MLND Millendo Therapeutics Inc

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Risks Related to Tempest

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Risks Related to the Merger

The exchange ratio will not be adjusted based on the market price of Millendo common stock so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

At the effective time of the merger, outstanding shares of Tempest capital stock will be converted into shares of Millendo common stock. Applying the exchange ratio, the former Tempest securityholders immediately before the merger, including shares purchased in the Tempest pre-closing financing, are expected to own approximately 81.5% of the aggregate number of shares of Millendo common stock following the merger, and Millendo securityholders immediately before the merger are expected to own approximately 18.5% of the aggregate number of shares of Millendo common stock following the merger, subject to certain assumptions, including, but not limited to, (a) Millendo’s net cash as of the earlier of the closing and June 30, 2021 being between $15.3 million and $18.7 million, and (b) Tempest raising $30 million in the Tempest pre-closing financing. To the extent that Millendo’s net cash is greater than $18.7 million, Millendo securityholders immediately before the merger would own a greater percentage of the aggregate shares of Millendo common stock following the merger than stated above and, accordingly, the former Tempest securityholders immediately before the merger, including securityholders that purchased shares in the Tempest pre-closing financing, would own a lesser percentage of the aggregate shares of Millendo common stock following the merger than stated above. Conversely, to the extent that Millendo’s net cash is less than $15.3 million, Millendo securityholders immediately before the merger would own a lesser percentage of the aggregate shares of Millendo common stock following the merger than stated above and, accordingly, the former Tempest securityholders immediately before the merger, including securityholders that purchased shares in the Tempest pre-closing financing, would own a greater percentage of the aggregate shares of Millendo common stock following the merger than stated above.

Any changes in the market price of Millendo stock before the completion of the merger will not affect the number of shares Tempest stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the merger, the market price of Millendo common stock increases from the market price on the date of the Merger Agreement, then Tempest stockholders could receive merger consideration with substantially more value for their shares of Tempest capital stock than the parties had negotiated when they established the exchange ratio. Similarly, if before the completion of the merger the market price of Millendo common stock declines from the market price on the date of the Merger Agreement, then Tempest stockholders could receive merger consideration with substantially lower value. The Merger Agreement does not include a price-based termination right.

Failure to complete the merger may result in either Millendo or Tempest paying a termination fee to the other party, which could harm the common stock price of Millendo and future business and operations of each company.

If the merger is not completed, Millendo and Tempest are subject to the following risks:

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If the Merger Agreement is terminated and the board of directors of Millendo or Tempest determines to seek another business combination, there can be no assurance that either Millendo or Tempest will be able to find a partner with whom a business combination would yield greater benefits than the benefits to be provided under the Merger Agreement.

If the conditions to the merger are not satisfied or waived, the merger may not occur.

Even if the Merger Agreement is adopted by the stockholders of Tempest and Proposal Nos. 1 and 2 as described in this proxy statement/prospectus are approved by the Millendo stockholders, specified conditions must be satisfied or waived to complete the merger. These conditions are set forth in the Merger Agreement and described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 154 of this proxy statement/prospectus. Millendo and Tempest cannot assure you that all of the conditions to the consummation of the merger will be satisfied or waived. If the conditions are not satisfied or waived, the merger may not occur or the closing may be delayed, and Millendo and Tempest each may lose some or all of the intended benefits of the merger.

The merger may be completed even though a material adverse effect may result from the announcement of the merger, industry-wide changes or other causes.

In general, neither Millendo nor Tempest is obligated to complete the merger if there is a material adverse effect affecting the other party between March 29, 2021, the date of the Merger Agreement, and the closing of the merger. However, certain types of changes are excluded from the concept of a “material adverse effect.” Such exclusions include but are not limited to changes in general economic or market conditions, industry wide changes, changes in GAAP, changes in laws, rules or regulations of general applicability or interpretations thereof, natural disasters, pandemics (including the COVID-19 pandemic), outbreaks of hostilities or acts of terrorism, changes resulting from the announcement or pendency of the merger, and failures to meet internal guidance, budgets, plans or forecasts. Therefore, if any of these events were to occur impacting Millendo or Tempest, the other party would still be obliged to consummate the closing of the merger. If any such adverse changes occur and Millendo and Tempest consummate the closing of the merger, the stock price of the combined company may suffer. This in turn may reduce the value of the merger to the stockholders of Millendo, Tempest or both. For a more complete discussion of what constitutes a material adverse effect on Millendo or Tempest, see the section titled “The Merger Agreement—Representations and Warranties” beginning on page 145 of this proxy statement/prospectus.

If Millendo and Tempest complete the merger, the combined company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements, which may cause significant dilution to the combined company’s stockholders or restrict the combined company’s operations.

On March 29, 2021, Tempest entered into Funding Agreements with certain investors, including existing investors of Tempest, pursuant to which the investors agreed to purchase, in the aggregate, approximately $30 million in shares of common stock of Tempest immediately prior to the closing of the merger, referred to as the Tempest pre-closing financing. The closing of the Tempest pre-closing financing is conditioned upon the satisfaction or waiver of the conditions to the closing of the merger as well as certain other conditions. The Tempest pre-closing financing is more fully described under the section titled “Agreements Related to the Merger—Funding Agreements” beginning on page 163 of this proxy statement/prospectus.

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Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, such financing will cause additional dilution to all securityholders of the combined company, including Millendo’s pre-merger securityholders and Tempest’s former securityholders. It is also possible that the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Some Millendo and Tempest directors and executive officers have interests in the merger that are different from yours and that may influence them to support or approve the merger without regard to your interests.

Directors and executive officers of Millendo and Tempest may have interests in the merger that are different from, or in addition to, the interests of other Millendo stockholders generally. These interests with respect to Millendo’s directors and executive officers may include, among others, acceleration of stock option vesting, retention bonus payments, extension of exercisability periods of previously issued stock option grants, severance payments if employment is terminated in a qualifying termination in connection with the merger and rights to continued indemnification, expense advancement and insurance coverage. A current member of the Millendo board of directors will continue as a director of the combined company after the effective time of the merger, and, following the closing of the merger, will be eligible to be compensated as non-employee director of the combined company pursuant to the Millendo non-employee director compensation policy that is expected to remain in place following the effective time of the merger. These interests with respect to Tempest’s directors and executive officers may include, among others, that certain of Tempest’s directors and executive officers have options, subject to vesting, to purchase shares of Tempest common stock which, after the effective time of the merger, will be converted into and become options to purchase shares of the common stock of the combined company; Tempest’s executive officers are expected to continue as executive officers of the combined company after the effective time of the merger; and all of Tempest’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. Further, certain current members of Tempest’s board of directors will continue as directors of the combined company after the effective time of the merger, and, following the closing of the merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Millendo non-employee director compensation policy that is expected to remain in place following the effective time of the merger. The directors and executive officers own options to purchase the shares of their respective companies.

The Millendo and Tempest boards of directors were aware of and considered those interests, among other matters, in reaching their decisions to approve and adopt the Merger Agreement, approve the merger, and recommend the approval of the Merger Agreement to Millendo and Tempest stockholders. These interests, among other factors, may have influenced the directors and executive officers of Millendo and Tempest to support or approve the merger.

For more information regarding the interests of Millendo and Tempest directors and executive officers in the merger, please see the sections titled “The Merger—Interests of Millendo Directors and Executive Officers in the Merger” beginning on page 125 and “The Merger—Interests of Tempest Directors and Executive Officers in the Merger” beginning on page 131 of this proxy statement/prospectus.

Millendo stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger, including the conversion of Tempest common stock issued in the Tempest pre-closing financing.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the merger, Millendo stockholders will have experienced substantial dilution of their ownership interests

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without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the merger.

If the merger is not completed, Millendo’s stock price may fluctuate significantly.

The market price of Millendo common stock is subject to significant fluctuations. During the 12-month period ended May 7, 2021, the closing sales price of Millendo’s common stock on The Nasdaq Capital Market ranged from a high of $3.28 on June 17, 2020 to a low of $0.93 on April 21, 2021. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of Millendo common stock will likely be volatile based on whether stockholders and other investors believe that Millendo can complete the merger or otherwise raise additional capital to support Millendo’s operations if the merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of Millendo common stock is exacerbated by low trading volume. Additional factors that may cause the market price of Millendo common stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of Millendo common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

Millendo and Tempest securityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the merger as compared to their current ownership and voting interests in the respective companies.

After the completion of the merger, the current stockholders of Millendo and Tempest will own a smaller percentage of the combined company than their ownership of their respective companies prior to the merger. Immediately after the merger, Millendo securityholders as of immediately prior to the merger are expected to own approximately 18.5% of the outstanding shares of the combined company and former Tempest securityholders, including shares purchased in the Tempest pre-closing financing are expected to own approximately 81.5% of the outstanding shares of the combined company, subject to certain assumptions, including, but not limited to, (a) Millendo’s net cash as of the earlier of the closing and June 30, 2021 being between $15.3 million and $18.7 million, and (b) Tempest raising $30 million in the Tempest pre-closing financing. The President and Chief Operating Officer of Tempest will serve as the Chief Executive Officer of the combined company following the completion of the merger.

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During the pendency of the merger, Millendo and Tempest may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective business prospects.

Covenants in the Merger Agreement impede the ability of Millendo and Tempest to make acquisitions during the pendency of the merger, subject to specified exceptions. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, proposing, seeking or knowingly encouraging, facilitating or supporting any inquiries, indications of interest, proposals or offers that constitute or may reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them. For more information, see the section titled “The Merger Agreement—Non-Solicitation.”

Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the transactions contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Millendo and Tempest from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances as described in further detail in the section titled “The Merger Agreement—Non-Solicitation.” In addition, if the Merger Agreement is terminated under specified circumstances, Millendo would be required to pay Tempest a termination fee of $1.4 million and reimburse up to $1.0 million of expenses. This termination fee may discourage third parties from submitting competing proposals to Millendo or its stockholders, and may cause the Millendo board of directors to be less inclined to recommend a competing proposal.

Because the lack of a public market for Tempest’s capital stock makes it difficult to evaluate the fair market value of Tempest’s capital stock, Millendo may pay more than the fair market value of Tempest’s capital stock and/or the stockholders of Tempest may receive consideration in the merger that is less than the fair market value of Tempest’s capital stock.

The outstanding capital stock of Tempest is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Tempest’s capital stock. Because the percentage of Millendo equity to be issued to Tempest stockholders was determined based on negotiations between the parties, it is possible that the value of the Millendo common stock to be received by Tempest stockholders will be less than the fair market value of Tempest’s capital stock, or Millendo may pay more than the aggregate fair market value for Tempest’s capital stock.

The merger may fail to qualify as a “reorganization” for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by Tempest stockholders in respect of their Tempest capital stock.

Millendo and Tempest intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, as described in the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus. In the event that the merger does not qualify as a “reorganization,” the merger would result in taxable gain or loss for each Tempest stockholder, with the amount of such gain or loss determined by the amount that each Tempest stockholder’s adjusted tax basis in the Tempest capital stock surrendered is less or more than the fair market value of the Millendo common stock and any cash in lieu of a fractional share received in exchange therefor. Each holder of Tempest capital stock is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the merger.

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Risks Related to the Proposed Reverse Stock Split

The reverse stock split may not increase the combined company’s stock price over the long-term.

The principal purpose of the reverse stock split is to increase the per-share market price of Millendo’s common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of Millendo and the shares of Millendo common stock being issued in the merger on Nasdaq will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Millendo’s common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by Millendo and Tempest, or result in any permanent or sustained increase in the market price of Millendo’s common stock, which is dependent upon many factors, including Millendo’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of Millendo might meet the listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of the combined company’s common stock.

Although the Millendo board of directors believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the combined company’s common stock. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.

The reverse stock split may lead to a decrease in the combined company’s overall market capitalization.

Should the market price of the combined company’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the combined company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to the Combined Company

In determining whether you should approve the issuance of shares of Millendo common stock, the change of control resulting from the merger and other matters related to the merger, as applicable, you should carefully read the following risk factors in addition to the risks described above.

The market price of the combined company’s common stock is expected to be volatile, and the market price of the common stock may drop following the merger.

The market price of the combined company’s common stock following the merger could be subject to significant fluctuations. Some of the factors that may cause the market price of the combined company’s common stock to fluctuate include:

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Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company’s common stock. In addition, a recession, depression or other sustained adverse market event resulting from the spread of COVID-19 or otherwise could materially and adversely affect the combined company’s business and the value of its common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies. Furthermore, market volatility may lead to increased shareholder activism if the combined company experiences a market valuation that activists believe is not reflective of its intrinsic value. Activist campaigns that contest or conflict with the combined company’s strategic direction or seek changes in the composition of its board of directors could have an adverse effect on its operating results and financial condition.

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Following the merger, the combined company may be unable to integrate successfully and realize the anticipated benefits of the merger.

The merger involves the combination of two companies which currently operate as independent companies. The combined company may fail to realize some or all of the anticipated benefits of the merger if the integration process takes longer than expected or is more costly than expected. In addition, Millendo and Tempest have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process also could result in the diversion of each company’s management’s attention, the disruption or interruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect the combined company’s ability to maintain relationships with customers, suppliers and employees or the ability to achieve the anticipated benefits of the merger, or could otherwise adversely affect the business and financial results of the combined company.

The combined company will need substantial additional funding before it can complete the development of its product candidates. If the combined company is unable to obtain such additional capital on favorable terms, on a timely basis or at all, it would be forced to delay, reduce or eliminate its product development and clinical programs and may not have the capital required to otherwise operate its business.

Developing cancer therapies, including conducting pre-clinical studies and clinical trials and establishing manufacturing capabilities, is expensive. The combined company has not generated any revenues from the commercial sale of products and will not be able to generate any product revenues until, and only if, the combined company receives approval to sell its product candidates from the FDA or other regulatory authorities. The cash expected from both Millendo and Tempest at closing, including the net proceeds of the Tempest pre-closing financing, are expected to fund the further development of the combined company’s three oncology programs and operate the combined company into early 2023. However, as the combined company has not generated any revenue from commercial sales to date and does not expect to generate any revenue for several years, if ever, the combined company will need to raise substantial additional capital in order to fund its general corporate activities and to fund its research and development, including its currently planned clinical trials and plans for new clinical trials and product development.

The combined company may seek to raise additional funds through various potential sources, such as equity and debt financings, or through strategic collaborations and license agreements. The combined company can give no assurances that it will be able to secure such additional sources of funds to support its operations or, if such funds are available, that such additional financing will be sufficient to meet its needs. Moreover, to the extent that the combined company raises additional funds by issuing equity securities, its stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that the combined company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable.

Given the combined company’s capital constraints, it will need to prioritize spending on its clinical and pre-clinical programs. If the combined company is unable to raise sufficient funds to support its current and planned operations, it may elect to discontinue certain of its ongoing activities or programs. The combined company’s inability to raise additional funds could also prevent it from taking advantage of opportunities to pursue promising new or existing programs in the future.

The combined company’s forecasts regarding its beliefs in the sufficiency of its financial resources to support its current and planned operations are forward-looking statements and involve significant risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section. These estimates are based on assumptions that may prove to be wrong, and the combined company could utilize its available capital resources sooner than currently expected.

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The combined company will incur additional costs and increased demands upon management as a result of complying with the laws and regulations affecting public companies.

The combined company will incur significant legal, accounting and other expenses as a public company that Tempest did not incur as a private company, including costs associated with public company reporting obligations under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The combined company’s management team will consist of the executive officers of Tempest prior to the merger. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that the combined company complies with all of these requirements. Any changes the combined company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for the combined company to attract and retain qualified persons to serve on the board of directors or on board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

Once the combined company is no longer a smaller reporting company or otherwise no longer qualifies for applicable exemptions, the combined company will be subject to additional laws and regulations affecting public companies that will increase the combined company’s costs and the demands on management and could harm the combined company’s operating results.

The combined company will be subject to the reporting requirements of the Exchange Act, which requires, among other things, that the combined company file with the SEC, annual, quarterly and current reports with respect to the combined company’s business and financial condition as well as other disclosure and corporate governance requirements. However, as a “smaller reporting company” the combined company may take advantage of some of exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in the combined company’s periodic reports and proxy statements. Once the combined company is no longer a smaller reporting company or otherwise qualifies for these exemptions, the combined company will be required to comply with these additional legal and regulatory requirements applicable to public companies and will incur significant legal, accounting and other expenses to do so. If the combined company is not able to comply with the requirements in a timely manner or at all, the combined company’s financial condition or the market price of the combined company’s common stock may be harmed. For example, if the combined company or its independent auditor identifies deficiencies in the combined company’s internal control over financial reporting that are deemed to be material weaknesses the combined company could face additional costs to remedy those deficiencies, the market price of the combined company’s stock could decline or the combined company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

The unaudited pro forma condensed combined financial data for Millendo and Tempest included in this proxy statement/prospectus is preliminary, and the combined company’s actual financial position and operations after the merger may differ materially from the unaudited pro forma financial data included in this proxy statement/prospectus.

The unaudited pro forma financial data for Millendo and Tempest included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of the combined company’s actual financial condition or results of operations of future periods, or the financial condition or results of operations that would have been realized had the entities been combined during the periods presented. The unaudited pro forma financial statements have been derived from the historical financial statements of Millendo and Tempest Therapeutics and adjustments and assumptions have been made regarding the combined company after giving effect to the transaction. The information upon which these adjustments and assumptions have been

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made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the transactions or that have been incurred since the date of such unaudited pro forma financial statements. The assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition following the transaction. For more information see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 294.

Provisions that will be in the combined company’s certificate of incorporation and by-laws and provisions under Delaware law could make an acquisition of the combined company, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove its management.

Provisions that will be included in the combined company’s certificate of incorporation and by-laws may discourage, delay or prevent a merger, acquisition or other change in control of the combined company that stockholders may consider favorable, including transactions in which its common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of the combined company’s common stock, thereby depressing the market price of its common stock. In addition, because the combined company’s board of directors will be responsible for appointing the members of the combined company’s management team, these provisions may frustrate or prevent any attempts by the combined company’s stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the combined company’s board of directors. Among other things, these provisions:

Moreover, because the combined company is incorporated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which prohibits a person who owns 15 percent or more of the combined company’s outstanding voting stock from merging or combining with the combined company for a period of three years after the date of the transaction in which the person acquired 15 percent or more of the combined company’s outstanding voting stock, unless the merger or combination is approved in a manner prescribed by the statute.

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The certificate of incorporation and bylaws of the combined company will provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between the combined company and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the combined company or its directors, officers or other employees.

The bylaws of the combined company will provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on the combined company’s behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against it arising pursuant to any provisions of the DGCL, its certificate of incorporation or its bylaws, or any action asserting a claim against it that is governed by the internal affairs doctrine. The provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees, which may discourage such lawsuits against the combined company and its directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, the combined company may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect its business, financial condition and results of operations.

The combined company’s ability to utilize its net operating loss carryforwards and tax credit carryforwards may be subject to limitations.

The combined company’s ability to use its federal and state net operating losses (“NOLs”) to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon the combined company’s generation of future taxable income, and Millendo and Tempest cannot predict with certainty when, or whether, the combined company will generate sufficient taxable income to use all of its NOLs.

Under Section 382 and Section 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. Millendo believes that it has experienced an ownership change in the past, and may experience ownership changes in the future due to subsequent shifts in its stock ownership (some of which are outside of its control). Tempest may have experienced ownership changes in the past, may experience an ownership change as a result of the merger, and may experience ownership changes in the future due to subsequent shifts in the combined company’s stock ownership (some of which are outside of its control). Furthermore, the merger, if consummated, will constitute an ownership change (within the meaning of Section 382 of the Code) of Millendo which could eliminate or otherwise substantially limit the combined company’s ability to use Millendo’s federal and state NOLs to offset its future taxable income. Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of Tempest’s, Millendo’s or the combined company’s NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit the combined company’s use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, the combined company’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

Changes in tax laws or regulations could materially adversely affect the combined company.

New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, modified or applied in a manner that is adverse to the combined company, which could adversely affect its business and financial condition. For example, legislation enacted in 2017, informally titled the Tax Act, enacted many significant changes to the U.S. tax laws, including changes in corporate tax rates, the utilization of NOLs and other deferred tax assets, the deductibility of expenses, and the taxation of foreign earnings. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act

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may affect the combined company, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. The impact of changes under the Tax Act, the CARES Act, or future reform legislation could increase the combined company’s future U.S. tax expense and could have a material adverse impact on its business and financial condition.

Millendo and Tempest do not anticipate that the combined company will pay any cash dividends in the foreseeable future.

The current expectation is that the combined company will retain its future earnings, if any, to fund the growth of the combined company’s business as opposed to paying dividends. As a result, capital appreciation, if any, of the common stock of the combined company will be your sole source of gain, if any, for the foreseeable future.

An active trading market for the combined company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

Prior to the merger, there had been no public market for shares of Tempest capital stock. An active trading market for the combined company’s shares of common stock may never develop or be sustained. If an active market for the combined company’s common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares at an attractive price or at all.

Future sales of shares by existing stockholders could cause the combined company’s stock price to decline.

If existing securityholders of Millendo and Tempest sell, or indicate an intention to sell, substantial amounts of the combined company’s common stock in the public market after legal restrictions on resale discussed in this proxy statement/prospectus lapse, the trading price of the common stock of the combined company could decline. Based on shares outstanding as of March 31, 2021, the shares to be issued in the Tempest pre-closing financing and shares expected to be issued upon completion of the merger the combined company is expected to have outstanding a total of approximately 111,559,188 shares of common stock immediately following the completion of the merger. Of the shares of common stock, approximately 55,961,483 shares will be available for sale in the public market beginning 180 days after the closing of the merger as a result of the expiration of lock-up agreements between Millendo and Tempest on the one hand and certain securityholders of Millendo and Tempest on the other hand. All other outstanding shares of common stock, other than shares held by affiliates of the combined company, will be freely tradable, without restriction, in the public market. In addition, shares of common stock that are subject to outstanding options of Tempest will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements and Rules 144 and 701 under the Securities Act. If these shares are sold, the trading price of the combined company’s common stock could decline.

After completion of the merger, the combined company’s executive officers, directors and principal stockholders will have the ability to control or significantly influence all matters submitted to the combined company’s stockholders for approval.

Upon the completion of the merger, and giving effect to the issuance of the shares of common stock of Tempest prior to the closing of the merger pursuant to the Tempest pre-closing financing, it is anticipated that the combined company’s executive officers, directors and principal stockholders will, in the aggregate, beneficially own approximately 54.4% of the combined company’s outstanding shares of common stock, subject to certain assumptions, including, but not limited to, (a) Millendo’s net cash as of the earlier of the closing and June 30, 2021 being between $15.3 million and $18.7 million, and (b) Tempest raising $30 million in the Tempest pre-closing financing. As a result, if these stockholders were to choose to act together, they would be able to

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control or significantly influence all matters submitted to the combined company’s stockholders for approval, as well as the combined company’s management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the combined company’s assets. This concentration of voting power could delay or prevent an acquisition of the combined company on terms that other stockholders may desire.

The combined company may be exposed to increased litigation, including stockholder litigation, which could have an adverse effect on the combined company’s business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, consumers and other third parties due to the combination of Millendo’s business and Tempest’s business following the merger. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations. In addition, in the past, stockholders have initiated class action lawsuits against biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against the combined company, could cause the combined company to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on the combined company’s business, financial condition and results of operations.

The combined company may be exposed to continued litigation resulting from the four complaints described above in the section titled “Recent Developments - Litigation” beginning on page 15 of this proxy statement/prospectus. Such lawsuits, if remaining outstanding following the closing, could cause the combined company to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on the combined company’s business, financial condition and results of operations.

If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about the combined company, its business or its market, its stock price and trading volume could decline.

The trading market for the combined company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company’s common stock after the completion of the merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts or the content and opinions included in their reports. The price of the combined company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The combined company will have broad discretion in the use of the cash and cash equivalents of the combined company and the proceeds from the Tempest pre-closing financing and may invest or spend the proceeds in ways with which you do not agree and in ways that may not increase the value of your investment.

The combined company will have broad discretion over the use of the cash and cash equivalents of the combined company and the proceeds from the Tempest pre-closing financing. You may not agree with the combined company’s decisions, and its use of the proceeds may not yield any return on your investment. The combined company’s failure to apply these resources effectively could compromise its ability to pursue its growth strategy and the combined company might not be able to yield a significant return, if any, on its investment of these net proceeds. You will not have the opportunity to influence its decisions on how to use the combined company’s cash resources.

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The combined company’s internal control over financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, could have a material adverse effect on the combined company’s business and share price.

As a privately held company, Tempest was not required to evaluate its internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404 of the Sarbanes-Oxley Act, or Section 404. Following the merger, the combined company’s management will be required to report on the effectiveness of the combined company’s internal control over financial reporting. The rules governing the standards that must be met for the combined company’s management to assess the combined company’s internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

In preparing Tempest’s financial statements as of and for the year ended December 31, 2020, management of Tempest identified material weaknesses in its internal control over financial reporting. See “Tempest has identified material weaknesses in its internal control over financial reporting. Failure to achieve and maintain effective internal control over financial reporting could harm its business and negatively impact the value of its common stock.” The combined company cannot assure you that the material weaknesses identified at Tempest will be remediated by the combined company on the timelines currently anticipated by Tempest, or at all, and/or that there will not be additional material weaknesses or significant deficiencies in the combined company’s internal control over financial reporting in the future. Any failure to maintain effective internal control over financial reporting could severely inhibit the combined company’s ability to accurately report its financial condition, results of operations or cash flows. If the combined company is unable to conclude that its internal control over financial reporting is effective, or if the combined company’s independent registered public accounting firm determines the combined company has a material weakness or significant deficiency in the combined company’s internal control over financial reporting once that firm begins its reporting on internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the combined company’s common stock could decline, and the combined company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in the combined company’s internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict the combined company’s future access to the capital markets.

Risks Related to Millendo

Risks Related to the Proposed Merger and Millendo’s Retention of Key Employees

Millendo’s merger with Tempest may not be consummated or may not deliver the anticipated benefits Millendo expects.

In 2020, Millendo undertook a strategic review process, which was intended to result in an actionable plan that leverages its assets, capital and capabilities to maximize stockholder value. Following an extensive process of evaluating strategic alternatives and identifying and reviewing potential candidates for a strategic acquisition or other transaction, on March 29, 2021, Millendo entered into a merger agreement with Tempest, under which the privately held Tempest will merge with a wholly owned subsidiary of Millendo. Pre-merger Millendo shareholders will own approximately 18.5% of the combined company and pre-merger Tempest stockholders will own approximately 81.5% of the combined company (assuming the Tempest pre-closing financing results in gross proceeds of approximately $30 million). Millendo is devoting substantially all of its time and resources to consummating this transaction, however, there can be no assurance that such activities will result in the consummation of this transaction or that such transaction will deliver the anticipated benefits or enhance stockholder value.

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Certain provisions of the Merger Agreement may discourage third-parties from submitting alternative acquisition proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each party from soliciting or engaging in discussions with third parties regarding alternative acquisition proposals, except in limited circumstances when such party’s board of directors determines in good faith that an unsolicited acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal and that failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law. In addition, if the Merger Agreement is terminated by Millendo or Tempest under certain circumstances, including because of a decision of Millendo’s board of directors to accept a superior proposal, Millendo would be required to pay Tempest a termination fee of $1.4 million or reimburse Tempest’s expenses up to a maximum of $1.0 million. This termination fee may discourage third parties from submitting alternative takeover proposals to Millendo or its stockholders, and may cause Millendo’s board of directors to be less inclined to recommend an alternative proposal.

The announcement and pendency of the merger, whether or not consummated, may adversely affect the trading price of Millendo’s common stock and its business prospects.

The announcement and pendency of the merger, whether or not consummated, may adversely affect the trading price of Millendo’s common stock and its business prospects. In the event that the merger is not completed, the announcement of the termination of the Merger Agreement may also adversely affect the trading price of Millendo’s common stock and its business prospects.

Failure to consummate the merger may result in Millendo paying a termination fee to Tempest and could harm Millendo’s common stock price and its future business and operations.

The merger will not be consummated if the conditions precedent to the consummation of the transaction are not satisfied or waived, or if the Merger Agreement is terminated in accordance with its terms. If the merger is not consummated, Millendo is subject to the following risks:

If the merger does not close for any reason, Millendo’s board of directors may elect to, among other things, attempt to complete another strategic transaction, attempt to sell or otherwise dispose of Millendo’s various assets, dissolve or liquidate its assets, declare bankruptcy or seek to continue to operate its business. If Millendo seeks another strategic transaction or attempts to sell or otherwise dispose of its various assets, there is no assurance that it will be able to do so, that the terms would be equal to or superior to the terms of the merger or as to the timing of such transaction. If Millendo decides to dissolve and liquidates its assets, Millendo would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurance as to the amount or timing of available cash left to distribute to stockholders after paying its debts and other obligations and setting aside funds for reserves.

If Millendo was to seek to continue its business, it would need to determine whether to acquire one or more other product candidates. Millendo would also need to raise funds to support continued operations and re-assess its workforce requirements in consideration of its reduced workforce.

If the merger is not consummated, Millendo may be unable to retain the services of key remaining members of its management team and, as a result, may be unable to seek or consummate another strategic transaction, properly dissolve and liquidate its assets or continue its business.

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If Millendo does not successfully consummate the transaction with Tempest, Millendo’s board of directors may dissolve or liquidate its assets to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to Millendo’s stockholders will depend heavily on the timing of such transaction or liquidation.

If the merger does not close for any reason, Millendo’s board of directors may elect to, among other things, dissolve or liquidate its assets, which may include seeking protection from creditors in a bankruptcy proceeding. If Millendo decides to dissolve and liquidate its assets, Millendo would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left to distribute to stockholders after paying its debts and other obligations and setting aside funds for reserves.

In the event of a dissolution and liquidation, the amount of cash available for distribution to Millendo’s stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as Millendo funds its operations in preparation for the consummation of the merger. Further, the Merger Agreement contains certain termination rights for each party, and provides that, upon termination under specified circumstances, Millendo may be required to pay Tempest a termination fee of $1.4 million or reimburse Tempest’s expenses up to a maximum of $1.0 million, which would further decrease Millendo’s available cash resources. If Millendo’s board of directors were to approve and recommend, and its stockholders were to approve, a dissolution and liquidation, Millendo would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to its stockholders. Millendo’s commitments and contingent liabilities may include (i) regulatory and clinical obligations remaining under its clinical trials; (ii) obligations under its employment, separation and retention agreements with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of Millendo; and (iii) potential litigation against Millendo, and other various claims and legal actions arising in the ordinary course of business. As a result of this requirement, a portion of Millendo’s assets may need to be reserved pending the resolution of such obligations. In addition, Millendo may be subject to litigation or other claims related to a dissolution and liquidation of Millendo. If a dissolution and liquidation were pursued, Millendo’s board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of Millendo common stock could lose all or a significant portion of their investment in the event of its liquidation, dissolution or winding up.

As a result of Millendo’s decision to discontinue further investment in MLE-301 and the reductions in Millendo’s workforce, Millendo has only 10 employees remaining as of the date of this proxy statement/prospectus. If Millendo is unable to retain certain of its remaining employees, the ability to consummate the planned merger transaction may be delayed or seriously jeopardized.

On January 28, 2021, Millendo announced workforce reductions, and current headcount has been reduced to 10 employees as of the date of this proxy statement/prospectus. Millendo’s cash conservation activities may yield unintended consequences, such as attrition beyond the planned workforce reductions and reduced employee morale, which may cause the remaining employees to seek alternate employment. Competition among biotechnology companies for qualified employees is intense, and the ability to retain the remaining employees is critical to Millendo’s ability to effectively manage its business and to consummate the planned merger transaction. Additional attrition could have a material adverse effect on its business and ability to consummate the merger. In addition, as a result of the reduction in the workforce, Millendo may face an increased risk of employment litigation.

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

Millendo has incurred significant operating losses since inception and anticipates that it will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, Millendo has incurred significant operating losses and negative operating cash flows and there is no assurance that Millendo will ever achieve or sustain profitability. Millendo’s net loss was $36.4 million and $44.6 million and for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, Millendo had an accumulated deficit of $245.1 million and expects to continue to incur significant expenses and increasing operating losses for the foreseeable future. Millendo has devoted substantially all of its efforts to the acquisition of and preclinical and clinical development of MLE-301, in which it decided to discontinue its investment in January 2021, nevanimibe, in which Millendo ceased investing in June 2020, and livoletide, of which Millendo discontinued development in April 2020, as well as to building its management team and infrastructure. The net losses Millendo incurs may fluctuate significantly from quarter to quarter and year to year. Millendo anticipates that expenses may increase if it resumes drug development activities. Millendo’s failure to become and remain profitable would decrease its value and could impair its ability to raise capital, continue its operations. A decline in its value also could cause Millendo stockholders to lose all or part of their investment.

Millendo has a limited operating history and has never generated any revenue from product sales, which may make it difficult to assess its future viability.

Millendo is a biopharmaceutical company with a limited operating history. Its operations to date, with respect to the development of its product candidates, has been limited to organizing and staffing its business, business planning, raising capital, acquiring its product candidates and other assets and conducting preclinical and clinical development of its product candidates. Millendo has not demonstrated an ability to successfully complete clinical development of a product candidate, obtain marketing approval, manufacture a commercial-scale drug (or arrange for a third-party to do so on Millendo’s behalf), or conduct sales and marketing activities necessary for successful commercialization. Consequently, Millendo’s predictions about the future success or viability may not be as accurate as they could be if it had more experience developing product candidates.

If the merger is not completed, Millendo would need to raise substantial additional funding to the extent it resumes drug development efforts, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force delays, limit or terminate its drug development efforts or other operations.

If the merger is not completed, Millendo may require substantial additional capital to fund any research and development and expenses related to its business. Millendo had cash, cash equivalents and restricted cash of $38.7 million at December 31, 2020. In the event that the merger is not completed, Millendo may pursue a liquidation, dissolution or winding-up, or may seek to complete an alternate strategic transaction or may elect to resume investment in other product candidates. Based on the current operating plan, Millendo believe that its existing cash, cash equivalents and restricted cash will be sufficient to allow it to fund its current operating plan for at least the next 12 months.

Millendo cannot predict to what extent it will resume drug development activities for any other drug product candidates. If Millendo resumes drug development activities, only a small minority of all research and development programs ultimately result in commercially successful drugs. Clinical failure can occur at any stage of clinical development and clinical trials may produce negative or inconclusive results, and Millendo may decide, or regulators may require Millendo, to conduct additional clinical or preclinical trials. In addition, data obtained from trials are susceptible to varying interpretations, and regulators may not interpret the data as favorably as Millendo does, which may delay, limit or prevent regulatory approval. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a drug candidate. Further, even if Millendo completes the

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development for a drug product candidate and gains marketing approvals from the U.S. Food and Drug Administration, or FDA, and comparable foreign regulatory authorities in a timely manner, it cannot be sure that such drug product candidate will be commercially successful in the pharmaceutical market. If the results of clinical trials, the anticipated or actual timing of marketing approvals, or the market acceptance of any drug product candidate, if approved, do not meet the expectations of investors or public market analysts, the market price of Millendo’s common stock would likely decline. Further, if Millendo resumes drug development activities, it will need substantial additional financing to complete the development of any other drug product candidates it may develop.

Millendo expects to incur losses for the foreseeable future. Millendo’s ability to achieve profitability in the future is dependent upon achieving a level of revenues adequate to support its cost structure. Millendo may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital. If Millendo raises additional capital through the sale of equity or convertible debt securities, the issuance of those securities could result in substantial dilution for current Millendo stockholders and the terms may include liquidation or other preferences that adversely affect the rights of current stockholders, further diminishing current stockholders’ ability to realize any value for their stock holdings. Furthermore, the issuance of additional securities, whether equity or debt, by Millendo, or the possibility of such issuance, may cause the market price of Millendo’s common stock to decline further and existing stockholders may not agree with its financing plans or the terms of such financings. There can be no assurances, however, that additional funding will be available on terms acceptable to Millendo, or at all.

Millendo will require additional capital to finance its operations, which may not be available on acceptable terms, if at all. Failure to obtain capital when needed may force Millendo to delay, limit or terminate certain of its development programs, future commercialization efforts or other operations.

Millendo expects its expenses to increase in connection with ongoing activities and expects to continue to incur additional costs associated with operating as a public company. As of December 31, 2020, Millendo’s cash, cash equivalents and restricted cash were $38.7 million. Millendo’s existing cash, cash equivalents and restricted cash are currently expected to be sufficient to fund its current operating plans through at least the next 12 months. This cash runway guidance is based on Millendo’s current operational plans and excludes any additional funding that may be received and business development activities that may be undertaken. In addition, the operating plans may change as a result of many factors currently unknown to Millendo, including the short- and long-term effects of the COVID-19 pandemic, and Millendo may need to seek additional funds sooner than planned, through public or private equity or debt financings, third-party funding, and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or a combination of these approaches. In any event, Millendo will require additional capital to pursue preclinical and clinical activities, regulatory approval and the commercialization of its current and future product candidates. Even if Millendo believes it has sufficient capital for its current operating plans, Millendo may seek additional capital if market conditions are favorable or if it has specific strategic considerations. If Millendo elects to do so, additional capital may not be available to it on acceptable terms, if at all. Millendo’s ability to access additional capital, and as a result its operating results and liquidity needs, could be negatively affected by market fluctuations and economic downturn. The COVID-19 pandemic has already resulted in a significant disruption of global financial markets. If the disruption persists and deepens, Millendo could experience an inability to access additional capital, which could negatively affect its business. Any additional capital raising efforts may divert its management from its day-to-day activities, which may adversely affect Millendo’s ability to develop and commercialize its current and future product candidates.

Raising additional capital by issuing equity or debt securities may cause dilution to Millendo’s existing stockholders, and raising funds through lending and licensing arrangements may restrict Millendo’s operations or require Millendo to relinquish proprietary rights.

Until such time as Millendo can generate substantial revenue from product sales, if ever, Millendo expects to finance its cash needs through a combination of equity and debt financings, strategic alliances and license and development agreements in connection with any future collaborations. To the extent that Millendo raises

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additional capital by issuing equity securities, its existing stockholders’ ownership may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect an investor in Millendo’s rights as a stockholder. Equity and debt financing, if available, may involve agreements that include covenants limiting or restricting Millendo’s ability to take specific actions, such as redeeming Millendo’s shares, making investments, incurring additional debt, making capital expenditures or declaring dividends.

The incurrence of indebtedness could result in increased fixed payment obligations and Millendo may be required to agree to certain restrictive covenants therein, such as limitations on its ability to incur additional debt, limitations on its ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely affect its ability to conduct its business.

If Millendo raises additional capital through collaborations, strategic alliances or third-party licensing arrangements, it may have to relinquish valuable rights to its intellectual property, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to it. If Millendo is unable to raise additional capital through equity or debt financings when needed, it may be required to delay, limit, reduce or terminate its product development or future commercialization efforts, or grant rights to develop and market product candidates that it would otherwise develop and market itself.

Risks Related to Development and Commercialization

Millendo has never obtained marketing approval for a product candidate and may be unable to obtain, or may be delayed in obtaining, marketing approval for any future product candidates that it may develop.

Millendo has never obtained marketing approval for a product candidate. It is possible that the FDA may refuse to accept for substantive review any NDAs that Millendo submits for any future candidates Millendo may choose to develop or may conclude after review of the data that Millendo’s application is insufficient to obtain marketing approval of its product candidates. If the FDA does not accept or approve Millendo’s NDAs for any of Millendo’s future product candidates, it may require that Millendo conduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before it will reconsider Millendo’s applications. Depending on the extent of these or any other FDA-required trials or studies, approval of any New Drug Application, or NDA, or application that Millendo submits may be delayed by several years or may require Millendo to expend more resources than it has available. It is also possible that additional trials or studies, if performed and completed, may not be considered sufficient by the FDA to approve Millendo’s NDAs.

Any delay in obtaining, or an inability to obtain, marketing approvals would prevent Millendo from commercializing its product candidates, generating revenues and achieving and sustaining profitability. If any of these outcomes occurs, Millendo may be forced to abandon its development efforts for its product candidates, which could significantly harm its business, prospects, operating results and financial condition.

Millendo is exposed to a variety of risks associated with its international operations.

Since the closing date of the merger Millendo completed with OvaScience, Inc. or OvaScience in 2018 (“the OvaScience Merger”), Millendo has been engaged in the process of winding up various subsidiaries of OvaScience, some or all of which are in foreign jurisdictions. Millendo is also in the process of closing all other international subsidiaries. Millendo expects to incur additional costs to complete these processes. Moreover, even if Millendo successfully winds up these entities, Millendo may be exposed to liability in these foreign jurisdictions as a result of their historical operations.

In addition, in December 2017, Millendo acquired Alizé Pharma SAS (“Alizé”), a biopharmaceutical company based in Lyon, France. As of March 31, 2021, Millendo had 11 employees located in the United States and one employee located in France. Millendo’s past and current global operations expose it to numerous and

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sometimes conflicting legal, tax and regulatory requirements, and violations or unfavorable interpretation by the respective authorities of these regulations could harm its business. Risks associated with international operations include the following, and these risks may be more pronounced if Millendo seeks to commercialize any future product candidates outside of the United States:

In addition, there are complex regulatory, tax, labor, and other legal requirements imposed by both the European Union and many of the individual countries in and outside of the European Union, with which Millendo may need to comply.

Product liability lawsuits against Millendo could cause it to incur substantial liabilities and could limit commercialization of any future product candidate that Millendo may develop.

Millendo faces an inherent risk of product liability exposure related to its historical testing of product candidates. If Millendo cannot successfully defend itself against claims that any such product candidates caused injuries, Millendo could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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In addition, Millendo faces an inherent risk of product liability exposure related to OvaScience’s prior use of fertility treatments in humans. Product liability claims involving OvaScience’s activities may be brought for significant amounts because OvaScience’s potential fertility treatments involved mothers and children. For example, it is possible that Millendo will be subject to product liability claims that assert that OvaScience’s potential fertility treatments have caused birth defects in children or that such defects are inheritable. These claims could be made many years into the future based on effects that were not observed or observable at the time of birth. If Millendo cannot successfully defend against claims that OvaScience’s potential fertility treatments caused injuries, Millendo will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in, among other things, significant costs to defend the related litigation; substantial monetary awards or payments to trial participants or patients; loss of revenue; and the diversion of management’s resources.

Although Millendo maintains product liability insurance coverage, such insurance may not be adequate to cover all liabilities that it may incur. Millendo anticipates that it will need to increase its insurance coverage each time it commences a clinical trial and if it successfully commercializes any product candidate. Insurance coverage is increasingly expensive. Millendo may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

If OvaScience failed to comply with environmental, health and safety laws and regulations, Millendo could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of its business.

OvaScience was 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. OvaScience’s prior operations involved the use of hazardous and flammable materials, including chemicals and biological materials. OvaScience’s prior operations also produced hazardous waste products. OvaScience generally contracted with third-parties for the disposal of these materials and wastes. In the event of contamination or injury resulting from OvaScience’s use of hazardous materials, Millendo could be held liable for any resulting damages, and any liability could exceed Millendo’s resources. Millendo also could incur significant costs associated with civil or criminal fines and penalties.

Millendo does not maintain insurance for environmental liability or toxic tort claims that may be asserted against it in connection with OvaScience’s storage or disposal of biological, hazardous or radioactive materials.

Risks Related to Regulatory Compliance

Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters could adversely affect Millendo’s ability to conduct its business.

Millendo is subject to and affected by laws, rules, regulations and industry standards related to data privacy and security, and restrictions or technological requirements regarding the collection, use, storage, security, retention or transfer of data. In the United States, the rules and regulations to which Millendo may be subject include federal laws and regulations enforced by the Federal Trade Commission, HHS, and state privacy, data security, and breach notification laws, as well as regulator enforcement positions and expectations. Internationally, governments and agencies have adopted and could in the future adopt, modify, apply or enforce additional laws, policies, regulations, and standards covering privacy and data security that may apply to Millendo’s business. New regulation or legislative actions regarding data privacy and security (together with applicable industry standards) may increase its costs of doing business. In addition to privacy and data security regulations currently in force in the jurisdictions where Millendo operates, the European Union General Data Protection Regulation (“GDPR”), went into effect in May 2018. The GDPR contains numerous requirements and changes from existing European Union (“EU”), law, including more robust obligations on data processors and data controllers and heavier documentation requirements for data protection compliance programs. Specifically,

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the GDPR will introduce numerous privacy-related changes for companies operating in the EU, including greater control over personal data-by-data subjects (e.g., the “right to be forgotten”), increased data portability for EU consumers, data breach notification requirements, and increased fines. The GDPR requirements apply not only to third-party transactions, but also to transfers of information between Millendo and its subsidiaries, including employee information. However, despite the ongoing efforts to bring Millendo’s practices into compliance before the effective date of the GDPR, Millendo may not be successful either due to various factors within its control, such as limited financial or human resources, or other factors outside its control. It is also possible that local data protection authorities may have different interpretations of the GDPR, leading to potential inconsistencies amongst various EU member states. Any failure or alleged failure (including as a result of deficiencies in its policies, procedures, or measures relating to privacy, data security, marketing, or communications) by Millendo to comply with laws, regulations, policies, legal or contractual obligations, industry standards, or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties, additional regulatory oversight and reporting obligations or adverse publicity. Further, because of the work-from-home policies Millendo implemented due to COVID-19, information that is normally protected, including company confidential information, may be less secure.

Millendo expects that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the United States, the European Union, and in other jurisdictions, and cannot determine the impact such future laws, regulations and standards may have on its business. Future laws, regulations, standards and other obligations or any changed interpretation of existing laws or regulations could impair its ability to operate its business and negatively impact its results of operations.

Risks Related to Millendo’s Intellectual Property

If Millendo is unable to obtain and maintain patent protection for its technology and products, or if the scope of the patent protection obtained is not sufficiently broad, Millendo may not be able to compete effectively in its markets.

To the extent Millendo resumes drug development activities, it will rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to its product candidates. The patent prosecution process is expensive and time-consuming, and Millendo may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect Millendo’s rights to the same extent as the laws of the United States, or vice versa. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Further, Millendo may not be aware of all third-party intellectual property rights potentially relating to its product candidates. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically published 18 months after filing, or in some cases, not at all. Therefore, Millendo cannot know with certainty whether it was the first to make the inventions claimed in its owned or licensed patents or pending patent applications, or that it was the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of Millendo’s patent rights are highly uncertain. The pending and future patent applications may not result in patents being issued which protect Millendo’s technology or product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies and drugs. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of Millendo’s patents or narrow the scope of its patent protection.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of Millendo patent applications and the enforcement or defense of its issued patents. On September 16, 2011, the

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Leahy-Smith America Invents Act (the “Leahy-Smith Act”), was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The United States Patent and Trademark Office (“USPTO”), recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of Millendo’s business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Millendo’s patent applications and the enforcement or defense of its issued patents, all of which could have a material adverse effect on its business and financial condition. Any further changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of Millendo’s patents and patent applications or narrow the scope of its potential patent protection.

Moreover, Millendo may be subject to a third-party pre-issuance submission of prior art to the USPTO or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging its patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, Millendo’s patent rights, allow third-parties to commercialize its technology or product candidates and compete directly with Millendo, without payment to Millendo, or result in Millendo’s inability to manufacture or commercialize product candidates without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by Millendo’s patents and patent applications is threatened, it could dissuade companies from collaborating with Millendo to license, develop or commercialize current or future product candidates.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and Millendo’s owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit its ability to stop others from using or commercializing similar or identical technology and product candidates, or limit the duration of the patent protection of Millendo’s technology and product candidates. Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years from the earliest filing date of a non-provisional patent application. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Without patent protection for Millendo’s current or future product candidates, it may be open to competition from generic versions of such drugs. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, Millendo’s owned and licensed patent portfolio may not provide it with sufficient rights to exclude others from commercializing drugs similar or identical to that of us.

Millendo jointly owns patents and patent applications with third-parties. Millendo’s ability to exploit or enforce these patent rights, or to prevent the third-party from granting licenses to others with respect to these patent rights, may be limited in some circumstances.

Millendo jointly owns certain patents and patent applications with third-parties. In the absence of an agreement with each co-owner of jointly owned patent rights, Millendo will be subject to default rules pertaining to joint ownership. Some countries require the consent of all joint owners to exploit, license or assign jointly owned patents, and if Millendo is unable to obtain that consent from the joint owners, it may be unable to exploit the invention or to license or assign its rights under these patents and patent applications in those countries. For example, Millendo secured exclusive rights from the University of Michigan for certain patents and patent applications that they jointly own with Millendo related to nevanimibe. Additionally, in the United States, each co-owner may be required to be joined as a party to any claim or action Millendo may wish to bring to enforce these patent rights, which may limit its ability to pursue third-party infringement claims.

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Millendo has in-licensed patents and patent applications from third-parties. Its ability to exploit or enforce these patent rights, or to prevent the third-party from granting licenses to others with respect to these patent rights, may be limited in some circumstances.

Millendo has in-licensed certain patents and patent applications from third-parties. In the absence of an agreement with each patent rights owner, Millendo will be subject to default rules pertaining to ownership. Some countries require the consent of all owners to exploit, license or assign owned patents, and if Millendo is unable to obtain that consent from the owners, it may be unable to exploit the invention or to license or assign its rights under these patents and patent applications in those countries. For example, Millendo secured exclusive rights from Roche for certain patents and patent applications that Roche owns related to MLE-301. Additionally, in the United States, each owner may be required to be joined as a party to any claim or action Millendo may wish to bring to enforce these patent rights, which may limit its ability to pursue third-party infringement claims.

Obtaining and maintaining Millendo’s patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Millendo’s 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/or applications will be due to be paid to the USPTO and various government patent agencies outside of the United States in several stages over the lifetime of Millendo’s owned and licensed patents and/or applications and any patent rights it may own or license in the future. Millendo relies on its outside counsel or its licensing partners to pay these fees due to non-U.S. patent agencies. The USPTO and various non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. Millendo employs reputable law firms and other professionals to help it comply and is also dependent on its licensors to take the necessary action to comply with these requirements with respect to its licensed intellectual property. In many cases, an inadvertent lapse can 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 in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

In such an event, potential competitors might be able to enter the market and this circumstance would have a material adverse effect on Millendo’s business.

Patent terms may be inadequate to protect Millendo’s competitive position on its product candidates for an adequate amount of time.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Millendo has in the past sought, and in the future may seek, extensions of patent terms in the United States and, if available, in other countries where it is prosecuting patents. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits extension of the term of one U.S. patent that includes at least one claim covering the composition of matter of an FDA-approved drug, an FDA-approved method of treatment using the drug. The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent or 14 years from the date of the FDA approval of the drug. However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with Millendo’s assessment of whether such extensions are available, and may refuse to grant extensions to Millendo’s patents, or may grant more limited extensions than it requests. Further, Millendo may not elect to extend the most beneficial patent to it or the claims underlying the patent that it chooses to extend could be invalidated. If any of the foregoing occurs, Millendo’s competitors may be able to take advantage of Millendo’s investment in development and clinical trials by referencing its clinical and preclinical data and launch their drug earlier than might otherwise be the case.

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Intellectual property rights do not necessarily address all potential threats to Millendo’s business.

The degree of future protection afforded by Millendo’s intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect its business. The following examples are illustrative:

Third-parties may initiate legal proceedings, which are expensive and time consuming, alleging that Millendo is infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse impact on the success of Millendo’s business.

The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. Millendo may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to any future product candidates and technology, including interference proceedings, post grant review and inter partes review before the USPTO. Third-parties may assert infringement claims against Millendo based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third-parties may choose to engage in litigation with Millendo to enforce or to otherwise assert their patent rights against Millendo. Even if Millendo believes such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a material adverse effect on its ability to commercialize any future product candidates. In order to successfully challenge the validity of any such U.S. patent in federal court, Millendo would need to overcome a presumption of validity. As this burden is a high one requiring Millendo 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. If Millendo is found to infringe a third-party’s valid and enforceable intellectual property rights, Millendo could be required to obtain a license from such third-party to continue developing, manufacturing and marketing its product candidate and technology. However, Millendo may not be able to obtain any required license on commercially reasonable terms or at all. Even if Millendo was able to obtain a license, it could be non-exclusive, thereby giving its competitors and other third-parties access to the same technologies licensed to Millendo, and it could require Millendo to make substantial licensing and royalty payments. Millendo could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product candidate. In addition, Millendo could be found liable for monetary damages, including treble damages and

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attorneys’ fees, if it is found to have willfully infringed a patent or other intellectual property right. A finding of infringement could prevent Millendo from manufacturing and commercializing any future product candidates or force it to cease some or all of its business operations, which would have a material adverse effect on its business. Claims that Millendo has misappropriated the confidential information or trade secrets of third-parties could have a similar material adverse effect on its business. Even if Millendo prevails in such infringement claims, patent litigation can be expensive and time consuming, which would harm its business, financial condition and results of operations.

Millendo may become involved in lawsuits to protect or enforce its patents, the patents of its licensors or its other intellectual property rights, which could be expensive, time consuming and unsuccessful.

Competitors may infringe or otherwise violate Millendo’s patents, the patents of its licensors or its other intellectual property rights. To counter infringement or unauthorized use, Millendo may be required to file legal claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of Millendo or its licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that its patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of Millendo’s patents at risk of being invalidated or interpreted narrowly and could put Millendo’s patent applications at risk of not issuing. The initiation of a claim against a third-party may also cause the third-party to bring counter claims against Millendo such as claims asserting that Millendo’s patents are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third-parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Millendo cannot be certain that there is no invalidating prior art, of which Millendo and the patent examiner were unaware during prosecution. For the patents and patent applications that it has licensed, it may have a limited or no right to participate in the defense of any licensed patents against challenge by a third-party. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, Millendo would lose at least part, and perhaps all, of any future patent protection on its current or future product candidates. Such a loss of patent protection could have material adverse effect on its business.

Millendo may not be able to prevent, alone or with its licensors, misappropriation of its intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Any litigation or other proceedings to enforce its intellectual property rights may fail, and even if successful, may result in substantial costs and distract its management and other employees. Even if Millendo prevails in such infringement claims, patent litigation can be expensive and time consuming, which would harm its business, financial condition and results of operations.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Millendo’s confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of Millendo’s common stock.

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Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing Millendo’s ability to protect its product candidates.

The United States has recently enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to Millendo’s ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the U.S. Congress, federal courts, USPTO, and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken Millendo’s ability to obtain new patents or to enforce patents that it has licensed or that it might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions or changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken Millendo’s ability to obtain new patents or to enforce patents that it has licensed or that it may obtain in the future.

Millendo may not be able to protect its intellectual property rights throughout the world, which could have a material adverse effect on its business.

Filing, prosecuting and defending patents covering any future product candidates throughout the world would be prohibitively expensive. Competitors may use Millendo’s technologies in jurisdictions where it has not obtained patent protection to develop its own drugs and, further, may export otherwise infringing drugs to territories where Millendo may obtain patent protection, but where patent enforcement is not as strong as that in the United States. These drugs may compete with Millendo’s drugs in jurisdictions where Millendo does not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Millendo may be subject to claims that its employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third-parties.

Certain of Millendo’s employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including Millendo’s competitors or potential competitors. Although Millendo tries to ensure that its employees, consultants and advisors do not use the proprietary information or know-how of others in their work for Millendo, Millendo may be subject to claims that these individuals or Millendo has used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If Millendo fails in defending any such claims, in addition to paying monetary damages Millendo may lose valuable intellectual property rights or personnel. Even if Millendo is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is Millendo’s approach to require its employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to Millendo, it may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that Millendo regards as its own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and Millendo may be forced to bring claims against third-parties, or defend claims that they may bring against Millendo, to determine the ownership of what Millendo regards as its intellectual property.

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Risks Related to Millendo’s Dependence on Third-Parties

Millendo may in the future enter into collaborations with third-parties to develop its product candidates. If these collaborations are not successful, its business could be harmed.

Millendo may enter into collaborations with third-parties in the future. It may in the future determine to collaborate with other pharmaceutical and biotechnology companies for development and potential commercialization of its product candidates. These relationships, or those like them, may require Millendo to incur non-recurring and other charges, increase Millendo’s near- and long-term expenditures, issue securities that dilute Millendo’s existing stockholders or disrupt its management and business. In addition, Millendo could face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Millendo’s ability to reach a definitive collaboration agreement will depend, among other things, upon its assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of several factors. If Millendo licenses rights to its product candidates, it may not be able to realize the benefit of such transactions if it is unable to successfully integrate them with its existing operations and company culture.

If any such potential future collaborations do not result in the successful development and commercialization of product candidates, or if one of Millendo’s future collaborators terminates its agreement with Millendo, Millendo may not receive any future research funding or milestone or royalty payments under the collaboration. If Millendo does not receive the funding its expects under these agreements, the development of its product candidates could be delayed and it may need additional resources to develop its product candidates. In addition, if one of Millendo’s future collaborators terminates its agreement with Millendo, Millendo may find it more difficult to attract new collaborators and the perception of Millendo in the business and financial communities could be adversely affected. All of the risks relating to product development, regulatory approval and commercialization apply to the activities of Millendo’s potential future collaborators.

Risks Related to Millendo’s Business Operations and Employee Matters

Millendo’s business, preclinical studies and clinical development programs and timelines, its financial condition and results of operations could be materially and adversely affected by the current COVID-19 pandemic.

A novel strain of coronavirus, SARS-CoV-2, causing COVID-19, has been declared a pandemic by the World Health Organization. The COVID-19 pandemic has resulted in travel and other restrictions in order to reduce the spread of the disease, including state and local orders across the country, which, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel. In response to these public health directives and orders, Millendo has implemented work-from-home policies for certain employees. The effects of the executive orders, the shelter-in-place orders and the work-from-home policies may negatively impact productivity, disrupt Millendo’s business and delay its clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on Millendo’s ability to conduct its business in the ordinary course. These and similar, and perhaps more severe, disruptions in Millendo’s operations could negatively impact its business, operating results and financial condition.

Quarantines, shelter-in-place and similar government orders related to COVID-19 may adversely impact Millendo’s business operations and the business operations of its contract research organizations conducting its clinical trials and its third-party manufacturing facilities in the United States and other countries. In particular, some of Millendo’s third-party manufacturers which it uses for the supply of materials for product candidates or other materials necessary to manufacture product to conduct preclinical studies and clinical trials are located in countries affected by COVID-19, and should they experience disruptions, such as temporary closures or suspension of services, Millendo would likely experience delays in advancing these tests and trials.

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The spread of COVID-19, which has caused a broad impact globally, may materially affect Millendo economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing Millendo’s ability to access capital, which could in the future negatively affect Millendo’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect Millendo’s business and the value of its common stock.

The global pandemic of COVID-19 continues to rapidly evolve. The extent to which the COVID-19 pandemic impacts Millendo’s business, Millendo’s clinical development and regulatory efforts will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries, and business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. Accordingly, Millendo does not yet know the full extent of potential delays or impacts on its business, its clinical and regulatory activities, healthcare systems or the global economy as a whole. However, these impacts could adversely affect Millendo’s business, financial condition, results of operations and growth prospects.

In addition, to the extent the ongoing COVID-19 pandemic adversely affects Millendo’s business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described in this ‘‘Risk Factors’’ section.

Millendo has recently reduced the size of its organization, and it may encounter difficulties in managing its business as a result of this reduction, or the attrition that may occur following this reduction, which could disrupt Millendo’s operations. In addition, Millendo may not achieve anticipated benefits and savings from the reduction.

In January 2021, Millendo began the implementation of a reduction in force that will reduce the number of its employees by up to 85 percent. The reduction in force, and the attrition thereafter, resulted in the loss of longer-term employees, the loss of institutional knowledge and expertise and the reallocation and combination of certain of roles and responsibilities across the organization, all of which could adversely affect Millendo’s operations. Millendo anticipates that its pre-closing workforce will no longer be employed at the closing of the merger. However, if the merger is not consummated, given the complexity and nature of Millendo’s business, it must continue to implement and improve its managerial, operational and financial systems, manage its facilities and continue to recruit and retain qualified personnel. This will be made more challenging given the reduction in force described above and additional measures Millendo may take to reduce costs. As a result, Millendo’s management may need to divert a disproportionate amount of its attention away from its day-to-day strategic and operational activities, and devote a substantial amount of time to managing these organizational changes. Further, the restructuring and possible additional cost containment measures may yield unintended consequences, such as attrition beyond Millendo’s intended reduction in force and reduced employee morale. In addition, employees who were not affected by the reduction in force may seek alternate employment which would result in Millendo seeking contract support at unplanned additional expense. In addition, Millendo may not achieve anticipated benefits from the reduction in force. Due to Millendo’s limited resources, it may not be able to effectively manage its operations or recruit and retain qualified personnel, which may result in weaknesses in its infrastructure and operations, risks that it may not be able to comply with legal and regulatory requirements, loss of business opportunities, loss of employees and reduced productivity among remaining employees. If Millendo’s management is unable to effectively manage this transition and reduction in force and additional cost containment measures, Millendo’s expenses may be more than expected, and it may not be able to implement its business strategy.

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Millendo’s employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including historical noncompliance with regulatory standards and requirements, which could have an adverse effect on its results of operations.

Millendo is exposed to the risk of fraud or other misconduct by its employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in other jurisdictions, provide accurate information to the FDA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to Millendo. 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 restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to Millendo’s reputation. It is not always possible to identify and deter employee misconduct, and the precautions Millendo takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against Millendo and it is not successful in defending itself or asserting its rights, those actions could have a negative impact on Millendo’s business, financial condition and results of operations, including the imposition of significant fines or other sanctions.

Millendo may be delayed in its receipt of certain tax benefits that Alizé historically received as a French technology company.

As a French technology company, Alizé historically benefited from certain tax advantages, including the French research tax credit (credit d’impot recherche) (“CIR”). The CIR is a French tax credit aimed at stimulating research and development and can offset French corporate income tax due. Alizé has historically received CIR reimbursements promptly following filing for such reimbursements with applicable French taxing authorities. For the year ended December 31, 2018, claims were made totaling $1.3 million, which Millendo received in the third quarter of 2019. For the year ended December 31, 2019, claims were made totaling $1.3 million, which Millendo received in the second quarter of 2020. In the future, Millendo may no longer qualify as a French small or medium size enterprise, and, accordingly, it may be subject to a three-year waiting period for reimbursement of CIRs, which could adversely affect the combined business’s results of operations and cash flows. In addition, the amount of CIR received is, among other factors, dependent upon incurring qualified research and development expenses and maintaining a certain level of employee salaries and other personnel costs in France. The number of Millendo’s research and development employees in France decreased during the year ended December 31, 2020 and it experienced a decrease in qualified research and development expenses for the year ended December 31, 2020 due to the discontinuation of its livoletide program. Millendo plans to dissolve its subsidiary in France.

Millendo’s internal computer systems, or those of its collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of its product development programs.

Millendo’s internal computer systems and those of its current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While Millendo is not aware of any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in its operations, it could result in a material disruption of Millendo’s development programs and business operations, whether due to a loss of Millendo’s trade secrets or other proprietary information or other similar

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disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in Millendo’s regulatory approval efforts and significantly increase its costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, Millendo’s data or applications, or inappropriate disclosure of confidential or proprietary information, Millendo could incur liability, its competitive position could be harmed and the further development and commercialization of its product candidates could be delayed.

Millendo may be exposed to significant foreign exchange risk.

Millendo incurs portions of its expenses, and may in the future derive revenue, in currencies other than the U.S. dollar, in particular, the euro. As a result, it is exposed to foreign currency exchange risk as its results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. Any fluctuation in the exchange rate of these foreign currencies may negatively impact Millendo’s business, financial condition and operating results. Global economic events, such as the COVID-19 pandemic, have and may continue to significantly impact local economies and the foreign exchange markets, which may increase the risks associated with sales denominated in foreign currencies. Millendo currently does not engage in hedging transactions to protect against uncertainty in future exchange rates between particular foreign currencies and the euro. Therefore, for example, an increase in the value of the euro against the U.S. dollar could be expected to have a negative impact on its operating expenses as euro denominated expenses, if any, would be translated into U.S. dollars at an increased value. Millendo cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect its financial condition, results of operations and cash flows.

The risks arising with respect to the historic OvaScience business and operations may be different from what Millendo anticipates, which could lead to significant, unexpected costs and liabilities and could materially and adversely affect Millendo’s business going forward.

It is possible that Millendo may not have fully anticipated the extent of the risks associated with the OvaScience Merger Millendo completed with OvaScience in 2018. After the OvaScience Merger, OvaScience’s historic business was discontinued, but prior to the transaction OvaScience had a significant operating history. As a consequence, Millendo may be subject to claims, demands for payment, regulatory issues, costs and liabilities that were not and are not currently expected or anticipated. Notwithstanding Millendo’s exercise of due diligence pre-transaction and winding down of the OvaScience business post-transaction, the risks involved with taking over a business with a significant operating history and the costs and liabilities associated with these risks may be greater than anticipated. Millendo may not be able to contain or control the costs or liabilities associated with OvaScience’s historic business, which could materially and adversely affect its business, liquidity, capital resources or results of operation.

Risks Related to Ownership of Millendo’s Common Stock and Its Status as a Public Company

The trading price of the shares of Millendo’s common stock has been and is likely to continue to be volatile, and purchasers of its common stock could incur substantial losses.

The market price of Millendo’s common stock has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in price in response to various factors. A number of factors could influence the volatility in the trading price of Millendo’s common stock, including changes in the economy or in the financial markets, including recently in connection with the ongoing COVID-19 pandemic, industry-related developments, and the impact of material events and changes in its operations, including as a result of its recent announcements that Millendo has discontinued its livoletide program in PWS and ceased investing in its nevanimibe program and its MLE-301 program. Worsening economic conditions and other adverse effects or developments relating to Millendo’s business or the ongoing COVID-19 pandemic may negatively affect the market price of its common stock. The market price for Millendo’s common stock is likely to continue to be volatile, particularly due to the ongoing COVID-19 pandemic, and subject to significant price and volume fluctuations in response to market, industry and other factors, including the risk factors described in this “Risk Factors” section. As a result of this

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volatility, investors may not be able to sell their common stock at or above the price paid for the shares. The market price for Millendo’s common stock may be influenced by many factors, including:

In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against Millendo, could cause it to incur substantial costs and divert management’s attention and resources from its business.

Future sales of Millendo’s common stock in the public market could cause its share price to decline.

Sales of a substantial number of shares of Millendo’s common stock in the public market could occur at any time, subject to the restrictions and limitations described below. If Millendo stockholders sell, or the market perceives that its stockholders intend to sell, substantial amounts of Millendo’s common stock in the public market, the market price of Millendo’s common stock could decline significantly and could impair Millendo’s ability to raise capital through the sale of additional equity securities. Millendo is unable to predict the effect that sales, particularly sales by its directors, executive officers, and significant stockholders, may have on the prevailing market price of its common stock. As of March 31, 2021, Millendo had 19,043,034 shares of common stock outstanding. All of the outstanding shares of Millendo common stock are available for sale in the public market, subject only to the restrictions of Rule 144 under the Securities Act. In addition, the shares of common stock subject to outstanding options under Millendo’s equity incentive plans and the shares reserved for future issuance under those equity incentive plans will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. In addition, certain holders of Millendo’s common stock have

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the right, subject to various conditions and limitations, to request Millendo include their shares of Millendo’s common stock in registration statements Millendo may file relating to its securities.

Provisions in Millendo’s certificate of incorporation and by-laws and under Delaware law could make an acquisition of Millendo, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove its current management.

Provisions in Millendo’s certificate of incorporation and by-laws may discourage, delay or prevent a merger, acquisition or other change in control of Millendo that stockholders may consider favorable, including transactions in which its common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of Millendo’s common stock, thereby depressing the market price of its common stock. In addition, because the Millendo board of directors is responsible for appointing the members of Millendo’s management team, these provisions may frustrate or prevent any attempts by Millendo stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the Millendo board of directors. Among other things, these provisions:

Moreover, because Millendo is incorporated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns 15 percent or more of Millendo’s outstanding voting stock from merging or combining with Millendo for a period of three years after the date of the transaction in which the person acquired 15 percent or more of Millendo’s outstanding voting stock, unless the merger or combination is approved in a manner prescribed by the statute.

Millendo is at risk of securities class action and similar litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of Millendo’s securities. This risk is especially relevant for Millendo because biopharmaceutical companies have experienced significant stock price volatility in recent years. Millendo remains the subject of various securities class action lawsuits and shareholder derivative lawsuits that were filed against OvaScience and certain of its officer and directors, as described in more detail in the section titled “Millendo’s Business—Legal Proceedings” of this proxy statement/prospectus. These lawsuits, as well as any similar lawsuits initiated in the future, could result in substantial cost and a diversion of management’s attention and resources, which could harm Millendo’s business.

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As described above in the section titled “Recent Developments - Litigation” beginning on page 14 of this proxy statement/prospectus, four complaints have been filed against Millendo and each of its directors in connection with the transaction. These lawsuits, as well as any similar lawsuits initiated in the future, could result in substantial cost and a diversion of management’s attention and resources, which could harm Millendo’s business.

If Millendo fails to maintain proper and effective internal controls, its ability to produce accurate financial statements on a timely basis could be impaired.

Millendo is subject to the reporting requirements of the Exchange Act, The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the stock market on which Millendo’s common stock is listed. The Sarbanes-Oxley Act requires, among other things, that Millendo maintains effective disclosure controls and procedures and internal control over financial reporting and that it furnish a report by management on, among other things, the effectiveness of its internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by Millendo’s management in its internal control over financial reporting. However, due to recent changes in SEC rules related to smaller reporting companies, Millendo is not required to have its auditors formally attest to the effectiveness of its internal control over financial reporting. For the year ended December 31, 2018, Millendo was unable to conduct the required assessment primarily due to the OvaScience Merger occurring in the fourth quarter of 2018 and the substantial change in operational focus, management and the internal control environment following the OvaScience Merger. As a result, Millendo provided its first internal control assessment with its Annual Report on Form 10-K for the year ended December 31, 2019.

Millendo may identify weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. its 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 Millendo is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if it is unable to maintain proper and effective internal controls, it may not be able to produce timely and accurate financial statements. If that were to happen, the market price of Millendo’s stock could decline and it could be subject to sanctions or investigations by the stock exchange on which Millendo’s common stock is listed, the SEC, or other regulatory authorities.

Millendo expects to continue to incur increased costs as a result of operating as a public company, and its management is required to devote substantial time to compliance with its public company responsibilities and corporate governance practices.

As a relatively new public company, Millendo continues to incur significant legal, accounting and other expenses that it did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq and other applicable securities rules and regulations impose various requirements on public companies. Millendo’s management and other personnel need to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations increase its legal and financial compliance costs and will make some activities more time-consuming and costly. For example, Millendo expects that these rules and regulations may make it more difficult and more expensive for it to obtain directors’ and officers’ liability insurance, compared to when it was a private company, which could make it more difficult for it to attract and retain qualified members of its board of directors. Millendo cannot predict or estimate the amount of additional costs it will continue to incur as a public company or the timing of such costs.

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Millendo’s effective tax rate may fluctuate, and it may incur obligations in tax jurisdictions in excess of accrued amounts.

Millendo is subject to taxation in more than one tax jurisdiction. As a result, its effective tax rate is derived from a combination of applicable tax rates in the various places that it operates. In preparing financial statements, Millendo estimates the amount of tax that will become payable in each of such places. Nevertheless, its effective tax rate may be different than experienced in the past due to numerous factors, including changes to the federal corporate income tax laws, changes in the mix of its profitability from jurisdiction to jurisdiction, the results of examinations and audits of its tax filings, its inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes, cash repatriation restrictions and possible withholding taxes and other changes in tax laws. Any of these factors could cause Millendo to experience an effective tax rate significantly different from previous periods or its current expectations and may result in tax obligations in excess of amounts accrued in its financial statements.

Millendo’s ability to use net operating loss carryforwards and tax credit carryforwards may be subject to limitations.

As of December 31, 2020, Millendo had federal and state NOLs of $330.8 million and $280.9 million, respectively. Its NOLs could expire unused and be unavailable to offset future income tax liabilities because of their limited duration or because of restrictions under U.S. tax law. Millendo’s federal and state NOL carryforwards will begin to expire, if not utilized, by 2031.

Under Section 382 and Section 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. Millendo believes that it has experienced an ownership change in the past, and may experience ownership changes in the future due to subsequent shifts in its stock ownership (some of which are outside of its control). Furthermore, the merger, if consummated, will constitute an ownership change (within the meaning of Section 382 of the Code) of Millendo which could eliminate or otherwise substantially limit the combined company’s ability to use its federal and state NOLs to offset its future taxable income. Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of Millendo’s NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit Millendo’s use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, Millendo’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

Millendo does not anticipate paying any cash dividends on its common stock in the foreseeable future.

Investors should not rely on an investment in Millendo’s common stock to provide dividend income. Millendo has not declared or paid cash dividends on its common stock to date. Millendo currently intends to retain its future earnings, if any, to fund the development and growth of its business. In addition, the terms of any existing or future debt agreements may preclude Millendo from paying dividends. As a result, capital appreciation, if any, of its common stock will be a Millendo stockholder’s sole source of gain for the foreseeable future. Investors seeking cash dividends should not purchase Millendo common stock.

Risks Related to Tempest

Risks Related to Tempest’s Financial Position

Tempest and its auditors have substantial doubt about Tempest’s ability to continue as a going concern, which may hinder its ability to obtain further financing.

Tempest’s recurring losses from operations raise substantial doubt about its ability to continue as a going concern. As a result, management has included disclosures in Note 1 of the financial statements and Tempest’s

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independent registered public accounting firm included an explanatory paragraph in its report on its financial statements for the year ended December 31, 2020 with respect to this uncertainty. Tempest’s 2020 financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Tempest’s ability to continue as a going concern will require Tempest to obtain additional funding. If Tempest is unable to raise capital when needed or on acceptable terms, it would be forced to delay, reduce or eliminate its research and development programs, and Tempest’s stockholders could lose all, or a significant portion, of their investment in Tempest.

Tempest has a history of operating losses, and Tempest may not achieve or sustain profitability. Tempest anticipates that it will continue to incur losses for the foreseeable future. If Tempest fails to obtain additional funding to conduct its planned research and development efforts, Tempest could be forced to delay, reduce or eliminate Tempest’s product development programs or commercial development efforts.

Tempest is a clinical-stage biotechnology company with a limited operating history. Biotechnology product development is a highly speculative undertaking and involves a substantial degree of risk. Tempest’s operations to date have been limited primarily to organizing and staffing Tempest, business planning, raising capital, acquiring and developing product and technology rights, manufacturing, and conducting research and development activities for Tempest’s product candidates. Tempest has never generated any revenue from product sales. Tempest has not obtained regulatory approvals for any of its product candidates, and has funded its operations to date through proceeds from sales of its preferred stock and common stock.

Tempest has incurred net losses in each year since its inception. Tempest incurred net losses of $14.4 million and $19.2 million for the year ended December 31, 2019 and the year ended December 31, 2020, respectively. As of December 31, 2020, Tempest had an accumulated deficit of $71.8 million. Substantially all of Tempest’s operating losses have resulted from costs incurred in connection with Tempest’s research and development programs and from general and administrative costs associated with Tempest’s operations. Tempest expects to continue to incur significant expenses and operating losses over the next several years and for the foreseeable future as Tempest intends to continue to conduct research and development, clinical testing, regulatory compliance activities, manufacturing activities, and, if any of Tempest’s product candidates is approved, sales and marketing activities that, together with anticipated general and administrative expenses, will likely result in Tempest incurring significant losses for the foreseeable future. Tempest’s prior losses, combined with expected future losses, have had and will continue to have an adverse effect on Tempest’s stockholders’ equity and working capital.

Tempest expects that it will need to raise additional funding before Tempest can expect to become profitable from any potential future sales of Tempest’s product candidates. This additional financing may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force Tempest to delay, limit or terminate its product development efforts or other operations.

Tempest will require substantial future capital in order to complete planned and future preclinical and clinical development for its product candidates and potentially commercialize these product candidates. Based upon Tempest’s current operating plan, Tempest believes that its existing cash and cash equivalents as of December 31, 2020, along with the net cash held by Millendo upon consummation of the transaction, including the expected proceeds from the Tempest pre-closing financing, will enable Tempest to fund its operating expenses and capital expenditure requirements through into early 2023. Tempest expects Tempest’s spending levels to increase in connection with Tempest’s preclinical studies and clinical trials of Tempest’s product candidates. In addition, if Tempest obtains marketing approval for any of Tempest’s product candidates, Tempest expects to incur significant expenses related to commercial launch, product sales, medical affairs, marketing, manufacturing and distribution. Furthermore, Tempest expects to incur additional costs associated with operating as a public company. Accordingly, Tempest will need to obtain substantial additional funding in connection with its continuing operations before any commercial revenue may occur.

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Additional capital might not be available when Tempest needs it and Tempest’s actual cash requirements might be greater than anticipated. If Tempest requires additional capital at a time when investment in its industry or in the marketplace in general is limited, Tempest might not be able to raise funding on favorable terms, if at all. If Tempest is not able to obtain financing when needed or on terms favorable to Tempest, Tempest may need to delay, reduce or eliminate certain research and development programs or other operations, sell some or all of Tempest’s assets or merge with another entity.

Tempest’s operations have consumed significant amounts of cash since inception. Tempest’s future capital requirements will depend on many factors, including:

Tempest’s product candidates, if approved, may not achieve commercial success. Tempest’s commercial revenues, if any, will be derived from sales of product candidates that Tempest does not expect to be commercially available for many years, if at all. Accordingly, Tempest will need to continue to rely on additional financing to achieve Tempest’s business objectives, which may not be available to Tempest on acceptable terms, or at all.

Tempest has identified material weaknesses in its internal control over financial reporting. Failure to achieve and maintain effective internal control over financial reporting could harm its business and negatively impact the value of its common stock.

Tempest has identified material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Tempest’s annual or interim financial statements will not be prevented or detected on a timely basis. In preparing Tempest’s financial statements as of and for the year ended December 31, 2020, management of Tempest identified the following material weaknesses in its internal control over financial reporting:

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These material weaknesses resulted in adjustments to Tempest’s financial statements. Additionally, these material weaknesses could result in a misstatement of Tempest’s accounts or disclosures that would result in a material misstatement of its annual or interim financial statements that would not be prevented or detected, and accordingly, Tempest determined that these control deficiencies constitute material weaknesses.

Tempest is actively recruiting additional accounting personnel with appropriate experience, certification, education and training as a component of its plans to remediate the material weaknesses. Tempest also plans to design and implement controls related to review of clinical trial expenses to properly evaluate progress of expense incurred in clinical trial contracts. To the extent that Tempest is not able to hire and retain such individuals, or is unable to successfully design and implement such controls, the material weaknesses identified may not be remediated and management may be required to record additional adjustments to its financial statements in the future.

Tempest’s limited operating history may make it difficult for you to evaluate the success of Tempest’s business to date and to assess Tempest’s future viability.

Tempest is a clinical-stage biotechnology company formed in February 2011 and renamed Tempest Therapeutics in August 2017. Tempest’s operations to date have been limited to organizing and staffing Tempest, business planning, raising capital, acquiring Tempest’s technology, identifying potential product candidates, undertaking research and preclinical studies of Tempest’s product candidates, manufacturing, and establishing licensing arrangements. Tempest has not yet demonstrated the ability to complete clinical trials of Tempest’s product candidates, obtain marketing approvals, manufacture a commercial scale product or conduct sales and marketing activities necessary for successful commercialization. Consequently, any predictions you make about Tempest’s future success or viability may not be as accurate as they could be if Tempest had a longer operating history.

In addition, as a new business, Tempest may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. Tempest will need to transition from a company with a licensing and research focus to a company that is also capable of supporting clinical development and commercial activities. Tempest may not be successful in such a transition.

Risks Related to Tempest’s Product Development and Regulatory Approval

If Tempest is unable to develop, obtain regulatory approval for and commercialize TPST-1495 and TPST-1120 and its future product candidates, or if Tempest experiences significant delays in doing so, Tempest’s business will be materially harmed.

Tempest plans to invest a substantial amount of its efforts and financial resources in its current lead product candidates, TPST-1495, a dual EP2/EP4 prostaglandin (PGE2) receptor antagonist, and TPST-1120, a peroxisome proliferator-activated receptor alpha (PPARα) antagonism for the treatment of various cancers. Tempest has initiated phase 1 clinical trials of TPST-1495 and TPST-1120 for the treatment of advanced solid tumors. In addition, Tempest plans to advance its TREX-1 inhibitor program and select a development candidate for this program by the end of 2021. Tempest’s ability to generate product revenue will depend heavily on the successful development and eventual commercialization of TPST-1495 and TPST-1120 and Tempest’s other product candidates, which may never occur. Tempest currently generates no revenue from sales of any product and Tempest may never be able to develop or commercialize a marketable product.

Each of Tempest’s programs and product candidates will require further clinical and/or preclinical development, regulatory approval in multiple jurisdictions, obtaining preclinical, clinical and commercial manufacturing supply, capacity and expertise, building of a commercial organization, substantial investment and significant marketing efforts before Tempest generates any revenue from product sales. TPST-1495 and TPST-1120 and Tempest’s other product candidates must be authorized for marketing by the U.S. Food and Drug Administration, or FDA, the Health Products and Food Branch of Health Canada, or HPFB, the European

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Medicines Agency, or EMA, and certain other foreign regulatory agencies before Tempest may commercialize any of its product candidates in the United States, Canada, EU, or other jurisdictions.

The success of TPST-1495 and TPST-1120 and Tempest’s other product candidates depends on multiple factors, including:

If Tempest does not succeed in one or more of these factors in a timely manner or at all, Tempest could experience significant delays or an inability to successfully commercialize its product candidates, which would materially harm Tempest’s business. If Tempest does not receive regulatory approvals for Tempest’s product candidates, Tempest may not be able to continue its operations.

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Success in preclinical studies and earlier clinical trials for Tempest’s product candidates may not be indicative of the results that may be obtained in later clinical trials, which may delay or prevent obtaining regulatory approval.

Clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Success in preclinical studies and early clinical trials may not be predictive of results in later-stage clinical trials, and successful results from early or small clinical trials may not be replicated or show as favorable an outcome in later-stage or larger clinical trials, even if successful. Tempest will be required to demonstrate through adequate and well-controlled clinical trials that Tempest’s product candidates are safe and effective for their intended uses before Tempest can seek regulatory approvals for their commercial sale. The conduct of phase 3 trials and the submission of an NDA is a complicated process. Tempest has not previously completed any clinical trials, has limited experience in preparing, submitting and supporting regulatory filings, and has not previously submitted an NDA. Consequently, Tempest may be unable to successfully and efficiently execute and complete necessary clinical trials and other requirements in a way that leads to NDA submission and approval of any product candidate Tempest is developing.

Although TPST-1495 and TPST-1120 are being evaluated in clinical trials, Tempest’s other product candidates, such as TREX-1, have not been evaluated in human clinical trials, and Tempest may experience unexpected or negative results in the future if and when TREX-1 or Tempest’s other product candidates are evaluated in clinical trials. Any positive results Tempest observes for TREX-1 in preclinical animal models may not be predictive of Tempest’s future clinical trials in humans, as animal models carry inherent limitations relevant to all preclinical studies. Tempest’s product candidates, including TREX-1, may also fail to show the desired safety and efficacy in later stages of clinical development even if they successfully advance through initial clinical trials. Even if Tempest’s clinical trials demonstrate acceptable safety and efficacy of TPST-1495, TPST-1120 or TREX-1 or any other product candidates and such product candidates receive regulatory approval, the labeling Tempest obtains through negotiations with the FDA or foreign regulatory authorities may not include data on secondary endpoints and may not provide Tempest with a competitive advantage over other products approved for the same or similar indications.

Many companies in the biotechnology industry have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development, and there is a high failure rate for product candidates proceeding through clinical trials. In addition, different methodologies, assumptions and applications Tempest utilizes to assess particular safety or efficacy parameters may yield different statistical results. Even if Tempest believes the data collected from clinical trials of Tempest’s product candidates are promising, these data may not be sufficient to support approval by the FDA or foreign regulatory authorities. Preclinical and clinical data can be interpreted in different ways. Accordingly, the FDA or foreign regulatory authorities could interpret these data in different ways from Tempest or Tempest’s partners, which could delay, limit or prevent regulatory approval. If Tempest’s study data do not consistently or sufficiently demonstrate the safety or efficacy of any of Tempest’s product candidates, including TPST-1495 and TPST-1120, to the satisfaction of the FDA or foreign regulatory authorities, then the regulatory approvals for such product candidates could be significantly delayed as Tempest works to meet approval requirements, or, if Tempest is not able to meet these requirements, such approvals could be withheld or withdrawn.

If Tempest encounters difficulties enrolling patients in Tempest’s clinical trials, Tempest’s clinical development activities could be delayed or otherwise adversely affected.

Tempest may experience difficulties in patient enrollment in Tempest’s clinical trials for a variety of reasons, including, without limitation, the impact of the COVID-19 pandemic. The timely completion of clinical trials in accordance with their protocols depends, among other things, on Tempest’s ability to enroll a sufficient number of patients who remain in the study until its conclusion. The enrollment of patients depends on many factors, including:

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Tempest intends to conduct a number of clinical trials for product candidates in the fields of cancer in geographies which are affected by COVID-19 pandemic. Tempest believes that the coronavirus pandemic could have an impact on various aspects of its future clinical trials. For example, investigators may not want to take the risk of exposing cancer patients to COVID-19 since the dosing of patients is conducted within an in-patient setting. Other potential impacts of the COVID-19 pandemic on Tempest’s future various clinical trials include patient dosing and study monitoring, which may be paused or delayed due to changes in policies at various clinical sites, federal, state, local or foreign laws, rules and regulations, including quarantines or other travel restrictions, prioritization of healthcare resources toward pandemic efforts, including diminished attention of physicians serving as Tempest’s clinical trial investigators and reduced availability of site staff supporting the conduct of its clinical trials, interruption or delays in the operations of the government regulators, or other reasons related to the COVID-19 pandemic. It is unknown how long these pauses or disruptions could continue.

In addition, Tempest’s clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as Tempest’s product candidates, and this competition will reduce the number and types of patients available to Tempest because some patients who might have opted to enroll in Tempest trials may instead opt to enroll in a trial being conducted by one of Tempest’s competitors. Since the number of qualified clinical investigators is limited, some of Tempest’s clinical trial sites are also being used by some of Tempest’s competitors, which may reduce the number of patients who are available for Tempest’s clinical trials in that clinical trial site.

Moreover, because Tempest’s product candidates represent unproven methods for cancer treatment, potential patients and their doctors may be inclined to use existing therapies rather than enroll patients in Tempest’s clinical trials.

Delays in patient enrollment may result in increased costs or may affect the timing or outcome of Tempest’s ongoing clinical trial and planned clinical trials, which could prevent completion of these trials and adversely affect Tempest’s ability to advance the development of Tempest’s product candidates.

Interim “top line” and preliminary data from Tempest’s clinical trials that Tempest may announce or publish from time to time may change as more patient data becomes available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Tempest may publish interim “top line” or preliminary data from Tempest’s clinical studies. Interim data from clinical trials that Tempest 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.

Preliminary or “top line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Tempest previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm Tempest’s business prospects.

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Even if Tempest completes the necessary preclinical studies and clinical trials, Tempest cannot predict when, or if, Tempest will obtain regulatory approval to commercialize a product candidate and the approval may be for a narrower indication than Tempest seeks.

Prior to commercialization, TPST-1495, TPST-1120 and Tempest’s other product candidates must be approved by the FDA pursuant to an NDA in the United States and pursuant to similar marketing applications by the HPFB, EMA and similar regulatory authorities outside the United States. The process of obtaining marketing approvals, both in the United States and abroad, is expensive and takes many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent Tempest from commercializing the product candidate. Tempest has not received approval to market TPST-1495, TPST-1120 or any of Tempest’s other product candidates from regulatory authorities in any jurisdiction. Tempest has no experience in submitting and supporting the applications necessary to gain marketing approvals, and, in the event regulatory authorities indicate that Tempest may submit such applications, Tempest may be unable to do so as quickly and efficiently as desired. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Tempest’s product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude Tempest’s obtaining marketing approval or prevent or limit commercial use. Regulatory authorities have substantial discretion in the approval process and may refuse to accept or file any application or may decide that Tempest’s data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate.

Approval of TPST-1495 and TPST-1120 and Tempest’s other product candidates may be delayed or refused for many reasons, including:

Even if Tempest’s product candidates meet their pre-specified safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner and may not

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consider such the clinical trial results sufficient to grant, or Tempest may not be able to obtain, regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, Tempest may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings, contraindications or Risk Evaluation and Mitigation Strategies, or REMS. These regulatory authorities may also grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of Tempest’s product candidates. Any of the foregoing scenarios could materially harm the commercial prospects for Tempest’s product candidates and adversely affect Tempest’s business, financial condition, results of operations and prospects.

The outbreak of COVID-19, or similar public health crises, could have a material adverse impact on Tempest’s business, financial condition and results of operations, including the execution of Tempest’s planned clinical trials.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, was identified. This virus has since spread globally, including within the United States and while cases and hospitalization are currently on the decline in the US, there can be no assurances they will not continue at the current rate or increase in the future especially in light of the number of variants that are emerging across the world. Governments in the United States and elsewhere have taken and are continuing to take severe measures to slow the spread of COVID-19, including requiring that certain businesses close or conduct only the minimum necessary operations. The pandemic and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, facilities and production have been suspended, and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. The extent to which COVID-19 will continue to impact Tempest’s business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and government measures taken in response.

Site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis for Tempest’s planned clinical trials may be delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the pandemic. Additionally, some participants and clinical investigators may not be able to comply with clinical trial protocols. For example, quarantines or other travel limitations (whether voluntary or required) may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, and Tempest may be unable to conduct its planned clinical trials. If the global effort to control the spread of COVID-19 and treat COVID-19 patients continues for an extended period of time, Tempest risks a delay in activating sites and enrolling subjects as previously projected. Any such delays to Tempest’s planned clinical trials for TPST-1495 and TPST-1120 and the planned clinical trials for its other product candidates could impact the use and sufficiency of its existing cash reserves, and it may be required to raise additional capital earlier than it had previously planned. Tempest may be unable to raise additional capital if and when needed, which may result in further delays or suspension of its development plans.

Further, infections and deaths related to COVID-19 are disrupting certain healthcare and healthcare regulatory systems globally. Such disruptions could divert healthcare resources away from, or materially delay review by, the FDA and comparable foreign regulatory agencies. It is unknown how long these disruptions could continue, were they to occur. Any elongation or de-prioritization of Tempest’s clinical trials or delay in regulatory review resulting from such disruptions could materially adversely affect the development and study of its product candidates.

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Tempest currently utilizes third parties to, among other things, manufacture raw materials and its product candidates, components, parts, and consumables, and to perform quality testing. If either Tempest or any third-party in the supply chain for materials used in the production of its product candidates are adversely impacted by restrictions resulting from the COVID-19 pandemic, its supply chain may be disrupted, limiting Tempest’s ability to manufacture product candidates for its clinical trials.

In response to the COVID-19 pandemic, Tempest complied with applicable regulation and limited required on-site staff to essential workers, with the balance of its employees continuing their work primarily outside of Tempest’s offices. Due to shelter-in-place orders or other mandated local travel restrictions, third parties conducting clinical or manufacturing activities may not be able to access laboratory or manufacturing space, and Tempest’s core activities may be significantly limited or curtailed, possibly for an extended period of time.

While the potential economic impact brought by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets and the trading prices of biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic, which may reduce Tempest’s ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market event resulting from the global effort to control COVID-19 infections could materially and adversely affect Tempest’s business.

The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change. Tempest does not yet know the full extent of potential delays or impacts on its business, its planned clinical trials, healthcare systems or the global economy as a whole. However, these effects could have a material adverse impact on Tempest’s business, financial condition and results of operations.

TPST-1495, TPST-1120 and Tempest’s other product candidates may cause undesirable and/or unforeseen side effects or be perceived by the public as unsafe, which could delay or prevent their advancement into clinical trials or regulatory approval, limit the commercial potential or result in significant negative consequences.

As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with Tempest’s product candidates’ use. Results of Tempest’s clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. As Tempest continues developing its product candidates and initiate clinical trials of its additional product candidates, serious adverse events (SAEs), undesirable side effects, relapse of disease or unexpected characteristics may emerge causing Tempest to abandon these product candidates or limit their development to more narrow uses or subpopulations in which the SAEs or undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective or in which efficacy is more pronounced or durable

If any such adverse events occur, Tempest’s clinical trials could be suspended or terminated and the FDA, the HPFB, the European Commission, the EMA or other regulatory authorities could order Tempest to cease further development of, or deny approval of, Tempest’s product candidates for any or all targeted indications. Even if Tempest can demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if Tempest elects, or is required, to not initiate, delay, suspend or terminate any future clinical trial of any of Tempest’s product candidates, the commercial prospects of such product candidates may be harmed and Tempest’s ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these occurrences may harm Tempest’s ability to develop other product candidates, and may adversely affect Tempest’s business, financial condition, results of operations and prospects significantly. Other treatments for cancers that utilize a dual EP2/EP4 antagonist or a PPARα antagonist or similar mechanism of action could also generate data that could adversely affect the clinical, regulatory or commercial perception of TPST-1495 and TPST-1120 and Tempest’s other product candidates.

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Additionally, if any of Tempest’s product candidates receives marketing approval, the FDA could require Tempest to adopt a REMS to ensure that the benefits of the product outweigh its risks, which may include, for example, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners, or other elements to assure safe use of the product. Furthermore, if Tempest or others later identify undesirable side effects caused by Tempest’s product candidates, several potentially significant negative consequences could result, including:

Any of these occurrences may harm Tempest’s business, financial condition, results of operations and prospects significantly.

Tempest may not be successful in its efforts to expand its pipeline of product candidates and develop marketable products.

Because Tempest has limited financial and managerial resources, Tempest focuses on research programs and product candidates that Tempest identifies for specific indications. Tempest’s business depends on its successful development and commercialization of the limited number of internal product candidates Tempest is researching or has in preclinical development. Even if Tempest is successful in continuing to build its pipeline, development of the potential product candidates that Tempest identifies will require substantial investment in additional clinical development, management of clinical, preclinical and manufacturing activities, regulatory approval in multiple jurisdictions, obtaining manufacturing supply capability, building a commercial organization, and significant marketing efforts before Tempest generates any revenue from product sales. Furthermore, such product candidates may not be suitable for clinical development, including as a result of their harmful side effects, limited efficacy or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance. If Tempest cannot develop further product candidates, Tempest may not be able to obtain product revenue in future periods, which would adversely affect Tempest’s business, prospects, financial condition and results of operations.

Although Tempest’s pipeline includes multiple programs, Tempest is primarily focused on its lead product candidates, TPST-1495 and TPST-1120, and Tempest may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Tempest’s resource allocation decisions may cause Tempest to fail to capitalize on viable commercial products or profitable market opportunities. Tempest’s spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. Tempest’s understanding and evaluation of biological targets for the discovery and development of new product candidates may fail to identify challenges encountered in subsequent preclinical and clinical development. If Tempest does not accurately evaluate the commercial potential or target market for a particular product candidate, Tempest 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 Tempest to retain sole development and commercialization rights.

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Any product candidate for which Tempest obtains marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and Tempest may be subject to penalties if it fails to comply with regulatory requirements or if it experiences unanticipated problems with its product candidates, when and if any of them are approved.

Tempest’s product candidates and the activities associated with their development and potential commercialization, including their testing, manufacturing, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other U.S. and international regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, including current Good Manufacturing Practices, or cGMPs, quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by the FDA and other regulatory authorities and requirements regarding the distribution of samples to providers and recordkeeping. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMPs.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of any approved product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure that they are marketed in a manner consistent with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products. If Tempest promotes its product candidates in a manner inconsistent with FDA-approved labeling or otherwise not in compliance with FDA regulations, Tempest may be subject to enforcement action. Violations of the Federal Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws and similar laws in international jurisdictions.

In addition, later discovery of previously unknown adverse events or other problems with Tempest’s product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

The occurrence of any event or penalty described above may inhibit Tempest’s ability to commercialize its product candidates and generate revenue and could require Tempest to expend significant time and resources in response and could generate negative publicity. The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory

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approval of Tempest’s product candidates. If Tempest is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Tempest is not able to maintain regulatory compliance, it may lose any marketing approval that it has obtained, and Tempest may not achieve or sustain profitability.

Non-compliance with Canadian and European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with Canada’s or Europe’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

Tempest’s failure to obtain regulatory approval in international jurisdictions would prevent Tempest from marketing its product candidates outside the United States.

To market and sell TPST-1495, TPST-1120 and Tempest’s other product candidates in other jurisdictions, Tempest must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time and data required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, Tempest must secure product reimbursement approvals before regulatory authorities will approve the product for sale in that country. Failure to obtain foreign regulatory approvals or non-compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for Tempest and could delay or prevent the introduction of Tempest’s product candidates in certain countries.

If Tempest fails to comply with the regulatory requirements in international markets and receive applicable marketing approvals, Tempest’s target market will be reduced and its ability to realize the full market potential of its product candidates will be harmed and its business will be adversely affected. Tempest may not obtain foreign regulatory approvals on a timely basis, if at all. Tempest’s failure to obtain approval of any of its product candidates by regulatory authorities in another country may significantly diminish the commercial prospects of that product candidate and Tempest’s business prospects could decline.

Risks Related to Commercialization and Manufacturing

The commercial success of Tempest’s product candidates, including TPST-1495 and TPST-1120, will depend upon their degree of market acceptance by providers, patients, patient advocacy groups, third-party payors and the general medical community.

Even if the requisite approvals from the FDA, the HPFB, the EMA and other regulatory authorities internationally are obtained, the commercial success of Tempest’s product candidates will depend, in part, on the acceptance of providers, patients and third-party payors of drugs designed to act as a dual antagonist of EP2 and EP4 and PPARα antagonists in general, and Tempest’s product candidates in particular, as medically necessary, cost-effective and safe. In addition, Tempest may face challenges in seeking to establish and grow sales of TPST-1495 and TPST-1120 or its other product candidates. Any product that Tempest commercializes may not gain acceptance by providers, patients, patient advocacy groups, third-party payors and the general medical community. If these products do not achieve an adequate level of acceptance, Tempest may not generate significant product revenue and may not become profitable. The degree of market acceptance of TPST-1495, TPST-1120 and Tempest’s other product candidates, if approved for commercial sale, will depend on several factors, including:

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Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched.

The pricing, insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for Tempest’s product candidates, if approved, could limit Tempest’s ability to market those products and decrease Tempest’s ability to generate product revenue.

Successful sales of Tempest’s product candidates, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors including governmental healthcare programs, such as Medicare and Medicaid, managed care organizations and commercial payors, among others. Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which Tempest obtains regulatory approval. In addition, because Tempest’s product candidates represent new approaches to the treatment of cancer, Tempest cannot accurately estimate the potential revenue from Tempest’s product candidates.

Tempest expects that coverage and reimbursement by third-party payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of Tempest’s product candidates will depend substantially, both domestically and internationally, on the extent to which the costs of Tempest’s product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government payors, private health coverage insurers and other third-party payors. Even if coverage is provided, the established reimbursement amount may not be high enough to allow Tempest to establish or maintain pricing sufficient to realize a sufficient return on Tempest’s investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered and reimbursed. The Medicare program covers certain individuals aged 65 or older, disabled or suffering from end-stage renal disease. The Medicaid program, which varies from state-to-state, covers certain individuals and families who have limited financial means. The Medicare and Medicaid programs increasingly are used as models for how private payors and other government payors develop their coverage and reimbursement policies for drugs. One payor’s determination to provide coverage for a drug product, however, does not assure that other payors will also provide coverage for the drug product. Further, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

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In addition to government and private payors, professional organizations such as the American Medical Association, or the AMA, can influence decisions about coverage and reimbursement for new products by determining standards for care. In addition, many private payors contract with commercial vendors who sell software that provide guidelines that attempt to limit utilization of, and therefore reimbursement for, certain products deemed to provide limited benefit compared to existing alternatives. Such organizations may set guidelines that limit reimbursement or utilization of Tempest’s product candidates, if approved. Even if favorable coverage and reimbursement status is attained for one or more product candidates for which Tempest’s collaborators receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and Tempest believes 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 Tempest’s product candidates. In many countries, particularly the countries of the EU, the prices of medical products 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 the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, Tempest may be required to conduct a clinical trial that compares the cost-effectiveness of Tempest’s product candidate to other available therapies. In general, the prices of products 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 Tempest is able to charge for its product candidates. Accordingly, in markets outside the United States, the reimbursement for Tempest’s product candidates may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Moreover, increasing efforts by government and other third-party payors, in the United States and internationally, to cap or reduce healthcare costs may cause such payors to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for Tempest’s product candidates. Tempest expects to experience pricing pressures in connection with the sale of any of Tempest’s product candidates due to the trend toward managed healthcare, the increasing influence of certain third-party payors, such as health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the healthcare market. Recently there have been instances in which third-party payors have refused to reimburse treatments for patients for whom the treatment is indicated in the FDA-approved product labeling. Even if Tempest is successful in obtaining FDA approval to commercialize Tempest’s product candidates, Tempest cannot guarantee that Tempest will be able to secure reimbursement for all patients for whom treatment with Tempest’s product candidates is indicated.

If third parties on which Tempest depends to conduct its planned preclinical studies or clinical trials do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, Tempest’s development program could be delayed with adverse effects on Tempest’s business, financial condition, results of operations and prospects.

Tempest relies on third party CROs, CMOs, consultants and others to design, conduct, supervise and monitor key activities relating to, discovery, manufacturing, preclinical studies and clinical trials of Tempest’s product candidates, and Tempest intends to do the same for future activities relating to existing and future programs. Because Tempest relies on third parties and does not have the ability to conduct all required testing, discovery, manufacturing, preclinical studies or clinical trials independently, Tempest has less control over the timing, quality and other aspects of discovery, manufacturing, preclinical studies and clinical trials than Tempest would if Tempest conducted them on its own. These investigators, CROs, CMOs and consultants are not Tempest’s employees, and Tempest has limited control over the amount of time and resources that they dedicate

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to Tempest’s programs. These third parties may have contractual relationships with other entities, some of which may be Tempest’s competitors, which may draw time and resources from Tempest’s programs. The third parties Tempest contracts with might not be diligent, careful or timely in conducting Tempest’s discovery, manufacturing, preclinical studies or clinical trials, resulting in testing, discovery, manufacturing, preclinical studies or clinical trials being delayed or unsuccessful, in whole or in part.

If Tempest cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not carry out their contractual duties, satisfy legal and regulatory requirements for the conduct of preclinical studies or clinical trials or meet expected deadlines, Tempest’s clinical development programs could be delayed and otherwise adversely affected. In all events, Tempest is responsible for ensuring that each of Tempest’s preclinical studies and clinical trials is conducted in accordance with the general investigational plan and protocols for the trial, as well as in accordance with GLP, GCP and other applicable laws, regulations and standards. Tempest’s reliance on third parties that it does not control does not relieve Tempest of these responsibilities and requirements. The FDA and other regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If Tempest or any of these third parties fails to comply with applicable GCPs, the clinical data generated in its clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Tempest to perform additional clinical trials before approving its marketing applications. Tempest cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of Tempest’s clinical trials have complied with GCPs. In addition, Tempest’s clinical trials must be conducted with product produced in accordance with cGMPs. Tempest’s failure to comply with these regulations may require it to repeat clinical trials, which could delay or prevent the receipt of regulatory approvals. Any such event could have an adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Tempest faces significant competition in an environment of rapid technological change, and it is possible that Tempest’s competitors may achieve regulatory approval before Tempest or develop therapies that are more advanced or effective than Tempest’s, which may harm Tempest’s business, financial condition and Tempest’s ability to successfully market or commercialize TPST-1495, TPST-1120, and Tempest’s other product candidates.

The biopharmaceutical industry, and the immuno-oncology industry specifically, is characterized by intense competition and rapid innovation. Tempest is aware of other companies focused on developing cancer therapies in various indications. Tempest may also face competition from large and specialty pharmaceutical and biotechnology companies, academic research institutions, government agencies and public and private research institutions that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing and commercialization.

Many of Tempest’s potential competitors, alone or with their strategic partners, may have substantially greater financial, technical and other resources than Tempest does, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Tempest’s commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product candidates that Tempest may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly than Tempest may obtain approval for its products, which could result in Tempest’s competitors establishing a strong market position before Tempest is able to enter the market, if ever. Additionally, new or advanced technologies developed by Tempest’s competitors may render Tempest’s current or future product candidates uneconomical or obsolete, and Tempest may not be successful in marketing its product candidates against competitors.

To become and remain profitable, Tempest must develop and eventually commercialize product candidates with significant market potential, which will require Tempest to be successful in a range of challenging activities.

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These activities include, among other things, completing preclinical studies and initiating and completing clinical trials of Tempest’s product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those products that are approved and satisfying any post marketing requirements. Tempest may never succeed in any or all of these activities and, even if Tempest does, Tempest may never generate revenues that are significant or large enough to achieve profitability. If Tempest does achieve profitability, Tempest may not be able to sustain or increase profitability on a quarterly or annual basis. Tempest’s failure to become and remain profitable would decrease the value of Tempest and could impair Tempest’s ability to raise capital, maintain Tempest’s research and development efforts, expand Tempest’s business or continue operations. A decline in the value of Tempest also could cause you to lose all or part of your investment.

Tempest may rely on third parties to manufacture Tempest’s clinical product supplies, and Tempest may have to rely on third parties to produce and process Tempest’s product candidates, if approved.

Tempest must currently rely on outside vendors to manufacture supplies and process Tempest’s product candidates. Tempest has not yet caused its product candidates to be manufactured or processed on a commercial scale and may not be able to achieve manufacturing and processing and may be unable to create an inventory of mass-produced, off-the-shelf product to satisfy demands for any of Tempest’s product candidates.

Tempest does not yet have sufficient information to reliably estimate the cost of the commercial manufacturing and processing of Tempest’s product candidates, and the actual cost to manufacture and process Tempest’s product candidates could materially and adversely affect the commercial viability of its product candidates. As a result, Tempest may never be able to develop a commercially viable product.

In addition, Tempest anticipates reliance on a limited number of third-party manufacturers exposes it to the following risks:

Tempest’s contract manufacturers would also be subject to the same risks Tempest faces in developing its own manufacturing capabilities, as described above. Each of these risks could delay Tempest’s clinical trials, the approval, if any, of Tempest’s product candidates by the FDA or the commercialization of Tempest’s product candidates or result in higher costs or deprive Tempest of potential product revenue. In addition, Tempest will

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rely on third parties to perform release tests on Tempest’s product candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could be put at risk of serious harm.

The manufacture of drugs is complex, and Tempest’s third-party manufacturers may encounter difficulties in production. If any of Tempest’s third-party manufacturers encounter such difficulties, Tempest’s ability to provide adequate supply of its product candidates for clinical trials, Tempest’s ability to obtain marketing approval, or Tempest’s ability to provide supply of Tempest’s product candidates for patients, if approved, could be delayed or stopped.

Tempest intends to establish manufacturing relationships with a limited number of suppliers to manufacture raw materials, the drug substance and finished product of any product candidate for which Tempest is responsible for preclinical or clinical development. Each supplier may require licenses to manufacture such components if such processes are not owned by the supplier or in the public domain. As part of any marketing approval, a manufacturer and its processes are required to be qualified by the FDA prior to regulatory approval. If supply from the approved vendor is interrupted, there could be a significant disruption in commercial supply. An alternative vendor would need to be qualified through an NDA supplement which could result in further delay. The FDA or other regulatory agencies outside of the United States may also require additional studies if a new supplier is relied upon for commercial production. Switching vendors may involve substantial costs and is likely to result in a delay in Tempest’s desired clinical and commercial timelines.

The process of manufacturing drugs is complex, highly-regulated and subject to multiple risks. Manufacturing drugs is highly susceptible to product loss due to contamination, equipment failure, improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered at the facilities of Tempest’s manufacturers, such facilities may need to be closed for an extended period of time to investigate and remedy the contamination, which could delay clinical trials and adversely harm Tempest’s business. Moreover, if the FDA determines that Tempest’s CMOs are not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny NDA approval until the deficiencies are corrected or Tempest replaces the manufacturer in Tempest’s NDA with a manufacturer that is in compliance. In addition, approved products and the facilities at which they are manufactured are required to maintain ongoing compliance with extensive FDA requirements and the requirements of other similar agencies, including ensuring that quality control and manufacturing procedures conform to cGMP requirements. As such, Tempest’s CMOs are subject to continual review and periodic inspections to assess compliance with cGMPs. Furthermore, although Tempest does not have day-to-day control over the operations of its CMOs, it is responsible for ensuring compliance with applicable laws and regulations, including cGMPs.

In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with good manufacturing practices, lot consistency and timely availability of raw materials. Even if Tempest’s collaborators obtain regulatory approval for any of Tempest’s product candidates, there is no assurance that manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product or to meet potential future demand. If Tempest’s manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Tempest believes that it will rely upon on a limited number of manufacturers for its product candidates, which may include single-source suppliers for the various steps of manufacture. This reliance on a limited number of manufacturers and the complexity of drug manufacturing and the difficulty of scaling up a manufacturing process could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of Tempest’s product candidates, cause Tempest to incur higher costs and prevent Tempest

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from commercializing Tempest’s product candidates successfully. Furthermore, if Tempest’s suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and Tempest is unable to secure one or more replacement suppliers capable of production in a timely manner at a substantially equivalent cost, Tempest’s clinical trials may be delayed or Tempest could lose potential revenue.

If Tempest is unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell Tempest’s product candidates, Tempest may be unable to generate any revenues.

Tempest currently does not have an organization for the sales, marketing and distribution of TPST-1495, TPST-1120, TREX-1 and Tempest’s other product candidates, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. To market any products that may be approved, Tempest must build its sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. With respect to certain of Tempest’s current programs as well as future programs, Tempest may rely completely on an alliance partner for sales and marketing. In addition, although Tempest intends to establish a sales organization if Tempest is able to obtain approval to market any product candidates, Tempest may enter into strategic alliances with third parties to develop and commercialize TPST-1495, TPST-1120 and other product candidates, including in markets outside of the United States or for other large markets that are beyond Tempest’s resources. This will reduce the revenue generated from the sales of these products.

Any future strategic alliance partners may not dedicate sufficient resources to the commercialization of Tempest’s product candidates or may otherwise fail in their commercialization due to factors beyond Tempest’s control. If Tempest is unable to establish effective alliances to enable the sale of Tempest’s product candidates to healthcare professionals and in geographical regions, including the United States, that will not be covered by Tempest’s marketing and sales force, or if Tempest’s potential future strategic alliance partners do not successfully commercialize the product candidates, Tempest’s ability to generate revenues from product sales will be adversely affected.

If Tempest is unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, Tempest may not be able to generate sufficient product revenue and may not become profitable. Tempest will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, Tempest may be unable to compete successfully against these more established companies.

Tempest may not be successful in finding strategic collaborators for continuing development of certain of Tempest’s future product candidates or successfully commercializing or competing in the market for certain indications.

In the future, Tempest may decide to collaborate with non-profit organizations, universities and pharmaceutical and biotechnology companies for the development and potential commercialization of existing and new product candidates. Tempest faces significant competition in seeking appropriate collaborators. Whether Tempest reaches a definitive agreement for a collaboration will depend, among other things, upon Tempest’s assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to Tempest’s ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with Tempest for

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Tempest’s product candidate. The terms of any additional collaborations or other arrangements that Tempest may establish may not be favorable to Tempest. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

Tempest may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If Tempest is unable to do so, Tempest may have to curtail the development of the product candidate for which Tempest is seeking to collaborate, reduce or delay its development program or one or more of Tempest’s other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase Tempest’s expenditures and undertake development or commercialization activities at Tempest’s expense. If Tempest elects to increase Tempest’s expenditures to fund development or commercialization activities on Tempest’s product candidates, Tempest may need to obtain additional capital, which may not be available to Tempest on acceptable terms or at all. If Tempest does not have sufficient funds, Tempest may not be able to further develop Tempest’s product candidates or bring them to market and generate product revenue.

The success of any potential collaboration arrangements will depend heavily on the efforts and activities of Tempest’s collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of such collaboration arrangements. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect Tempest financially and could harm Tempest’s business reputation.

Risks Related to Government Regulation

The FDA regulatory approval process is lengthy and time-consuming, and Tempest may experience significant delays in the clinical development and regulatory approval of Tempest’s product candidates.

Obtaining FDA approval 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 product 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 Tempest’s data are insufficient for approval and require additional preclinical, clinical or other data. Even if Tempest eventually completes clinical testing and receive approval for its product candidates, the FDA may approve its product candidates for a more limited indication or a narrower patient population than originally requested or may impose other prescribing limitations or warnings that limit the product’s commercial potential. Tempest has not submitted for, or obtained, regulatory approval for any product candidate, and it is possible that none of its product candidates will ever obtain regulatory approval. Further, development of Tempest’s product candidates and/or regulatory approval may be delayed for reasons beyond its control.

Tempest may also experience delays in obtaining regulatory approvals, including but not limited to:

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Tempest could also encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of Tempest’s product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by

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Tempest, the IRBs for the institutions in which such trials are being conducted or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or Tempest clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions, lack of adequate funding to continue the clinical trial, or based on a recommendation by the Data Safety Monitoring Committee. If Tempest experiences termination of, or delays in the completion of, any clinical trial of Tempest’s product candidates, the commercial prospects for Tempest’s product candidates will be harmed, and Tempest’s ability to generate product revenue will be delayed. In addition, any delays in completing Tempest’s clinical trials will increase Tempest’s costs, slow down Tempest’s product development and approval process and jeopardize Tempest’s ability to commence product sales and generate revenue.

Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of Tempest’s product candidates.

Tempest may seek Breakthrough Therapy designation or Fast Track designation by the FDA for one or more of its product candidates, but may not receive such designation. Even if Tempest secures such designation, it may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that Tempest’s product candidates will receive marketing approval.

Tempest may seek Breakthrough Therapy or Fast Track designation for some of its product candidates. If a product candidate is intended for the treatment of a serious or life-threatening condition and clinical or preclinical data demonstrate the potential to address unmet medical needs for this condition, the product candidate may be eligible for Fast Track designation. The benefits of Fast Track designation include more frequent meetings with FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval, more frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers, eligibility for Accelerated Approval and Priority Review, if relevant criteria are met, and rolling review, which means that a drug company can submit completed sections of its NDA for review by FDA, rather than waiting until every section of the NDA is completed before the entire application can be reviewed. NDA review usually does not begin until the entire application has been submitted to the FDA.

A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drugs designated as breakthrough therapies by the FDA may be eligible for all features of Fast Track designation, intensive guidance on an efficient drug development program, beginning as early as Phase 1, and organizational commitment involving senior managers at FDA.

The FDA has broad discretion whether or not to grant these designations, so even if Tempest believes a particular product candidate is eligible, it cannot assure that the FDA would decide to grant the designation. Even if Tempest obtains Fast Track designation and/or Breakthrough Therapy designation for one or more of Tempest’s product candidates, it may not experience a faster development process, review or approval compared to non-expedited FDA review procedures. In addition, the FDA may withdraw Fast Track designation or Breakthrough Therapy designation if it believes that the designation is no longer supported. These designations do not guarantee qualification for the FDA’s priority review procedures or a faster review or approval process.

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Tempest may attempt to secure FDA approval of its product candidates through the accelerated approval pathway. If Tempest is unable to obtain accelerated approval, Tempest may be required to conduct additional preclinical studies or clinical trials beyond those that Tempest currently contemplates, which could increase the expense of obtaining, and delay the receipt of, necessary marketing approvals.

Tempest is developing certain product candidates for the treatment of serious conditions, and therefore may decide to seek approval of such product candidates under the FDA’s accelerated approval pathway. A product may be eligible for accelerated approval if it is designed to treat a serious or life-threatening disease or condition and provides a meaningful therapeutic benefit over existing treatments based upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability of or lack of alternative treatments. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit.

The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verity and describe the drug’s anticipated effect on irreversible morbidity or mortality or other clinical benefit. In some cases, the FDA may require that the trial be designed, initiated, and/or fully enrolled prior to approval. If the sponsor fails to conduct such studies in a timely manner, or if such post-approval studies fail to verify the drug’s predicted clinical benefit, or if other evidence demonstrates that Tempest’s product candidate is not shown to be safe and effective under the conditions of use, the FDA may withdraw its approval of the drug on an expedited basis.

If Tempest decides to submit an NDA seeking accelerated approval or receives an expedited regulatory designation for any of its product candidates, there can be no assurance that such submission or application will be accepted or that any expedited development, review or approval will be granted on a timely basis, or at all. If any of Tempest’s competitors were to receive full approval on the basis of a confirmatory trial for an indication for which Tempest is seeking accelerated approval before Tempest receives accelerated approval, the indication Tempest is seeking may no longer qualify as a condition for which there is an unmet medical need and accelerated approval of its product candidate would be more difficult or may not occur.

Failure to obtain accelerated approval or any other form of expedited development, review or approval for Tempest’s product candidates would result in a longer time period to commercialization of such product candidate, if any, and could increase the cost of development of such product candidate harm Tempest’s competitive position in the marketplace.

Tempest may be unsuccessful in obtaining Orphan Drug Designation for its product candidates or transfer of designations obtained by others for future product candidates, and, even if Tempest obtains such designation, it may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity.

FDA may designate drugs intended to treat relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug in the United States will be recovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA. In the United States, Orphan Drug Designation entitles a party to financial incentives such as opportunities for tax credits for qualified clinical research costs and exemption from prescription drug user fees.

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Generally, if a drug with an Orphan Drug Designation subsequently receives the first marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes FDA from approving another marketing application for the same drug and indication for that time period, except in limited circumstances. If a competitor is able to obtain orphan drug exclusivity prior to Tempest for a product that constitutes the same active moiety and treats the same indications as Tempest’s product candidates, Tempest may not be able to obtain approval of its drug by the applicable regulatory authority for a significant period of time unless Tempest is able to show that its drug is clinically superior to the approved drug. The applicable period is seven years in the United States.

Tempest may seek Orphan Drug Designation for one or more of its product candidates in the United States as part of its business strategy. However, Orphan Drug Designation does not guarantee future orphan drug marketing exclusivity. Even after an orphan drug is approved, the FDA can also subsequently approve a later application for the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer in a substantial portion of the target populations, more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if Tempest is unable to manufacture sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

Enacted and future legislation may increase the difficulty and cost for Tempest to commercialize and obtain marketing approval of Tempest’s product candidates and may affect the prices Tempest may set.

Existing regulatory policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of Tempest’s product candidates. Tempest cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Tempest is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Tempest is not able to maintain regulatory compliance, Tempest may lose any marketing approval that Tempest may have obtained, and Tempest may not achieve or sustain profitability.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the Affordable Care Act, or ACA, was enacted to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The ACA contains provisions that may potentially affect the profitability of Tempest’s product candidates, if approved, including, for example, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs, and expansion of the entities eligible for discounts under the 340B Drug Pricing Program.

While Congress has not passed legislation to comprehensively repeal the ACA, legislation affecting the ACA has been signed into law, including the Tax Cuts and Jobs Act of 2017, which eliminated, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the “individual mandate.” In December 2018, a federal district court in Texas ruled that the ACA’s individual mandate, without the penalty that was eliminated effective January 1, 2019, was unconstitutional and could not be severed from the ACA. As a result, the court ruled the remaining provisions of the ACA were also invalid. The Fifth Circuit Court of Appeals affirmed the district court’s ruling that the individual mandate was

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unconstitutional, but it remanded the case back to the district court for further analysis of whether the mandate could be severed from the ACA (i.e., whether the entire ACA was therefore also unconstitutional). The Supreme Court of the United States granted certiorari on March 2, 2020 and heard oral argument in November 2020. The Supreme Court is expected to issue its decision in 2021. While Congress continues to amend the ACA, the law appears likely to continue the downward pressure on pharmaceutical pricing, and may also increase Tempest’s regulatory burdens and operating costs. In the future, there may be other efforts to challenge, repeal or replace the ACA. Tempest is continuing to monitor any changes to the ACA that, in turn, may potentially impact its business in the future.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021 due to the coronavirus pandemic, unless additional Congressional action is taken. While there is currently legislation pending that would extend this suspension through the end of 2021, passage of the law is not certain. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Additionally, effective January 1, 2019, the Bipartisan Budget Act of 2018, among other things, further amended portions of the Social Security Act implemented as part of the ACA to increase from 50% to 70% the point-of-sale discount that pharmaceutical manufacturers participating in the Coverage Gap Discount Program must provide to eligible Medicare Part D beneficiaries during the coverage gap phase of the Part D benefit, commonly referred to as the “donut hole,” and to reduce standard beneficiary cost sharing in the coverage gap from 30% to 25% in most Medicare Part D plans. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for Tempest’s drugs, if approved, and accordingly, Tempest’s financial operations.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through December 31, 2020 implemented under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which was signed into law on March 27, 2020, unless additional Congressional action is taken. In addition, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for Tempest’s drugs, if approved, and accordingly, Tempest’s financial operations.

Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn and Matthew Bellina Right to Try Act of 2017 was signed into law. The law, among other things, provides a federal framework for certain patients who have been diagnosed with life-threatening diseases or conditions to access certain investigational new drug products that have completed a phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA authorization under an FDA expanded access program; however, manufacturers are not obligated to provide investigational new drug products under the current federal right to try law. Tempest may choose to seek an expanded access program for Tempest’s product candidates, or to utilize comparable rules in other countries that allow the use of a drug, on a named patient basis or under a compassionate use program.

Recently, the cost of prescription pharmaceuticals has been the subject of considerable discussion in the United States at both the federal and state levels. While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the new Biden administration have each indicated that it

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will seek new legislative and/or administrative measures to address prescription drug costs. Since the Presidential inauguration, the Biden administration has taken several executive actions that signal changes in policy from the prior administration. For example, on January 20, 2021, the Biden administration directed all federal departments and agencies to consider taking steps to withdraw or delay certain regulations and guidance issued by the Trump administration that had not become effective as of January 20, 2021 to permit the Biden administration to review such actions for questions of fact, law, and policy. At the state level, legislatures and agencies are increasingly passing legislation and implementing regulations designed to control spending on and patient out-of-pocket costs for drug products. These measures include constraints on pricing, discounting and reimbursement; restrictions on certain product access and marketing; cost disclosure and transparency measures that require detailed reporting of drug pricing and marketing information both at product launch and in the event of a price increase; and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.

Tempest expects that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that Tempest receives for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent Tempest from being able to generate revenue, attain profitability, or commercialize Tempest’s product candidates.

Legislative and regulatory proposals have also been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. Tempest cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of Tempest’s product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject Tempest to more stringent product labeling and post-marketing testing and other requirements.

The FDA’s ability to review and approve new products may be hindered by a variety of factors, including budget and funding levels, ability to hire and retain key personnel, statutory, regulatory and policy changes and global health concerns.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect Tempest’s business. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.

