AbCellera Biologics (ABCL) risk factors, FY2024 10-K

Risks Related to Our Financial Position and Need for Additional Capital

1. 01We have incurred losses in certain years since inception, including in 2024, and we may not be able to generate sufficient revenue to achieve profitability
2. 02Our success depends on our ability to develop and monetize a therapeutic, either on our own or where we have significant participation. If or until either of those events occur, we do not anticipate being able to generate sufficient revenue to achieve profitability
3. 03Our revenue has fluctuated from period to period, and our revenue for any historical period may not be indicative of results that may be expected for any future period
4. 04Our quarterly and annual operating results have fluctuated significantly in the past and may fluctuate significantly in the future, making it difficult to predict our future operating results and could cause our operating results to fall below expectations
5. 05Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and share price

Risks Related to our Business and the Development and Commercialization of Our Product Candidates

1. 06Our commercial success depends on the quality of our antibody discovery and development capabilities, technological capabilities, the advancement of internal programs, and their acceptance by new and existing partners in our industry
2. 07Failure to execute our business strategy could adversely impact our growth and profitability
3. 08We allocate our resources to pursue a particular development candidate or indication and, as a result, may fail to capitalize on other development candidates or indications that may be more profitable or for which there is a greater likelihood of success
4. 09be no assurance that our partnerships will successfully develop, secure marketing approvals for and commercialize any therapeutics based on the antibodies that we discover. As a result, we may not realize the intended benefits of our partnerships
5. 10The failure of our partners to meet their contractual obligations to us could adversely affect our business
6. 11Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their contractual obligations to us, which may have a material adverse effect on our business, financial condition and results of operations
7. 12Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common shares to decline
8. 13We may not be able to file applications or amendments to commence additional clinical trials on the timelines we expect, and even if we are able to, the regulatory body may not permit us to proceed
9. 14We have no marketed proprietary products and have not yet independently started clinical development, which makes it difficult to assess our ability to independently develop future product candidates and monetize any resulting products
10. 15We have a limited number of product candidates, all which are still in preclinical development. If we do not obtain regulatory approval of one or more of our product candidates, or experience significant delays in doing so, our business will be materially adversely affected
11. 16clinical testing and receive approval of any regulatory filing for our product candidates, the regulatory authority may approve our product candidates for a more limited indication or a narrower patient population than we originally requested
12. 17If clinical trials for our product candidates are prolonged, delayed or stopped, we may be unable to obtain regulatory approval and commercialize our product candidates on a timely basis, or at all, which would require us to incur additional costs and delay our receipt of any product revenue
13. 18later-stage clinical trials, particularly because early trials have smaller numbers of subjects tested. In addition, it is not uncommon for product candidates to exhibit unforeseen safety or efficacy issues, such as immunogenicity, when tested in humans despite promising results in preclinical animal models
14. 19Any failure or significant delay in commencing or completing clinical trials for our product candidates would adversely affect our ability to obtain regulatory approval, and our commercial prospects and ability to generate product revenue will be diminished
15. 20Our long-term prospects depend in part upon discovering, developing and commercializing additional product candidates, which may fail in development or suffer delays that adversely affect their commercial viability
16. 21If we, or any of our partners, are unable to enroll patients in clinical trials, we will be unable to complete these trials on a timely basis or at all
17. 22The design or our execution of clinical trials may not support regulatory approval
18. 23Interim, preliminary or top-line data from our clinical trials that we may announce or publish 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
19. 24Successful development of our current and future product candidates is uncertain and we may discontinue or reprioritize the development of any of our product candidates at any time, at our discretion
20. 25If any of our product candidates receive regulatory approval, the approved products may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales would be limited
21. 26Even if we obtain FDA approval of any of our product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential
22. 27If we do not achieve one or more of these requirements in a timely manner, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business
23. 28Reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance. If there is not sufficient reimbursement for our products, it is less likely that our products will be widely used
24. 29We may not be successful in our efforts to use our therapeutic platforms to build a pipeline of product candidates
25. 30Even if we receive regulatory approval to commercialize any of the product candidates that we develop, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense
26. 31If any product liability lawsuits are successfully brought against us or any of our strategic partners, we may incur substantial liabilities and may be required to limit commercialization of our product candidates
27. 32If we or any of our third-party manufacturers encounter manufacturing difficulties, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented
28. 33Material modifications in method of product candidate manufacturing or formulating, and price controls imposed by governments may adversely affect our future profitability
29. 34Current and future legislation may increase the difficulty and cost for us to commercialize any products that we or our strategic partners develop and affect the prices we may obtain
30. 35Our business may be adversely affected by public health outbreaks and pandemics
31. 36Healthcare providers, physicians and third-party payors in the countries in which we operate and elsewhere play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval
32. 37Because of the breadth of these laws and the narrowness of any available statutory exceptions and safe harbors, it is possible that some of our current and future business activities could be subject to challenge under one or more of such laws
33. 38We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than our product candidates, our commercial opportunities will be negatively impacted
34. 39In addition, we expect to compete with biosimilar versions of already approved products, and even if our product candidates achieve marketing approval, they may be challenged to achieve a price premium over competitive biosimilar products and will compete for market share with them
35. 40We depend on our information technology systems, and any failure of these systems could harm our business
36. 41Upgrading and integrating our business systems could result in implementation issues and business disruptions
37. 42Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or protected health information or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation
38. 43sensitive data, conduct data protection assessments, transfer personal data to affiliates, and respond to consumer rights requests
39. 44We may be unable to adequately protect our information systems from cyberattacks, which could result in the disclosure of confidential or proprietary information, including personal data, damage our reputation, and subject us to significant financial and legal exposure
40. 45The loss of any member of our senior management team or our ability to attract and retain talent across the Company, including senior management, could adversely affect our business
41. 46Our restructuring and reorganization activities may be disruptive to our operations or ineffective
42. 47We have made technology acquisitions and expect to acquire businesses or assets or make investments in other companies or technologies that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense
43. 48Our billing and collections processing activities are time-consuming, and any delay in transmitting invoices or failure to comply with applicable billing requirements, could have an adverse effect on our future revenue
44. 49If our operating facilities become damaged or inoperable or we are required to vacate a facility, our ability to conduct and pursue our research and development efforts may be jeopardized
45. 50We do not carry insurance for all categories of risk that our business may encounter and our policies have limits and significant deductibles. Some of the policies we currently maintain include general liability, property, umbrella and directors’ and officers’ insurance
46. 51Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation
47. 52Growth of our international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of Canada and the United States
48. 53Our business is subject to risks relating to foreign currency exchange rates
49. 54We rely on a limited number of suppliers for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers
50. 55Unexpected shortages in raw materials or other materials and other unanticipated events could adversely affect our business, prospects, financial condition and results of operation
51. 56We use biological and hazardous materials that require considerable expertise and expense for handling, storage and disposal and may result in claims against us
52. 57Our discovery and development capabilities, and internal programs, utilize various species of animals that could contract disease or die and could otherwise subject us to controversy and adverse publicity, which may interrupt our business operations or harm our reputation
53. 58Once completed, our manufacturing operations will be dependent upon third-party suppliers, including single source suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business
54. 59Although we expect business acquisitions will result in synergies and other benefits to us, we may not realize those benefits because of uncertainties related to certain assets acquired as a result of the acquisitions

