before the completion of the Merger in accordance with its terms. As a result, there is no assurance that the Merger will be completed.
The completion of the Merger is subject to the satisfaction or waiver, as applicable, of a number of important conditions set forth in the Merger Agreement, including the approval of the Merger by the shareholders of Longevity, our obtaining the 4D Pharma Shareholder Approvals, and several other customary closing conditions. If these conditions are not satisfied or, if applicable, waived by the date that is           , the Merger Agreement may be terminated by either party and you will not receive the Merger Consideration. For more information, see “The Merger Agreement.”
The Unaudited Pro Forma Condensed Combined Financial Information included in this proxy statement/prospectus may not be representative of our results after the Merger.
The Unaudited Pro Forma Condensed Combined Financial Information included elsewhere in this proxy statement/prospectus has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the transactions been consummated as of the dates indicated, nor is it indicative of our future operating results or financial position after the assumed consummation of the transactions. The Unaudited Pro Forma Condensed Combined Financial Information present the combination of our financial information and the financial information of Longevity after giving effect to the Merger and related adjustments described in the accompanying notes. See “Unaudited Pro Forma Condensed Combined Financial Information.”
The Unaudited Pro Forma Condensed Combined Financial Information does not reflect future events that may occur, including any future nonrecurring charges resulting from the Merger, and does not consider potential impacts of current market conditions on revenues or expense. The Unaudited Pro Forma Condensed Combined Financial Information is based in part on certain assumptions that we believe are reasonable under the circumstances. Our assumptions may not prove to be accurate over time.
You are being offered a fixed number 4D Pharma ADSs, which involves the risk of market fluctuations.
You will receive a fixed number of 4D Pharma ADSs representing 4D Pharma Shares in the Merger, rather than a number of 4D Pharma Shares or 4D Pharma ADSs with a fixed market value. Consequently, the market value of 4D Pharma Shares and 4D Pharma ADSs, and of the Longevity Shares at the time of the completion of the Merger, may fluctuate significantly from the date of this proxy statement/prospectus, and the exchange ratio in the Merger might not be reflective of future market price ratios of 4D Pharma Shares relative to Longevity securities. In addition, the market price of 4D Pharma Shares and Longevity Shares may be adversely affected by arbitrage activities occurring prior to the completion of the Merger. These sales, or the prospects of such sales in the future, could adversely affect the market price for, and the ability to sell in the market, Longevity Shares before the Merger is completed and 4D Pharma Shares before and 4D Pharma Shares and 4D Pharma ADs after the Merger is completed.
The Merger may not result in increased share liquidity for 4D Pharma’s shareholders, including former Longevity Shareholders, following the Merger.
We are undertaking the Merger because we believe that the Merger will provide us and Longevity, and our and their respective shareholders, with a number of advantages, including providing our shareholders and Longevity Shareholders with securities that we expect will enjoy greater market liquidity than the securities these shareholders currently hold. However, the Merger may not accomplish these objectives. We cannot predict whether a liquid market for the newly issued 4D Pharma ADSs and existing 4D Pharma Shares will be maintained. If the Merger does not result in increased liquidity for the securities held by our shareholders and Longevity Shareholders, you may experience a decrease in your ability to sell the 4D Pharma ADSs you receive in the Merger compared to your ability to sell the Longevity Shares you currently hold.
 
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Your ownership percentage in 4D Pharma will be less than the ownership percentage you currently hold in Longevity.
Your ownership percentage in 4D Pharma Shares following the Merger will be less than your existing ownership percentage in Longevity as a result of dilution attributable to the relative equity values of the companies involved in the Merger. Immediately after the Merger, it is anticipated that (i) the former shareholders of Longevity will hold as a group approximately 13.1% of the 4D Pharma Shares and (ii) the current shareholders of 4D Pharma will hold as a group approximately 86.9% of the outstanding capital stock of 4D Pharma Shares. As a result, you may have less influence over matters submitted to a vote of 4D Pharma shareholders.
Holders of Longevity Shares, warrants and rights may recognize gain for U.S. federal tax purposes from the Merger, regardless of whether the Merger qualifies as a reorganization for U.S. federal tax purposes.
Although the Merger is intended to qualify as a tax-deferred Reorganization, its qualification as such is subject to uncertainty. Even if the Merger qualifies as a Reorganization, U.S. Holders may be required to recognize gain on account of the application of the passive foreign investment company (PFIC) rules. As described in more detail in the discussion in the section of this proxy statement/prospectus titled “Material Tax Consequences — Material U.S. Federal Income Tax Consequences — Material U.S. Federal Income Tax Consequences of the Merger — Application of the PFIC Rules to the Merger,” if, as is expected to be the case, Longevity is treated as a PFIC for U.S. federal tax purposes and we are not, a U.S. holder who exchanges Longevity Shares, warrants or rights for 4D Pharma ADSs or warrants pursuant to the Merger generally will recognize gain (but not loss) for U.S. federal income tax purposes unless, solely with respect to a U.S. Holder’s Longevity Shares, Longevity is a “pedigreed QEF” with respect to such U.S. Holder (which requires the U.S. Holder to have made and maintained a “qualified electing fund” (QEF) election with respect to the Longevity Shares). It is not expected that a U.S. Holder of Longevity rights or warrants will have been able to make a QEF election with respect to such rights or warrants.
If the Merger does not qualify as a Reorganization, the Merger will be a taxable transaction for U.S. Holders.
For additional information, including regarding the treatment of Longevity warrants and rights, see “Material Tax Consequences — Material U.S. Federal Income Tax Consequences.” The tax consequences of the Merger to you will depend on the facts of your own situation. You should consult your tax advisor in this regard.
Risks Related to Our Financial Position and Need for Additional Capital after the Merger
We are a development-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
Since inception, we have incurred significant operating losses, have not generated any revenue from product sales to date and have financed our operations principally from proceeds from sales of our ordinary shares on AIM. Our net loss was $14.8 million for the six months ended June 30, 2020 and $30.3 million for the year ended December 31, 2019, respectively. As of June 30, 2020 we had an accumulated deficit of $132.5 million. We have devoted substantially all of our financial resources and efforts to developing our MicroRx LBP discovery platform, identifying potential therapeutic candidates and conducting preclinical and clinical studies of our therapeutic candidates. We are in the early stages of developing our therapeutic candidates, and we have not completed the development of any microbiome therapies or other drugs or biologics. As a result, we expect that it could be several years, if ever, before we have a commercialized product and generate revenue from product sales. Even if we succeed in receiving marketing approval for and commercialize one or more of our therapeutic candidates, we expect that we will continue to incur substantial research and development costs and other expenses in order to discover, develop and market additional potential products.
 
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We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

continue and expand clinical trials to investigate the efficacy of our current therapeutic candidates;

seek to enhance our discovery platform and discover and develop additional therapeutic candidates;

seek regulatory approvals for any therapeutic candidates that successfully complete clinical trials;

seek to establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval;

maintain, expand and protect our intellectual property portfolio; and

add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our operations as a public company.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. In addition, we anticipate that our expenses will increase substantially if we experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges. The net losses we incur may fluctuate significantly from quarter to quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our working capital, our ability to fund the development of our therapeutic candidates and our ability to achieve and maintain profitability and the performance of our ADSs.
We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts.
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for, MRx0518, MRx-4DP0004, Blautix and Thetanix and our other programs. Even if one or more of the therapeutic candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with sales, marketing, manufacturing and distribution activities. Our expenses could increase beyond expectations if we are required by the FDA, the EMA or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that we currently anticipate. Other unanticipated costs may also arise. Because the design and outcome of our planned and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate we develop. While we have met with the FDA and EMA to discuss the clinical development of our candidates, we have not discussed commercialization of any of programs, and we are not permitted to market or promote MRx0518, MRx-4DP0004, Blautix and Thetanix, or any other product candidate, before we receive marketing approval from the FDA or EMA. Accordingly, we will need to obtain substantial additional funding in order to continue our operations.
As of June 30, 2020, we had $12.4 million in cash and cash equivalents. As of such time, we expected our current cash and cash equivalents, including the sales of ordinary shares in July 2020, without giving effect to the Merger, would be sufficient to fund our current operating plan into the first quarter of 2021. Our estimate as to how long we expect the net proceeds from the sales of ordinary shares in July 2020, together with our existing cash and cash equivalents, to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
 
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We could be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources, which may dilute our stockholders or restrict our operating activities. We do not have any committed external source of funds. Adequate additional financing may not be available to us on acceptable terms, or at all. 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 may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business. If we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our therapeutic candidates, or grant licenses on terms that are not favorable to us. 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.
Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our research-stage programs, clinical trials or future commercialization efforts.
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our therapeutic candidates.
Our business depends entirely on the successful discovery, development and commercialization of therapeutic candidates. We have no products approved for commercial sale and do not anticipate generating any revenue from product sales in the short to medium term, if ever. To become and remain profitable, we, and any future collaborators, must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our therapeutic candidates, discovering additional therapeutic candidates, obtaining regulatory approval for these therapeutic candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenue that is significant enough to achieve profitability.
Because of the numerous risks and uncertainties associated with pharmaceutical product and biological 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. If we are required by the FDA or the EMA or other regulatory authorities to perform preclinical or clinical studies in addition to those currently expected, or if there are any delays in completing our preclinical studies or clinical trials or the development of any of our therapeutic candidates, our expenses could increase and revenue could be further delayed.
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 our value and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our therapeutic offerings or even continue our operations.
We have a limited operating history, have not initiated or completed any pivotal clinical trials, and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and likelihood of success and current and future viability.
We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. Since our inception in 2014, we have devoted substantially all of our resources to identifying and developing our therapeutic candidates, building our intellectual property portfolio, process development and manufacturing function, taking candidates through preclinical and clinical development, planning our business, raising capital and providing general and administrative support for these operations. All of our therapeutic candidates are in clinical or preclinical development.
Drug development is a highly uncertain undertaking and involves a substantial degree of risk. While we have now completed three clinical trials and have five more clinical trials ongoing, we do not have any products approved for sale. For instance, MRx0518, our lead immuno-oncology therapeutic candidate is
 
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being assessed in three separate clinical trials: in combination with Keytruda in patients with advanced or metastatic NSCLC, RCC, UC who are refractory to prior anti-PD-1/PD-L1 therapy, as a monotherapy in the neoadjuvant setting in patients undergoing surgical resection of solid tumors and in combination with hypofractionated radiotherapy in the neoadjuvant setting in patients with potentially resectable pancreatic cancer. We have also investigated the efficacy of two therapeutic candidates in our gastrointestinal program in clinical trials, Blautix and Thetanix for patients with IBS and pediatric Crohn’s disease, respectively. In our respiratory program, our therapeutic candidate, MRx-4DP0004, is being assessed in patients with partly controlled asthma and to prevent or reduce the hyperinflammatory response in patients hospitalized with COVID-19. We also have other therapeutic candidates in discovery and preclinical trials that are being assessed in a variety of disease types including, MRx1299 in solid tumors in various types of cancer, MRx0006 in rheumatoid arthritis and MRx0002 in multiple sclerosis. To date, however, we have not obtained marketing approval for and successfully commercialized a therapeutic candidate. We have devoted substantially all of our resources to research and development activities, including with respect to MRx0518, MRx-4DP0004, Blautix and Thetanix therapeutic candidates, MicroRx and other preclinical programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.
We have not yet demonstrated our ability to successfully initiate and complete a pivotal clinical trial, obtain marketing approvals, obtain regulatory approvals to commercialize a product, manufacture a commercial-scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. As a result, it may be more difficult for you to accurately predict our likelihood of success and viability than it could be if we had a longer operating history. In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical-stage biopharmaceutical companies in rapidly evolving fields. We also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities.
Additionally, we 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. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history.
We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern.
We may be forced to delay or reduce the scope of our development programs and/or limit or cease our operations if we are unable to obtain additional funding to support our current operating plan. We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern. Likewise, our independent registered accounting firm has included an explanatory paragraph in their report (included elsewhere in this proxy statement/prospectus) expressing substantial doubt about our ability to continue as a going concern. As of June 30, 2020, we had $12.4 million in cash and cash equivalents. Based on our available cash resources, including the sale of ordinary shares in July 2020, we believe we do not have sufficient cash and cash equivalents on hand to support current operations for at least one year from the date that the consolidated financial statements were issued. This condition raises substantial doubt about our ability to continue as a going concern. Nevertheless, our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We will need to raise additional capital to fund our future operations and remain as a going concern. To the extent that we raise additional capital through future equity offerings, the ownership interest of ordinary shareholders will be diluted, which dilution may be significant. However, we cannot guarantee that we will be able to obtain any or sufficient additional funding or that such funding, if available, will be obtainable on terms satisfactory to us. In the event that we are unable to obtain any or sufficient additional funding, there can be no assurance that we will be able to continue as a going concern.
Raising additional capital may cause dilution to our holders, including holders of our ADSs, restrict our operations or require us to relinquish rights to our technologies or therapeutic candidates.
We expect that significant additional capital will be needed in the future to continue our planned operations, including expanded research and development activities and potential commercialization efforts.
 
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Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through any or a combination of securities offerings, debt financings, license and collaboration agreements and research grants and tax credits.
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 shareholder. Debt financing and preferred equity financing, if available, could result in fixed payment obligations, and we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or therapeutic candidates or to grant licenses on terms that may not be favorable to us. In addition, we could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable.
If we raise funds through research grants or take advantage of research and development tax credits, we may be subject to certain requirements, which may limit our ability to use the funds or require us to share information from our research and development. 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 a third party to develop and market therapeutic candidates that we would otherwise prefer to develop and market ourselves. Raising additional capital through any of these or other means could adversely affect our business and the holdings or rights of our shareholders, and may cause the market price of our ADSs to decline.
Risks Related to the Discovery, Development, Regulatory Approval and Potential Commercialization of Our Therapeutic Candidates
We are very early in our development efforts and may not be successful in our efforts to use our platform to build a pipeline of therapeutic candidates and develop marketable drugs.
We are using our MicroRx platform, with an initial focus on developing therapies in immuno-oncology, gastrointestinal, inflammatory and CNS conditions, to discover and develop a pipeline of therapeutic candidates. While we believe our preclinical and clinical studies to date have validated our platform to a degree, we are at an early stage of development and our platform has not yet, and may never lead to, approvable or marketable products. We are developing these therapeutic candidates and additional therapeutic candidates that we intend to use to treat additional immunological diseases, respiratory diseases, gastrointestinal diseases, neuroinflammation and neurodegeneration, behavioral, and other therapeutic areas. We may have problems applying our technologies to these other areas, and our new therapeutic candidates may not demonstrate a comparable ability in treating disease as our initial or our competitors’ therapeutic candidates. Even if we are successful in identifying additional therapeutic candidates, they may not be suitable for clinical development as a result of our inability to manufacture products comprising bacteria which are challenging to produce on a large scale, or which have limited efficacy, unacceptable safety profiles or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance, or will be unacceptably challenging to manufacture. The success of our therapeutic candidates will depend on several factors, including the following:

completion of preclinical studies and clinical trials with positive results;

receipt of marketing approvals from applicable regulatory authorities;

obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our therapeutic candidates;

making arrangements with third-party manufacturers, or the success of our existing commercial manufacturing capabilities;

launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;
 
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entering into new collaborations throughout the development process as appropriate, from preclinical studies through to commercialization;

acceptance of our products, if and when approved, by patients, the medical community and third-party payors;

effectively competing with other therapies;

obtaining and maintaining coverage and adequate reimbursement by third-party payors, including government payors, for our products, if approved;

protecting our rights in our intellectual property portfolio;

operating without infringing or violating the valid and enforceable patents or other intellectual property of third parties;

maintaining an acceptable safety profile of the products following approval; and

maintaining and growing an organization of scientists and business people who can develop and commercialize our products and technology.
If we do not successfully develop and commercialize therapeutic candidates based upon our technological approach, we will not be able to obtain product revenue in future periods, which likely would result in significant harm to our financial position and adversely affect our stock price.
Certain of our therapeutic candidates are intended to act on cells in the small intestine to produce therapeutic effects in tissues remote from the gut with limited side effects. This biological interaction between the small intestine and the rest of the body may not function in humans the way we have observed in mice and our drugs may not reproduce the systemic effects we have seen in preclinical data.
We believe certain of our therapeutic candidates, including MRx0518, MRx-4DP0004, Blautix and Thetanix, work by modulating systemic responses via interactions with cells in the small intestine. This requires our therapeutics be dosed to achieve sufficient exposure to the small intestine, requiring them to firstly pass safely through the gut. Dosing to achieve sufficient exposure may require an inconvenient dosing regimen. Even with successful formulation and delivery to achieve proper exposure of our LBPs to the small intestine, we may not get sufficient or even any activity at the site of disease. This may be because our understanding of the mechanisms of the small intestine do not work in humans the way we believe they do. Despite the positive early results observed in our clinical studies and the strong justification in the academic literature to support the concept, these principles and the ability to use microbiome derived therapies to modulate the immune system and other systems has not yet been proven in large scale studies in humans.
Our therapeutic candidates are Live Biotherapeutics Products, which are an unproven approach to therapeutic intervention.
All of our LBP candidates are based on single strains of commensal bacterial. We have not, nor to our knowledge has any other company, received regulatory approval for an oral therapeutic based on this approach. We cannot be certain that our approach will lead to the development of approvable or marketable products. In addition, our LBPs may have different safety profiles and efficacy in various indications. Finally, regulatory agencies may lack experience in evaluating the safety and efficacy of products based on live bacteria, which could result in a longer than expected regulatory review process, increase our expected development costs and delay or prevent commercialization of our therapeutic candidates.
Even if our therapeutic candidates do not cause off target adverse events, there may be immunotoxicity associated with the fundamental pharmacology of our therapeutic candidates.
Our therapeutic candidates, including MRx0518, MRx-4DP0004 and Thetanix, work by modulating the immune system. While we have observed in preclinical studies that our LBPs have favorable side effect profiles, the pharmacological immune effects we induce are often remote from the gut. Although not observed in any of the clinical studies we have run to date, systemic immunomodulation from taking our LBPs could lead to immunotoxicity in patients, which may cause us or regulatory authorities to delay, limit or
 
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suspend clinical development. Other immunomodulatory agents have shown immunotoxicity. In the case of immune activating agents, such as pembrolizumab and nivolumab, induction of adverse auto-immune events has been observed in some patients. Immunotoxicity in one program could cause regulators to view these adverse events as a class effect of our LBPs, which may impact the timing of the development of our pipeline of potential therapeutic candidates. Even if the adverse events are manageable, the profile of the drug may be such that it limits or diminishes the possible number of patients who could receive our therapy.
Our therapeutic candidates may cause undesirable side effects, toxicities or other undesirable side effects when used alone or in combination with other approved products or investigational new drugs, or have other properties that may result in a safety profile that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, prevent market acceptance, or result in significant negative consequences following marketing approval, if any.
If our therapeutic candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trials when used alone or in combination with other approved products or investigational new drugs we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. Any of these occurrences may prevent us from achieving or maintaining market acceptance of the affected product candidate and may harm our business, financial condition and prospects significantly.
For example, our current therapeutic candidates consist of lyophilized live biological material that remain viable in the gastrointestinal tract of humans. If these bacteria exert a pathogenic effect, despite this not having been observed in any clinical trials to date, the bacteria carry a risk of causing infections in patients. Some infections may require treatment with antibiotics to eliminate the pathogenic bacteria. All our therapeutic candidates are screened for antibiotic sensitivity but it is possible that if antibiotic therapy does not eliminate the live biological material, a resistant version of our strain could remerge. These events, while unlikely, could cause a delay in our clinical development and/or could increase the regulatory standards for the entire class of microbiome derived therapies. In an instance where the infection risk of taking our therapeutic candidates is high, this may cause the benefit risk profile of therapy to be non-competitive in the market and may lead to discontinuation of development of the product.
In addition, it is possible that infections from our therapeutic candidates could be rare and not frequently observed in our clinical trials. In larger post marketing authorization trials, however, data could show that the infection risk, while small, does exist. If unacceptable side effects arise in the development of our therapeutic candidates, we, the FDA, EMA or comparable foreign regulatory authorities, the IRBs at the institutions in which our studies are conducted, or ethics committees, or the DSMB could suspend or terminate our clinical trials or the FDA, EMA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our therapeutic candidates for any or all targeted indications. Although none have been observed in any of our clinical studies to date, treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our therapeutic candidates to understand the side effect profiles for the LBPs we are studying in our clinical trials and upon any commercialization of any of our therapeutic candidates. Inadequate training in recognizing or managing the potential side effects of our therapeutic candidates could result in patient injury or death. Any of these occurrences may harm our business, financial condition and prospects significantly.
If any of our therapeutic candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw their approval of the product;

we may be required to recall a product or change the way such product is administered to patients;
 
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additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;

we may be required to conduct post-marketing studies or clinical trials;

regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

we may be required to implement a risk evaluation and mitigation strategy or create a medication guide outlining the risks of such side effects for distribution to patients;

we could be sued and held liable for harm caused to patients;

the product may become less competitive; and

our reputation may suffer.
Any of the foregoing events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and result in the loss of significant revenues to us, which would materially and adversely affect our results of operations and business.
Companies with differing microbiome or microbial products may produce negative clinical data which will adversely affect public perception of microbiome-derived therapies, and may negatively impact regulatory approval of, or demand for, our potential products.
Our LBP therapeutic candidates are pharmaceutical compositions of commensal bacteria. While we believe our approach is distinct from other types of microbiome therapy, negative data from clinical trials using microbiome-based therapies and other types of microbiome therapy could negatively impact the perception of the therapeutic use of microbiome-based products. This could negatively impact our ability to enroll patients in clinical trials. The clinical and commercial success of our potential products will depend in part on the public and clinical communities’ acceptance of the use of LBPs. Moreover, our success depends upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of therapeutic candidates we may develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.
Adverse events in our preclinical studies or clinical trials or those of our competitors or of academic researchers utilizing microbiome technologies, even if not attributable to our therapeutic candidates, and the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our potential therapeutic candidates, stricter labeling requirements for our therapeutic candidates that are approved, if any, and a decrease in demand for any such products.
We have limited experience manufacturing our therapeutic candidates at commercial scale, and if we decide to expand our own manufacturing facility, we cannot assure you that we can manufacture our therapeutic candidates in compliance with regulations at a cost or in quantities necessary to make them commercially viable.
We have significantly invested in our in-house manufacturing facility for our therapeutic candidates for production at a commercial scale. Although we have taken seven strains through process development and scale-up to be able to manufacture clinic-ready product, and our in-house facility has the ability to produce over 30 million capsules of current good manufacturing practice (cGMP) drug product per year, with capacity to support our ongoing trials and potentially small-scale commercial supply, we have limited experience in commercial-scale manufacturing of our therapeutic candidates. We are investigating external manufacturing capability as we scale our therapeutic candidates and prepare for commercialization of one or more of our therapeutic candidates. Currently, we are dependent on the manufacturing of product for each of our therapeutic candidates at our internal manufacturing facility. Developing our in-house manufacturing facility, required and continues to require substantial additional funds and hiring and training a significant number of qualified employees to staff this facility. We may not be able to develop commercial-scale manufacturing facilities that are able to produce an adequate supply of materials in the event of significant commercial uptake of one of LBP therapeutics.
 
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Although having in-house control of production has been a significant advantage in a field that has experienced significant hurdles relating to manufacturing, the equipment and facilities employed in the manufacture of pharmaceuticals are subject to stringent qualification requirements by regulatory agencies, including validation of facility, equipment, systems, processes and analytics. Our in-house manufacturing facility is currently compliant with cGMP regulations. However, if we are found to no longer comply with cGMP regulations or similar regulatory requirements outside of the United States or if we cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, EMA or others, we will not be able to secure and/or maintain marketing approval for our manufacturing facility or any future facilities.
Catastrophic events at our manufacturing facility or loss of our master cell banks could significantly impair our ability to manufacture our therapeutic candidates.
We currently manufacture all of the material for our therapeutic candidates out of our sole manufacturing facility in Leòn, Spain. We have not undertaken a systematic analysis of the potential consequences to our business and financial results if our manufacturing facility is impacted by flood, fire, earthquake, power loss, terrorist activity or other disasters and do not have a recovery plan or alternative manufacturing facility. In addition, we do not carry sufficient insurance to compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us could harm our business. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.
In addition, our LBP therapeutic candidates require that we manufacture from MCBs of strains from our library of single strain bacteria. There is a possibility of a catastrophic failure or destruction of our MCBs. This could make it impossible for us to continue to manufacture a specific product. Recreating and recertifying our MCBs is possible, as we have back-up stocks of our clinical candidates stored remotely from the MCBs, but not certain and could put at risk the supply of our therapeutic candidates for preclinical studies or clinical trials or any products, if approved, to our customers.
The regulatory approval processes of the FDA, EMA and other comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval of our therapeutic candidates, we will be unable to generate product revenue and our business will be substantially harmed.
Obtaining approval by the FDA, EMA and other comparable foreign regulatory authorities is unpredictable, typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the type, complexity and novelty of the therapeutic candidates involved. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. Even if we eventually complete clinical testing and receive approval for our therapeutic candidates, the FDA, EMA and other comparable foreign regulatory authorities may approve our therapeutic candidates for a more limited indication or a narrower patient population than we originally requested or may impose other prescribing limitations or warnings that limit the product’s commercial potential. We have not submitted for, or obtained, regulatory approval for any product candidate, and it is possible that none of our therapeutic candidates will ever obtain regulatory approval. Further, development of our therapeutic candidates and/or regulatory approval may be delayed for reasons beyond our control.
Applications for our therapeutic candidates could fail to receive regulatory approval for many reasons, including the following:

the FDA, EMA or other comparable foreign regulatory authorities may disagree with the design, implementation or results of our clinical trials

the FDA, EMA or other comparable foreign regulatory authorities may determine that our therapeutic candidates are not safe and effective, are only moderately effective or have undesirable or
 
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unintended side effects, toxicities or other characteristics that preclude our obtaining marketing approval or prevent or limit commercial use;

the population studied in the clinical trial may not be sufficiently broad or representative to assure efficacy and safety in the full population for which we seek approval;

the FDA, EMA or other comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

we may be unable to demonstrate to the FDA, EMA or other comparable foreign regulatory authorities that our product candidate’s risk-benefit ratio for its proposed indication is acceptable;

the FDA, EMA or other comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;

the FDA, EMA or other comparable regulatory authorities may fail to approve companion diagnostic tests required for our therapeutic candidates; and

the approval policies or regulations of the FDA, EMA or other comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in our failing to obtain regulatory approval to market any of our therapeutic candidates, which would significantly harm our business, results of operations and prospects.
The clinical trials of our therapeutic candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, EMA or other comparable foreign regulatory authorities or otherwise produce positive results.
Before obtaining marketing approval from the FDA, EMA or other comparable foreign regulatory authorities for the sale of our therapeutic candidates, we must complete preclinical development and extensive clinical trials to demonstrate with substantial evidence the safety and efficacy of such therapeutic candidates. Clinical testing is expensive, difficult to design and implement, can take many years to complete and its ultimate outcome is uncertain. A failure of one or more clinical trials can occur at any stage of the process. The outcome of preclinical studies and early-stage clinical trials may not be predictive of the success of later clinical trials. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their therapeutic candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their drugs.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent receipt of marketing approval or our ability to commercialize our therapeutic candidates, including:

receipt of feedback from regulatory authorities that requires us to modify the design of our clinical trials;

negative or inconclusive clinical trial results that may require us to conduct additional clinical trials or abandon certain drug development programs;

the number of patients required for clinical trials being larger than anticipated, enrollment in these clinical trials being slower than anticipated or participants dropping out of these clinical trials at a higher rate than anticipated;

third-party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

the suspension or termination of our clinical trials for various reasons, including non-compliance with regulatory requirements or a finding that our therapeutic candidates have undesirable side effects or other unexpected characteristics or risks;

the cost of clinical trials of our therapeutic candidates being greater than anticipated;

the supply or quality of our therapeutic candidates or other materials necessary to conduct clinical trials of our therapeutic candidates being insufficient or inadequate; and
 
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regulators revising the requirements for approving our therapeutic candidates.
If we are required to conduct additional clinical trials or other testing of our therapeutic candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our therapeutic candidates or other testing in a timely manner, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may incur unplanned costs, be delayed in seeking and obtaining marketing approval, if we receive such approval at all, receive more limited or restrictive marketing approval, be subject to additional post-marketing testing requirements or have the drug removed from the market after obtaining marketing approval.
The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA, EMA or other comparable foreign regulatory authorities.
We will be required to demonstrate with substantial evidence through well-controlled clinical trials that our therapeutic candidates are safe and effective for use in a diverse population before we can seek marketing approvals for their commercial sale. Success in preclinical studies and early-stage clinical trials does not mean that future clinical trials will be successful. For example, we have not yet completed a clinical trial of MRx-4DP0004. While we have received positive results from the preclinical trials of MRx-4DP0004, we do not know how it will perform in current or future clinical trials as it has in prior preclinical studies. Therapeutic candidates in later-stage clinical trials may fail to demonstrate sufficient safety and efficacy to the satisfaction of the FDA, EMA and other comparable foreign regulatory authorities despite having progressed through preclinical studies and early-stage clinical trials.
Additionally, while we are aware of several other clinical-stage companies developing new therapeutics, to our knowledge, there are no therapeutics approved for the treatment of patients with solid tumors that are refractory to ICI therapy. However, the development of MRx0518 and our stock price may be impacted by inferences, whether correct or not, that are drawn between the success of our therapeutic candidates and those of other companies. Regulatory authorities may also limit the scope of later-stage trials until we have demonstrated satisfactory safety, which could delay regulatory approval, limit the size of the patient population to which we may market our therapeutic candidates, or prevent regulatory approval.
In some instances, there can be significant variability in safety and efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial protocols, differences in size and type of the patient populations, differences in and adherence to the dose and dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. Patients treated with our therapeutic candidates may also be undergoing surgical, and other treatments and may be using other approved products or investigational new drugs, which can cause side effects or adverse events that are unrelated to our therapeutic candidates. As a result, assessments of efficacy can vary widely for a particular patient, and from patient to patient and site to site within a clinical trial. This subjectivity can increase the uncertainty of, and adversely impact, our clinical trial outcomes.
We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain approval to market any of our therapeutic candidates.
If we experience delays or difficulties in the enrollment of patients in clinical trials, our regulatory submissions or receipt of necessary regulatory approvals could be delayed or prevented.
We may not be able to initiate or continue clinical trials for our therapeutic candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA, EMA or other comparable foreign regulatory authorities. We are developing our therapeutic candidates, MRx0518, to treat multiple types of cancer, Blautix, to treat both major subtypes of IBS (IBS-C and IBS-D), Thetanix, to treat pediatric patients with Crohn’s disease and ulcerative colitis, and MRx-4DP0004 to treat asthma and COVID-19. There are a limited number of patients from which to draw for clinical studies for many of our therapeutic candidates.
Enrollment of patients in our clinical trials and maintaining patients in our ongoing clinical trials may be delayed or limited as our clinical trial sites limit their onsite staff or temporarily close as a result of the
 
