Adial Pharmaceuticals (ADIL) risk factors, FY2025 10-K

Risks Relating to Our Company

1. 01We have incurred net losses every year and quarter since our inception and anticipate that we will continue to incur net losses in the future
2. 02Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern30% rewritten
3. 03We currently have no product revenues and may not generate revenue at any time in the near future, if at all. Currently, we have no products approved for commercial sale
4. 04We have had limited operations to date and there can be no assurance that we will be able to execute on our business strategy
5. 05In the past we have identified material weaknesses in our internal controls, and we cannot provide assurances that additional material weaknesses will not occur in the future
6. 06The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal controls over financial reporting85% rewritten
7. 07Our business is dependent upon the success of our lead product candidate, AD04, which requires significant additional clinical testing before we can seek regulatory approval and potentially launch commercial sales28% rewritten
8. 08The active ingredient of our product candidate, ondansetron, is currently available in generic form
9. 09Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results
10. 10We intend to market our products, particularly AD04, for long-term use by patients seeking to reduce their number of days of heavy drinking, and we assume future sales volumes reflecting such extended use
11. 11The current data for our lead product candidate, AD04 are the result of Phase 2 clinical trials conducted by third parties as well as data generated from the ONWARD trial we conducted and do not currently provide sufficient evidence that our products are viable as potential pharmaceutical products
12. 12The FDA and/or other global regulators may not accept our planned Phase 3 endpoints for final approval of AD04 and may determine additional clinical trials are required for approval of AD0447% rewritten
13. 13Our use of the currently manufactured clinical trial material in the planned Phase 3 trial is dependent upon the review and approval of the relevant regulatory agencies and authorities
14. 14Our investigational product, AD04, is dependent on a successful development, approval, and commercialization of a genetic test, which is expected to be classified as a companion diagnostic
15. 15Our product candidate will require extensive clinical and other testing
16. 16Our clinical trials may fail to demonstrate adequately the safety and efficacy of AD04 or any future product candidates, which would likely prevent or delay regulatory approval and commercialization
17. 17If we experience delays in the enrollment of patients in our clinical trials our receipt of necessary regulatory approvals could be delayed or prevented24% rewritten
18. 18Our success will be dependent upon adoption by physicians and others
19. 19Rapid technological change and substantial competition may impair the business

Risks Relating to Our Business and Industry

1. 20If we do not obtain the necessary regulatory approvals in the United States and/or other countries, we will not be able to sell our product candidates
2. 21Obtaining and maintaining regulatory approval of product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of product candidates in other jurisdictions
3. 22Clinical trials are very expensive, time-consuming and difficult to design and implement
4. 23AD04 and any future product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences
5. 24We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits
6. 25There is uncertainty as to market acceptance of our technology and product candidates
7. 26Because we expect virtually all of our product revenues for the foreseeable future to be generated from sales of AD04, if approved, the failure of this product to find market acceptance would substantially harm our business and would adversely affect our revenue
8. 27Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
9. 28Additionally, we are subject to state and foreign equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope and may apply regardless of the payor
10. 29We have no experience selling, marketing or distributing products and have no internal capability to do so
11. 30We may not be successful in establishing and maintaining strategic partnerships or collaborations, which could adversely affect our ability to develop and commercialize products34% rewritten
12. 31No assurance can be given that a definitive agreement to implement the terms set forth in the collaboration framework agreement will be executed with MolteniNew
13. 32To the extent we elect to enter into licensing or collaboration agreements to partner AD04 or any future product candidates, our dependence on such relationships may adversely affect our business
14. 33We may face particular data protection, data security and privacy risks in connection with the European Union’s Global Data Protection Regulation and other privacy regulations
15. 34We rely extensively on our information technology systems, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks
16. 35Our internal computer systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches
17. 36We have limited protection for our intellectual property. Our licensed patents and proprietary rights may not prevent us from infringing on the rights of others or prohibit potential competitors from commercializing products
18. 37The technology we license, our products or our development efforts may be found to infringe upon third-party intellectual property rights
19. 38We may be involved in lawsuits to protect or enforce the patents of our licensors, which could be expensive, time-consuming and unsuccessful
20. 39Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
21. 40Patents are subject to changing legal interpretation by the USPTO and the Courts
22. 41We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties
23. 42Our ability to generate product revenues will be diminished if our products sell for inadequate prices or patients are unable to obtain adequate levels of reimbursement
24. 43If we are unable to obtain adequate coverage and reimbursement for our tests, it is unlikely that our tests will gain widespread acceptance
25. 44A variety of risks associated with marketing AD04 or any future product candidates internationally could materially adversely affect our business
26. 45We may not successfully effect our intended expansion
27. 46Because of the specialized nature of our business, our ability to maintain a competitive position depends on our ability to attract and retain qualified management and other personnel. We cannot assure you that we will be able to continue to attract or retain such persons
28. 47Declining general economic or business conditions and changes to trade policy, including tariff and customs regulations, may have a negative impact on our business
29. 48Healthcare reform measures could hinder or prevent the commercial success of our product candidatesNew
30. 49A shutdown of the U.S. federal government may adversely affect our businessNew

Risks Related to Our Securities and Investing in Our Securities

1. 50Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our common stock87% rewritten
2. 51As reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, at September 30, 2025, our stockholders’ equity of $4.5 million was above the Nasdaq minimum requirement of $2.5 millionNew
3. 52Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans and outstanding warrants, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall60% rewritten
4. 53We have additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock
5. 54If we issue preferred stock with superior rights than our common stock, it could result in a decrease in the value of our common stock and delay or prevent a change in control of us
6. 55We have never paid dividends and have no plans to pay dividends in the future
7. 56We are a “smaller reporting company,” and we cannot be certain if the reduced SEC reporting requirements applicable to smaller reporting companies will make our common stock less attractive to investors
8. 57As a result of being a public company, we are subject to additional reporting and corporate governance requirements that will require additional management time, resources and expense
9. 58Our common stock has often been thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares
10. 59Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses
11. 60Our need for future financing may result in the issuance of additional securities which will cause investors to experience dilution
12. 61The application of the “penny stock” rules to our common stock could limit the trading and liquidity of the common stock, adversely affect the market price of our common stock and increase your transaction costs to sell those shares
13. 62Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
14. 63If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline