Item 1A. RISK FACTORS

In addition to the information set forth in this quarterly report on Form 10-Q, one should also carefully review and consider the

information contained in the other reports and periodic filings that we make with the SEC, including, without limitation, the information

contained under the caption “Item 1A. Risk factors” in our annual report on Form 10-K for the year ended December 31, 2024. Those risk

factors could materially affect our business, financial condition, and results of operations. The risks that we describe in our public filings

are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we presently deem to be

immaterial, also may materially adversely affect our business, financial condition, and results of operations.

There have been no material changes in our risk factors from those disclosed under the caption “Item 1A. Risk factors” in our

annual report on Form 10-K for the year ended December 31, 2024, except for the following updates:

Changes to regulatory, funding, staffing, trade, and other policies and actions by the U.S. government could

adversely affect our business operations or those of our tenants and our venture investment portfolio companies.

Domestic and international policy shifts may introduce considerable uncertainty to the macroeconomic and regulatory

landscape in which we, our tenants, and our venture investment portfolio companies operate. Our tenants and our venture

investment portfolio companies include entities in the pharmaceutical, biotechnology, medical device, life science, and related

industries, academic and private institutions, government institutions that determine their research and development budgets

based on several factors, including the availability of government and other funding, and the operational efficiency and reliability

of public regulatory institutions.

Since January 2025, the current U.S. administration has enacted and proposed substantial policy changes that affect

federal health agencies, research funding, public health priorities, and international trade. These measures — ranging from

staffing and budget reductions at the U.S. Food and Drug Administration (“FDA”) and the National Institutes of Health (“NIH”) to

sweeping tariff actions, as described below — may significantly disrupt the life science ecosystem in which we, our tenants, and

our venture investment portfolio companies operate.

Reductions in FDA Workforce and Budget

In 2025, the FDA laid off approximately 3,500 employees, representing approximately 19% of its workforce at the

beginning of the year. Such workforce reductions at the FDA have raised some concerns regarding the agency’s capacity to

perform timely regulatory reviews and approvals of drugs and other medical products. Recent and/or potential further reductions

in workforce or other personnel changes at the FDA, including terminations, may disrupt the agency’s review and approval

processes for our tenants’ and our venture investment portfolio companies’ products. Such disruptions could lead to setbacks in

research and development timelines, negatively impacting life science companies’ ability to advance their pipelines, secure

investor funding, or achieve commercial viability, which could severely affect their operations and financial performance and, as

a result adversely impact our operating and financial results.

NIH Grant Cuts and Impact on Research Institutions

The current U.S. administration has implemented significant policy changes affecting the NIH, leading to substantial

disruptions in biomedical research across the U.S. These actions included staff layoffs and funding cuts, as described below,

and resulted in the suspension of numerous research projects, posing risks to scientific advancement and introducing

uncertainty for some of our tenants and venture investment portfolio companies.

• NIH budget freeze and workforce cuts. On January 27, 2025, the U.S. administration issued an executive order to

suspend NIH grant funding, freezing much of NIH’s nearly $48 billion budget for 2025. Though the suspension was

eventually blocked and reversed, during the first half of 2025 the NIH laid off approximately 5,000 employees and

contractors across its approximately 20,000-person workforce.

In May 2025, the White House introduced a budget proposal for fiscal year 2026 that would reduce the NIH budget by

40%, from $48 billion to $27.5 billion. The proposal has been met with push back from Congress, and, until a new

budget is approved by the legislature, the NIH budget will remain at 2024 levels through a continuing resolution.

Should the NIH budget be significantly reduced, it may affect funding of early research that drives the formation of new

life companies, potentially impacting the U.S.'s global life science leadership and long-term demand for life science

real estate.

• Termination of NIH grants and funding commitments to major research institutions. On January 20, 2025, President

Trump issued an executive order directing every U.S. agency, including the NIH, to “terminate, to the maximum extent

allowed by law” all grants relating to diversity, equity, and inclusion. On January 29, 2025, the President issued an

executive order to make it “the policy of the United States to combat anti-Semitism vigorously, using all available and

appropriate legal tools, to prosecute, remove, or otherwise hold to account the perpetrators of unlawful anti-Semitic

harassment and violence.” As a result of one or both executive orders, the NIH, the world’s largest funder of

biomedical research, has withheld funding from certain U.S. research institutions.

• 15% cap on indirect cost reimbursements of all NIH grants. On February 7, 2025, the NIH introduced a policy limiting

indirect cost reimbursements to 15% for all NIH grants, representing a significant reduction from historic levels, which

were approximately double that rate on average, and in some cases significantly higher. This change threatens to

substantially impact the ability of research institutions to support their infrastructure and administrative costs, including

their ability to lease life science facilities.

A coalition of 22 state attorneys general, along with organizations like the Association of American Medical Colleges,

filed lawsuits challenging the NIH’s policy changes, particularly the 15% cap on indirect costs. On April 7, 2025, a federal court

issued a permanent injunction blocking the enforcement of this cap. However, the U.S. administration has signaled its intent to

appeal and/or pursue similar funding restrictions through future legislative or administrative actions. If implemented, any such

funding cap could negatively impact our tenants that depend on grant funding for its operations. It could also reduce the

financial resources available to such tenants, forcing them to scale back operations, reduce leased space, or delay their plans

for lease expansion.

Termination of federal research funding that affected prominent academic institutions has already led to reductions in

postdoctoral hiring and the closure of critical programs. Moreover, recent changes to visa rules have introduced new uncertainty

around the ability of international graduate students and postdoctoral researchers to remain in the U.S. following graduation.

Many of these individuals represent years of training investment and historically have formed a key segment of the U.S. biotech

workforce. As limitations on their residency and employment take effect, a growing share of talent is migrating to foreign

markets. The U.S. life sciences real estate market has historically benefited from robust domestic R&D activity and venture

capital investment. However, other countries are increasingly positioned to attract top-tier biomedical talent, venture capital, and

clinical trials. The global leadership in biotechnology currently held by the U.S. may begin to shift abroad. The reduced

attractiveness of the U.S. as a destination for research and commercialization could lead to a substantial long-term decline in

the size of our life science tenant base and of life science real estate.

Drug Pricing Regulation — Most Favored Nation Executive Order

On May 12, 2025, President Trump issued an executive order titled “Delivering Most-Favored-Nation Prescription Drug

Pricing to American Patients,” directing the U.S. Department of Health and Human Services to establish pricing benchmarks for

prescription drugs based on the lowest prices paid in other developed countries. While the President announced that the

“prescription drug and pharmaceutical prices will be reduced, almost immediately, by 30% to 80%,” many of the proposed

changes would require formal rulemaking and are expected to face legal challenges. Although the implementation timeline and

extent of any actual price reductions remain uncertain. If enacted, these changes could materially affect our life science tenants

by potentially diminishing their profitability and constraining future growth, which in turn can reduce their future demand for life

science space.

Dismissal of the Entire Independent Vaccine Advisory Panel at the U.S. Centers for Disease Control and Prevention (CDC)

In June 2025, the U.S. Health Secretary unilaterally dismissed all 17 members of the Advisory Committee on

Immunization Practices (ACIP) at the CDC, and withdrew a recommendation for administering COVID shots to children and

pregnant women. Shortly thereafter, the Health Secretary named eight new members to serve on the panel, including several

anti-vaccine advocates.

Reductions in Medicaid Funding under the One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act was signed into law. Included in the bill is an estimated $1 trillion in cuts

to Medicaid spending, implemented through Medicaid work requirements, patient cost-sharing, and a phasedown of Medicaid

provider taxes and state-directed payments. Such reductions in Medicaid spending could result in lower revenue for some life

science tenants, adversely impacting financial performance and potentially resulting in reduced life science real estate

requirements.

The Rapid Expansion of China’s Biotechnology Sector May Adversely Impact Demand for U.S. Life Sciences Real Estate

The U.S. life sciences real estate market has historically benefited from robust domestic R&D activity and venture

capital investment. The accelerated growth of China’s biotechnology industry—fueled by state subsidies, regulatory reform, and

inexpensive talent —poses a potential threat to U.S. lab space demand. Given lower operational costs and faster clinical trial

recruitment timelines, China may attract biotech firms to conduct R&D activities in China rather than the U.S.

Additionally, the U.S. biopharma sector is increasingly sourcing innovative assets from China, with over one-third of in-

licensed molecules at major U.S. pharmaceutical companies now originating from Chinese firms. If biopharma companies

increasingly rely on acquiring or in-licensing assets from China instead of looking to innovation developed in the U.S., it could

negatively impact the fundamentals of the U.S. biotech market leading to reduced investment and fewer U.S.-based biotech

companies. Should this occur, demand for domestic lab space could decline.

Tariff Escalation, Trade Disruption, and Financial Market Instability

Beginning in March 2025, the U.S. government implemented a series of trade actions that have reshaped global

economic relations and triggered market volatility, specifically:

• On February 1, 2025, President Trump signed executive orders imposing a 25% tariff on all goods from Mexico and

Canada and a 10% tariff on China.

• On March 3, 2025, the President increased tariffs on all products from China from 10% to 20%. He also implemented

new 25% tariffs on imports from Mexico and Canada.

• On April 2, 2025, the President declared a national emergency to address the U.S. trade deficit and imposed a 10%

universal import tariff on all goods, with higher rates for 57 trading partners. This announcement led to a significant

stock market decline, with the S&P 500 Index, Dow Jones Industrial Average, and the Nasdaq Composite dropping by

approximately 6.0%, 5.5%, and 5.8%, respectively.

• On April 9, 2025, facing a global market meltdown, the President announced a 90-day pause on tariffs for most

countries but raised the tax rate on Chinese imports to 125%. Following the announcement, the S&P 500 Index surged

9.5%. However, on April 10, 2025, U.S. stocks fell as the initial euphoria over the pause on tariffs faded. Subsequently,

on June 12, 2025, the President announced that the 125% tariff would be replaced with a 55% tariff on select Chinese

goods. Pharmaceutical ingredients and critical materials remain partially exempt.

• On April 14, 2025, the U.S. government launched an investigation into pharmaceuticals to justify tariffs that may be

implemented on pharmaceutical products. In 2024, over $200 billion in pharmaceutical products were imported to the

U.S., and it is estimated that U.S. tariffs could add $46 billion in costs to the pharmaceutical industry.

If financial markets continue to be disrupted, we may face the following risks:

• Restricted access to capital. Market instability may hinder our ability to raise capital, including through dispositions,

sales of partial interests, and new debt capital, and could potentially delay our current or future development and

redevelopment projects.

• Rising construction costs. Our general contractors may face difficulty procuring construction materials at reasonable

prices, particularly those subject to tariffs or disrupted supply, which may lead to project delays and/or increased costs.

Rising costs and procurement challenges could significantly impact the yields and delay net operating income

commencement from our current and future development and redevelopment pipeline.

• Risks to tenant operations. Many of our tenants rely on the import and export of materials, components, and/or

specialized equipment. As a result, their products may become prohibitively expensive to manufacture or sell. These

challenges may adversely affect our tenants’ ability to meet their lease obligations or to renew their leases with us.

• Macroeconomic impact. Widespread tariffs, restricted trade, increased market volatility, and reduced investor

confidence may trigger inflationary pressure and elevate the risk of a U.S. recession.

The cost increases that may result from tariffs, trade conflicts, and financial market volatility may significantly impact our

development and redevelopment projects. Elevated material costs may lead to higher overall project budgets and extended

construction timelines or require modifications to project scope to preserve economic feasibility. Any such adjustments may adversely

affect our ability to deliver space on time and within budget, delay occupancy and commencement of rental income, and impact

projected net operating income and yields.

Any of the aforementioned and future developments may adversely affect occupancy rates, rental income, and the value of

our real estate portfolio in several ways. First, regulatory delays and reduced NIH funding may slow the pace of innovation and

company formation, leading to fewer early-stage tenants seeking lab space. Established tenants may face financial strain due to

reduced grant support, drug pricing pressures, and increased operational costs from tariffs, prompting them to downsize, consolidate,

or defer expansion plans. This could result in lower leasing, increased vacancy rates, and downward pressure on rental rates across

our portfolio.

Second, macroeconomic volatility and restricted access to capital markets may impair our ability to fund new developments or

raise new debt or equity capital at favorable terms. Rising construction costs and supply chain disruptions could delay project

completions, reduce development yields, and impact the timing of rental income generation. Additionally, if tenants are unable to absorb

higher operating costs or pass them on to customers, their financial health may deteriorate, increasing the risk of lease defaults or

renegotiations.

Finally, the growing competitiveness of international markets—particularly China’s rapidly expanding biotech sector—may

shift R&D activity abroad, reducing domestic demand for specialized lab infrastructure. If U.S.-based life sciences companies

increasingly rely on foreign innovation or relocate operations to more favorable regulatory or cost environments, the long-term

fundamentals of the U.S. life sciences real estate market could weaken. This may lead to asset devaluation, reduced investor

confidence, and a more challenging environment for sustaining growth and delivering shareholder value.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities

On December 9, 2024, we announced that our Board of Directors authorized a share repurchase program, allowing the

repurchase of shares with an aggregate value up to $500.0 million until December 31, 2025 in the open market, through privately

negotiated transactions, or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the

Exchange Act. During the three months ended June 30, 2025, we did not repurchase any shares of our common stock under the

program. As of June 30, 2025, we had remaining authorization to repurchase shares with an aggregate value up to $241.8 million.