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COVID-19 pandemic. In addition, patients may not be able to visit clinical trial sites for dosing or data collection purposes due to limitations on travel and physical distancing imposed or recommended by federal or state governments or patients’ reluctance to visit the clinical trial sites during the pandemic. These factors resulting from the COVID-19 pandemic could delay the anticipated readouts from our clinical trials and our regulatory submissions. For example, enrollment for our Phase I/II clinical trial of MRx-4DP0004 in patients with partly controlled asthma has been impacted due to factors associated with the COVID-19 pandemic, potentially delaying expected preliminary data for this clinical trial.
Patient enrollment is also affected by other factors including:

the severity of the disease under investigation;

the patient eligibility criteria for the study in question;

the existence of competing clinical trials with the same patient population;

the perceived risks and benefits of the product candidate under study;

the availability of other treatments for the disease under investigation;

the efforts to facilitate timely enrollment in clinical trials;

our payments for conducting clinical trials;

the patient referral practices of physicians;

the ability to monitor patients adequately during and after treatment; and

the proximity and availability of clinical trial sites for prospective patients.
Our inability to enroll a sufficient number of patients or volunteers for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our therapeutic candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.
Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose preliminary or topline data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our ADSs.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly
 
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disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on therapeutic 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 intend to focus on developing therapeutic candidates that we identify as most likely to succeed, in terms of both regulatory approval and commercialization. As a result, we may forego or delay pursuit of opportunities with other therapeutic candidates or for other indications that may 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 product development programs and therapeutic 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.
We have begun developing and expect to continue to develop MRx0518 and potentially other therapeutic candidates in combination with other therapies, which exposes us to additional risks.
We have begun developing and intend to continue to develop MRx0518 and potentially other programs, in combination with one or more currently approved therapies. In 2019, we initiated a Phase I/II study evaluating our LBP MRx0518 in combination with Keytruda in heavily pre-treated patients with secondary resistant tumors refractory to ICIs. Although we have dosed patients with MRx0518 and Keytruda without any observed drug related serious adverse events, as we move into larger study populations, we cannot exclude the possibility of observing that some patients may not be able to tolerate MRx0518 or any of our other therapeutic candidates in combination with other therapies or dosing of MRx0518 in combination with other therapies may have unexpected consequences. Even if any of our therapeutic candidates were to receive marketing approval or be commercialized for use in combination with other existing therapies, we would continue to be subject to the risks that the FDA, EMA or other comparable foreign regulatory authorities could revoke approval of the therapy used in combination with any of our therapeutic candidates, or safety, efficacy, manufacturing or supply issues could arise with these existing therapies. In addition, it is possible that existing therapies with which our therapeutic candidates are approved for use could themselves fall out of favor or be relegated to later lines of treatment. This could result in the need to identify other combination therapies for our therapeutic candidates or our own products being removed from the market or being less successful commercially.
Additionally, if the third-party providers of therapies or therapies in development used in combination with our therapeutic candidates are unable to produce sufficient quantities for clinical trials or for commercialization of our therapeutic candidates, or if the cost of combination therapies are prohibitive, our development and commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects. For example, for our Phase I/II trial of MRx0518 in combination with the ICI Keytruda, we entered into a clinical trial collaboration and supply agreement with MSD. Under the terms of the clinical trial collaboration and supply agreement, MSD supply us with Keytruda to use in combination with MRx0518. If this agreement terminates and we are unable to obtain Keytruda on the current terms, the cost to us to conduct this trial may significantly increase.
Even if any of our therapeutic candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, hospitals, third-party payors and others in the medical community necessary for commercial success.
Even if our therapeutic candidates pass scrutiny by regulatory authorities, since LBPs are a new therapeutic modality, the degree of market acceptance by physicians, patients, hospitals, third-party payors and others in the medical community of any of our approved therapeutic candidates will depend on a number of factors, including:
 
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the efficacy and safety profile as demonstrated in clinical trials compared to alternative treatments;

the timing of market introduction of the product candidate as well as competitive products;

the clinical indications for which a product candidate is approved;

restrictions on the use of therapeutic candidates in the labeling approved by regulatory authorities, such as boxed warnings or contraindications in labeling, or a risk evaluation and mitigation strategy, if any, which may not be required of alternative treatments and competitor products;

the potential and perceived advantages of our therapeutic candidates over alternative treatments;

the cost of treatment in relation to alternative treatments;

the availability of coverage and adequate reimbursement by third-party payors, including government authorities;

the availability of an approved product candidate for use as a combination therapy;

relative convenience and ease of administration;

the willingness of the target patient population to try new therapies and undergo required diagnostic screening to determine treatment eligibility and of physicians to prescribe these therapies and diagnostic tests;

the effectiveness of sales and marketing efforts;

unfavorable publicity relating to our therapeutic candidates; and

the approval of other new therapies for the same indications.
If any of our therapeutic candidates are approved but do not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we may not generate or derive sufficient revenue from that product candidate and our financial results could be negatively impacted.
If we are unable to establish sales or marketing capabilities or enter into agreements with third parties to sell or market our therapeutic candidates, we may not be able to successfully sell or market our therapeutic candidates that obtain regulatory approval.
We currently do not have and have never had a marketing or sales team. In order to commercialize any therapeutic candidates, if approved, we must build marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services for each of the territories in which we may have approval to sell or market our therapeutic candidates. We may not be successful in accomplishing these required tasks.
Establishing an internal sales or marketing team with technical expertise and supporting distribution capabilities to commercialize our therapeutic candidates will be expensive and time-consuming, and will require significant attention of our executive officers to manage. Any failure or delay in the development of our internal sales, marketing and distribution capabilities could adversely impact the commercialization of any of our therapeutic candidates that we obtain approval to market, if we do not have arrangements in place with third parties to provide such services on our behalf. Alternatively, if we choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, we will be required to negotiate and enter into arrangements with such third parties relating to the proposed collaboration and such arrangements may prove to be less profitable than commercializing the product on our own. If we are unable to enter into such arrangements when needed, on acceptable terms, or at all, we may not be able to successfully commercialize any of our therapeutic candidates that receive regulatory approval, or any such commercialization may experience delays or limitations. If we are unable to successfully commercialize our approved therapeutic candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we may incur significant additional losses.
 
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We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the products we develop, our commercial opportunities will be negatively impacted.
The development and commercialization of new drug and biologic products is highly competitive and is characterized by rapid and substantial technological development and product innovations. We face competition with respect to our current therapeutic candidates and will face competition with respect to therapeutic candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. We are aware of a number of large pharmaceutical and biotechnology companies, including AbbVie Inc., Amgen Inc., AstraZeneca plc, Biogen Inc., Bristol-Myers Squibb, F. Hoffmann-La Roche A.G., Novartis, Janssen, GlaxoSmithKline plc, Johnson & Johnson, MSD, Novartis International A.G., Pfizer Inc., Regeneron Pharmaceuticals, Inc., Sanofi S.A. and Teva Pharmaceutical Industries Ltd., as well as smaller, early-stage companies, that are pursuing the development of products, including microbiome-based therapeutics in some instances, for disease indications we are targeting. Some of these competitive products and therapies are based on scientific approaches that are similar to our approach, and others may be based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations.
Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources, established presence in the market and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and reimbursement 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.
These third parties compete with us in recruiting and retaining qualified scientific, sales and marketing 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.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could delay us from obtaining FDA approval to market our therapeutic candidates and result in our competitors establishing a strong market position before we are able to enter the market, especially for any competitor developing a microbiome-based therapeutic which will likely share our same regulatory approval requirements. For more information, please see “Risk Factors — Our therapeutic candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated, which may delay us from marketing our therapeutic candidates.” In addition, our ability to compete may in future be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic or biosimilar products.
Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our therapeutic candidates in 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 therapeutic candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

regulatory investigations, product recalls or withdrawals, or labeling, marketing or promotional restrictions;

decreased demand for any therapeutic candidates or products that we may develop;

injury to our reputation and significant negative media attention;

withdrawal of clinical trial participants;
 
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significant costs to defend the related litigation;

substantial monetary awards to trial participants or patients;

loss of revenue;

reduced resources of our management to pursue our business strategy; and

the inability to commercialize any products that we may develop.
Our current product liability insurance coverage and any product liability insurance coverage that we acquire in the future may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our therapeutic candidates. 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.
Our therapeutic candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated, which may delay us from marketing our therapeutic candidates.
Even if we are successful in achieving regulatory approval to commercialize a product candidate faster than our competitors, we may face competition from biosimilars. The BPCIA created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.
We believe that any of our therapeutic candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our therapeutic candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
In Europe, the European Commission has granted marketing authorizations for biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In Europe, a competitor may reference data supporting approval of an innovative biological product but will not be able to get on the market until 10 years after the time of approval of the innovative product. This 10-year marketing exclusivity period will be extended to 11 years if, during the first eight of those 10 years, the marketing authorization holder obtains an approval for one or more new therapeutic indications that bring significant clinical benefits compared with existing therapies. In addition, companies may be developing biosimilars in other countries that could compete with our products. If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences.
Failure to obtain marketing approval in international jurisdictions would prevent our therapeutic candidates from being marketed abroad.
In order to market and sell our therapeutic candidates in the United States, the European Union and many other jurisdictions, we or our collaborators must obtain separate marketing approvals and comply
 
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with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval in foreign countries may differ substantially from that required to obtain FDA, EMA or other applicable regulatory approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA, EMA or other applicable regulatory approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or our collaborators may not obtain approvals for our therapeutic candidates from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market.
Any therapeutic candidates we develop may become subject to unfavorable third-party coverage and reimbursement practices, as well as pricing regulations.
The availability and extent of coverage and adequate reimbursement by third-party payors, including government health administration authorities, private health coverage insurers, managed care organizations and other third-party payors is essential for most patients to be able to afford expensive treatments. Sales of any of our therapeutic candidates that receive marketing approval will depend substantially, both in the United States and internationally, on the extent to which the costs of such therapeutic candidates will be covered and reimbursed by third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our therapeutic candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize an adequate return on our investment. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval.
There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, for example, principal decisions about reimbursement for new products are typically made by the CMS, an agency within the HHS. CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare, and private third-party payors often follow CMS’s decisions regarding coverage and reimbursement to a substantial degree. However, one third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product. As a result, the coverage determination process is often time-consuming and costly. This process will require us to provide scientific and clinical support for the use of our products to each third-party payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. The approval process may be more cumbersome for us since our LBP therapeutic candidates have not been previously marketed for the uses we propose.
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. Further, such payors are increasingly challenging the price, examining the medical necessity and reviewing the cost effectiveness of medical therapeutic candidates. There may be especially significant delays in obtaining coverage and reimbursement for newly approved drugs. Third-party payors may limit coverage to specific therapeutic candidates on an approved list, known as a formulary, which might not include all FDA-approved drugs for a particular indication. We may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of our products. Nonetheless, our therapeutic candidates may not be considered medically necessary or cost effective. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be.
In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products. Similar
 
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challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will apply to any companion diagnostics we invent and develop with intent to commercialize. Additionally, if any companion diagnostic provider is unable to obtain reimbursement or is inadequately reimbursed, that may limit the availability of such companion diagnostic, which would negatively impact prescriptions for our therapeutic candidates, if approved.
Outside the United States, the commercialization of therapeutics is generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the pricing and usage of therapeutics such as our therapeutic candidates. In many countries, particularly the countries of the European Union, medical product prices are subject to varying price control mechanisms as part of national health systems. In these countries, pricing negotiations with governmental authorities can take considerable time after a product receives marketing approval. 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. In general, product prices under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our therapeutic candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.
If we are unable to establish or sustain coverage and adequate reimbursement for any therapeutic candidates from third-party payors, the adoption of those products and sales revenue will be adversely affected, which, in turn, could adversely affect the ability to market or sell those therapeutic candidates, if approved. Coverage policies and third-party payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
We expect to depend on collaborations with third parties for the research, development, and commercialization of certain of the therapeutic candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those therapeutic candidates.
We currently use and expect to continue to work with third-party collaborators for the research, development, and commercialization of certain of the therapeutic candidates we may develop. For example, we have entered into a research collaboration and option to license agreement with MSD to discover and develop LBPs for vaccines. We also entered into a strategic alliance with the University of Texas MD Anderson Cancer Center. To date, we have initiated two clinical trials as part of this strategic alliance. For additional information on our relationships with MSD and the University of Texas MD Anderson Cancer Center, see “Business — Collaborations.” Our likely collaborators for any other collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies, biotechnology companies and academic institutions. While we generally impose diligence obligations on our collaborators, we often have limited control over the amount and timing of resources that they dedicate to the development or potential commercialization of any therapeutic candidates we may seek to develop with them. Our ability to generate revenue from these arrangements with commercial entities will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any collaboration that we enter into.
Collaborations involving any therapeutic candidates we may develop, pose the following risks to us:

despite being subject to contractual diligence obligations, collaborators generally control the efforts and resources that they will apply to these collaborations;

collaborators may not properly obtain, maintain, enforce, or defend intellectual property or proprietary rights relating to our therapeutic candidates or research programs or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity, and enforceability of our intellectual property;
 
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collaborators may own or co-own intellectual property covering our therapeutic candidates or research and development programs that results from our collaboration with them, and in such cases, we may not have the right to commercialize such intellectual property or such therapeutic candidates or research programs;

we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us;

collaborators may decide to not pursue development and commercialization of any therapeutic candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities or collaborators may elect to fund or commercialize a competing product;

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our therapeutic candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

collaborators may restrict us from researching, developing, or commercializing certain products or technologies without their involvement;

collaborators with marketing and distribution rights to one or more therapeutic candidates may not commit sufficient resources to the marketing and distribution of such therapeutic candidates;

we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control;

collaborators may grant sublicenses to our technology or therapeutic candidates or undergo a change of control, and the sublicensees or new owners may decide to take the collaboration in a direction which is not in our best interest;

collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how, or intellectual property of the collaborator relating to our products, therapeutic candidates, or research programs;

key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators;

collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders, or disrupt our management and business;

if our collaborators do not satisfy their obligations under our agreements with them, or if they terminate our collaborations with them, we may not be able to develop or commercialize therapeutic candidates as planned;

collaborations may require us to share in development and commercialization costs pursuant to budgets that we do not fully control, and our failure to share in such costs could have a detrimental impact on the collaboration or our ability to share in revenue generated under the collaboration;

collaborations may be terminated in their entirety or with respect to certain therapeutic candidates or technologies and, if so terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable therapeutic candidates or technologies; and

collaboration agreements may not lead to development or commercialization of therapeutic candidates in the most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our development or commercialization program under such collaboration could be delayed, diminished, or terminated.
We may face significant competition in seeking appropriate collaborations. Recent business combinations among biotechnology and pharmaceutical companies have resulted in a reduced number of potential
 
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collaborators. In addition, the negotiation process is time-consuming and complex, and we may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, 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 increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop therapeutic candidates or bring them to market and generate product revenue.
We may not realize the benefit of collaborations if we or our collaborator elects not to exercise the rights granted under the agreement or if we or our collaborator are unable to successfully integrate a product candidate into existing operations and company culture. In addition, if our agreement with any of our collaborators terminates, our access to technology and intellectual property licensed to us by that collaborator may be restricted or terminate entirely, which may delay our continued development of our therapeutic candidates utilizing the collaborator’s technology or intellectual property or require us to stop development of those therapeutic candidates completely. We may also find it more difficult to find a suitable replacement collaborator or attract new collaborators, and our development programs may be delayed or the perception of us in the business and financial communities could be adversely affected. Many of the risks relating to product development, regulatory approval, and commercialization described in this “Risk Factors” section also apply to the activities of our collaborators and any negative impact on our collaborators may adversely affect us.
We 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, research and studies.
We rely, and expect to continue to rely, on third parties, such as CROs, clinical data management organizations, medical institutions, clinical investigators and potential pharmaceutical partners, to conduct and manage our clinical trials, including our clinical trials of MRx0518, MRx-4DP0004 and potential future trials with Blautix and Thetanix.
Third parties have a significant role in the conduct of our clinical trials and the subsequent collection and analysis of data. These third parties are not our employees, and except for obligations imposed upon those third parties and remedies available to us under our agreements with such third parties, we have limited ability to control the amount or timing of resources that any such third party will devote to our clinical trials. The third parties we rely on for these services may also have relationships with other entities, some of which may be our competitors. Some of these third parties may be able to terminate their engagements with us at any time. If we need to enter into alternative arrangements with a third party, it would delay our drug development activities.
Our reliance on these third parties for such drug development activities will reduce our control over these activities but will not relieve us of our regulatory 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 GCP standards, regulations for conducting, recording and reporting the results of clinical trials to assure that data and reported results are reliable and accurate and that the rights, integrity and confidentiality of trial participants are protected. The EMA also requires us to comply with similar standards. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials substantially comply with GCP regulations. In addition, our clinical trials must be conducted with product produced under current cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the marketing approval process.
 
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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 therapeutic candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our therapeutic candidates.
We also rely on third parties to store and distribute drug product required by our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our therapeutic candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent and other intellectual property protection for any therapeutic candidates we develop, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize any therapeutic candidates we may develop may be adversely affected.
Our commercial success will depend in large part on our ability to obtain and maintain patent, trademark, trade secret and other intellectual property protection of our therapeutic candidates and other technology, methods used to manufacture them and methods of treatment, as well as successfully defending our patent and other intellectual property rights against third-party challenges. It is difficult and costly to protect and enforce intellectual property rights, and we may not be able to ensure the same for every product. Our ability to stop unauthorized third parties from making, using, selling, offering to sell, importing or otherwise commercializing our therapeutic candidates is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.
We seek to protect our proprietary position by developing a comprehensive intellectual property portfolio including filing patent applications and obtaining granted patents in the United States and abroad related to our therapeutic candidates that are important to our business. If we are unable to obtain or maintain patent protection with respect to a product candidate we may develop, or if the scope of the patent protection secured is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours and our ability to commercialize that product candidate may be adversely affected.
The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant markets. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors, and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art. Furthermore, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are uncertain and we may become involved in complex and costly litigation. Our pending and future patent applications may not result in patents being issued which protect therapeutic candidates or effectively prevent others from commercializing competitive technologies and therapeutic candidates.
 
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Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain, enforce and defend our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our owned and licensed patent rights. We also cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will be valid and enforceable and provide sufficient protection from competitors. Any patents that we own or in-license may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether any therapeutic candidates we may develop will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.
In addition, given the amount of time required for the development, testing, and regulatory review of new therapeutic candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Moreover, some of our owned patents and patent applications may in the future be, co-owned by us with third parties. If we are unable to obtain an exclusive license to such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
Our patents and patent applications contain claims directed to compositions of matter on therapeutic candidates, as well as methods directed to the use of such therapeutic candidates for treatment of specific indications. Method-of-use patents do not prevent a competitor or other third party from developing or marketing an identical product for an indication that is outside the scope of the patented method. Moreover, with respect to method-of-use patents, even if competitors or other third parties do not actively promote their product for our targeted indications or uses for which we may obtain patents, providers may recommend that patients use these products off-label, or patients may do so themselves.
The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own may fail to result in issued patents with claims that cover our therapeutic candidates or uses thereof in the United States or in other foreign countries. For example, while our patent applications are pending, we may be subject to a third party pre-issuance submission of prior art to the United States Patent and Trademark Office, or USPTO, or become involved in interference or derivation proceedings, or equivalent proceedings in foreign jurisdictions. Even if patents do successfully issue, third parties may challenge their inventorship, validity, enforceability or scope, including through opposition, revocation, reexamination, post-grant and inter partes review proceedings. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable certain patent rights, allow third parties to commercialize our technology or therapeutic candidates 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. Moreover, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge features of patentability with respect to one or more patents and patent applications. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, 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 therapeutic candidates. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims. 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 develop, and threaten our ability to commercialize, our therapeutic candidates. Further, if we encounter delays in development, testing, and regulatory review of new therapeutic candidates, the period of time during which we could market our therapeutic candidates under patent protection would be reduced.
 
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Given that patent applications in the United States and other countries are confidential for a period of time after filing, at any moment in time, we cannot be certain that we were in the past or will be in the future the first to file any patent application related to our therapeutic candidates. In addition, some patent applications in the United States may be maintained in secrecy until the patents are issued. As a result, there may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim, and we may be subject to priority disputes. We may in the future become a party to proceedings or priority disputes in Europe or other foreign jurisdictions. The loss of priority for, or the loss of, these patents could have a material adverse effect on the conduct of our business.
We may be required to disclaim part or all of the term of certain patents or patent applications. There may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim. There also may be prior art of which we or potential future licensors are aware, but which we or those licensors do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. No assurance can be given that, if challenged, our patents would be declared by a court, patent office or other governmental authority to be valid or enforceable or that even if found valid and enforceable, a competitor’s technology or product would be found by a court to infringe our patents. We may analyze patents or patent applications of our competitors that we believe are relevant to our activities, and consider that we are free to operate in relation to our therapeutic candidates or if applicable challenge the validity of any issued patents, but our competitors may achieve issued claims, including in patents we consider to be unrelated, that block our efforts or potentially result in our therapeutic candidates or our activities infringing such claims. It is possible that our competitors may have filed, and may in the future file, patent applications covering our products or technology similar to ours. Those patent applications may have priority over our patent applications or patents, which could require us to obtain rights to issued patents covering such technologies. The possibility also exists that others will develop products that have the same effect as our therapeutic candidates on an independent basis that do not infringe our patents or other intellectual property rights, or will design around the claims of our patent applications or our in-licensed patents or patent applications that cover our therapeutic candidates.
Likewise, our current patents and patent applications directed to our therapeutic candidates are expected to expire from December 2035 through October 2039 (upon issuing as patents), without taking into account any possible patent term adjustments or extensions. Our patents may expire before, or soon after, our first product candidate achieves marketing approval in the United States or foreign jurisdictions. Additionally, no assurance can be given that the USPTO or relevant foreign patent offices will grant any of the pending patent applications we own or in-license currently or in the future. Upon the expiration of our current patents, we may lose the right to exclude others from practicing these inventions. The expiration of these patents could also have a similar material adverse effect on our business, financial condition, results of operations and prospects.
We may also be subject to claims that former employees, collaborators, or other third parties have an interest in our patents or patent applications or other intellectual property as an inventor or co-inventor. If we are unable to obtain an exclusive license to any such third party co-owners’ interest in such patent applications, such co-owners may be able to license their rights to other third parties, including our competitors. In addition, we may need the cooperation of any such co-owners to enforce any patents that issue from such patent applications against third parties, and such cooperation may not be provided to us.
If we are unsuccessful in any interference proceedings or other priority, validity (including any patent oppositions), or inventorship disputes to which we maybe subject, we may lose valuable intellectual property rights through the loss of one or more of our owned, licensed, or optioned patents, or such patent claims may be narrowed, invalidated, or held unenforceable, or through loss of exclusive ownership of or the exclusive right to use our patents. In the event of loss of patent rights as a result of any of these disputes, we may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture, and commercialization of one or more of the therapeutic candidates we may develop. The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and therapeutic candidates. Even if we are successful in an interference proceeding or other similar priority or inventorship disputes, it
 
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could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could result in a material adverse effect on our business, financial condition, results of operations, or prospects.
We have intellectual property coverage for our therapeutic candidates in the United States, Europe, and other territories, but our foreign intellectual property rights are not exhaustive.
We have intellectual property for our therapeutic candidates in many key markets such as the United States and Europe. However, we do not have intellectual property rights in every country throughout the world. Filing, prosecuting, and defending patents on therapeutic candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States, and Europe can be less extensive than those in the United States. In addition, the laws of foreign countries do not protect intellectual property rights to the same extent as federal and state laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our therapeutic candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology and pharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products against third parties in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our patents and intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Moreover, the initiation of proceedings by third parties to challenge the scope or validity of our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business and / or the limitation or loss of key patent rights. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.
We may enter into license agreements for intellectual property rights in the future and if we fail to comply with our obligations in such agreements or otherwise experience disruptions to our business relationships with our licensors or research and development partners, we could lose license rights that are important to our business.
We cannot provide any assurances that third-party patents do not exist which might be enforced against our current technology, resulting in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant. It is possible that our ability to commercialize some therapeutic candidates in the United States and abroad may be adversely affected if we cannot obtain a license to any potentially relevant third-party patents on commercially-reasonable terms that would allow us to make an appropriate return on our investment. In addition, the licensing or acquisition of
 
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third-party intellectual property rights is a highly competitive area, and other, potentially more established companies may pursue strategies to license or acquire third party intellectual property rights that we may, in the future, consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Further, even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability, or priority. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. As such, we could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or therapeutic candidates. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Thus, we may be required to expend significant time and resources to redesign our technology, therapeutic candidates, or the methods for manufacturing them or to develop or license replacement technology, or we may need to abandon development of the relevant program or product candidate, all of which may not be feasible on a technical or commercial basis and could have a material adverse effect on our business, financial condition, results of operations, and prospects. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.
The intellectual property landscape pertaining to live therapeutics is in constant flux.
The field of Live Biotherapeutics is still in its infancy, and few if any therapeutic candidates have reached the market. Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is evolving and in flux, and it may remain uncertain for the coming years. There may be significant intellectual property related litigation and proceedings relating to intellectual property and proprietary rights in the future.
Our commercial success depends upon our ability and the ability of future collaborators to develop, manufacture, market, and sell any therapeutic candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. We are, and may in future be subject to and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights including interference proceedings, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the EPO. Currently three of our European patents have been challenged by third parties in Opposition proceedings before the EPO. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties exist in the fields in which we are developing our therapeutic candidates and they may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.
As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our therapeutic candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including us, which patents cover various types of therapies, products or their methods of use or manufacture. There may be third-party patents or patent application with claims to technologies, methods of manufacture or methods for treatment related to the use or manufacture of our therapeutic candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our therapeutic candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.
 
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Defense of third-party claims of infringement of misappropriation, or violation of intellectual property rights involves substantial litigation expense and would be a substantial diversion of management and employee time and resources from our business. Some third-parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, financial condition, results of operations and prospects. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations and prospects.
We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming, and unsuccessful and could result in a finding that such patents are unenforceable or invalid.
Competitors may infringe our patents, or we may be required to defend against claims of infringement. In addition, our patents also are, and may in the future become, involved in inventorship, priority, validity or enforceability disputes. Countering or defending against such claims can be expensive and time consuming. In future infringement proceedings, a court may decide that a patent owned by us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our owned or any in-licensed 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.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. These types of mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). These types of proceedings could result in revocation or amendment to our patents such that they no longer cover our therapeutic candidates. The outcome for any particular patent following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we, our patent counsel and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, or if we are otherwise unable to adequately protect our rights, we would lose at least part, and perhaps all, of the patent protection on our technology and/or therapeutic candidates. Defense of these types of claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.
Conversely, we may choose to challenge the patentability of claims in a third party’s U.S. patent by requesting that the USPTO review the patent claims in re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). We are currently challenging, and in the future may choose to challenge, third party patents in patent opposition proceedings in the EPO or before another foreign patent office. Even if successful, the costs of these opposition proceedings could be substantial, and may consume our time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other patent office then we may be exposed to litigation by a third party alleging that the patent may be infringed by our therapeutic candidates or other proprietary technologies.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation in the US and certain other jurisdictions, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially
 
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increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications are due to be paid to the USPTO and foreign patent agencies outside of the United States over the lifetime of our patents and applications. The USPTO and foreign patent agencies require compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application process. While an inadvertent lapse can ordinarily be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations, however, in which non-compliance can result a partial or complete loss of patent rights in the relevant jurisdiction. Were a noncompliance event to occur, our competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Changes in patent law in the United States and in non-U.S. jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our therapeutic candidates.
As is the case with other biotech and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.
Changes in either the patent laws or interpretation of the patent laws could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of our issued patents. For example, in March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, the United States transitioned from a “first to invent” to a “first-to-file” patent system. Under a “first-to-file” system, assuming that other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on an invention regardless of whether another inventor had made the invention earlier. A third party that files a patent application in the USPTO after March 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either file any patent application related to our technology or therapeutic candidates or invent any of the inventions claimed in our or our licensor’s patents or patent applications. The America Invents Act also includes a number of other significant changes to U.S. patent law, including provisions that affect the way patent applications will be prosecuted, allowing third party submission of prior art and establish a new post-grant review system including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. The effects of these changes are currently unclear as the USPTO continues to promulgate new regulations and procedures in connection with the America Invents Act and many of the substantive changes to patent law, including the “first-to-file” provisions, only became effective in March 2013. In addition, the courts have yet to address many of these provisions and the applicability of the act and new regulations
 