Risks Related to Our Intellectual Property

1. 60Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our technology
2. 61issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects
3. 62Issued patents covering our discovery and development capabilities could be found invalid or unenforceable if challenged
4. 63If we cannot acquire or license rights to use technologies on reasonable terms or if we fail to comply with our obligations under such agreements, we may not be able to commercialize new technologies or services in the future and our business could be harmed
5. 64While we still face all of the risks described herein with respect to those agreements, we cannot prevent third parties from also accessing those technologies. In addition, our licenses may place restrictions on our future business opportunities
6. 65We may not be able to protect our intellectual property rights throughout the world
7. 66Intellectual property rights do not necessarily address all potential threats to our competitive advantage
8. 67If we are unable to protect the confidentiality of our information and our trade secrets, the value of our technology could be materially adversely affected and our business could be harmed
9. 68We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers
10. 69We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest thereby harming our competitive position
11. 70We may be subject to claims challenging the inventorship of our patents and other intellectual property
12. 71We are currently, and in the future may be, involved in litigation and other proceedings related to intellectual property, which could be time-intensive and costly and may adversely affect our business, financial condition, results of operations and prospects
13. 72The outcome of our litigation with Bruker Cellular Analysis may adversely affect our business, financial condition, results of operations and prospects
14. 73The outcome of our civil litigation with Schrader may adversely affect our business, financial condition, results of operations and prospects
15. 74Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities
16. 75We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business
17. 76Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
18. 77Patent terms may be inadequate to protect our competitive position on our technology for an adequate amount of time
19. 78Our use of open source software could compromise our ability to offer our data packages and subject us to possible litigation

Risks Related to Ownership of Our Common Shares

1. 79If we fail to maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed
2. 80Future sales and issuances of our common shares or rights to purchase common shares, including pursuant to our Employee Share Option and Incentive Plan, or ESOIP, could result in additional dilution of the percentage ownership of our shareholders and could cause our share price to fall
3. 81Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies
4. 82We do not intend to pay dividends on our common shares, so any returns will be limited to the value of our common shares
5. 83Our principal shareholders and management own a significant percentage of our shares and will be able to exert significant influence over matters subject to shareholder approval
6. 84We have filed registration statements on Form S-3 and on Form S-8 to register our common shares that are issuable pursuant to our equity incentive plans. Shares registered under Form S-8 will be available for sale in the public market subject to vesting arrangements and exercise of options
7. 85We are governed by the corporate laws of Canada which in some cases have a different effect on shareholders than the corporate laws of the United States
8. 86Our articles and certain Canadian legislation contain provisions that may have the effect of delaying, preventing or making undesirable an acquisition of all or a significant portion of our shares or assets or preventing a change in control
9. 87Our articles designate specific courts in Canada and the United States as the exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us
10. 88Because we are a Canadian company, it may be difficult to serve legal process or enforce judgments against us
11. 89If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected
12. 90Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
13. 91Our U.S. shareholders may suffer adverse tax consequences if we are characterized as a PFIC
14. 92Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits
15. 93Changes in tax law could adversely affect our business and financial condition
16. 94The total purchase price pertaining to our acquisitions in recent years have been allocated to net tangible assets, identifiable intangible assets, in-process research and development and goodwill
17. 95Our employees, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading
18. 96The market price of our common shares may be volatile, and you could lose all or part of your investment
19. 97Requirements associated with being a public company could increase our costs significantly, as well as divert significant company resources and management attention
20. 98If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline