common stock may be adversely affected by third-parties trying to drive down the market price. Short sellers and others, some of whom post anonymously on social media, may be positioned to profit
if our stock declines and their activities can negatively affect our stock price. These broad market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rate changes and international currency
fluctuations, may negatively affect the market price of our common stock.
In the past, many companies that have experienced volatility and sustained
declines in the market price of their stock have become subject to securities class action and derivative action litigation. We have been involved in four such lawsuits that were dismissed in September 2017, July 2018 and September 2018, and were
involved in one such lawsuit that was resolved in December 2020. We are currently defending two such lawsuits, and 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 managements attention from other business concerns, which could materially harm our business. Any insurance we maintain may not provide adequate coverage against potential losses such securities litigation, and if claims or losses
exceed our liability insurance coverage, our business would be adversely impacted. In addition, insurance coverage may become more expensive, which would harm our results of operations.
The concentration of our capital stock ownership and certain rights we have granted to insiders will limit the ability of other stockholders to influence corporate matters and presents risks related to our
future securities offerings, which could substantially impact our business.
As of December 31, 2020, over 50% of our capital stock was
beneficially owned by five significant stockholders, including Foris Ventures, LLC, or Foris, FMR LLC, DSM, Vivo, and Farallon Capital. Furthermore, most of these parties and other insider stockholders holds some or a combination of convertible
preferred stock, warrants and purchase rights, pursuant to which they may acquire additional shares of our common stock and thereby increase their ownership interest in the Company. Additionally, Foris is indirectly owned by John Doerr, one of our
current directors, and each of DSM and Vivo have one director on our Board of Directors pursuant to designation rights under their respective agreements with the Company. This significant concentration of share ownership may adversely affect the
trading price of our common stock because investors often perceive disadvantages in owning stock in companies with stockholders with significant interests. Also, these stockholders, acting together, may be able to control or materially influence our
management and affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate transactions such as mergers, consolidations or the sale of all or substantially all of our assets, and
may not act in the best interests of our other stockholders. Consequently, this concentration of ownership may have the effect of delaying or preventing a change of control, or a change in our management or Board of Directors, or discouraging a
potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, even if such actions would benefit our other stockholders.
In May 2017, we entered into an agreement with DSM, which was amended and restated in August 2017, pursuant to which we agreed (i) that for as long as there is a
DSM-designated director serving on our Board of Directors, we will not engage in certain commercial or financial transactions or arrangements without the consent of such director, and (ii) to provide DSM
with certain exclusive negotiating rights in connection with certain future commercial projects and arrangements. These provisions could discourage other potential partners from approaching us with business opportunities, and could restrict, delay
or prevent us from pursuing or engaging in such opportunities, which could adversely affect our business.
Additionally, in connection with their
investments in the Company, we granted certain investors, including DSM and Vivo, a right of first investment if we propose to sell securities in certain financing transactions. With these rights, such investors may subscribe for a portion of any
such new financing and require us to comply with certain notice periods, which could discourage other investors from participating in, or cause delays in our ability to close, such a financing.
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