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on the specific patents discussed in this filing have not been determined and would need to be reviewed. Thus, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the America Invents 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.
In addition, 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. These cases include Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 12-398 (2013) or Myriad; Alice Corp. v. CLS Bank International, 573 U.S. 13-298 (2014); and Collaborative Services v. Prometheus Laboratories, Inc., or Prometheus, 566 U.S. 10-1150 (2012). In addition to increasing uncertainty with regard to our ability to obtain patents in the future, 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 weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not patentable, but claims to complementary DNA, or cDNA, molecules, which are not genomic sequences, may be patent eligible because they are not a natural product. The effect of the decision on patents for other isolated natural products is uncertain. However, on March 4, 2014, the USPTO issued a memorandum to patent examiners providing guidance for examining claims that recite laws of nature, natural phenomena or natural products under the Myriad and Prometheus decisions. The guidance did not limit the application of Myriad to DNA but, rather, applied the decision broadly to other natural products, which may include our therapeutic candidates. The March 4, 2014 memorandum and the USPTO’s interpretation of the cases and announced examination rubric received widespread criticism from stakeholders during a public comment period and was superseded by interim guidance published on December 15, 2014. We cannot predict how this and future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents. Any similar adverse changes in the patent laws of other jurisdictions could also have a material adverse effect on our business, financial condition, results of operations and prospects.
Patent terms may be inadequate to protect our competitive position on our therapeutic candidates for an adequate amount of time.
Patents have a limited lifespan. The terms of individual patents depends upon the legal term for patents in the countries in which they are granted. In most countries, including the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest non-provisional filing date in the applicable country. However, the actual protection afforded by a patent varies from country to country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. Various extensions including PTE and PTA, may be available, but the life of a patent, and the protection it affords, is limited. For more information regarding PTA and PTE, please see “Business — Intellectual Property.” Even if patents covering our therapeutic candidates are obtained, once the patent life has expired, we may be open to competition from competitive products, including generics. Given the amount of time required for the development, testing and regulatory review of new therapeutic candidates, patents protecting our therapeutic candidates might expire before or shortly after we or our partners commercialize those candidates. 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.
If we do not obtain Patent Term Extension (PTE) for any therapeutic candidates we may develop, our business may be materially harmed.
Depending upon the timing, duration and specifics of any FDA marketing approval of any therapeutic candidates we may develop, one or more of our U.S. patents may be eligible for limited PTE under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. Analogous extensions of patent term may be available upon marketing approval in other jurisdictions. The Hatch-Waxman Amendments PTE term of up to five years as compensation for patent term lost during the FDA regulatory review process. A PTE cannot extend the remaining term of a patent beyond a total of
 
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14 years from the date of product approval, only one patent per product may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. However, even if we were to seek a PTE or corresponding extension of patent term in other jurisdictions, it may not be granted because of, for example, the failure to exercise due diligence during the testing phase or regulatory review process, the failure to apply within applicable deadlines, the failure to apply prior to expiration of relevant patents, or any other failure to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain PTE or a corresponding extension of patent term in other jurisdictions, or the term of any such extension is less than we request, our competitors may be able to launch competing products earlier than anticipated following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for our technology and therapeutic candidates, we also rely on know-how and trade secret protection, as well as confidentiality agreements, non-disclosure agreements and invention assignment agreements with our employees, consultants and third-parties, to protect our confidential and proprietary information, especially where we do not believe patent protection is appropriate or obtainable.
It is our policy to require our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors, and other third parties to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed by or made known to the individual or entity during the course of the party’s relationship with us is to be kept confidential and not disclosed to third parties, except in certain specified circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual, and that are related to our current or planned business or research and development or made during normal working hours, on our premises or using our equipment or proprietary information, are our exclusive property. In the case of consultants and other third parties, the agreements provide that all inventions conceived in connection with the services provided are our exclusive property. However, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. Additionally, the assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable.
In addition to contractual measures, we try to protect the confidential nature of our proprietary information through other appropriate precautions, such as physical and technological security measures. However, trade secrets and know-how can be difficult to protect. These measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and any recourse we might take against this type of misconduct may not provide an adequate remedy to protect our interests fully. In addition, trade secrets may be independently developed by others in a manner that could prevent us from receiving legal recourse. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any of that information was independently developed by a competitor, our competitive position could be harmed.
In addition, some courts inside and outside the United States are sometimes less willing or unwilling to protect trade secrets. If we choose to go to court to stop a third party from using any of our trade secrets, we may incur substantial costs. Even if we are successful, these types of lawsuits may consume our time and other resources. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
 
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Third parties may assert that our employees, consultants, or advisors have wrongfully used or disclosed confidential information or misappropriated trade secrets.
As is common in the biotechnology and pharmaceutical industries, we employ individuals that are currently or were previously employed at universities, research institutions or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Also, we have in the past and may in the future be subject to claims that these individuals are violating non-compete agreements with their former employers. We may then have to pursue litigation to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, that perception could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce our resources available for development activities, and we may not have sufficient financial or other resources to adequately conduct this type of litigation or proceedings. For example, some of our competitors may be able to sustain the costs of this type of litigation or proceedings more effectively than we can because of their substantially greater financial resources. In any case, uncertainties resulting from the initiation and continuation of intellectual property litigation or other intellectual property related proceedings could adversely affect our ability to compete in the marketplace.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and growth prospects.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

any therapeutic candidates we may develop will likely eventually become commercially available in generic or biosimilar product forms;

others may be able to make live biotherapeutic products that are similar to any therapeutic candidates we may develop but that are not covered by the claims of the patents that we own or may own in the future;

we, or our current or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or may own in the future;
 
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we, or our current or future collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

we, or our current or future collaborators, may fail to meet our obligations to the U.S. government regarding any patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights;

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

it is possible that our pending patent applications or those that we may own in the future will not lead to issued patents;

it is possible that there are prior public disclosures that could invalidate our patents, or parts of our patents;

it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our therapeutic candidates or technology similar to ours

it is possible that our patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable;

issued patents that we hold rights to may be held invalid, unenforceable, or narrowed in scope, including as a result of legal challenges by our competitors;

the claims of our issued patents or patent applications, if and when issued, may not cover our therapeutic candidates;

the laws of foreign countries may not protect our proprietary rights or the proprietary rights of current or future collaborators to the same extent as the laws of the United States;

the inventors of our patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors;

our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents;

we may not develop additional proprietary technologies that are patentable;

any therapeutic candidates we develop may be covered by third parties’ patents or other exclusive rights;

the patents of others may harm our business; or

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations, and prospects.
 
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Risks Related to Our Business Operations and Compliance with Government Regulations
Our operations and financial results could be adversely impacted by the COVID-19 pandemic in the United Kingdom, United States and the rest of the world.
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China, resulting in significant disruptions to Chinese manufacturing and travel. COVID-19 has now spread to numerous other countries, including the United Kingdom, United States, resulting in the World Health Organization characterizing COVID-19 as a pandemic. As a result of measures imposed by the governments in affected regions, many commercial activities, businesses and schools have been suspended as part of quarantines and other measures intended to contain this pandemic. As the COVID-19 pandemic continues to spread around the globe, we may experience disruptions that could severely impact our business and clinical trials, including:

delays or difficulties in enrolling patients in our clinical trials;

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of clinical trials;

interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

limitations in resources that would otherwise be focused on the conduct of our business or our clinical trials, including because of sickness or the desire to avoid contact with large groups of people or as a result of government-imposed “shelter in place” or similar working restrictions;

delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;

delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;

changes in regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, or to discontinue the clinical trials altogether, or which may result in unexpected costs; and

delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government or contractor personnel.
We are still assessing the impact that COVID-19 may have on our ability to effectively conduct our business operations as planned and there can be no assurance that we will be able to avoid a material impact on our business from the spread of COVID-19 or its consequences, including disruption to our business and downturns in business sentiment generally or in our industry. A significant proportion of our employees are currently telecommuting, which may impact certain of our operations over the near term and long term.
Additionally, certain third parties with whom we engage, including our collaborators, contract organizations, third party manufacturers, suppliers, clinical trial sites, regulators and other third parties with whom we conduct business are similarly adjusting their operations and assessing their capacity in light of the COVID-19 pandemic. If these third parties experience shutdowns or continued business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively impacted. For example, as a result of the COVID-19 pandemic, there could be delays in the manufacturing supply chain for our clinical trials, which could delay or otherwise impact our ongoing clinical programs in oncology and respiratory disease. We may also experience delays in procurement of materials for certain aspects of our studies due to the pandemic, which could impact our ability to conduct prespecified analysis.
 
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Additionally, certain preclinical studies for our discovery research programs are conducted by CROs, which could be discontinued or delayed as a result of the pandemic. It is also likely that the disproportionate impact of COVID-19 on hospitals and clinical sites will have an impact on recruitment and retention for our clinical trials.
In addition, certain of our clinical trial sites have experienced, and others may experience in the future, delays in collecting, receiving and analyzing data from patients enrolled in our clinical trials. For example, we experience delays to our study of MRx4DP0004 in patients with partly controlled asthma due to limited staff at sites, limitation or suspension of on-site visits by patients, or patients’ reluctance to visit the clinical trial sites during the pandemic. We and our CROs have also made certain adjustments to the operation of such trials in an effort to ensure the monitoring and safety of patients and to minimize risks to trial integrity during the pandemic in accordance with the guidance issued by the FDA on March 18, 2020 and generally, and may need to make further adjustments in the future. Many of these adjustments are new and untested, may not be effective, and may have unforeseen effects on the enrollment, progress and completion of these trials and the findings from these trials. While we are currently continuing our clinical trials and considering adding new clinical trial sites to accelerate patient recruitment, we may not be successful in adding trial sites, may experience delays in patient enrollment or in the progression of our clinical trials, may need to suspend our clinical trials, and may encounter other negative impacts to our trials, due to the effects of the COVID-19 pandemic.
The global outbreak of COVID-19 continues to rapidly evolve. While the extent of the impact of the current COVID-19 pandemic on our business and financial results is uncertain, a continued and prolonged public health crisis such as the COVID-19 pandemic could have a material negative impact on our business, financial condition and operating results.
Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees.
To succeed, we must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel, and we face significant competition for experienced personnel. We are highly dependent on the principal members of our management and scientific and medical staff. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan and harm our operating results. In particular, the loss of one or more of our executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. We could in the future have difficulty attracting and retaining experienced personnel and may be required to expend significant financial resources in our employee recruitment and retention efforts.
Many of the other biotechnology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide higher compensation, more diverse opportunities and better prospects for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what we have to offer. If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover, develop and commercialize our therapeutic candidates will be limited and the potential for successfully growing our business will be harmed.
Additionally, we rely on our scientific founders and other scientific and clinical advisors and consultants to assist us in formulating our research, development and clinical strategies. These advisors and consultants are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. In addition, these advisors and consultants typically will not enter into non-compete agreements with us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. Furthermore, our advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with ours. In particular, if we are unable to maintain consulting relationships with our scientific founders or if they provide services to our competitors, our development and commercialization efforts will be impaired and our business will be significantly harmed.
 
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In order to successfully implement our plans and strategies, we will need to grow the size of our organization, and we may experience difficulties in managing this growth.
As of June 30, 2020, we had 118 employees, including 56 employees in the United Kingdom and one employee in the United States. Of these employees, 103 were engaged in research and development activities and 15 were engaged in administrative activities. In order to successfully implement our development and commercialization plans and strategies, and we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

identifying, recruiting, integrating, maintaining and motivating additional employees;

managing our internal development efforts effectively, including the commercial, clinical and regulatory development of MRx0518, MRx-4DP0004, Blautix and Thetanix and any other therapeutic candidates, while complying with any contractual obligations to contractors and other third parties we may have; and

improving our operational, financial and management controls, reporting systems and procedures.
Our future financial performance and our ability to successfully develop and commercialize MRx0518, MRx-4DP0004, Blautix and Thetanix and other therapeutic candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including key aspects of clinical development and manufacturing. We cannot assure you that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by third party service providers is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of MRx0518 and MRx-4DP0004 and any other therapeutic candidates or otherwise advance our business. We cannot assure you that we will be able to manage our existing third-party service providers or find other competent outside contractors and consultants on economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third-party service providers, we may not be able to successfully implement the tasks necessary to further develop and commercialize MRx0518, MRx-4DP0004, Blautix and Thetanix and other therapeutic candidates and, accordingly, may not achieve our research, development and commercialization goals.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.
Our quarterly and annual operating results may fluctuate significantly in the future, which makes it difficult for us to predict our future operating results. From time to time, we may enter into license or collaboration agreements or strategic partnerships with other companies that include development funding and significant upfront and milestone payments and/or royalties, which may become an important source of our revenue. These upfront and milestone payments may vary significantly from period to period and any such variance could cause a significant fluctuation in our operating results from one period to the next.
In addition, we measure compensation cost for stock-based awards made to employees at the grant date of the award, based on the fair value of the award as determined by our board of directors, and recognize the cost as an expense over the employee’s requisite service period. As the variables that we use as a basis for valuing these awards change over time, including, after the closing of this offering, our underlying share price and stock price volatility, the magnitude of the expense that we must recognize may vary significantly.
 
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Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:

the timing and cost of, and level of investment in, research and development activities relating to our current therapeutic candidates and any future therapeutic candidates and research-stage programs, which will change from time to time;

our ability to enroll patients in clinical trials and the timing of enrollment;

the cost of manufacturing our current therapeutic candidates and any future therapeutic candidates, which may vary depending on FDA, EMA or other comparable foreign regulatory authority guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers;

expenditures that we will or may incur to acquire or develop additional therapeutic candidates and technologies or other assets;

the timing and outcomes of clinical trials for MRx0518, MRx-4DP0004, Blautix and Thetanix, and any of our other therapeutic candidates, or competing therapeutic candidates;

the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated;

competition from existing and potential future products that compete with MRx0518, MRx-4DP0004, Blautix and Thetanix and any of our other therapeutic candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners;

any delays in regulatory review or approval of MRx0518, MRx-4DP0004, Blautix and Thetanix or any of our other therapeutic candidates;

the level of demand for MRx0518, MRx-4DP0004, Blautix and Thetanix and any of our other therapeutic candidates, if approved, which may fluctuate significantly and be difficult to predict;

the risk/benefit profile, cost and reimbursement policies with respect to our therapeutic candidates, if approved, and existing and potential future products that compete with MRx0518, MRx-4DP0004, Blautix and Thetanix and any of our other therapeutic candidates;

our ability to commercialize MRx0518, MRx-4DP0004, Blautix and Thetanix and any of our other therapeutic candidates, if approved, inside and outside of the United States, either independently or working with third parties;

our ability to establish and maintain collaborations, licensing or other arrangements;

our ability to adequately support future growth;

potential unforeseen business disruptions that increase our costs or expenses;

future accounting pronouncements or changes in our accounting policies; and

the changing and volatile global economic and political environment.
The cumulative effect of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.
 
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Our internal computer systems, or those of any of our CROs, manufacturers, other contractors or consultants or potential future collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to our brand and material disruption of our operations.
Despite the implementation of security measures in an effort to protect systems that store our information, given their size and complexity and the increasing amounts of information maintained on our internal information technology systems, and those of our third-party CROs, other contractors (including sites performing our clinical trials) and consultants, these systems are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our employees, contractors, consultants, business partners, and/or other third parties, or from cyber-attacks by malicious third parties (including the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information), which may compromise our system infrastructure or lead to the loss, destruction, alteration or dissemination of, or damage to, our data. For example, companies have experienced an increase in phishing and social engineering attacks from third parties in connection with the COVID-19 pandemic. To the extent that any disruption or security breach were to result in a loss, destruction, unavailability, alteration or dissemination of, or damage to, our data or applications, or for it to be believed or reported that any of these occurred, we could incur liability and reputational damage and the development and commercialization of our therapeutic candidates could be delayed. We cannot assure you that our data protection efforts and our investment in information technology, or the efforts or investments of CROs, consultants or other third parties, will prevent significant breakdowns or breaches in systems or other cyber incidents that cause loss, destruction, unavailability, alteration or dissemination of, or damage to, our data that could have a material adverse effect upon our reputation, business, operations or financial condition. For example, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our therapeutic candidates could be delayed. In addition, the loss of clinical trial data for our therapeutic candidates could result in delays in our marketing approval efforts and significantly increase our costs to recover or reproduce the data. Furthermore, significant disruptions of our internal information technology systems or security breaches could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, data (including trade secrets or other confidential information, intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to us. For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.
Notifications and follow-up actions related to a security incident could impact our reputation and cause us to incur significant costs, including legal expenses and remediation costs. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the lost data. We expect to incur significant costs in an effort to detect and prevent security incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security breach. We also rely on third parties to manufacture our therapeutic candidates, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security incident were to result in a loss, destruction or alteration of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be exposed to litigation and governmental investigations, the further development and commercialization of our therapeutic candidates could be delayed, and we could be subject to significant fines or penalties for any noncompliance with certain state, federal and/or international privacy and security laws.
 
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Our insurance policies may not be adequate to compensate us for the potential losses arising from any such disruption in or, failure or security breach of our systems or third-party systems where information important to our business operations or commercial development is stored. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all. Further, our insurance may not cover all claims made against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention.
The collection, processing and cross-border transfer of personal information is subject to restrictive laws and regulations.
We are subject to privacy and data protection laws and regulations that apply to the collection, transmission, storage and use of personally identifiable information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing amount of focus on compliance in this area, with the potential to affect our business.
In the EU, the collection and use of personal data (including health data) is governed by the provisions of the General Data Protection Regulation (GDPR) which became effective and enforceable across all then-current member states of the EU on May 25, 2018. The GDPR enhances data protection obligations for both processors and controllers of personal data, including by materially expanding the definition of what is expressly noted to constitute personal data, requiring additional disclosures about how personal data is to be used, imposing limitations on retention of personal data, creating mandatory data breach notification requirements in certain circumstances, and establishing onerous new obligations on services providers who process personal data simply on behalf of others, as well as obligations regarding the security and confidentiality of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Economic Area to third countries, including the United States. The GDPR has expanded its reach to include any business, regardless of its location, that processes personal data in relation to the offering of goods or services to individuals in the EU and/or the monitoring of their behavior. This expansion would incorporate any clinical trial activities in EU member states. The GDPR imposes special protections for “sensitive information” which includes health and genetic information of data subjects residing in the EU. The GDPR also grants individuals the opportunity to object to the processing of their personal information, allows them to request deletion of personal information in certain circumstances, and provides an express right to seek legal remedies in the event the individual believes his or her rights have been violated. Failure to comply with the requirements of the GDPR may result in fines of up to 4% of an undertaking’s total global annual turnover for the preceding financial year, or €20 million, whichever is greater. In addition to administrative fines, a wide variety of other potential enforcement powers are available to competent authorities in respect of potential and suspected violations of the GDPR, including extensive audit and inspection rights, and powers to order temporary or permanent bans on all or some processing of personal data carried out by noncompliant actors. While we have taken steps to comply with the GDPR, and implementing legislation in applicable member states, including by seeking to establish appropriate lawful bases for the various processing activities we carry out as a controller, reviewing our security procedures, and entering into data processing agreements with relevant customers and business partners, we cannot guarantee that our efforts to achieve and remain in compliance have been, and/or will continue to be, fully successful.
In the United Kingdom, the Data Protection Act 2018 complements the GDPR. Following the United Kingdom’s withdrawal from the EU on January 31, 2020, pursuant to transitional arrangements, the GDPR will continue to have effect in U.K. law until December 31, 2020 in the same fashion as was the case prior to that withdrawal, as if the United Kingdom had remained a member state of the EU for such purposes. Following December 31, 2020, it is likely that the data protection obligations of the GDPR will continue to apply to U.K.-based organizations’ processing of personal data in substantially unvaried form and fashion, for at least the short term thereafter. However, the United Kingdom’s withdrawal from the EU could still lead to further legislative and regulatory changes and increase our compliance costs. In particular, from January 2021 (after the end of the transitional period), we could potentially be exposed to two parallel regimes, each with the power to impose fines up to the greater of either 4% of total global annual revenue, or €20 million (for the EU) or £17.5 million (for the United Kingdom).
Similarly, failure to comply with federal and state laws in the United States regarding privacy and security of personal information could further expose us to penalties under privacy and data protection
 
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laws. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our business.
Our employees, consultants and contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements or insider trading violations, which could significantly harm our business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, consultants or contractors could include intentional failures to comply with governmental regulations, comply with healthcare fraud and abuse and anti-kickback laws and regulations in the United States, the United Kingdom and other jurisdictions, or failure to report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of, including improper trading based upon information obtained in the course of clinical studies, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a robust compliance program, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
Healthcare legislative reform measures may have a negative impact on our business and results of operations.
In the United States, there have been, and continue to be, legislative and regulatory developments regarding the healthcare system that could prevent or delay marketing approval of our therapeutic candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any therapeutic candidates for which we obtain marketing approval. Additionally, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. While any proposed measures will require authorization through additional legislation to become effective, Congress and the current administration have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or successfully commercialize our drugs.
The withdrawal of the United Kingdom from the EU, commonly referred to as “Brexit,” may adversely impact our ability to obtain regulatory approvals of our therapeutic candidates in the EU, result in restrictions or imposition of taxes and duties for importing our therapeutic candidates into the EU, and may require us to incur additional expenses in order to develop, manufacture and commercialize our therapeutic candidates in the EU.
Following the result of a referendum in 2016, the United Kingdom left the EU on January 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the EU, the United Kingdom will be subject to a transition period until December 31, 2020, or the Transition Period, during which EU rules will continue to apply. Negotiations between the United Kingdom and the EU have continued in relation to the customs and trading relationship between the United Kingdom and the EU following the expiry of the Transition Period. Under the formal withdrawal
 
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arrangements between the United Kingdom and the EU, the parties had until June 30, 2020 to agree to extend the Transition Period if required. No such extension was agreed prior to such date. No agreement has yet been reached between the United Kingdom and the EU and it may be the case that no formal customs and trading agreement will be reached prior to the expiry of the Transition Period on December 31, 2020.
Since a significant proportion of the regulatory framework in the United Kingdom applicable to our business and our therapeutic candidates is derived from EU directives and regulations, the withdrawal could materially impact the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our therapeutic candidates in the United Kingdom or the EU. Following the Transition Period, the United Kingdom will no longer be covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA and, unless a specific agreement is entered into, a separate process for authorization of drug products, including our therapeutic candidates, will be required in the United Kingdom, the potential process for which is currently unclear. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, could make it more difficult for us to commercialize our therapeutic candidates in the EU or in the United Kingdom and restrict our ability to generate revenue and achieve and sustain profitability. In addition, we may be required to pay taxes or duties or be subjected to other hurdles in connection with the importation of our therapeutic candidates into the EU and the United Kingdom. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom or the EU for our therapeutic candidates, or incur significant additional expenses to operate our business, which could significantly and materially harm or delay our ability to generate revenues or achieve profitability of our business.
In the near term, there is a risk of disrupted import and export processes due to a lack of administrative processing capacity by the respective U.K. and EU customs agencies that may delay time-sensitive shipments and may negatively impact our product supply chain. Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us. These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the United Kingdom. It is also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the EU, and make travel between our U.K., Irish and Spanish facilities more difficult, time-consuming and expensive than previously was the case.
Harmonization of trading within the EU, including the UK, resulted in the simplification of goods and services tax (known as VAT in the UK) between EU entities. Provisions under the rules split such supply for EU entities between goods and services with the direct collection on sale only occurring for the supply of goods within the same country with any such tax incurred historically reclaimable under the 8th Directive. Depending on the terms of the UK’s exit from the EU the tax on all supplies may be included and may not be reclaimable, alternatively reclaims could be significantly more complex and slower to process. Such differences have the potential to materially affect cash requirements and costs to the business.
Legal, political and economic uncertainty surrounding Brexit may be a source of instability in international markets, create significant currency fluctuations, adversely affect our operations in the United Kingdom and pose additional risks to our business, revenue, financial condition, and results of operations.
While our headquarters are in the United Kingdom, we have subsidiaries elsewhere in the EU, including Ireland and Spain and rely on suppliers elsewhere in the EU. The lack of clarity on future U.K. laws and regulations, including financial laws and regulations, tax and free trade agreements, intellectual property rights, data protection laws, supply chain logistics, environmental, health and safety laws and regulations, immigration laws and employment laws, after the expiration of the Transition Period may negatively impact foreign direct investment in the United Kingdom, increase costs, depress economic activity and restrict access to capital.
The uncertainty concerning the United Kingdom’s legal, political and economic relationship with the EU after the Transition Period may be a source of instability in the international markets, create significant currency fluctuations, and/or otherwise adversely affect trading agreements or similar cross-border co-operation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise).
 
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These developments, or the perception that any of them could occur, have had, and may continue to have, a significant adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and limit the ability of key market participants to operate in certain financial markets. In particular, it could also lead to a period of considerable uncertainty in relation to the U.K. financial and banking markets, as well as on the regulatory process in Europe. Asset valuations, currency exchange rates and credit ratings may also be subject to increased market volatility.
If the United Kingdom and the EU are unable to negotiate acceptable trading and customs terms or if other EU member states pursue withdrawal, barrier-free access between the United Kingdom and other EU member states or among the European Economic Area overall could be diminished or eliminated. The long-term effects of Brexit will depend on any agreements (or lack thereof) between the United Kingdom and the EU and, in particular, any arrangements for the United Kingdom to retain access to EU markets after the Transition Period.
Such a withdrawal from the EU is unprecedented, and it is unclear how the United Kingdom’s access to the European single market for goods, capital, services and labor within the EU, or single market, and the wider commercial, legal and regulatory environment, will impact our U.K. operations and customers.
There may continue to be economic uncertainty surrounding the consequences of Brexit, following the Transition Period, which could adversely impact customer confidence resulting in customers reducing their spending budgets on our products, which could adversely affect our business, revenue, financial condition, results of operations and could adversely affect the market price of our ADSs.
Exchange rate fluctuations may adversely affect our results of operations and cash flows.
Our functional currency is pounds sterling, and our transactions are commonly denominated in that currency. However, we receive payments under our collaboration agreements in U.S. dollars and we incur a portion of our expenses in other currencies, primarily Euros. As a result, fluctuations in exchange rates, particularly between the pound sterling on the one hand and the U.S. dollar and Euro on the other hand, may adversely affect our reported results of operations and cash flows. Since the Brexit referendum in 2016, there has been a significant increase in the volatility of these exchange rates and an overall weakening of the pound sterling. Our business and the price of our ADSs may be affected by fluctuations in foreign exchange rates between the pound sterling and these and other currencies, any of which may have a significant impact on our results of operations and cash flows from period to period.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
 
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Risks Related to Our ADSs and Shares and Our Prospective Nasdaq Listing
We do not know whether an active, liquid and orderly trading market will develop for our ADSs or what the market price of our ADSs will be and as a result it may be difficult for you to sell your ADSs at or above the price you pay for them, if at all.
Prior to this filing, while our ordinary shares have been traded on AIM since February 2014, no public market has previously existed for our ADSs or ordinary shares in the United States. We will apply to list our ADSs on The Nasdaq Capital Market. Any delay in the commencement of trading of our ADSs on Nasdaq would impair the liquidity of the market for the ADSs and make it more difficult for holders to sell the ADSs. There can be no assurance that an active trading market for the ADSs will develop or be sustained after our ADSs are listed on Nasdaq. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of the ADSs and could also affect the market price for our ordinary shares on AIM. The price at which ADSs trade on Nasdaq may or may not be correlated with the price at which our ordinary shares trade on AIM.
The price of our ADSs may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our ADSs, and we could be subject to securities class action litigation as a result.
Our stock price is likely to be volatile. The stock market in general and the market for smaller biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your ADSs at or above the price at which you purchase the shares. The market price for our ADSs may be influenced by many factors, including:

the success of competitive products or technologies;

actual or anticipated changes in our growth rate relative to our competitors;

results of clinical trials of our therapeutic candidates or those of our competitors;

developments related to any future collaborations;

regulatory or legal developments in the United States and other countries;

adverse actions taken by regulatory agencies with respect to our preclinical studies or clinical trials, manufacturing or sales and marketing activities;

any adverse changes to our relationship with third party contractors or manufacturers;

development of new therapeutic candidates that may address our markets and may make our existing therapeutic candidates less attractive;

changes in physician, hospital or healthcare provider practices that may make our therapeutic candidates less useful;

announcements by us, our collaborators or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

developments or disputes concerning patent applications, issued patents or other proprietary rights;

the recruitment or departure of key personnel;

the level of expenses related to any of our therapeutic candidates or product development programs;

failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;

press reports or other negative publicity, whether or not true, about our business;

the results of our efforts to discover, develop, acquire or in-license additional therapeutic candidates or products;

actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
 
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variations in our financial results or those of companies that are perceived to be similar to us;

changes in the structure of healthcare payment systems;

market conditions in the pharmaceutical and biotechnology sectors;

the trading volume of our ADSs on Nasdaq;

sales of our ADSs or ordinary shares by us, members of our senior management and directors or our shareholders;

general economic, political, and market conditions and overall fluctuations in the financial markets in the United States, the United Kingdom, the EU, and other countries, including the global and regional impacts of the COVID-19 pandemic; and

the other factors described in this “Risk Factors” section.
These and other market and industry factors may cause the market price and demand for our ADSs to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their ADSs at or above the price paid for the ADSs and may otherwise negatively affect the liquidity of our ADSs.
Some companies that have experienced volatility in the trading price of their shares have been the subject of securities class action litigation. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms.
Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time-consuming and could divert our management’s and key employees’ attention and our resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market price of our ADSs.
Future sales, or the possibility of future sales, of a substantial number of ADSs representing our shares or our shares could adversely affect the price of such securities.
Future sales of a substantial number of ADSs or shares, or the perception that such sales will occur, could cause a decline in the market price of our ADSs. All of our outstanding shares are freely tradeable on AIM. The ADSs issued in connection with the Merger will be freely tradeable on Nasdaq. If holders sell substantial amounts of ADSs on Nasdaq or ordinary shares on AIM, or if the market perceives that such sales may occur, the market price of the ADSs and the ordinary shares our ability to raise capital through an issue of equity securities in the future could be adversely affected.
The dual-listing of ordinary shares and ADSs is costly to maintain and may adversely affect the liquidity and value of our ordinary shares and ADSs.
Our ordinary shares trade on AIM and we will apply to list our ADSs on Nasdaq. For now, we plan to maintain a dual listing, which will generate additional costs, including increased legal, accounting, investor relations and other expenses that we did not incur prior to the listing of our ADSs on Nasdaq, in addition to the costs associated with the additional reporting requirements described elsewhere in this proxy statement/prospectus. We cannot predict the effect of this dual listing on the value of our ADSs and ordinary shares. However, the dual listing of ADSs and ordinary shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for our ADSs. The price of our ADSs could also be adversely affected by trading in our ordinary shares on AIM.
We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our ADSs less attractive to investors.
We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and may remain an emerging growth company until the earlier of (i) the last day of the fiscal year (A) following the fifth anniversary of the completion of the Merger, (B) in which we have
 
