Ardelyx (ARDX) risk factors, FY2024 10-K

Risks Related to our Financial Condition and Capital Requirements

1. 01We have incurred losses in each year since our inception, and we expect to continue to incur operating losses in the future as we incur additional expenses related to our ongoing operations and our pursuit of future business opportunities
2. 02We expect to continue to incur operating losses for the foreseeable future as we incur expenses related to our ongoing operations and our pursuit of future business opportunities
3. 03Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited
4. 04We have generated limited revenue from product sales and may never be profitable for a full fiscal year
5. 05Principal Risks Related to Our Business
6. 06XPHOZAH is now included in the ESRD PPS, effective January 1, 2025, which means coverage for XPHOZAH for Medicare beneficiaries is no longer available under Medicare Part D, and as a result the revenue that we may generate on sales of XPHOZAH will be negatively and materially impacted
7. 07IBSRELA and/or XPHOZAH may cause undesirable side effects or have other properties that could limit the commercial success of the product
8. 08Third-party payor coverage and reimbursement status of newly commercialized products are uncertain. Failure to obtain or maintain adequate coverage and reimbursement for IBSRELA and XPHOZAH could limit our ability to market those products and decrease our ability to generate revenue
9. 09for our products may be reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenue and profits
10. 10Our future results depend on CMOs, many of whom are our single source manufacturers
11. 11Our operating activities may be restricted as a result of covenants related to the indebtedness under our loan and security agreement with SLR, as amended, and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business
12. 12The biotechnology and pharmaceutical industries are highly competitive, and we face significant competition from companies in the biotechnology, pharmaceutical and other related markets that are researching and marketing products designed to address diseases that we are currently developing products to treat
13. 13We may experience difficulties in managing our current activities and growth given our level of managerial, operational, financial and other resources
14. 14We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management
15. 15If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of IBSRELA and/or XPHOZAH
16. 16If we fail to attract, retain and motivate our executives, senior management and key personnel, our business will suffer
17. 17Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition
18. 18foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations
19. 19We have formed in the past, and may form in the future, collaboration partnerships, joint ventures and/or licensing arrangements, and we may not realize the benefits of such collaborations
20. 20Clinical drug development involves a lengthy and expensive process with an uncertain outcome
21. 21We will rely on third parties to conduct all of our nonclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for additional products or commercialize our product candidates
22. 22Our business involves the use of hazardous materials and we and third-parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business
23. 23We may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster

Risks Related to Government Regulation

1. 24We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the U.S. or abroad
2. 25Disruptions at the U.S. FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise review and process regulatory submissions in a timely manner, which could negatively impact our business
3. 26We and our CMOs are subject to significant regulation with respect to manufacturing IBSRELA and XPHOZAH. The manufacturing facilities on which we rely may not continue to meet regulatory requirements or may not be able to meet supply demands
4. 27IBSRELA and/or XPHOZAH may cause or contribute to adverse medical events that we are required to report to regulatory agencies and if we fail to do so we could be subject to sanctions that would materially harm our business
5. 28Our employees, independent contractors, principal investigators, CROs, collaboration partners, consultants, CMOs and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
6. 29Failure to obtain regulatory approvals in foreign jurisdictions would prevent us from marketing our products internationally
7. 30We and our collaboration partners are subject to healthcare laws, regulation and enforcement; our failure or the failure of any such collaboration partners to comply with these laws could have a material adverse effect on our results of operations and financial conditions
8. 31Legislative or regulatory healthcare reforms in the U.S. may make it more difficult and costly for us to obtain regulatory clearance or approval of our product candidates and to produce, market and distribute our products after clearance or approval is obtained
9. 32Each of these would likely entail substantial time and cost and could materially harm our business and our financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products would harm our business, financial condition and results of operations

Risks Related to Intellectual Property

1. 33Our success will depend on our ability to obtain, maintain and protect our intellectual property rights
2. 34If we are not able to successfully enforce our intellectual property rights, the commercial value of IBSRELA and XPHOZAH or other product candidates may be adversely affected and we may not be able to compete effectively in our market
3. 35We may not be able to enforce our intellectual property rights throughout the world
4. 36If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed
5. 37If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
6. 38We may be subject to claims that we or our employees have misappropriated the intellectual property, including know-how or trade secrets, of a third party, or claiming ownership of what we regard as our own intellectual property

Risks Related to Our Common Stock

1. 39Our stock price may continue to be volatile and our stockholders may not be able to resell shares of our common stock at or above the price they paid
2. 40If we sell shares of our common stock in future financings, stockholders may experience immediate dilution and, as a result, our stock price may decline
3. 41We are no longer a “smaller reporting company” and as a result we are or will be subject to certain enhanced disclosure requirements which will require us to incur significant expenses and expend time and resources
4. 42We may be adversely affected by the global economic environment
5. 43Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management
6. 44In addition, these provisions would apply even if we were to receive an offer that some stockholders may consider beneficial
7. 45Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law
8. 46We do not currently intend to pay dividends on our common stock, and, consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock