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ImmunoGen (IMGN)
:IMGN
Risk Overview Q1, 2023
Risk Distribution
26% Tech & Innovation
26% Legal & Regulatory
19% Finance & Corporate
16% Production
9% Ability to Sell
5% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
ImmunoGen Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q1, 2023
Main Risk Category
Tech & Innovation
With 11 Risks
Tech & Innovation
With 11 Risks
Number of Disclosed Risks
43
+1
From last reportS&P 500 Average: 32
43
+1
From last reportS&P 500 Average: 32
Recent Changes
1Risks added
0Risks removed
1Risks changed
Since Mar 2023
1Risks added
0Risks removed
1Risks changed
Since Mar 2023
Number of Risk Changed
1
-17
From last reportS&P 500 Average: 4
1
-17
From last reportS&P 500 Average: 4
See the risk highlights of ImmunoGen in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 43
Tech & Innovation
Total Risks: 11/43 (26%)Above Sector Average
Innovation / R&D8 | 18.6%
Innovation / R&D - Risk 1
ELAHERE has received FDA approval as a monotherapy in a limited patient population, and additional successful clinical trials and regulatory approvals may be needed to expand its indications. Such trials may fail, or we may fail to obtain such regulatory approvals, either of which could adversely affect our business and prospects.Innovation / R&D - Risk 2
We have received orphan drug designation for ELAHERE and our product candidates for specified indications; we may seek additional orphan drug designation for additional indications and for our other product candidates. However, we may be unsuccessful in obtaining or may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.ELAHERE has been granted orphan drug designation by the FDA in the United States, and orphan medicinal product status by the EMA in the European Union for the treatment of ovarian cancer. Pivekimab has been granted orphan drug designation by the FDA for the treatment of AML and for the treatment of BPDCN, and by the EMA for the treatment of BPDCN. As part of our business strategy, we may seek orphan drug designation for our other product candidates; however, we may be unsuccessful.
Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drug or biologic for the indication for that time period. Even if we obtain orphan drug exclusivity for a drug, that exclusivity may not effectively protect the designated drug from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve another product that meets the definition of a "same drug" under 21 C.F.R. 316.3 for the same condition if the FDA concludes that the later product is clinically superior by evidence that it is safer, 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 drug 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 the manufacturer is unable to assure sufficient quantity of the drug 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. While we intend to seek additional orphan drug designation for our other product candidates, we may never receive such designations. Even if we receive orphan drug designation, there is no guarantee that we will enjoy the benefits of those designations or obtain orphan drug exclusivity.
Innovation / R&D - Risk 3
Side effects, serious adverse events, or other undesirable properties associated with ELAHERE or our product candidates could delay or halt clinical trials, affect our ability to obtain or maintain regulatory approval, limit the commercial profile reflected in product labeling, or negatively affect market acceptance and commercial sales.The prescribing information for ELAHERE includes a boxed warning related to the risk of severe ocular toxicities, including visual impairment, keratopathy, dry eye, photophobia, eye pain, and uveitis, as well as other warnings and precautions for various toxicities and reactions, including pneumonitis, peripheral neuropathy, and embryo-fetal toxicity. Side effects and toxicities associated with ELAHERE, as well as the warnings, precautions, and requirements listed in the prescribing information, could affect the willingness of physicians to prescribe, and patients to use, ELAHERE and negatively affect market acceptance and commercial sales. Patients receiving ELAHERE may experience serious adverse events in the future, whether the serious adverse events are disclosed in the prescribing information or are newly reported. Further, patients receiving our products with co-morbid diseases not previously studied may experience new or different serious adverse events. Reports of adverse events or new safety concerns involving ELAHERE, including from our ongoing and recently completed trials, could result in the limitation or withdrawal of regulatory approval, implementation of a risk evaluation mitigation strategy or the inclusion of unfavorable information in our product labeling, such as additional boxed warnings, limitations of use, contraindications, and warnings and precautions.
Additionally, undesirable side effects or serious adverse events caused by ELAHERE or our product candidates could cause us or regulatory authorities to interrupt, delay, or halt clinical trials and could result in a restrictive label or the delay, denial, or withdrawal of regulatory approval by the FDA or other comparable foreign regulatory authorities.
Any related drug-side effects or serious adverse events in our clinical trials could affect clinical trial patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims.
If we or others identify undesirable side effects or serious adverse events caused by ELAHERE or any of our product candidates that may receive marketing approval, a number of potentially significant negative consequences could result, including:
- we may suspend or be forced to suspend marketing;- we may be obliged to conduct a product recall or withdrawal;- regulatory authorities may suspend, vary, or withdraw their approvals;- regulatory authorities may order the seizure of product;- regulatory authorities may require additional warnings on the label or a risk evaluation and mitigation strategy (REMS) that could diminish the usage or otherwise limit commercial success;- we may be required to conduct post-approval trials;- we could be sued and held liable for harm caused to patients;- we could be required to pay fines and face other administrative, civil, and criminal penalties; and - our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of ELAHERE or any of our product candidates that may receive marketing approval.
Innovation / R&D - Risk 4
If our product requirements for clinical trials or commercialization are significantly higher than we estimated, the inability to procure additional antibody production, conjugation, or fill/finish services in a timely manner could impair our ability to initiate or advance our clinical trials or commercialization of ELAHERE or our product candidates.We rely on third-party suppliers to manufacture antibodies used in our own proprietary compounds. Due to the specific nature of the antibody and availability of production capacity, there is significant lead time required by these suppliers to provide us with the needed materials. If our antibody requirements for clinical or commercial materials to be manufactured are significantly higher than we estimated, we may not be able to readily procure additional antibody which would impair our ability to advance our clinical trials currently in process or initiate additional trials or commercialize ELAHERE or our product candidates. We also rely on third parties to manufacture bulk drug substance and convert it into filled and finished vials of drug product for clinical use and commercial sales. If our product requirements are significantly higher than we estimated, we may not be able to readily procure slots to manufacture bulk drug substance or to convert drug substance into filled and finished vials of drug product for clinical or commercial use. There can be no assurance that we will not have supply problems that could delay or stop our clinical trials, hinder our commercialization efforts, or otherwise could have a material adverse effect on our business.