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total annual gross revenue of at least $1.07 billion, or (C) in which we are deemed to be a large accelerated filer, which means the market value of our outstanding ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

reduced disclosure obligations regarding executive compensation; and

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have elected to take advantage of this extended transition period.
We have elected to take advantage of certain of the reduced reporting obligations. In particular, we have not included all of the executive compensation information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our ADSs less attractive if we rely on certain or all of these exemptions. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs and our ADS price may be more volatile.
We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company. This may limit the information available to holders of our ADSs.
We are a foreign private issuer, as such term is defined in Rule 405 under the Securities Act, and upon the listing of our ADSs on Nasdaq, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. As a foreign private issuer, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time (including the requirement applicable to emerging growth companies to disclose the compensation of our Chief Executive Officer and the other two most highly compensated executive officers on an individual, rather than an aggregate, basis); and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. Accordingly, there may be less publicly available information concerning our business than there would be if we were a U.S. public company and you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
 
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As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.
As a foreign private issuer listed on Nasdaq, we will be subject to corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country in lieu of certain Nasdaq corporate governance listing standards. Certain corporate governance practices in England, which is our home country, may differ significantly from Nasdaq corporate governance listing standards. For example, neither the corporate laws of England nor our articles of association require a majority of our directors to be independent; we may include non-independent directors as members of our nominations and remuneration committees; and our independent directors would not necessarily hold regularly scheduled meetings at which only independent directors are present. We are required to follow the AIM Rules for Companies published by London Stock Exchange plc, and have adopted the Corporate Governance Code published by the Quoted Companies Alliance. Therefore, our shareholders may be afforded less protection than they otherwise would have under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Management — and Compensation of 4D Pharma Foreign Private Issuer Exemption” for the exemptions to the Nasdaq corporate governance rules applicable to foreign private issuers.
We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.
We are a foreign private issuer, as such term is defined in Rule 405 under the Securities Act, however, under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2021 (the end of our second fiscal quarter in the fiscal year after this listing).
In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we may elect to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus, and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis.
We would also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.
We will incur increased costs as a result of simultaneously having our ADSs listed in the United States and our ordinary shares admitted to trading on AIM in the United Kingdom, and our senior management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a company whose securities are publicly listed in the United States, we will incur significant legal, accounting and other expenses that we did not incur previously, even though our ordinary shares are admitted to trading on AIM, and these expenses may increase even more after we are no longer an “emerging
 
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growth company.” We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly, which will increase our operating expenses. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain sufficient coverage, particularly in light of recent cost increases related to coverage. We cannot accurately predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
In addition, as a public company we will be required to incur additional costs and obligations in order to comply with SEC rules that implement Section 404 of the Sarbanes-Oxley Act. Under these rules, beginning with our second annual report on Form 20-F after we become a company whose securities are publicly listed in the United States, we will be required to make a formal assessment of the effectiveness of our internal control over financial reporting, and once we cease to be an emerging growth company, we will be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaging in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are designed and operating effectively, and implement a continuous reporting and improvement process for internal control over financial reporting.
The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares is listed, the SEC or other regulatory authorities.
Further, being a U.S. listed company and an English public company with ordinary shares admitted to trading on AIM impacts the disclosure of information and requires compliance with two sets of applicable rules. From time to time, this may result in uncertainty regarding compliance matters and result in higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure and adherence to heightened governance practices. As a result of the enhanced disclosure requirements of the U.S. securities laws, business and financial information that we report is broadly disseminated and highly visible to investors, which we believe may increase the likelihood of threatened or actual litigation, including by competitors and other third parties, which could, even if unsuccessful, divert financial resources and the attention of our management and key employees from our operations.
 
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If we do not develop and implement all required accounting practices and policies, including proper and effective internal control over financial reporting, we may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ADSs.
Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. In connection with the listing, we intend to improve the process of documenting, reviewing and improving our internal controls and procedures for compliance with Section 404, which will require annual management assessment of the effectiveness of our internal control over financial reporting. We have begun recruiting additional finance and accounting personnel with certain skill sets that we will need as an English public company listed in the U.S.
Implementing any appropriate changes to our internal controls may distract our officers and employees from day to day business operations, entail substantial costs to modify our existing processes, and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.
Any delays or deficiencies in our internal controls could penalize us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and hurt our reputation and could thereby impede our ability to implement our growth strategy. In addition, any such delays or deficiencies could result in our failure to meet the requirements for listing of our ADSs on a national securities exchange.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, the price and trading volume of our ADSs could decline.
The trading market for our ADSs will be influenced by the research and reports that equity research analysts publish about us and our business. As a company admitted to trading on AIM, our equity securities are currently subject to coverage by a number of analysts. Equity research analysts may elect not to provide research coverage of our ADSs, and such lack of research coverage may adversely affect the market price of our ADSs. We will not have any control over the analysts or the content and opinions included in their reports. If any of the equity research analysts who cover us downgrade our ADSs or issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target preclinical studies or clinical studies and/or operating results fail to meet the expectations of analysts, the price of our ADSs could decline. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our ADSs could decrease, which in turn could cause the trading price or trading volume of our ADSs to decline.
Concentration of ownership of our ordinary shares (including ordinary shares represented by ADSs) among our existing senior management, directors and principal shareholders may prevent new investors from influencing significant corporate decisions and matters submitted to shareholders for approval.
Upon the listing of our ADSs on The Nasdaq Capital Market, members of our senior management, directors and current beneficial owners of 5% or more of our ordinary shares and their respective affiliates will, in the aggregate, beneficially own approximately       % of our issued and outstanding ordinary shares, based on the number of ordinary shares issued and outstanding as of November 12, 2020. As a result, depending on the level of attendance at general meetings of our shareholders, these persons, acting together, would be able to significantly influence all matters requiring shareholder approval, including the election, re-election and removal of directors, any merger, scheme of arrangement, or sale of all or substantially all of our assets, or other significant corporate transactions, and amendments to our articles of association. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our ADSs by:

delaying, deferring, or preventing a change in control;
 
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entrenching our management and/or the board of directors;

impeding a merger, scheme of arrangement, takeover, or other business combination involving us; or

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
In addition, some of these persons or entities may have interests different than yours. For example, because many of these shareholders purchased their shares at prices substantially below the current market price for an ordinary share on AIM and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other shareholders.]
Because we do not anticipate paying any cash dividends on our ordinary shares (including ordinary shares represented by ADSs) in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.
You should not rely on an investment in our ADSs to provide dividend income. Under current English law, a company’s accumulated realized profits must exceed its accumulated realized losses (on a non-consolidated basis) before dividends can be paid. Therefore, we must have distributable profits before issuing a dividend. We have never declared or paid a dividend on our ordinary shares in the past, and we currently intend to retain our future earnings, if any, to fund the development of our technologies and therapeutic candidates and the growth of our business. As a result, capital appreciation, if any, on our ADSs will be your sole source of gains for the foreseeable future. Investors seeking cash dividends should not purchase our ADSs.
Securities traded on AIM may carry a higher risk than securities traded on other exchanges, which may impact the value of your investment.
Our ordinary shares are currently traded on AIM. Investment in equities traded on AIM is sometimes perceived to carry a higher risk than an investment in equities quoted on exchanges with more stringent listing requirements, such as the Main Market of the London Stock Exchange, New York Stock Exchange or Nasdaq. This is because AIM imposes less stringent corporate governance and ongoing reporting requirements than those other exchanges. In addition, AIM requires only half-yearly, rather than quarterly, financial reporting. The value of our ordinary shares may be influenced by many factors, some of which may be specific to us and some of which may affect AIM companies generally, including the depth and liquidity of the market, our performance, a large or small volume of trading in our ordinary shares, legislative changes and general economic, political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations. Therefore, the market price of our ordinary shares, the ADSs, or the ordinary shares underlying the ADSs, may not reflect the underlying value of our company.
Fluctuations in the exchange rate between the U.S. dollar and the British pound sterling may increase the risk of holding ADSs and ordinary shares.
The share price of our ordinary shares is quoted on AIM in British pounds sterling, while our ADSs will trade on Nasdaq in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the British pound sterling may result in differences between the value of our ADSs and the value of our ordinary shares, which may result in heavy trading by investors seeking to exploit such exchange rate differences. In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the British pound sterling, the U.S. dollar equivalent of the proceeds that a holder of the ADSs would receive upon the sale in the United Kingdom of any ordinary shares withdrawn from the depositary, and the U.S. dollar equivalent of any cash dividends paid in British pounds sterling on ordinary shares represented by the ADSs, could also decline.
Holders of our ADSs have fewer rights than our shareholders and must act through the depositary to exercise their rights.
Holders of our ADSs do not have the same rights as our shareholders who hold our ordinary shares directly and may only exercise their voting rights with respect to the underlying ordinary shares in accordance
 
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with the provisions of the deposit agreement. Holders of the ADSs will appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the ordinary shares represented by the ADSs. When a general meeting is convened, if you hold ADSs, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw the ordinary shares underlying your ADSs to allow you to vote with respect to any specific matter. We will use commercially reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive voting materials in time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote. Furthermore, the depositary will not be liable for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ADSs are not voted as you request. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.
You may be subject to limitations on transfers of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when deemed necessary or advisable by it in good faith in connection with the performance of its duties or at our reasonable written request, subject in all cases to compliance with applicable U.S. securities laws. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to certain rights to cancel ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting, or because we are paying a dividend on our ordinary shares or similar corporate actions.
The depositary for our ADSs is entitled to charge holders fees for various services, including annual service fees.
The depositary for our ADSs is entitled to charge holders fees for various services, including for the issuance of ADSs upon deposit of ordinary shares (other than in the case of ADSs issued pursuant to the merger), cancellation of ADSs, distributions of cash dividends or other cash distributions, distributions of ADSs pursuant to share dividends or other free share distributions, distributions of securities other than ADSs and annual service fees. In the case of ADSs issued by the depositary into The Depository Trust Company, or DTC, the fees will be charged by the DTC participant to the account of the applicable beneficial owner in accordance with the procedures and practices of the DTC participant as in effect at the time. The depositary for our ADSs will not generally be responsible for any United Kingdom stamp duty or stamp duty reserve tax arising upon the issuance or transfer of ADSs.
You may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs.
Although we do not have any present plans to declare or pay any dividends, in the event we declare and pay any dividend, the depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to register under U.S. securities laws any offering of ADSs, ordinary shares or other securities received through such distributions. We also have no obligation to take any other action to permit distribution on the ADSs, ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have an adverse effect on the value of your ADSs.
 
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Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.
Under English law, shareholders usually have preemptive rights to subscribe on a pro rata basis in the issuance of new shares for cash. The exercise of preemptive rights by certain shareholders not resident in the United Kingdom may be restricted by applicable law or practice in the United Kingdom and overseas jurisdictions. We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Also, under the deposit agreement, the depositary bank will not make rights available to you unless either both the rights and any related securities are registered under the Securities Act, or the distribution of them to ADS holders is exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. If the depositary does not distribute the rights, it may, under the deposit agreement, either sell them, if possible, or allow them to lapse. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings. We are also permitted under English law to disapply preemptive rights (subject to the approval of our shareholders by special resolution or the inclusion in our articles of association of a power to disapply such rights) and thereby exclude certain shareholders, such as overseas shareholders, from participating in a rights offering (usually to avoid a breach of local securities laws).
We may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors owning the ADSs or our ordinary shares.
A non-U.S. corporation, such as our company, will be considered a passive foreign investment company, or PFIC, for any taxable year if either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.
Based upon our current and projected income and assets, and projections as to the value of our assets, we do not anticipate that we will be a PFIC for the taxable year in which the Merger occurs or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations in the market price of the ADSs may cause us to be classified as a PFIC in any taxable year because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of the ADSs from time to time (which may be volatile). If our market capitalization subsequently declines, we may be or become classified as a PFIC for the taxable year in which the Merger occurs or future taxable years. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash acquired or received in the Merger and any future fundraising activity. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase.
If we were treated as a PFIC for any taxable year during which a U.S. investor held an ADS or an ordinary share, certain adverse U.S. federal income tax consequences could apply to the U.S. Holder. See “Material Tax Consequences — U.S Federal Income Tax Consequences — Passive foreign investment company rules.”
We may be unable to use U.K., Irish and Spanish carryforward tax losses to reduce future tax payments or benefit from favorable U.K. tax legislation.
As a U.K. resident trading entity with Irish, Spanish, U.S, and BVI subsidiaries, we are subject to U.K. corporate taxation with Corporation tax in the other jurisdictions also applicable. Due to the nature of our business, we have generated losses since inception. As of December 31, 2019, we had gross cumulative carryforward tax losses of $53.1 million, $5.6 million and $0.9 million respectively in the UK, Ireland and
 
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Spain. With our U.S. and BVI entities having been recently formed there are no such carryforwards losses. Subject to any relevant restrictions (including those that limit the percentage of profits that can be reduced by carried forward losses and those that can restrict the use of carried forward losses where there is a change of ownership of more than half the ordinary shares of the company and a major change in the nature, conduct or scale of the trade), we expect these to be available to carry forward and offset against future operating profits.
As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime under the scheme for small and medium-sized enterprises, or SMEs or in some instances we access the RDEC scheme in place of this. Under the SME scheme, we are able to surrender to the UK tax authorities some of our trading losses that arise from our qualifying research and development activities for a cash payment using an enhanced effective rate of up to 33.35% of such qualifying research and development expenditures (again subject to certain restrictions but including enhanced deductions), while the RDEC scheme offers up to 13% (10.53% after tax). We may not be able to continue to claim payable research and development tax credits under the SME Scheme in the future if we cease to qualify as an SME, based on size criteria concerning employee headcount, turnover and gross assets. Qualifying expenditures largely are comprised of employment costs for research staff, research materials, outsourced CRO costs and R&D consulting costs incurred as part of research projects. Under the SME scheme specified subcontracted qualifying research expenditures are eligible for a cash rebate of up to 21.67% and may be ineligible to qualify for the more stringent rules of the RDEC scheme.
Recent proposed changes to the SME scheme, which are scheduled to begin for years from April 2021, will cap the available claim under the schemes to a multiple of payroll taxes. This cap is likely to limit the value we can claim.
In the event we generate revenues in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from patents or patented products with a UK nexus to be taxed at an effective rate of 10%. We are the owners of several patents which cover our product candidates, and accordingly, future upfront fees, milestone fees, product revenues and royalties could be taxed at this tax rate. When taken in combination with the enhanced relief available on our research and development expenditures, we expect a long-term lower effective rate of corporation tax to apply to us. If, however, there are unexpected adverse changes to the U.K. research and development tax credit regime or the “patent box” regime, or for any reason we are unable to qualify for such advantageous tax legislation, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments, our business, results of operations, and financial condition may be adversely affected. This may impact our ongoing requirement for investment and the timeframes within which additional investment is required.
We may be subject to securities litigation, which is expensive and could divert management attention.
The market price of our ADSs may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
Changes and uncertainties in the tax system in the countries in which we have operations, could cause us to experience fluctuations in our tax obligations and effective tax rate materially adversely affecting our financial condition and results of operations, and reducing net returns to our shareholders.
We are subject to a variety of taxes and tax collection obligations in the United Kingdom and in other jurisdictions where we record tax expense, including indirect taxes, based on current tax payments and our estimates of future tax payments. We may recognize additional tax expense and be subject to additional tax liabilities, including tax collection obligations, due to changes in tax law such as legislation, including regulations, administrative practices, outcomes of court cases, and changes to the global tax framework. Further, our effective tax rate and cash taxes paid in a given financial statement period may be adversely impacted by results of our business operations including changes in the mix of costs and revenue among different jurisdictions, acquisitions, investments, entry into new geographies, the relative amount of foreign
 
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earnings, changes in foreign currency exchanges rates, changes in our stock price, intercompany transactions, changes to accounting rules, expectation of future profits, changes to trading rules post Brexit, changes in our deferred tax assets and liabilities and our assessment of their realizability, and changes to our ownership or capital structure. Fluctuations in our tax obligations and effective tax rate could adversely affect our business.
In the ordinary course of our business, there are numerous transactions and calculations for which the ultimate tax determination is uncertain. Although we believe that our tax positions and related provisions reflected in the financial statements are fully supportable, we recognize that these tax positions and related provisions may be challenged in the future by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including changes in interpretation of tax laws, developments in case law, and closing of statute of limitations. To the extent that the ultimate results differ from our original or adjusted estimates, our effective tax rate can be adversely affected.
The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which we operate. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by us. In addition, should tax authorities review our income tax returns filed by us then they may raise issues regarding our filing positions, timing and amount of income and deductions, and the allocation of income among the jurisdictions in which we operate. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a tax authority with respect to that return. Any adjustments as a result of any examination may result in additional taxes or penalties being assessed on or imposed against us. If the ultimate result of any audit differs from original or adjusted estimates, it could have a material impact our effective tax rate and tax liabilities.
While we have transfer pricing policies in place for trade with subsidiaries in multiple countries the tax authorities could come to a different determination on the values and amounts of such transfers. Such a determination could lead to additional tax liabilities and may also incur fines and penalties which may have a material impact on our brought forwards losses and our tax liability.
At any one time, multiple tax years could be subject to audit by various taxing jurisdictions. As a result, we could be subject to higher than anticipated tax liabilities as well as ongoing variability in our disclosed tax rates as audits close and exposures are re-evaluated.
We continue to analyze our exposure for taxes and related liabilities and do not have provisions for current tax liabilities arising in the normal course of business as we anticipate that any such liabilities would be covered by our losses to date. We do have provisions for deferred tax liabilities relating to the increases in value arising on recognition of the fair value of acquired over the amounts paid and we had deferred tax provisions of $31.0 thousand at December 31, 2019.
If a U.S. person is treated as owning at least 10% of our ordinary shares (including ordinary shares represented by ADSs), such holder may be subject to adverse U.S. federal income tax consequences.
If a U.S. person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to us or to any of our subsidiaries, if we or any of our subsidiaries constitute a “controlled foreign corporation” (in each case, as such terms are defined under the Code). Certain United States shareholders of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of  “Subpart F income,” “global intangible low-taxed income” and certain investments in U.S. property by controlled foreign corporations, whether or not we make any distributions to such United States shareholder. A failure by a United States shareholder to comply with its reporting obligations may subject the United States shareholder to significant monetary penalties and other adverse tax consequences, and may extend the statute of limitations with respect to the United States shareholder’s U.S. federal income tax return for the year for which such reporting was due. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are controlled foreign corporations or whether any investor is a United States shareholder with respect to any such controlled foreign corporations. We also cannot guarantee that we will furnish to United States
 
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shareholders information that may be necessary for them to comply with the aforementioned obligations. United States investors should consult their own advisors regarding the potential application of these rules to their investments in us. The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our ADSs.
Protections found in provisions under the U.K. Takeover Code may delay or discourage a takeover attempt, including attempts that may be beneficial to holders of our ADSs.
The U.K. Takeover Code applies, amongst other things, to an offer for a public company whose registered office is in the United Kingdom and whose securities are admitted to trading on a multilateral trading facility in the United Kingdom, which includes AIM. We are therefore subject to the Takeover Code.
The U.K. Takeover Code provides a framework within which takeovers of certain companies organized in the United Kingdom are regulated and conducted. The following is a brief summary of some of the most important rules of the U.K. Takeover Code:

In connection with a potential offer, if, following an approach by or on behalf of a potential bidder, the company is “the subject of rumor or speculation” or there is an “untoward movement” in the company’s share price, there is a requirement for the potential bidder to make a public announcement about a potential offer for the company, or for the company to make a public announcement about its review of a potential offer.

When a person or group of persons acting in concert (i) acquires, whether by a series of transactions over a period of time or not, interests in shares carrying 30% or more of the voting rights of a company (which percentage is treated by the Takeover Code as the level at which effective control is obtained) or (ii) increases the aggregate percentage interest they have when they are already interested in not less than 30% and not more than 50%, they must make a cash offer to all other shareholders at the highest price paid by them or any person acting in concert with them in the 12 months before the offer was announced.

When interests in shares carrying 10% or more of the voting rights of a class have been acquired for cash by an offeror (i.e. a bidder) or any person acting in concert with them in the offer period (i.e. before the shares subject to the offer have been acquired) or within the previous 12 months, the offer must be in cash or be accompanied by a cash alternative for all shareholders of that class at the highest price paid by the offeror or any person acting in concert with them in that period. Further, if an offeror or any person acting in concert with them acquires for cash any interest in shares during the offer period, the offer must be in cash or accompanied by a cash alternative at a price at least equal to the price paid for such shares during the offer period.

If after an announcement is made, the offeror or any person acting in concert with them acquires an interest in shares in an offeree company (i.e. a target) at a price higher than the value of the offer, the offer must be increased accordingly.

The board of directors of the offeree company must appoint a competent independent adviser whose advice on the financial terms of the offer must be made known to all the shareholders, together with the opinion of the board of directors of the offeree company.

Favorable deals for selected shareholders are not permitted, except in certain circumstances where independent shareholder approval is given and the arrangements are regarded as fair and reasonable in the opinion of the financial adviser to the offeree company.

All shareholders must be given the same information.

Those issuing documents in connection with a takeover must include statements taking responsibility for the contents thereof.

Profit forecasts, quantified financial benefits statements and asset valuations must be made to specified standards and must be reported on by professional advisers.

Misleading, inaccurate or unsubstantiated statements made in documents or to the media must be publicly corrected immediately.
 
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Actions during the course of an offer by the offeree company which might frustrate the offer are generally prohibited unless shareholders approve these plans. Frustrating actions would include, for example, lengthening the notice period for directors under their service contract or agreeing to sell off material parts of the target group.

Stringent requirements are laid down for the disclosure of dealings in relevant securities during an offer, including the prompt disclosure of positions and dealings in relevant securities by the parties to an offer and any person who is interested (directly or indirectly) in 1% or more of any class of relevant securities.

Employees of both the offeror and the offeree company and the trustees of the offeree company’s pension scheme must be informed about an offer. In addition, the offeree company’s employee representatives and pension scheme trustees have the right to have a separate opinion on the effects of the offer on employment appended to the offeree board of directors’ circular or published on a website.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of our ADSs, are governed by English law, including the provisions the U.K. Companies Act and by our articles of association. These rights differ in certain respects from the rights of shareholders in typical BVI or U.S. corporations. See “Comparison of Rights of Longevity Shareholders and 4D Pharma Shareholders” in this proxy statement/prospectus for a description of the principal differences between the provisions of the U.K. Companies Act applicable to us as opposed to the BVI Companies Act.
As an English public company, certain capital structure decisions will require shareholder approval, which may limit our flexibility to manage our capital structure.
English law provides that a board of directors may only allot shares (or grant rights to subscribe for, or to convert any security into, shares) with the prior authorization of shareholders by ordinary resolution, being a resolution passed by a simple majority of votes cast at a general meeting in person or by proxy, such authorization stating the aggregate nominal amount of shares that it covers and being valid for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution. In either case, this authorization would need to be renewed by our shareholders upon expiration (i.e., at least every five years). Typically, English public companies renew the authorization of their directors to allot shares on an annual basis at their annual general meeting.
English law also generally provides shareholders with preemptive rights when new shares are issued for cash. However, it is possible for the articles of association, or for shareholders to pass a special resolution at a general meeting, being a resolution passed by at least 75% of the votes cast, in person or by proxy, to disapply preemptive rights. Such a disapplication of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the disapplication is contained in the articles of association, or from the date of the shareholder special resolution, if the disapplication is by shareholder special resolution, but not longer than the duration of the authority to allot shares to which the disapplication relates. In either case, this disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). Typically, English public companies renew the disapplication of preemptive rights on an annual basis at their annual general meeting.
English law also generally prohibits a public company from repurchasing its own shares without the prior approval of shareholders by ordinary resolution, being a resolution passed by a simple majority of votes cast, at a general meeting in person or by proxy, and other formalities. Such approval may be for a maximum period of up to five years. See “Description of 4D Pharma Ordinary Shares Capital and Articles of Association.”
Claims of U.S. civil liabilities may not be enforceable against us.
We are incorporated under English law. All of our assets are located outside the United States. The majority of our senior management and board of directors reside outside the United States. As a result, it
 
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may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.
The United States and the United Kingdom do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in England and Wales. In addition, uncertainty exists as to whether the English and Welsh courts would entertain original actions brought in England and Wales against us or our directors or senior management predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained against us in U.S. courts would be treated by the courts of England and Wales as a cause of action in itself and sued upon as a debt so that no retrial of the issues would be necessary, provided that certain requirements are met consistent with English law and public policy. Whether these requirements are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws is an issue for the English court making such decision. If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose.
As a result, U.S. investors may not be able to enforce against us or our senior management, board of directors or certain experts named herein who are residents of the United Kingdom or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.
ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.
The deposit agreement governing our ADSs provides that owners and holders of ADSs irrevocably waive the right to a trial by jury in any legal proceeding arising out of or relating to the deposit agreement or the ADSs, including claims under U.S. federal securities laws, against us or the depositary to the fullest extent permitted by applicable law. If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. Although we are not aware of a specific federal decision that addresses the enforceability of a jury trial waiver in the context of U.S. federal securities laws, it is our understanding that jury trial waivers are generally enforceable. Moreover, insofar as the deposit agreement is governed by the laws of the State of New York, New York laws similarly recognize the validity of jury trial waivers in appropriate circumstances. In determining whether to enforce a jury trial waiver provision, New York courts and federal courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs.
In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim of fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim (as opposed to a contract dispute). No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.
If any owner or holder of our ADSs brings a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under U.S. federal securities laws, such owner or holder may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different results than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.
 
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SELECTED FINANCIAL DATA OF LONGEVITY
This proxy/statement proxy statement/prospectus incorporates by reference Longevity’s unaudited interim condensed consolidated financial statements as of August 31, 2020 and for the six months ended August 31, 2020 and Longevity’s audited consolidated financial statements as of February 29, 2020 and for the year ended February 29, 2020 and the related notes thereto (the “Longevity Financial Statements”). The consolidated financial statements of Longevity are prepared in accordance with GAAP and are presented in U.S. dollars. The unaudited condensed interim consolidated financial statements of Longevity are prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC and are presented U.S. dollars. The selected financial and operating information set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Longevity Financial Statements and the notes thereto incorporated by reference in this proxy statement/prospectus.
The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should carefully read the following selected financial information in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Longevity” and Longevity Financial Statements appearing elsewhere in this proxy statement/ prospectus.
U.S. dollars in thousands, except share and per share data
Six months ended
August 31,
Year ended
February 29,
March 9, 2018
(inception) to
February 28
2020
2019
2020
2019
Income Statement Data:
Operating costs
$ 370 $ 570 $ 1,079 $ 439
Interest income
46 455 788 430
Unrealized gain (loss)
6 (5)
Net Loss
$ (324) $ (109) $ (291) $ (14)
Weighted average number of Longevity Shares outstanding, basic and diluted(1)
1,997,943 1,809,240 1,859,697 1,522,527
Basic and diluted net loss per Longevity Share(2)
$ (0.17) $ (0.28) $ (0.50) $ (0.25)
(1)
Excludes an aggregate of up to 599,471 and 3,388,058 Longevity Shares subject to possible Redemption at August 31, 2020 and 2019, respectively. Excludes an aggregate of up to 3,280,938 and 3,471,054 Longevity Shares subject to possible Redemption as of February 29, 2020 and February 28, 2019, respectively.
(2)
Excludes interest income of $17 thousand and $391 thousand attributable to Longevity Shares subject to possible Redemption for the six months ended August 31, 2020 and 2019, respectively (see Note 3 to Longevity Financial Statements). Excludes interest income of $646 thousand and $369 thousand attributable to Longevity Shares subject to possible Redemption for the year ended February 29, 2020 and for the period from March 9, 2018 (inception) through February 28, 2019, respectively (see Note 3).
U.S. dollars in thousands
August 31,
2020
February 29,
2020
Balance Sheet Data:
Current Assets
$ 32 $ 138
Marketable securities held in Trust Account
14,506 42,413
Total assets
14,538 42,551
Longevity Shares subject to possible Redemption
6,409 34,789
Total shareholders’ equity
5,000 5,000
 
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SELECTED HISTORIC FINANCIAL DATA OF 4D PHARMA
The following table summarizes our financial data. We have derived the following statements of operations and comprehensive loss for the years ended December 31, 2019 and 2018 and balance sheet data as of December 31, 2019 from our audited financial statements included elsewhere in this proxy statement/prospectus. We have derived the following statements of operations data for the six months ended June 30, 2020 and 2019 and balance sheet data as of June 30, 2020 from our unaudited interim financial statements included elsewhere in this proxy statement/ prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this proxy statement/prospectus.
Our financial statements included in this proxy statement/prospectus were prepared in accordance with U.S. GAAP.
Six Months Ended
June 30,
(unaudited)
Year Ended
December 31,
U.S. dollars in thousands, except share and per share data
2020
2019
2019
2018
Revenues
$ 239 $ $ 269 $
Operating expenses:
Research and development expenses
13,493 11,701 29,193 27,830
General and administrative expenses
5,509 5,400 10,380 11,294
Foreign currency losses (gains)
(1,491) 148 957 (234)
Total operating expenses
17,511 17,249 40,530 38,890
Loss from operations
(17,272) (17,249) (40,261) (38,890)
Other income (expense), net:
Interest income
6 84 78 379
Interest expense
(1) (1) (3)
Other income
2,502 2,720 6,883 6,378
Change in fair value of contingent consideration payable
(252) 2,967 (465)
Total other income (expense), net
2,507 2,551 9,928 6,289
Net loss
$ (14,765) $ (14,698) $ (30,333) $ (32,601)
Other comprehensive loss:
Foreign currency translation adjustment
(2,081) 111 1,113 (3,995)
Comprehensive loss
(16,846) (14,587) (29,220) (36,596)
Basic and diluted net loss per common share
$ (0.15) $ (0.22) $ (0.46) $ (0.50)
Weighted average common shares used in computing basic and diluted net loss per common share
97,647,688 65,493,842 65,493,842