The ability of the FDA and other government agencies to properly administer their functions is highly dependent on the levels of government funding and the ability to fill key leadership appointments, among various factors. Delays in filling or replacing key positions could significantly impact the ability of the FDA and other agencies to fulfill their functions, and could greatly impact healthcare and the pharmaceutical industry.

Separately, in response to the COVID-19 pandemic, on March 10, 2020, the FDA announced its intention to postpone most foreign inspections of manufacturing facilities and, subsequently, on March 18, 2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. Subsequently, on July 10, 2020 the FDA announced its intention to resume certain on-site inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA intends to

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use this risk-based assessment system to identify the categories of regulatory activity that can occur within a given geographic area, ranging from mission critical inspections to resumption of all regulatory activities. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process Tempest’s regulatory submissions, which could have a material adverse effect on Tempest’s business.

Obtaining and maintaining regulatory approval of Tempest’s product candidates in one jurisdiction does not mean that Tempest will be successful in obtaining regulatory approval of Tempest’s product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of Tempest’s product candidates in one jurisdiction does not guarantee that Tempest will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that Tempest intends to charge for Tempest’s products is also subject to approval.

Tempest may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which Tempest must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for Tempest and could delay or prevent the introduction of Tempest’s products in certain countries. If Tempest fails to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, Tempest’s target market will be reduced and Tempest’s ability to realize the full market potential of Tempest’s product candidates will be harmed.

Tempest’s operations and relationships with future customers, providers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose Tempest to penalties including criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which Tempest obtains marketing approval. Tempest’s future arrangements with providers, third-party payors and customers will subject Tempest to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Tempest markets, sells and distributes any product candidates for which Tempest obtains marketing approval.

Restrictions under applicable U.S. federal and state healthcare laws and regulations include the following:

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Efforts to ensure that Tempest’s business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that Tempest’s business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If Tempest’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to Tempest,

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Tempest may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of Tempest’s operations. If any of the physicians or other healthcare providers or entities with whom Tempest expects to do business is found to be not in compliance with applicable laws, it may be costly to Tempest in terms of money, time and resources, and Tempest may be subject to criminal, civil or administrative sanctions, including exclusion from government-funded healthcare programs.

Risks Related to Tempest’s Intellectual Property

Tempest’s success depends in part on its ability to obtain, maintain and protect its intellectual property. It is difficult and costly to protect Tempest’s proprietary rights and technology, and Tempest may not be able to ensure their protection.

Tempest’s commercial success will depend in large part on obtaining and maintaining patent, trademark, trade secret and other intellectual property protection of Tempest’s proprietary technologies and product candidates, which include TPST-1495, TPST-1120 and the other product candidates Tempest has in development, their respective components, formulations, combination therapies, methods used to manufacture them and methods of treatment, as well as successfully defending Tempest’s patents and other intellectual property rights against third-party challenges. Tempest’s ability to stop unauthorized third parties from making, using, selling, offering to sell, importing or otherwise commercializing Tempest’s product candidates is dependent upon the extent to which Tempest has rights under valid and enforceable patents or trade secrets that cover these activities. If Tempest is unable to secure and maintain patent protection for any product or technology Tempest develops, or if the scope of the patent protection secured is not sufficiently broad, Tempest’s competitors could develop and commercialize products and technology similar or identical to Tempest’s, and Tempest’s ability to commercialize any product candidates Tempest may develop may be adversely affected.

The patenting process is expensive and time-consuming, and Tempest may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, Tempest may not pursue or obtain patent protection in all relevant markets. It is also possible that Tempest will fail to identify patentable aspects of Tempest’s research and development activities before it is too late to obtain patent protection. Moreover, in some circumstances, Tempest may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that Tempest licenses from or licenses to third parties and may be reliant on Tempest’s licensors or licensees to do so. Tempest’s pending and future patent applications may not result in issued patents. Even if patent applications Tempest licenses or owns currently or in the future issue as patents, they may not issue in a form that will provide Tempest with any meaningful protection, prevent competitors or other third parties from competing with Tempest, or otherwise provide Tempest with any competitive advantage. Any patents that Tempest holds or in-licenses may be challenged, narrowed, circumvented or invalidated by third parties. Consequently, Tempest does not know whether any of Tempest’s platform advances and product candidates will be protectable or remain protected by valid and enforceable patents. In addition, Tempest’s existing patents and any future patents Tempest obtains may not be sufficiently broad to prevent others from using Tempest’s technology or from developing competing products and technologies.

In the future, Tempest may depend on intellectual property licensed from third parties, and its licensors may not always act in Tempest’s best interest. If Tempest fails to comply with its obligations under its intellectual property licenses, if the licenses are terminated, or if disputes regarding these licenses arise, Tempest could lose significant rights that may be important to its business.

Although it is currently not the case, Tempest may in the future depend on patents, know-how and proprietary technology licensed from third parties. Tempest’s licenses to such patents, know-how and proprietary technology may not provide exclusive rights in all relevant fields of use and in all territories in which Tempest

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may wish to develop or commercialize Tempest’s products in the future. The agreements under which Tempest licenses patents, know-how and proprietary technology from others may be complex, and certain provisions in such agreements may be susceptible to multiple interpretations.

Tempest may need to obtain licenses from third parties to advance Tempest’s research or allow commercialization of product candidates Tempest may develop. It is possible that Tempest may be unable to obtain any licenses at a reasonable cost or on reasonable terms, if at all. In either event, Tempest may be required to expend significant time and resources to redesign Tempest’s technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If Tempest is unable to do so, Tempest may be unable to develop or commercialize the affected technology or product candidates.

If Tempest’s future licensors fail to adequately protect Tempest’s licensed intellectual property, Tempest’s ability to commercialize product candidates could suffer. Tempest may not have complete control over the maintenance, prosecution and litigation of Tempest’s future in-licensed patents and patent applications. For example, Tempest cannot be certain that activities such as the maintenance and prosecution by Tempest’s future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. It is possible that future Tempest’s licensors’ infringement proceedings or defense activities may be less vigorous than had Tempest conducted them itself or may not be conducted in accordance with Tempest’s best interests.

In addition, the resolution of any contract interpretation disagreement that may arise could narrow what Tempest might believe to be the scope of Tempest’s rights to the relevant patents, know-how and proprietary technology, or increase what Tempest believes to be Tempest’s financial or other obligations under the relevant agreement. Disputes that may arise between Tempest and Tempest’s future licensors regarding intellectual property subject to a license agreement could include disputes regarding:

If disputes over intellectual property that Tempest licenses in the future prevent or impair Tempest’s ability to maintain Tempest’s licensing arrangements on acceptable terms, Tempest may be unable to successfully develop and commercialize the affected technology or product candidates.

Tempest’s owned and in-licensed patents and patent applications may not provide sufficient protection of Tempest’s product candidates or result in any competitive advantage.

The patent position of biopharmaceutical 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 Tempest’s patent rights is highly uncertain. Tempest’s pending

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and future patent applications and those of its licensors may not result in patents being issued which protect its product candidates or which effectively prevent others from commercializing competitive product candidates.

The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that Tempest owns or, in the future, in-license may fail to result in issued patents with claims that cover Tempest’s product candidates or uses thereof in the United States or in other foreign countries. For example, while Tempest’s patent applications are pending, Tempest may be subject to a third party preissuance 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 may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, which could limit Tempest’s ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of Tempest’s technology and product candidates. Furthermore, even if they are unchallenged, Tempest’s patents and patent applications may not adequately protect Tempest’s intellectual property or prevent others from designing around Tempest’s claims. Moreover, some of Tempest’s owned and in-licensed patents and patent applications may be co-owned with third parties. If Tempest is unable to obtain an exclusive license to any 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 Tempest’s competitors, and Tempest’s competitors could market competing products and technology. In addition, Tempest may need the cooperation of any such co-owners of Tempest’s patents in order to enforce such patents against third parties, and such cooperation may not be provided to Tempest. If the breadth or strength of protection provided by the patent applications Tempest holds with respect to Tempest’s product candidates is threatened, it could dissuade companies from collaborating with Tempest to develop, and threaten Tempest’s ability to commercialize, Tempest’s product candidates. Further, if Tempest encounters delays in development, testing, and regulatory review of new product candidates, the period of time during which Tempest could market Tempest’s product candidates under patent protection would be reduced or eliminated.

Since patent applications in the United States and other countries are confidential for a period of time after filing or until issuance, at any moment in time, Tempest cannot be certain that it was in the past or will be in the future the first to file any patent application related to Tempest’s product 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 Tempest is not aware that may affect the validity or enforceability of a patent claim, and Tempest may be subject to priority disputes. Tempest may be required to disclaim part or all of the term of certain patents or all of the term of certain patent applications. There also may be prior art of which Tempest is aware, but which Tempest does 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, Tempest’s 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 Tempest’s patents. Tempest may analyze patents or patent applications of Tempest’s competitors that Tempest believes are relevant to Tempest’s activities, and consider that Tempest is free to operate in relation to Tempest’s product candidates, but Tempest’s competitors may achieve issued claims, including in patents Tempest considers to be unrelated, that block Tempest’s efforts or potentially result in Tempest’s product candidates or Tempest’s activities infringing such claims. It is possible that Tempest’s competitors may have filed, and may in the future file, patent applications covering Tempest’s products or technology similar to Tempest’s. Those patent applications may have priority over Tempest’s owned and in-licensed patent applications or patents, which could require Tempest to obtain rights to issued patents covering such technologies. The possibility also exists that others will develop products that have the same effect as Tempest’s product candidates on an independent basis that do not infringe Tempest’s patents or other intellectual property rights, or will design around the claims of patents that Tempest has had issued that cover Tempest’s product candidates or their use.

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Likewise, Tempest’s currently owned patents and patent applications, if issued as patents, directed to Tempest’s proprietary technologies and Tempest’s product candidates are expected to expire from 2033 through 2041, without taking into account any possible patent term adjustments or extensions. Tempest’s earliest patents may expire before, or soon after, Tempest’s first product achieves marketing approval in the United States or foreign jurisdictions. Additionally, Tempest cannot be assured that the USPTO or relevant foreign patent offices will grant any of the pending patent applications Tempest owns or in-licenses currently or in the future. Upon the expiration of Tempest’s current patents, Tempest 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 Tempest’s business, financial condition, results of operations and prospects.

The degree of future protection for Tempest’s proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect Tempest’s rights or permit Tempest to gain or keep Tempest’s competitive advantage. For example:

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Any of the foregoing could have a material adverse effect on Tempest’s business, financial conditions, results of operations and prospects.

Tempest’s strategy of obtaining rights to key technologies through in-licenses may not be successful.

The future growth of Tempest’s business may depend in part on Tempest’s ability to in-license or otherwise acquire the rights to additional product candidates and technologies. Tempest cannot assure you that Tempest will be able to in-license or acquire the rights to any product candidates or technologies from third parties on acceptable terms or at all.

For example, Tempest’s agreements with certain of its third-party research partners provide that improvements developed in the course of its relationship may be owned solely by either Tempest or its third-party research partner, or jointly between Tempest and the third party. If Tempest determines that exclusive rights to such improvements owned solely by a research partner or other third party with whom Tempest collaborates are necessary to commercialize Tempest’s drug candidates or maintain Tempest’s competitive advantage, Tempest may need to obtain an exclusive license from such third party in order to use the improvements and continue developing, manufacturing or marketing Tempest’s drug candidates. Tempest may not be able to obtain such a license on an exclusive basis, on commercially reasonable terms, or at all, which could prevent Tempest from commercializing its drug candidates or allow Tempest’s competitors or others the opportunity to access technology that is important to Tempest’s business. Tempest also may need the cooperation of any co-owners of Tempest’s intellectual property in order to enforce such intellectual property against third parties, and such cooperation may not be provided to Tempest.

In addition, the in-licensing and acquisition of these technologies is a highly competitive area, and a number of more established companies are also pursuing strategies to license or acquire product candidates or technologies that Tempest may consider attractive. These established companies may have a competitive advantage over Tempest due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive Tempest to be a competitor may be unwilling to license rights to Tempest. Furthermore, Tempest may be unable to identify suitable product candidates or technologies within Tempest’s area of focus. If Tempest is unable to successfully obtain rights to suitable product candidates or technologies, Tempest’s business and prospects could be materially and adversely affected.

If Tempest is unable to protect the confidentiality of its trade secrets, Tempest’s business and competitive position would be harmed.

In addition to patent protection, Tempest relies upon know-how and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with Tempest’s employees, consultants and third-parties, to protect Tempest’s confidential and proprietary information, especially where Tempest does not believe patent protection is appropriate or obtainable.

It is Tempest’s policy to require Tempest’s employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of

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employment or consulting relationships with Tempest. These agreements provide that all confidential information concerning Tempest’s business or financial affairs developed or made known to the individual or entity during the course of the party’s relationship with Tempest 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 Tempest’s current or planned business or research and development or made during normal working hours, on Tempest’s premises or using Tempest’s equipment or proprietary information (or as otherwise permitted by applicable law), are Tempest’s 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 Tempest’s exclusive property. However, Tempest cannot guarantee that Tempest has entered into such agreements with each party that may have or have had access to Tempest’s trade secrets or proprietary technology and processes. Tempest has also adopted policies and conducts training that provides guidance on Tempest’s expectations, and Tempest’s advice for best practices, in protecting its trade secrets. Despite these efforts, any of these parties may breach the agreements and disclose Tempest’s proprietary information, including its trade secrets, and Tempest may not be able to obtain adequate remedies for such breaches.

In addition to contractual measures, Tempests tries to protect the confidential nature of Tempest’s 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 Tempest’s proprietary information. Tempest’s security measures may not prevent an employee or consultant from misappropriating Tempest’s trade secrets and providing them to a competitor, and any recourse Tempest might take against this type of misconduct may not provide an adequate remedy to protect Tempest’s interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent Tempest from receiving legal recourse. If any of Tempest’s confidential or proprietary information, such as its trade secrets, were to be disclosed or misappropriated, such as through a data breach, or if any of that information was independently developed by a competitor, Tempest’s competitive position could be harmed. Additionally, certain trade secret and proprietary information may be required to be disclosed in submissions to regulatory authorities. If such authorities do not maintain the confidential basis of such information or disclose it as part of the basis of regulatory approval, Tempest’s competitive position could be adversely affected.

In addition, courts outside the United States are sometimes less willing to protect trade secrets. If Tempest chooses to go to court to stop a third party from using any of Tempest’s trade secrets, Tempest may incur substantial costs. Even if Tempest is successful, these types of lawsuits may result in substantial cost and require significant time from our scientists and management. Although Tempest takes steps to protect Tempest’s proprietary information and trade secrets, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to Tempest’s trade secrets or disclose Tempest’s technology, through legal or illegal means. As a result, Tempest may not be able to meaningfully protect its trade secrets. Any of the foregoing could have a material adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Third-party claims of intellectual property infringement may prevent, delay or otherwise interfere with Tempest’s product discovery and development efforts.

Tempest’s commercial success depends in part on Tempest’s ability to develop, manufacture, market and sell Tempest’s product candidates and use Tempest’s proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property or other proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO

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or oppositions and other comparable proceedings in foreign jurisdictions. Tempest may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that Tempest’s product candidates and/or proprietary technologies infringe, misappropriate or otherwise violate their intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties exist in the fields in which Tempest is developing Tempest’s product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that Tempest’s product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including Tempest, which patents cover various types of drugs, products or their methods of use or manufacture. Thus, because of the large number of patents issued and patent applications filed in Tempest’s field, third parties may allege they have patent rights encompassing Tempest’s product candidates, technologies or methods.

If a third-party claims that Tempest infringes, misappropriates or otherwise violates its intellectual property rights, Tempest may face a number of issues, including, but not limited to:

Some of Tempest’s competitors may be able to sustain the costs of complex patent litigation more effectively than Tempest 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 Tempest’s ability to raise the funds necessary to continue Tempest’s operations or could otherwise have a material adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Third parties may assert that Tempest is employing their proprietary technology without authorization, including by enforcing its patents against Tempest by filing a patent infringement lawsuit against Tempest. In this regard, patents issued in the United States by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,” a heightened standard of proof.

There may be third-party patents of which Tempest is currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of Tempest’s product 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 Tempest’s product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of Tempest’s technologies infringes upon these patents.

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If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of Tempest’s product candidates, or materials used in or formed during the manufacturing process, or any final product itself, the holders of those patents may be able to block Tempest’s ability to commercialize Tempest’s product candidate unless Tempest obtains a license under the applicable patents, or until those patents were to expire or those patents are finally determined to be invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of Tempest’s formulations, processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of that patent may be able to block Tempest’s ability to develop and commercialize the product candidate unless Tempest obtains a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, a license may not be available on commercially reasonable terms, or at all, particularly if such patent is owned or controlled by one of Tempest’s primary competitors. If Tempest is unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, Tempest’s ability to commercialize Tempest’s product candidates may be impaired or delayed, which could significantly harm Tempest’s business. Even if Tempest obtains a license, it may be non-exclusive, thereby giving Tempest’s competitors access to the same technologies licensed to Tempest. In addition, if the breadth or strength of protection provided by Tempest’s patents and patent applications is threatened, it could dissuade companies from collaborating with Tempest to license, develop or commercialize current or future product candidates.

Parties making claims against Tempest may seek and obtain injunctive or other equitable relief, which could effectively block Tempest’s ability to further develop and commercialize Tempest’s product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee time and resources from Tempest’s business. In the event of a successful claim of infringement against Tempest, Tempest may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign Tempest’s infringing products, which may be impossible or require substantial time and monetary expenditure. Tempest cannot predict whether any license of this nature would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, Tempest may need to obtain licenses from third parties to advance Tempest’s research or allow commercialization of Tempest’s product candidates and Tempest may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, Tempest would be unable to further develop and commercialize Tempest’s product candidates, which could significantly harm Tempest’s business.

Tempest may be involved in lawsuits to protect or enforce its patents or the patents of its licensors, which could be expensive, time-consuming and unsuccessful and could result in a finding that such patents are unenforceable or invalid.

Competitors may infringe Tempest’s patents or the patents of its future licensors. To counter infringement or unauthorized use, Tempest may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of Tempest’s patents is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that Tempest’s patents do not cover the technology in question.

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. Grounds for a validity challenge include an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description, non-enablement, or obviousness-type double patenting. Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution. 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

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result in revocation or amendment to Tempest’s patents such that they no longer cover Tempest’s product candidates. The outcome for any particular patent following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, Tempest cannot be certain that there is no invalidating prior art, of which Tempest, Tempest’s 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 Tempest is otherwise unable to adequately protect Tempest’s rights, Tempest would lose at least part, and perhaps all, of the patent protection on Tempest’s product 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 Tempest’s business.

Conversely, Tempest 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), or Tempest may choose to challenge a third party’s patent in patent opposition proceedings in the Canadian Intellectual Property Office, or CIPO, the European Patent Office, or EPO, or another foreign patent office. Even if successful, the costs of these opposition proceedings could be substantial, and may consume Tempest’s time or other resources. If Tempest fails to obtain a favorable result at the USPTO, CIPO, EPO or other patent office then Tempest may be exposed to litigation by a third party alleging that the patent may be infringed by Tempest’s product candidates or proprietary technologies.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Tempest’s 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. If securities analysts or investors perceive these results to be negative, that perception could have a substantial adverse effect on the price of Tempest’s common stock. Any of the foregoing could have a material adverse effect on Tempest’s business financial condition, results of operations and prospects.

Tempest may not be able to protect its intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and Tempest’s intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. For example, patents covering methods-of-use are not available in certain foreign countries. Consequently, Tempest may not be able to prevent third parties from practicing Tempest’s inventions in all countries outside the United States, or from selling or importing products made using Tempest’s inventions in and into the United States or other jurisdictions. Competitors may use Tempest’s technologies in jurisdictions where Tempest does not have or has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where Tempest has patent protection but where enforcement is not as strong as that in the United States. These products may compete with Tempest’s product candidates in jurisdictions where Tempest does not have any issued patents and Tempest’s patent claims 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 biopharmaceutical products, which could make it difficult for Tempest to stop the infringement of Tempest’s patents or marketing of competing products against third parties in violation of Tempest’s proprietary rights generally. The initiation of proceedings by third parties to challenge the scope or validity of Tempest’s patent rights in foreign jurisdictions could result in substantial cost and divert management’s efforts and attention from other aspects of Tempest’s business. Proceedings to enforce Tempest’s patent rights in foreign jurisdictions

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could result in substantial costs and divert management’s efforts and attention from other aspects of Tempest’s business, could put Tempest’s patents at risk of being invalidated or interpreted narrowly and Tempest’s patent applications at risk of not issuing and could provoke third parties to assert claims against Tempest. Tempest may not prevail in any lawsuits that Tempest initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, Tempest’s efforts to enforce Tempest’s intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Tempest develops or licenses.

Third parties may assert that Tempest’s employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.

As is common in the biotechnology and pharmaceutical industries, Tempest employs individuals who were previously employed at universities or other biopharmaceutical or pharmaceutical companies, including Tempest’s competitors or potential competitors. Although Tempest tries to ensure that Tempest’s employees and consultants do not use the proprietary information or know-how of others in their work for Tempest, Tempest may be subject to claims that Tempest’s employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Tempest may then have to pursue litigation to defend against these claims. If Tempest fails in defending any claims of this nature, in addition to paying monetary damages, Tempest may lose valuable intellectual property rights or personnel. Even if Tempest is successful in defending against these types of claims, litigation or other legal proceedings relating to intellectual property claims may cause Tempest to incur significant expenses, and could distract Tempest’s 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 Tempest’s common stock. This type of litigation or proceeding could substantially increase Tempest’s operating losses and reduce Tempest’s resources available for development activities, and Tempest may not have sufficient financial or other resources to adequately conduct this type of litigation or proceedings. For example, some of Tempest’s competitors may be able to sustain the costs of this type of litigation or proceedings more effectively than Tempest 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 Tempest’s ability to compete in the marketplace.

Obtaining and maintaining Tempest’s patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Tempest’s patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign patent agencies also require compliance with a number of procedural, documentary, fee payment and other provisions during the patent application process and following the issuance of a patent. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable laws and rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. Were a noncompliance event to occur, Tempest’s competitors might be able to enter the market, which would have a material adverse effect on Tempest’s business financial condition, results of operations and prospects.

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Changes in patent law in the United States and in non-U.S. jurisdictions could diminish the value of patents in general, thereby impairing Tempest’s ability to protect its product candidates.

As is the case with other biopharmaceutical companies, Tempest’s 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.

Past or future patent reform legislation could increase the uncertainties and costs surrounding the prosecution of Tempest’s patent applications and the enforcement or defense of Tempest’s issued patents. For example, in March 2013, under the Leahy-Smith America Invents Act, or America Invents Act, the United States moved from a “first to invent” to a “first-to-file” patent system. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on the invention regardless of whether another inventor had made the invention earlier. The America Invents Act includes a number of other significant changes to U.S. patent law, including provisions that affect the way patent applications are prosecuted, redefine prior art and establish a new post-grant review system. The effects of these changes continue to evolve as the USPTO continues to promulgate new regulations and procedures in connection with the America Invents Act. In addition, the courts have yet to address many of these provisions and the applicability of the act and new regulations on the specific patents discussed in this filing have not been determined and would need to be reviewed. Moreover, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Tempest’s patent applications and the enforcement or defense of Tempest’s issued patents.

Additionally, 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. In addition to increasing uncertainty with regard to Tempest’s ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken Tempest’s ability to obtain new patents or to enforce Tempest’s existing patents and patents that Tempest might obtain or license 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 patent-eligible.

Similarly, other cases by the U.S. Supreme Court have held that certain methods of treatment or diagnosis are not patent-eligible. U.S. law regarding patent-eligibility continues to evolve. While Tempest does not believe that any of Tempest’s patents will be found invalid based on these changes to US patent law, Tempest cannot predict how future decisions by the courts, the U.S. Congress or the USPTO may impact the value of Tempest’s patents and patent applications. Any similar adverse changes in the patent laws of other jurisdictions could also have a material adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Patent terms may be inadequate to protect Tempest’s competitive position on its product candidates for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering Tempest’s product candidates are obtained, once the patent life has expired, Tempest 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 product candidates, patents protecting Tempest’s product candidates might expire before or shortly after Tempest or Tempest’s partners commercialize those candidates. As a result, Tempest’s owned and licensed patent portfolio may not provide Tempest with sufficient rights to exclude others from commercializing products similar or identical to Tempest’s.

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If Tempest does not obtain patent term extension for any product candidates it may develop, Tempest’s business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates Tempest may develop, one or more of Tempest’s U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during clinical trials and the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 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. U.S. and ex-U.S. law concerning patent term extensions and foreign equivalents continue to evolve. Even if Tempest were to seek a patent term extension, 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 of extension or the scope of patent protection afforded could be less than Tempest requests. If Tempest is unable to obtain patent term extension or term of any such extension is less than it requests, Tempest’s competitors may obtain approval of competing products following Tempest’s patent expiration sooner than expected, and Tempest’s business, financial condition, results of operations and prospects could be materially harmed.

Intellectual property discovered through government funded programs may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit Tempest’s exclusive rights and limit its ability to contract with non-U.S. manufacturers.

Although Tempest does not currently own issued patents or pending patent applications that have been generated through the use of U.S. government funding, Tempest may acquire or license in the future intellectual property rights that have been generated through the use of U.S. government funding or grants. Pursuant to the Bayh-Dole Act of 1980, the U.S. government has certain rights in inventions developed with government funding. These U.S. government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (1) adequate steps have not been taken to commercialize the invention; (2) government action is necessary to meet public health or safety needs; or (3) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). If the U.S. government exercised its march-in rights in Tempest’s future intellectual property rights that are generated through the use of U.S. government funding or grants, Tempest could be forced to license or sublicense intellectual property developed by Tempest or that Tempest licenses on terms unfavorable to Tempest, and there can be no assurance that Tempest would receive compensation from the U.S. government for the exercise of such rights. The U.S. government also has the right to take title to these inventions if the grant recipient fails to disclose the invention to the government or fails to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require Tempest to expend substantial resources. In addition, the U.S. government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the United States. This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. industry may limit Tempest’s ability to contract with non-U.S. product manufacturers for products covered by such intellectual property.

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Risks Related to Employee Matters, Managing Growth and Other Risks Related to Tempest’s Business

Tempest expects to expand its development and regulatory capabilities, and as a result, Tempest may encounter difficulties in managing its growth, which could disrupt Tempest’s operations.

Tempest expects to experience significant growth in the number of Tempest’s employees and the scope of Tempest’s operations, particularly in the areas of product candidate development, growing Tempest’s capability to conduct clinical trials, and, if approved, through commercialization of Tempest’s product candidates. To manage its anticipated future growth, Tempest must continue to implement and improve its managerial, operational and financial systems, expand its facilities and continue to recruit and train additional qualified personnel, or contract with third parties to provide these capabilities for Tempest. Due to Tempest’s limited financial resources and the limited experience of Tempest’s management team in managing a company with such anticipated growth, Tempest may not be able to effectively manage the expansion of Tempest’s operations or recruit and train additional qualified personnel. The expansion of Tempest’s operations may lead to significant costs and may divert Tempest’s management and business development resources. Any inability to manage growth could delay the execution of Tempest’s business plans or disrupt Tempest’s operations.

Tempest must attract and retain highly skilled employees to succeed.

To succeed, Tempest must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel, and Tempest faces significant competition for experienced personnel. If Tempest does not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect Tempest’s ability to execute its business plan, harm Tempest’s results of operations and increase Tempest’s capabilities to successfully commercialize its product candidates. In particular, Tempest believes that its future success is highly dependent upon the contributions of its senior management, particularly its Chief Executive Officer, Tom Dubensky and its President and Chief Operating Officer, Stephen Brady. The loss of services of Messrs. Dubensky or Brady, or any of Tempest’s senior management, could delay or prevent the successful development of Tempest’s product pipeline, completion of Tempest’s planned clinical trials or the commercialization of Tempest’s product candidates, if approved. The competition for qualified personnel in the biotechnology field is intense and as a result, Tempest may be unable to continue to attract and retain qualified personnel necessary for the development of Tempest’s business or to recruit suitable replacement personnel.

Many of the other biotechnology companies that Tempest competes against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than Tempest does. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what Tempest has to offer. If Tempest is unable to continue to attract and retain high-quality personnel, the rate and success at which Tempest can discover and develop product candidates and Tempest’s business will be limited.

Future acquisitions or strategic alliances could disrupt Tempest’s business and harm Tempest’s financial condition and results of operations.

Tempest may acquire additional businesses or drugs, form strategic alliances or create joint ventures with third parties that Tempest believes will complement or augment Tempest’s existing business. If Tempest acquires businesses with promising markets or technologies, Tempest may not be able to realize the benefit of acquiring such businesses if Tempest is unable to successfully integrate them with Tempest’s existing operations and company culture. Tempest may encounter numerous difficulties in developing, manufacturing and marketing any new drugs resulting from a strategic alliance or acquisition that delay or prevent Tempest from realizing their expected benefits or enhancing Tempest’s business. Tempest cannot assure you that, following any such acquisition, Tempest will achieve the expected synergies to justify the transaction. The risks Tempest faces in connection with acquisitions, include:

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Tempest’s failure to address these risks or other problems encountered in connection with its past or future acquisitions or strategic alliances could cause Tempest to fail to realize the anticipated benefits of these transactions, cause Tempest to incur unanticipated liabilities and harm the business generally. There is also a risk that future acquisitions will result in the incurrence of debt, contingent liabilities, amortization expenses or incremental operating expenses, any of which could harm Tempest’s financial condition or results of operations.

If Tempest fails to comply with environmental, health, and safety laws and regulations, Tempest could become subject to fines or penalties or incur costs that could harm Tempest’s business.

Tempest is 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. Tempest’s operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Tempest’s operations also may produce hazardous waste products. Tempest generally contracts with third parties for the disposal of these materials and wastes. Tempest will not be able to eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from any use by Tempest of hazardous materials, Tempest could be held liable for any resulting damages, and any liability could exceed Tempest’s resources. Tempest also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

Although Tempest maintains workers’ compensation insurance to cover Tempest for costs and expenses Tempest may incur due to injuries to Tempest’s employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.

In addition, Tempest 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 Tempest’s research, development or production efforts. Tempest’s failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Unfavorable global economic conditions could adversely affect Tempest’s business, financial condition, stock price and results of operations.

Tempest’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For example, a global economic downturn that could result from the COVID-19 pandemic could cause extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to Tempest’s business, including, weakened demand for

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Tempest’s product candidates and Tempest’s ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain Tempest’s suppliers, possibly resulting in supply disruption, or cause Tempest’s customers to delay making payments for Tempest’s services. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on Tempest’s growth strategy, financial performance and stock price and could require Tempest to delay or abandon clinical development plans. In addition, there is a risk that one or more of Tempest’s current service providers, manufacturers and other partners may not survive such difficult economic times, which could directly affect Tempest’s ability to attain Tempest’s operating goals on schedule and on budget. Any of the foregoing could harm Tempest’s business and Tempest cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact Tempest’s business. Furthermore, the combined company’s stock price may decline due in part to the volatility of the stock market and any general economic downturn.

Tempest or the third parties upon whom Tempest depends may be adversely affected by natural disasters and other calamities, including pandemics, such as the global outbreak of COVID-19, and Tempest’s business continuity and disaster recovery plans may not adequately protect Tempest from a serious disaster.

Natural disasters could severely disrupt Tempest’s operations and have a material adverse effect on Tempest’s business, results of operations, financial condition and prospects. If a natural disaster, fire, hurricane, power outage or other event occurred that prevented Tempest from using all or a significant portion of Tempest’s headquarters, that damaged critical infrastructure, such as Tempest’s suppliers’ manufacturing facilities, or that otherwise disrupted operations, such as data storage, it may be difficult or, in certain cases, impossible for Tempest to continue Tempest’s business for a substantial period of time.

Occurrences of epidemics or pandemics, depending on their scale, may cause different degrees of damage to the national and local economies within Tempest’s geographic focus. Global economic conditions may be disrupted by widespread outbreaks of infectious or contagious diseases, and such disruption may adversely affect clinical development plans. For example, the COVID-19 pandemic could have an adverse effect on the coordination of research and development, Tempest’s capital raising efforts, and the financial condition of Tempest’s business, as well as the ability of Tempest to retain key personnel and continue to expand product candidate development and conduct clinical trials. In addition, the impact of COVID-19 is likely to continue to cause substantial changes in consumer behavior and has caused restrictions on business and individual activities, which are likely to lead to reduced economic activity. Extraordinary actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world, including travel bans, quarantines, “stay-at-home” orders and similar mandates for many individuals and businesses to substantially restrict daily activities could have an adverse effect on Tempest’s financial condition and ability to raise financing.

The disaster recovery and business continuity plans Tempest has in place may prove inadequate in the event of a serious disaster or similar event. Tempest may incur substantial expenses as a result of the limited nature of Tempest’s disaster recovery and business continuity plans, which could have a material adverse effect on Tempest’s business. As a result of the COVID-19 pandemic, Tempest may experience reduction in research and development, clinical testing, regulatory compliance activities, and manufacturing activities, and is unable at this time to estimate the extent of the effect of COVID-19 on its business. The extent and duration of the economic slowdown attributable to COVID-19 remains uncertain at this time. A continued significant economic slowdown could have a substantial adverse effect on Tempest’s financial condition, liquidity, and results of operations. If these conditions persist for an extended term, it could have a material adverse effect on Tempest’s future revenue and sales.

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Tempest’s internal computer and information systems, or those used by its CROs, CMOs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of Tempest’s development programs.

Despite the implementation of appropriate security measures, Tempest’s internal computer and information systems and those of Tempest’s current and any future CROs, CMOs and other contractors or consultants may become vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in Tempest’s operations, it could result in a material disruption of Tempest’s development programs and Tempest’s business operations, whether due to a loss of Tempest’s trade secrets or other proprietary information or other similar disruptions. For example, the loss of data from completed or future preclinical studies or clinical trials could result in significant delays in Tempest’s regulatory approval efforts and significantly increase Tempest’s costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, Tempest’s data or applications, or inappropriate disclosure of confidential or proprietary information, Tempest could incur liability, Tempest’s competitive position could be harmed and the further development and commercialization of Tempest’s product candidates could be significantly delayed. Tempest’s internal information technology systems and infrastructure are also vulnerable to damage from natural disasters, terrorism, war, telecommunication and electrical failures. System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems during the COVID-19 pandemic, could compromise Tempest’s ability to perform its day-to-day operations, which could harm its ability to conduct business or delay its financial reporting. Such failures could materially adversely affect Tempest’s operating results and financial condition.

Tempest is subject to a variety of privacy and data security laws, and Tempest’s failure to comply with them could harm Tempest’s business.

Tempest maintains a large quantity of sensitive information, including confidential business and patient health information in connection with Tempest’s preclinical and clinical studies, and is subject to laws and regulations governing the privacy and security of such information. In the United States, there are numerous federal and state privacy and data security laws and regulations governing the collection, use, disclosure and protection of personal information, including health information privacy laws, security breach notification laws, and consumer protection laws. Each of these laws is subject to varying interpretations and constantly evolving. In addition, Tempest may obtain health information from third parties (including research institutions from which it obtains clinical trial data) that are subject to privacy and security requirements under HIPAA. Depending on the facts and circumstances, Tempest could be subject to criminal penalties if it knowingly obtains, uses or discloses individually identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA.

Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. For example, California enacted the California Consumer Privacy Act, or the CCPA, which took effect on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase Tempest’s compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase Tempest’s potential liability and adversely affect Tempest’s business.

In Canada, the Personal Information Protection and Electronic Documents Act, or PIPEDA, and similar provincial laws may impose obligations with respect to processing personal information, including health-related information. PIPEDA requires companies to obtain an individual’s consent when collecting, using or disclosing that individual’s personal information. Individuals have the right to access and challenge the accuracy of their

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personal information held by an organization, and personal information may only be used for the purposes for which it was collected. If an organization intends to use personal information for another purpose, it must again obtain that individual’s consent. Failure to comply with PIPEDA could result in significant fines and penalties.

In May 2018, the General Data Protection Regulation, or the GDPR, took effect in the European Economic Area, the EEA. The GDPR governs the collection, use, disclosure, transfer or other processing of personal data of natural persons. Among other things, the GDPR imposes strict obligations on the ability to process health-related and other personal data of data subjects in the EEA, including in relation to use, collection, analysis and transfer (including cross-border transfer) of such personal data. The GDPR includes requirements relating to the consent of the individuals to whom the personal data relates, including detailed notices for clinical trial subjects and investigators. The GDPR also includes certain requirements regarding the security of personal data and notification of data processing obligations or security incidents to appropriate data protection authorities or data subjects as well as requirements for establishing a lawful basis on which personal data can be processed. In addition, the GDPR increases the scrutiny of transfers of personal data from clinical trial sites located in the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws, and imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of Tempest’s annual worldwide gross revenue). Further, recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of information from the EEA to the United States. For example, on June 16, 2020, the Court of Justice of the European Union, or the CJEU, declared the EU-U.S. Privacy Shield framework, or the Privacy Shield, to be invalid. As a result, Privacy Shield is no longer a valid mechanism for transferring personal data from the EEA to the United States. Moreover, it is uncertain whether the standard contractual clauses will also be invalidated by the European courts or legislature, which seems possible given the rationale behind the CJEU’s concerns about U.S. law and practice on government surveillance. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and Tempest may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. If Tempest fails to comply with any such laws or regulations, Tempest may face significant fines and penalties that could adversely affect Tempest’s business, financial condition and results of operations.

Tempest may be unable to adequately protect its information systems from cyberattacks, which could result in the disclosure of confidential information, damage Tempest’s reputation, and subject Tempest to significant financial and legal exposure.

Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data confidentiality, integrity and availability. A successful cyberattack could cause serious negative consequences for Tempest, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans. The COVID-19 pandemic is generally increasing the attack surface available to criminals, as more companies and individuals work online and work remotely, and as such, the risk of a cybersecurity incident potentially occurring, and Tempest’s investment in risk mitigations against such an incident, is increasing. For example, there has been an increase in phishing and spam emails as well as social engineering attempts from “hackers” hoping to use the recent COVID-19 pandemic to their advantage.

Although Tempest devotes resources to protect its information systems, Tempest realizes that cyberattacks are a threat, and there can be no assurance that Tempest’s efforts will prevent information security breaches that

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would result in business, legal, financial or reputational harm to Tempest, or would have a material adverse effect on Tempest’s results of operations and financial condition.

In addition, the computer systems of various third parties on which Tempest relies, including its CROs, CMOs and other contractors, consultants and law and accounting firms, may sustain damage from computer viruses, unauthorized access, data breaches, phishing attacks, cybercriminals, natural disasters (including hurricanes and earthquakes), terrorism, war and telecommunication and electrical failures. Tempest relies on its third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches.

Tempest’s employees, principal investigators, CROs, CMOs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

Tempest is exposed to the risk of fraud or other misconduct by Tempest’s employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with the regulations of FDA and non-U.S. regulators, to provide accurate information to the FDA and non-U.S. regulators, to comply with healthcare fraud and abuse laws and regulations in the United States and abroad, to report financial information or data accurately or disclose unauthorized activities to Tempest. 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. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and could cause serious harm to Tempest’s reputation. It is not always possible to identify and deter employee misconduct, and the precautions Tempest takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Tempest 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 Tempest, and Tempest is not successful in defending or asserting Tempest’s rights, those actions could have a significant impact on Tempest’s business, including the imposition of significant fines or other sanctions.

Tempest’s business entails a significant risk of product liability and Tempest’s ability to obtain sufficient insurance coverage could have a material and adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Tempest will face an inherent risk of product liability exposure related to the testing of its product candidates in clinical trials and will face an even greater risk if Tempest commercializes any of Tempest’s product candidates. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in a product, negligence, strict liability or breach of warranty. Claims could also be asserted under U.S. state consumer protection acts. If Tempest cannot successfully defend Tempest’s against claims that Tempest’s product candidates caused injuries, Tempest could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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While Tempest currently has insurance that Tempest believes is appropriate for Tempest’s stage of development, Tempest may need to obtain higher levels prior to clinical development or marketing any of its future product candidates. Any insurance Tempest has or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, Tempest may be unable to obtain sufficient insurance at a reasonable cost to protect Tempest against losses caused by product liability claims that could have a material and adverse effect on Tempest’s business, financial condition, results of operations and prospects.

Tempest’s ability to use net operating loss carryforwards and tax credit carryforwards may be subject to limitations.

As of December 31, 2020, Tempest had federal and state NOLs of approximately $80.9 million and $80.3 million, respectively. To the extent that Tempest’s taxable income exceeds any current year operating losses, Tempest plans to use its carryforwards to offset income that would otherwise be taxable. Its NOLs could expire unused and be unavailable to offset future income tax liabilities because of their limited duration or because of restrictions under U.S. tax law. Tempest’s federal and state NOL carryforwards will begin to expire, if not utilized, in 2031.

Under Section 382 and Section 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. Tempest may have experienced ownership changes in the past, may experience an ownership change as a result of the merger, and may experience ownership changes in the future due to subsequent shifts in the combined company’s stock ownership (some of which are outside of its control). Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of Tempest’s NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit Tempest’s use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, Tempest’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

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