Innovation / R&D - Risk 5
Interim, top-line, or preliminary data from our clinical trials that we announce may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.From time to time, we have publicly disclosed, and in the future will disclose, preliminary or top-line data from our preclinical studies and clinical trials, which are based on preliminary analyses of then- available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. Therefore, final results from the trials may differ from the top-line results initially reported, and the final results may indicate different conclusions once additional data have been evaluated. As such, top-line data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the outcomes may materially change as patient enrollment continues and more data become available. Adverse differences between top-line, preliminary, or interim data, on the one hand, and final data, on the other, could significantly harm our business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses, or may interpret or weigh the importance of data differently, which could negatively affect the approvability or commercialization of the particular product.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. If the final results differ from the interim, top-line, or preliminary data, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain or maintain approval for, and to commercialize, ELAHERE or our product candidates may be harmed, which may negatively affect our business, financial condition, results of operations, and prospects.
Innovation / R&D - Risk 6
Clinical trials for ELAHERE, our product candidates, and those of our collaborators will be lengthy and expensive, and their outcome is uncertain.Before we can convert our accelerated approval for ELAHERE to full approval, obtain regulatory approval for ELAHERE in additional indications, or obtain regulatory approval for our product candidates, we must demonstrate through clinical testing that our products are safe and effective for use in humans. Conducting clinical trials is a time-consuming, expensive, and uncertain process and typically requires years to complete. In our industry, the results from preclinical studies and early clinical trials often are not predictive of results obtained in later-stage clinical trials. Some compounds that have shown promising results in preclinical studies or early clinical trials subsequently fail to establish sufficient safety and efficacy data necessary to obtain regulatory approval. For example, despite encouraging results from earlier clinical trials of ELAHERE, our FORWARD I Phase 3 clinical trial evaluating ELAHERE compared to chemotherapy in women with FRa-positive, platinum-resistant ovarian cancer, did not meet the primary endpoint in either the entire treatment population or the pre-specified high FRa expression population. Based on post hoc exploratory analyses of the FORWARD I results and consultations with the FDA, we implemented two new trials of ELAHERE, SORAYA and MIRASOL. We reported positive results from our SORAYA trial, which served as the basis for ELAHERE's accelerated approval, but results from our ongoing MIRASOL trial may not show positive results consistent with our SORAYA trial, which would cause significant harm to our business and future prospects.
Before we can commence clinical trials for a therapeutic candidate, we must conduct extensive preclinical testing and studies and submit an IND to the FDA and foreign regulatory authorities. We cannot be sure that submission of an IND will result in the FDA and/or foreign regulatory authorities allowing our clinical trials to begin on the timelines we expect, if at all, as the FDA and/or foreign regulatory authorities may require additional preclinical, toxicology, or other in vivo or in vitro data to support the IND. Additionally, at any time during the clinical trials, we, our collaborators, or the FDA or other regulatory authority might delay or halt any clinical trials of our products for various reasons, including:
- occurrence of unacceptable toxicities or side effects;- ineffectiveness of the product;- insufficient drug supply, including delays in obtaining supplies/materials necessary for manufacturing such drugs;- negative or inconclusive results from the clinical trials, or results that necessitate additional nonclinical studies or clinical trials;- delays in obtaining or maintaining required approvals from institutions, review boards, or other reviewing entities at clinical sites;- delays in patient enrollment;- insufficient funding or a reprioritization of financial or other resources;- our or our collaborators' inability to develop and obtain approval for any companion in vitro diagnostic devices that the FDA or other regulatory authority may conclude must be used with such drug to ensure its safe use; or - other reasons that are internal to the businesses of our collaborators and third-party suppliers, which they may not share with us.
If we are required by the FDA, or foreign regulatory agencies, to perform studies and clinical trials in addition to those that we currently anticipate, or if there are any delays in our or our partners completing clinical trials or the development of any of ELAHERE or our product candidates, our expenses could increase beyond expectations. Any failure or substantial delay in successfully completing clinical trials and obtaining additional regulatory approvals for ELAHERE or our product candidates could severely harm our business.
Innovation / R&D - Risk 7
If our ADC technology does not produce safe, effective, and commercially viable products or if such products fail to obtain or maintain FDA approval, our business will be severely harmed.Our ADC technology yields novel product candidates for the treatment of cancer. To date, only two ADCs using our technology, KADCYLA and ELAHERE, have obtained marketing approval. Our ADC product candidates and/or those of our collaborators' may not prove to be safe, effective, or commercially viable treatments for cancer and as a result, our ADC technology may not result in any future meaningful benefits to us or for our current or potential collaborators. Furthermore, we are aware of only a limited number of other compounds that are based on technology similar to our ADC technology that have obtained marketing approval by the FDA. If our ADC technology fails to generate additional product candidates that are safe, effective, and commercially viable treatments for cancer or such product candidates fail to obtain or maintain FDA and foreign regulatory authorities approval, our business will be severely harmed.
Innovation / R&D - Risk 8
Our prospects are highly dependent on the success of our only approved product, ELAHERE, which received FDA approval under an accelerated approval pathway. If we are unable to maintain approval for, or successfully commercialize, ELAHERE, our business, financial condition, results of operations, as well as our prospects, could be adversely affected.We obtained FDA approval for ELAHERE for the treatment of adult patients with FRa positive, platinum-resistant epithelial ovarian, fallopian tube, or primary peritoneal cancer, who have received one to three prior systemic treatment regimens. We have not obtained any other marketing approvals for ELAHERE or our product candidates. We first commercialized ELAHERE in the U.S. in the fourth quarter of 2022 and therefore do not have a long history operating as a commercial company.
The FDA approved ELAHERE under the accelerated approval pathway and continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial. Our intent is for our ongoing Phase 3 MIRASOL trial to serve as our confirmatory trial and, if successful, to support full approval of ELAHERE. If the MIRASOL trial is unsuccessful, the FDA could require us to conduct additional trials to remain on the market, could require updates to our label, or could ultimately seek to withdraw marketing approval for ELAHERE. Separate from the confirmatory trial, ELAHERE is subject to additional post-approval requirements and commitments, including post-approval requirements to conduct a randomized clinical trial to evaluate the safety of the recommended dose of ELAHERE and alternative dosing schedules, conduct a dose escalation trial to determine the appropriate starting dose in patients with moderate hepatic impairment, and conduct a clinical trial or revise existing trials to incorporate prospectively scheduled ophthalmologic assessments to characterize the incidence and severity of ocular events and evaluate risk mitigation strategies. We are also subject to other post-approval requirements, including submission to the FDA of all promotional materials 30-120 days prior to their dissemination.
Failure to meet any of our post-approval requirements or commitments may result in adverse regulatory actions. Products that receive accelerated approval may be subject to expedited withdrawal procedures if post-approval trials fail to verify the predicted clinical benefit. The FDA could seek to withdraw accelerated approval for multiple reasons, including if we fail to conduct any required post-approval trial, other evidence shows that the product is not safe or effective under the conditions of use, or we disseminate promotional materials that are found by the FDA to be false or misleading.
Our long-term viability, growth, and ability to generate revenue depend heavily on successfully commercializing and obtaining full regulatory approval for ELAHERE. ELAHERE will be our first commercial launch,and its successful commercialization and our receipt of full regulatory approval in the United States are subject to many risks.
Trade Secrets2 | 4.7%
Trade Secrets - Risk 1
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights held by third parties and we may be unable to protect our rights to, or to commercialize, ELAHERE or our product candidates.Trade Secrets - Risk 2
If we are unable to protect our intellectual property rights adequately, the value of our technology, ELAHERE, and our product candidates could be diminished.Our success depends in part on obtaining, maintaining, and enforcing our patents and other proprietary rights and our ability to avoid infringing the proprietary rights of others. We seek to protect our proprietary position by filing patent applications in the United States and in foreign countries that cover ELAHERE, our other novel product candidates and their uses, pharmaceutical formulations and dosages, and processes for the manufacture of them. Our patent portfolio currently includes both patents and patent applications. Patent law relating to the scope of claims in the biotechnology field in which we operate is still evolving, is surrounded by a great deal of uncertainty, and involves complex legal, scientific, and factual questions. To date, no consistent policy has emerged regarding the breadth of claims allowed in biotechnology patents. Accordingly, our pending patent applications may not result in issued patents or in patent claims as broad as in the original applications. Although we own numerous patents, the issuance of a patent is not conclusive as to its validity or enforceability. Through litigation, a third party may challenge the validity or enforceability of a patent after its issuance. In addition, the patent prosecution process is expensive and time-consuming. We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope. It is also possible that we will fail to identify patentable aspects of our research and development before it is too late to obtain patent protection.
Following approval of ELAHERE in the U.S., we timely filed five applications for patent term extension. If one or more of the applications for patent term extension are deemed to be allowable by the U.S. Patent and Trademark Office, we will be able to designate one to proceed to grant, and thereby extend the term of one U.S. patent covering ELAHERE. Even if an extension is granted, any such extension may be shorter than what we seek or may otherwise fail to provide meaningful protection for ELAHERE.
Patents and patent applications owned or licensed by us may become the subject of inter partes review, post-grant review, ex parte reexamination, interference, opposition, nullity, or other proceedings in a court or patent office in the United States or in a foreign jurisdiction to determine validity, enforceability, patentability, or priority of invention, which could result in substantial cost to us. An adverse decision in such a proceeding may result in our inability to gain issuance of a patent from a pending patent application or our loss of rights under a patent or patent application. It is unclear how much protection, if any, will result from our patents if we attempt to enforce them or if they are challenged in court or in other proceedings. A competitor may successfully invalidate our patents, or a challenge could result in limitations of the patents' coverage. The courts continue to interpret various aspects of patent-related laws and related agency rules in ways that we cannot predict, potentially making it easier for competitors and other interested parties to challenge our patents, which, if successful, could have a material adverse effect on our business and prospects. In addition, the cost of litigation or patent office proceedings to uphold the validity of patents can be substantial. If we are unsuccessful in these proceedings, third parties may be able to use our patented technology and may be able to do so without paying us licensing fees or royalties. Moreover, competitors may infringe our patents or successfully avoid them through design innovation. To prevent infringement or unauthorized use, we may need to file infringement claims, which are expensive and time-consuming. In an infringement proceeding, a court may decide that a patent of ours is not valid. Even if the validity of our patents were upheld, a court may refuse to stop the other party from using the technology at issue on the ground that its activities are not covered by our patents or that the facts surrounding the other party's use of our technology do not satisfy the legal requirements to grant such an injunction.
Policing unauthorized use of our intellectual property is difficult, and we may not be able to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.
In addition to our patent rights, we also rely on unpatented technology, trade secrets, know-how, and confidential information. Third parties may independently develop substantially equivalent information and techniques or otherwise gain access to or disclose our technology. We may not be able to effectively protect our rights in unpatented technology, trade secrets, know-how, and confidential information. We require each of our employees, consultants, and corporate partners to execute a confidentiality agreement at the commencement of an employment, consulting, or collaborative relationship with us. Further, we require that all employees enter into assignment of invention agreements as a condition of employment. However, these agreements may not provide effective protection of our information, or, in the event of unauthorized use or disclosure, they may not provide adequate remedies. If we are unable to prevent material disclosure of the trade secrets and other intellectual property related to our technologies to third parties, we may not be able to establish or maintain the competitive advantage that we believe is provided by such intellectual property, adversely affecting our market position and business and operational results.
Technology1 | 2.3%
Technology - Risk 1
Our business and operations could suffer in the event of system failures.Legal & Regulatory
Total Risks: 11/43 (26%)Above Sector Average
Regulation7 | 16.3%
Regulation - Risk 1
As our business grows, we will become increasingly subject to additional healthcare regulation and enforcement by various government entities, and our failure to strictly adhere to these regulatory regimes could have a detrimental impact on our business.Regulation - Risk 2
Healthcare reform initiatives and other legislative action applicable to our product candidates could limit our potential product revenue.In the U.S., federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, health care, which include initiatives to reduce the cost of healthcare generally and drugs specifically. For example, in March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the "ACA"), which expanded health care coverage through Medicaid expansion and the implementation of the individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of drug products under government healthcare programs. Since its enactment, there have been and likely will be judicial, administrative, executive, and legislative challenges to certain aspects of the ACA. For example, tax reform legislation was enacted at the end of 2017 that eliminates the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019 (the so-called "individual mandate"). In 2021, the U.S. Supreme Court dismissed the latest judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Changes resulting from any successful challenges or other future modifications may have a material impact on our business.
Beyond the ACA, there are ongoing and widespread health care reform efforts, a number of which have focused on regulation of prices or payment for drug products. Drug pricing and payment reform was a focus of the Trump Administration and has been a focus of the Biden Administration. For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024. As another example, the Inflation Reduction Act (IRA) of 2022 contains various drug price negotiation, inflationary rebate, and pricing provisions. Among other provisions, the IRA imposes penalties if drug prices are increased at a rate faster than inflation, redesigns Medicare Part D benefits to shift a greater portion of the costs to manufacturers, and allows for the U.S. government to set prices for certain drugs in Medicare. More specifically, the IRA creates a drug price negotiation program under which the prices for Medicare units of certain high Medicare spend drugs and biologicals without generic or biosimilar competition will be limited by a cap that is defined by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026 for certain products. It is not yet clear which products the government will select and subject to the cap, but if one of our products is subject to the government-established price, there could be a significant impact to our business. Further, failure to comply with requirements under the drug price negotiation program can result in an excise tax and/or a civil monetary penalty. The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as the federal government has yet to make various IRA implementation decisions. This or any other legislative change could affect the market conditions for our products. We expect continued scrutiny on drug pricing and government price reporting from Congress, agencies, and other bodies.
Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price constraints, restrictions on copayment assistance by pharmaceutical manufacturers, value-based pricing, marketing cost disclosure and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.
Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge. For example, revisions to regulations under the federal anti-kickback statute would remove protection for traditional Medicare Part D discounts offered by pharmaceutical manufacturers to pharmacy benefit managers and health plans. Pursuant to court order, the removal was delayed, and the IRA further delayed implementation of the rule until January 1, 2032.
Health care reform at the federal or state level could affect demand for, or pricing of, our product candidates if approved for sale. We cannot, however, predict the ultimate content, timing, or effect of any federal and state reform efforts. There is no assurance that federal or state health care reform will not adversely affect our future business and financial results.
In addition, other broader legislative changes have been adopted that could have an adverse effect upon, and could prevent, our products' commercial success. For example, the Budget Control Act of 2011, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and remains in effect through 2031 (except May 1, 2020 to March 31, 2022) unless additional Congressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.
Regulation - Risk 3
Government pricing requirements, such as those under the Medicaid Drug Rebate Program, other federal government programs, and state price transparency laws, and their related reporting and payment obligations require strict adherence; our failure to adhere to such requirements could subject us to penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.We participate in the Medicaid Drug Rebate Program, the 340B program, the U.S. Department of Veterans Affairs, Federal Supply Schedule, or FSS, pricing program, and the Tricare Retail Pharmacy program, and have obligations to report the average sales price for certain drug products to the Medicare program. Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies, and the courts, which can change and evolve over time. Requirements are subject to change. For example, as of January 1, 2022, all manufacturers must report the average sales price for drugs under the Medicare program regardless of whether they are enrolled in the Medicaid Drug Rebate Program.
If we become aware that our reporting for a prior quarter or other time period was incorrect or has changed as a result of recalculation of pricing data, we generally are obligated to resubmit the corrected data and provide refunds or other reconciliations. Price recalculations may affect the ceiling price at which we are required to offer our products to certain customers under the 340B program and increase our general costs.
Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged certain customers more than the statutorily mandated ceiling price. The Centers for Medicare & Medicaid Services, or CMS, also could decide to terminate our Medicaid Drug Rebate agreement. Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental programs could negatively impact our financial results.
Several states have passed or are considering legislation that requires or purports to require companies to report pricing information, including proprietary pricing information. Such reporting requirements are not always clearly defined and failure to appropriately disclose in accordance with these requirements may lead to the imposition of penalties.
Regulation - Risk 4
We may never receive approval to commercialize ELAHERE or our product candidates outside of the U.S.We are not permitted to market or sell ELAHERE in the EU or in any other foreign countries on a commercial basis until we receive the requisite approval from such country's regulatory authorities. Obtaining and maintaining marketing approval, or pricing and reimbursement approval, of ELAHERE or our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain equivalent approvals in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. The process for obtaining marketing approval in a foreign country is an extensive, lengthy, expensive, and uncertain process and the regulatory authority may reject a filing or delay, limit, or deny marketing approval for many reasons. In many jurisdictions outside the United States, a product must be approved for reimbursement before it can be approved for sale. Failure to obtain marketing approval in other countries or any delay or setback in obtaining such approval would impair our ability to develop foreign markets for ELAHERE and could adversely affect our business and financial condition. Any such complications may reduce our target market and delay or limit the full commercial potential of ELAHERE.
Regulation - Risk 5
Failure to comply with the Foreign Corrupt Practices Act and other similar anti-corruption laws and anti-money laundering laws, as well as export control laws, customs laws, sanctions laws, and other laws governing our operations could subject us to significant penalties and damage our reputation.We are subject to the Foreign Corrupt Practices Act (FCPA), which generally prohibits U.S. companies and intermediaries acting on their behalf from offering or making payments to "foreign officials" for the purpose of obtaining or retaining business or securing an improper business advantage. The FCPA also requires companies whose securities are publicly listed in the United States to maintain accurate books and records and to maintain adequate internal accounting controls. We are also subject to other similar anti-corruption laws and anti-money laundering laws, as well as export control laws, customs laws, sanctions laws, and other laws that apply to our activities in the countries where we operate. Certain of the jurisdictions in which we conduct or expect to conduct business have heightened risks for public corruption, extortion, bribery, pay-offs, theft, and other fraudulent practices. In many countries, health care professionals who serve as investigators in our clinical trials or may prescribe or purchase ELAHERE or any of our product candidates if they are approved, are employed by a government or an entity owned or controlled by a government. Dealings with these investigators, prescribers, and purchasers are subject to regulation under the FCPA. Under these laws and regulations, as well as other anti-corruption laws, anti-money-laundering laws, export control laws, customs laws, sanctions laws, and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties, and other sanctions.
Regulation - Risk 6
We remain subject to ongoing regulatory requirements and review. If we or our collaborators fail to comply with regulations applicable to approved products, these approvals could be lost and the sale of our or our collaborators' products could be suspended.ELAHERE and any of our product candidates that may receive marketing approval will continue to be subject to extensive regulatory requirements related to product manufacturing, labeling, packaging, storage, record-keeping, advertising, promotion, registration and listing, and reporting of adverse events and other post-market information. The approval of a product could be conditioned on us or our collaborators conducting costly post-approval trials or could limit the indicated uses included in product labeling. Moreover, the product may later cause adverse effects that limit or prevent its widespread use, force us or our collaborators to withdraw it from the market, or impede or delay our or our collaborators' ability to obtain regulatory approvals in additional countries. In addition, the manufacturer of the product and its facilities will continue to be subject to regulatory review and periodic inspections to ensure adherence to applicable regulations. We may be unable or slow to comply with existing regulations, including changes in existing regulatory requirements, or new regulations. Furthermore, our collaborators may be slow to adapt, or may never adapt,to changes in existing regulatory requirements or adoption of new regulatory requirements pertaining to products that have already received approval.
The FDA closely regulates the post-approval marketing and promotion of drugs and biologics to ensure they are marketed only for the approved indications and in accordance with the provisions of the approved labeling. If we market our products outside of their approved indications, we may be subject to enforcement action for off-label promotion. Violations of the FDA's restrictions relating to the promotion of prescription drugs may also lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
If we or our collaborators fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or if previously unknown problems with our or our partners' products, manufacturers, or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions, including:
- restrictions on the products, manufacturers, or manufacturing processes;- warning or untitled letters;- civil or criminal penalties;- fines;- injunctions;- product seizures or detentions;- import bans;- voluntary or mandatory product recalls and publicity requirements;- suspension or withdrawal of regulatory approvals;- total or partial suspension of production; and - refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications.
Any one of these could have a material adverse effect on our business or financial condition.
Regulation - Risk 7
We and our collaborators are subject to extensive government regulations and we and our collaborators may not be able to obtain or maintain necessary regulatory approvals.We and our collaborators may not obtain or maintain the regulatory approvals necessary to commercialize our product candidates, which would cause our business to be severely harmed. Pharmaceutical products, including ELAHERE and our product candidates, are subject to extensive and rigorous government regulation. The FDA regulates, among other things, the development, testing, manufacture, safety, record-keeping, labeling, storage, approval, advertising, promotion, sale, and distribution of pharmaceutical products. If ELAHERE or our product candidates are marketed outside of the United States, they will also be subject to extensive regulation by foreign governments. The regulatory review and approval process, which includes preclinical studies and clinical trials of each product, is lengthy, complex, expensive, and uncertain. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the authorities for each indication to establish the product's safety and efficacy. Data obtained from preclinical and other nonclinical studies and clinical trials are susceptible to varying interpretation, which may delay, limit, or prevent regulatory approval. The approval process may take many years to complete and may involve ongoing requirements for post-approval trials. The FDA may approve our product candidate for indications that are significantly more limited than what we apply for or require labeling statements that limit the use of our products, such as a boxed warning or warnings, contra-indications, or precaution statements. The FDA may also require a REMS, which could include physician communication plans or restricted distribution methods, such as training, certification, or other requirements for prescribers, pharmacies, or patients. Any FDA or other regulatory approvals, once obtained, may be withdrawn or limited. Any of these actions could diminish the usage of the product or otherwise limit the commercial success of our product candidates. The effect of government regulation may be to:
- delay marketing of product candidates for a considerable period of time;- limit the indicated uses for which product candidates may be marketed;- impose costly requirements on our activities; and - place us at a competitive disadvantage to other pharmaceutical and biotechnology companies.
We may encounter delays or rejections in the regulatory approval process because of additional government regulation from future legislation or administrative action or changes in regulatory policy during the period of product development, clinical trials, and regulatory review. Failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or injunction, as well as other regulatory action against our products or us. In addition, we are, or may become, subject to various federal, state, and local laws, regulations, and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals, and the use and disposal of hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research work. If we fail to comply with the laws and regulations pertaining to our business, we may be subject to sanctions, including the temporary or permanent suspension of operations, product recalls, marketing restrictions, and civil and criminal penalties.
Litigation & Legal Liabilities1 | 2.3%
Litigation & Legal Liabilities - Risk 1
We face product liability risks and may not be able to obtain adequate insurance.Taxation & Government Incentives1 | 2.3%
Taxation & Government Incentives - Risk 1
Inadequate funding for the FDA, the Securities and Exchange Commission, and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions, which could negatively affect our business.Environmental / Social2 | 4.7%
Environmental / Social - Risk 1
We may be subject to, or may in the future become subject to, U.S. federal and state and foreign laws and regulations imposing obligations on how we collect, use, disclose, store, and process personal information. Our actual or perceived failure to comply with such obligations could result in liability or reputational harm and adversely affect our business. Ensuring compliance with such laws and regulations could also impair our efforts to maintain and expand our customer base, and thereby decrease our revenue.Environmental / Social - Risk 2
If we fail to comply with environmental, health, and safety laws and regulations that apply to us, we could become subject to fines or penalties or incur costs that could harm our business.We are subject to numerous federal, state, and local environmental, health, and safety laws and regulations, including those governing the manufacture and transportation of hazardous materials and pharmaceutical compounds. Although we believe that our contracted research, development, and manufacturing safety procedures for handling and disposing of these materials comply with the standards prescribed by applicable laws and regulations, we cannot completely eliminate the risk of accidental contamination or injury from these materials. In the event of such an accident, we could be held liable for any resulting damages, and any liability could exceed our resources. We may be required to incur significant costs to comply with these laws in the future, including civil or criminal fines and penalties, which we may not be able to afford.
In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations applicable to us. These current or future laws and regulations may impair our research, development, or production efforts or impact the research activities we pursue, particularly with respect to research involving human subjects or animal testing. Our failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions, which could cause our financial condition to suffer.
Finance & Corporate
Total Risks: 8/43 (19%)Above Sector Average
Share Price & Shareholder Rights2 | 4.7%
Share Price & Shareholder Rights - Risk 1
Our stock price may be volatile and fluctuate significantly and results announced by us and our collaborators or competitors could cause our stock price to decline.Share Price & Shareholder Rights - Risk 2
The potential sale of additional shares of our common stock may cause our stock price to decline.We may seek additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans through a variety of means, including through private and public equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest of existing shareholders will be diluted, and the price of our stock may decline. The price of our common stock may also decline if the market expects us to raise additional capital through the sale of equity or convertible debt securities whether or not we actually plan to do so.
Accounting & Financial Operations3 | 7.0%
Accounting & Financial Operations - Risk 1
We do not intend to declare or pay cash dividends on our common stock in the foreseeable future.Accounting & Financial Operations - Risk 2
We have a history of operating losses, expect to incur significant additional operating losses, and may never be profitable.We have generated operating losses since our inception. As of December 31, 2022, we had an accumulated deficit of $1.7 billion. We may never be profitable. We expect to incur substantial additional operating losses for at least the near term as our development, preclinical testing, clinical trials, and commercialization of ELAHERE continue. We intend to continue to invest significantly in ELAHERE and our product candidates. We may encounter technological, regulatory, or marketing difficulties as part of this development and commercialization process that we cannot overcome or remedy. Our revenues to date have been primarily from upfront and milestone payments, research and development support, clinical materials reimbursement from our collaborators, and from royalties received from the commercial sales of KADCYLA (to which we have sold our cash rights). We received approval of our first product, ELAHERE, in the fourth quarter of 2022, and have started generating revenue from product sales. Because of the numerous risks and uncertainties associated with developing and commercializing pharmaceutical drugs, we are unable to predict the extent of any future losses or when we will become profitable, if at all. In addition, our expenses could increase beyond expectations as we expand our commercial activities for ELAHERE and continue our ongoing trials with ELAHERE and our product candidates. Even with the approval and commercialization of ELAHERE, we will need to generate significant revenues from ELAHERE to achieve and maintain profitability. Even if we do become profitable, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our development efforts, expand our business, or continue our operations and may require us to raise additional capital that would dilute your ownership interest. A decline in the value of our company could also cause you to lose all or part of your investment.
Accounting & Financial Operations - Risk 3
Our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income may be limited.Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an "ownership change," is subject to limitations on its ability to use its pre-change net operating loss carryforwards (NOLs), and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes. For these purposes, an ownership change generally occurs where the equity ownership of one or more shareholders or groups of shareholders who own at least 5% of a corporation's stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period. We may have experienced such ownership changes in the past, and we may experience shifts in our stock ownership, some of which are outside our control. These ownership changes may subject our existing NOLs or credits to substantial limitations under Sections 382 and 383. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. As of December 31, 2022, we had federal NOLs of $443.3 million available to reduce federal taxable income, if any, that can be carried forward indefinitely. As of December 31, 2022, we also had $85.6 million of federal credit carryforwards that will begin to expire in 2027. Limitations on our ability to utilize those NOLs to offset U.S. federal taxable income could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Debt & Financing2 | 4.7%
Debt & Financing - Risk 1
If we are unable to obtain additional funding when needed, we may have to delay or scale back some of our programs or grant rights to third parties to develop and market ELAHERE or our product candidates.Debt & Financing - Risk 2
We have outstanding indebtedness in the form of a term loan and may incur additional indebtedness in the future, which could adversely affect our financial position and prevent us from implementing our business strategy.Added
In April 2023, we entered into a loan agreement with certain funds managed by Pharmakon Advisors, LP, which provides for a term loan facility for up to $175.0 million. The loan agreement contains customary affirmative and negative covenants for this transaction type, including certain restrictions on the ability to incur indebtedness and grant liens or security interests on assets, which could impose significant restrictions on our ability to operate and engage in acts that may be in our long-term best interest. The term loan is also secured by a perfected security interest on substantially all of the Company's assets, excluding certain products and related intellectual property and contracts that are not related to ELAHERE. A breach of any of the covenants or clauses under the loan agreement could result in a default under the loan agreement, which could cause all of the outstanding indebtedness under the facility to become immediately due and payable. In addition, if we are unable to pay our obligations under the loan agreement, the lenders could proceed against the collateral granted to them, which could restrict our ability to commercialize ELAHERE and adversely affect our business and results of operations. Our ability to pay principal or interest on the loan agreement depends on our future performance, which is subject to economic, financial, competitive, and other factors, some of which are beyond our control. Our business may not generate cash flow from operations in the future sufficient to satisfy any obligations under the loan agreement or under any future indebtedness we may incur. If we are unable to generate such cash flow, we may be required to delay, restrict, or eliminate all or a portion of our development programs or commercialization efforts or obtain additional financing on terms that may be onerous or highly dilutive. If we do not meet our debt obligations, it could materially adversely affect our business and results of operations.
Corporate Activity and Growth1 | 2.3%
Corporate Activity and Growth - Risk 1
There is substantial doubt about our ability to continue as a going concern.Production
Total Risks: 7/43 (16%)Above Sector Average
Employment / Personnel2 | 4.7%
Employment / Personnel - Risk 1
Our employees, independent contractors, principal investigators, CROs, consultants, and collaborators may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.Employment / Personnel - Risk 2
We depend on our key personnel, and we must continue to attract and retain key employees and consultants.We depend on our key scientific and management personnel. Our ability to pursue the development and commercialization of ELAHERE and our product candidates depends largely on retaining the services of our existing personnel and hiring additional qualified personnel to perform research, development, and commercialization activities. Although we have entered into employment agreements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain "key person" insurance for any of our executives or other employees. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. Attracting and retaining qualified personnel will be critical to our success. We may not be able to attract and retain personnel, or, in the event key personnel leave, suitable replacements for such personnel, on acceptable terms given the competition for such personnel among biotechnology, pharmaceutical, and healthcare companies, universities, and non-profit research institutions. Failure to retain our existing key management and scientific personnel or to attract additional highly qualified personnel could harm our business.
Supply Chain5 | 11.6%
Supply Chain - Risk 1
We rely on a third-party to develop, manufacture, and commercialize the companion diagnostic for ELAHERE, and any delay or interruption in supply could negatively impact our commercial activities.Supply Chain - Risk 2
We currently rely on, and expect to continue to rely on, third-party manufacturers to produce our antibodies, linkers, payloads, drug substance, and drug product for ELAHERE and our product candidates and any delay or interruption in such manufacturers' operations could impair our ability to advance clinical trials and commercialization.We rely on third-party contract manufacturers to produce sufficiently large quantities of drug materials that are and will be needed for clinical trials and commercialization of ELAHERE and our product candidates. We have established relationships with third-party manufacturers to provide clinical and commercial supply, but these third-party manufacturers may not be able to meet our needs with respect to timing, quantity, or quality of materials. If we are unable to contract for a sufficient supply of needed materials on acceptable terms, or if we should encounter delays or difficulties in our relationships with manufacturers, our ability to commercialize ELAHERE may be adversely affected. Additionally, our clinical trials may be delayed, thereby delaying the submission of applications for regulatory approval and the market introduction and subsequent commercialization of our product candidates. Any such delays may lower our revenues and potential profitability.
The facilities used to manufacture ELAHERE and our product candidates (drug substance and drug product) are subject to periodic inspection by the FDA and similar regulatory authorities. These facilities generally must be inspected by the FDA (and other similar regulatory agencies outside the United States depending on where marketing authorizations are filed) before marketing authorizations are approved. In the United States, if we want to change manufacturers or add additional manufacturers following product approval, the FDA must approve the use of these manufacturers through a supplemental BLA. We are completely dependent on our contract manufacturers for compliance with cGMPs in connection with the manufacture of ELAHERE and our product candidates. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the regulatory requirements of the FDA or others, we will not be able to use the products produced at their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance, and qualified personnel. If the FDA or a comparable foreign regulatory authority finds that these facilities do not comply with cGMP, we may need to find alternative manufacturing facilities, which would significantly impact our ability to successfully develop and commercialize ELAHERE and our product candidates and could result in inventory write-offs that adversely affect our results of operations. Further, our failure, or the failure of our third-party manufacturers, to comply with these or other applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of ELAHERE or our product candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our business and product supplies.
Supply Chain - Risk 3
We are currently contractually required to obtain DM4 used in ELAHERE from a single third-party manufacturer, and any delay or interruption in such manufacturer's operations could impair our ability to advance preclinical and clinical trials and commercialization of ELAHERE.We rely on a sole third-party supplier, Società Italiana Corticosteroidi S.r.l, to manufacture the DM4 used in ELAHERE. Any delay or interruption in the operations of our sole third-party supplier and/or our supply of DM4 could lead to a delay or interruption in our manufacturing operations, preclinical studies, clinical trials, and commercialization of ELAHERE, which could negatively affect our business.
Supply Chain - Risk 4
If our collaborators fail to perform their obligations under our agreements with them or determine not to continue with clinical trials, our business could be severely affected.The development and commercialization of ELAHERE and our product candidates depends, in part, upon the formation and maintenance of collaborative arrangements. Collaborations provide an opportunity for us to:
- generate cash flow and revenue;- fund some of the costs associated with our internal research and development, preclinical testing, clinical trials, and manufacturing;- seek and obtain regulatory approvals faster than we could on our own;- successfully commercialize ELAHERE and our product candidates; and - secure access to targets which, due to intellectual property restrictions, would otherwise be unavailable to our technology.
If we fail to secure or maintain successful collaborative arrangements, the development and marketing of compounds that use our technology may be delayed, scaled back, or otherwise may not occur. In addition, we may be unable to negotiate other collaborative arrangements or, if necessary, modify our existing arrangements on acceptable terms. We cannot control the amount and timing of resources our collaborators may devote to ELAHERE or our product candidates. Our collaborators may separately pursue competing product candidates, therapeutic approaches, or technologies to develop treatments for the diseases targeted by us or our collaborative efforts, or may decide, for reasons that may not be known to us or with which we may disagree, to discontinue development of our products under our agreements with them. Any of our collaborators may slow or discontinue the development of a product covered by a collaborative arrangement for reasons that include, but are not limited to:
- a change in the collaborative partner's strategic focus as a result of merger, management changes, adverse business events, or other causes;- a change in the priority of the product relative to other programs in the collaborator's pipeline;- a reassessment of the patent situation related to the compound or its target;- a change in the anticipated competition for the product candidate;- preclinical studies and clinical trial results; and - a reduction in the financial resources the collaborator can or is willing to apply to the development of new compounds.
Even if our collaborators continue their collaborative arrangements with us, they may nevertheless determine not to actively pursue the development or commercialization of any resulting product candidates. Also, our collaborators may fail to perform their obligations under the collaborative agreements or may be slow in performing their obligations. Our collaborators can terminate our collaborative agreements under certain conditions. The decision to advance a product candidate that is covered by a collaborative agreement through clinical trials and ultimately to commercialization is, in some cases, at the discretion of our collaborators. If any collaborative partner were to terminate or breach our agreements, fail to complete its obligations to us in a timely manner, or decide to discontinue its development of a product candidate, our anticipated revenue from the agreement and the development and commercialization of the product candidates could be severely limited or eliminated. If we are not able to establish additional collaborations or any or all of our existing collaborations are terminated and we are not able to enter into alternative collaborations on acceptable terms, or at all, our continued development, manufacture, and commercialization of our product candidates could be delayed or scaled back as we may not have the funds or capability to continue these activities. If our collaborators fail to successfully develop and commercialize ADC compounds, our business prospects could be harmed.
Supply Chain - Risk 5
Any inability to license proprietary technologies or processes from third parties that we use in connection with the development and manufacture of ELAHERE or our product candidates may impair our business.Other companies, universities, and research institutions have or may obtain patents that could limit our ability to use, manufacture, market, or sell ELAHERE or our product candidates or impair our competitive position. As a result, we would have to obtain licenses from other parties before we could continue using, manufacturing, marketing, or selling ELAHERE or our potential candidates. Any necessary licenses may not be available on commercially acceptable terms, if at all. If we do not obtain the required licenses, we may not be able to market our products at all or we may encounter significant delays in product development while we redesign products or methods that are found to infringe the patents held by others.
Ability to Sell
Total Risks: 4/43 (9%)Above Sector Average
Competition1 | 2.3%
Competition - Risk 1
We may be unable to compete successfully.Sales & Marketing3 | 7.0%
Sales & Marketing - Risk 1
If ELAHERE or our product candidates or those of our collaborators do not gain market acceptance, our business will suffer.Sales & Marketing - Risk 2
We currently do not have the direct sales, marketing, or distribution capabilities necessary to successfully commercialize our products on a global scale and may rely on third parties to support development and commercialization activities.We are commercializing ELAHERE in the United States and currently intend to commercialize ELAHERE in the European Union and UK if we receive marketing approval in these territories. We may choose to rely on third parties to market and sell ELAHERE outside of the United States, the European Union, and the UK, either through distributor or out-licensing arrangements. For example, in October 2020, we entered into a collaboration and license agreement with Huadong under which Huadong will exclusively develop and commercialize ELAHERE in Greater China. We retain all rights to ELAHERE in the rest of the world. In addition, arrangements with third parties to develop and commercialize ELAHERE or other future products could significantly limit the revenues we derive from these compounds, and these third parties, including Huadong, may fail to commercialize our compounds successfully.
Sales & Marketing - Risk 3
Adequate coverage and reimbursement from third-party payors may not be available for our products and we may be unable to successfully contract for coverage from third-party payors; conversely, to secure coverage from third-party payors, we may be required to pay rebates or other discounts; and we may confront other restrictions to reimbursement, any of which could diminish our sales or adversely affect our ability to sell our products profitably.Our ability to successfully commercialize and achieve market acceptance of our products depends in significant part on adequate financial coverage and reimbursement from third-party payors, including government healthcare programs, such as the Medicare and Medicaid programs within the U.S., and private entities, such as managed care organizations and private health insurers. Moreover, a third-party payor's decision to provide coverage for a product does not mean that an adequate reimbursement rate will be approved. We may be required to provide discounts or rebates to certain purchasers to obtain coverage under federal healthcare programs, or to sell products to government purchasers. Adequate third-party reimbursement may not be available to enable us to maintain net price levels sufficient to realize an appropriate return on our investment in product development. Additionally, coverage and reimbursement for drug products can differ significantly from payor to payor. One third-party payor's decision to cover a particular drug product or service does not ensure that other payors will also provide coverage for the medical product or service or will provide coverage at an adequate reimbursement rate. The demand for, and the profitability of, our products could be materially harmed if state Medicaid programs, the Medicare program, other government healthcare programs, or third-party commercial payors deny reimbursement for our products, limit the indications for which our products will be reimbursed, or provide reimbursement only on unfavorable terms.
Third-party payors are increasingly challenging the price and examining the cost-effectiveness of new products and services in addition to their safety and efficacy. To obtain or maintain coverage and reimbursement for any approved drug product, we may need to collect real-world evidence and conduct pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of our product. These studies will be in addition to the studies required to obtain or maintain regulatory approvals. If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product or, if they do, the level of payment may not be sufficient to allow sale of a product at a profit. Thus, obtaining and maintaining reimbursement status is complex and costly.
As part of the overall trend toward cost containment, third-party payors, directly or through pharmacy benefit managers, or PBMs, may seek to restrict coverage or control utilization of certain drug products. Third-party PBMs and third-party payors can limit coverage to specific products on an approved list, or formulary, which might not include all of the approved products for a particular indication and can exclude drugs from their formularies in favor of competitor drugs or alternative treatments. We cannot guarantee that we will be able to agree to coverage terms with all PBMs and third-party payors. Payors could decide to exclude our products from formulary coverage lists, impose step edits that require patients to try alternative, including generic, treatments before authorizing payment for our products, limit the types of diagnoses for which coverage will be provided, require pre-approval (known as "prior authorization") for coverage of a prescription for each patient (to allow the payor to assess medical necessity) or impose a moratorium on coverage for products while the payor makes a coverage decision. An inability to maintain adequate access, including through formulary positions, could increase patient cost-sharing for our products and cause some patients to determine not to use our products.
Healthcare reform efforts, future legislation, and regulatory actions aimed at reducing healthcare costs could impact our ability to obtain or maintain coverage and adequate reimbursement. This could materially harm our business and financial result. See "Regulatory Matters - Reimbursement". See also, "Risks Related to Government Regulation - Healthcare reform initiatives and other legislative action applicable to our product candidates could limit our potential product revenue."
Macro & Political
Total Risks: 2/43 (5%)Above Sector Average
Economy & Political Environment1 | 2.3%
Economy & Political Environment - Risk 1
Unfavorable global economic conditions, as well as regional conflicts, could adversely affect our business, financial condition, and results of operations.Changed
Natural and Human Disruptions1 | 2.3%
Natural and Human Disruptions - Risk 1
A pandemic, epidemic, or outbreak of an infectious disease, such as the COVID-19 pandemic, may materially and adversely affect our business and our financial results.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.