AtaiBeckley (ATAI) risk factors, FY2025 10-K

Risks Related to our Financial Position, Need for Additional Capital and Growth Strategy

1. 01We are a clinical-stage biotechnology company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never be profitable
2. 02Our limited operating history may make it difficult for you to evaluate the success of our business and to assess our future viability
3. 03If we are unable to obtain funding when needed and on acceptable terms, we could be forced to delay, limit or discontinue our product candidate development efforts
4. 04the costs of operating as a public company in the United States and maintaining a listing on the Nasdaq Stock Market LLC (“Nasdaq”)
5. 05We may fail to realize the anticipated benefits of our strategic combination with Beckley Psytech
6. 06The failure to successfully integrate the businesses and operations of atai and Beckley Psytech in the expected time frame may adversely affect the combined group’s future results
7. 07Our overall value may be dominated by a single or limited number of our clinical programs
8. 08If we obtain a controlling interest in certain of our existing companies or additional companies in the future, it could adversely affect our operating results and the value of our common stock, thereby disrupting our business
9. 09the impact of regulatory reviews and outcome of any legal proceedings that may be instituted with respect to a proposed acquisition, in-license or investment
10. 10Our programs are difficult to value given they are in the development stage
11. 11Our product candidates represent novel and innovative potential therapeutic areas, and negative perception of any product candidate that we develop could adversely affect our ability to conduct our business, obtain regulatory approvals or identify alternate regulatory pathways to market for such product candidate
12. 12We may not achieve our publicly announced milestones according to schedule, or at all
13. 13Exchange rate fluctuations may materially affect our results of operations and financial condition
14. 14We may use our existing cash, cash equivalents and short-term securities, to purchase digital currencies, including bitcoin, the price of which has been, and will likely continue to be, highly volatile

Risks Related to the Clinical Development, Regulatory Review and Approval of our Product Candidates

1. 15Our product candidates are in clinical (or preclinical) development, which is a lengthy and expensive process with uncertain outcomes. We cannot give any assurance that any of our product candidates will be successfully developed and/or receive regulatory approval, which is necessary before they can be commercialized
2. 16Clinical trials of our product candidates may be delayed, and certain programs may never advance in the clinic or may be more costly to conduct than we anticipate, any of which can affect our ability to fund our operations and would have a material adverse impact on our platform or our business
3. 17delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of product candidates that we may identify for use in clinical trials or the inability to do any of the foregoing
4. 18abuse, such as the requirement that physicians consult a state prescription drug monitoring program, may make physicians less willing to prescribe, and pharmacies to dispense, Schedule II products
5. 19Our product candidates contain psychedelic substances, the use of which may generate public controversy. Adverse publicity or public perception regarding our current or future product candidates may negatively influence the success of these therapies
6. 20Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain and may prevent us from obtaining approvals for the potential commercialization of our product candidates
7. 21If we encounter difficulties enrolling patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected
8. 22the risk that patients enrolled in clinical trials will not complete such trials, for any reason
9. 23If we have difficulty enrolling sufficient numbers of patients to conduct clinical trials as planned, we may need to delay or terminate clinical trials, either of which would have an adverse effect on our business
10. 24Additionally, adverse developments in clinical trials of pharmaceutical, biopharmaceutical or biotechnology products conducted by others may cause the FDA or other regulatory oversight bodies to suspend or terminate our clinical trials or to change the requirements for approval of any of our product candidates
11. 25Any of these occurrences could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and may harm our business, financial condition, results of operations and prospects significantly
12. 26availability and adequacy of coverage and reimbursement from government payors, managed care plans and other third-party payors
13. 27We currently, and may in the future continue to, conduct clinical trials for product candidates outside the United States, and the FDA, the EMA and comparable foreign regulatory authorities may not accept data from such trials
14. 28If we are unable to obtain regulatory approval in one or more jurisdictions for any product candidates that we may identify and develop, our business will be substantially harmed
15. 29the approval policies or regulations of the FDA, or comparable foreign regulatory authorities may change in a manner that renders the clinical trial design or data insufficient for approval
16. 30Certain of the product candidates we are developing are complex and difficult to manufacture. We could experience manufacturing problems that result in delays in our development or commercialization programs or otherwise harm our business
17. 31We may not elect or be able to take advantage of any expedited development or regulatory review and approval processes available to drug product candidates granted breakthrough therapy or fast track designation by the FDA or similar EMA expedited pathways
18. 32Such designations may not lead to a faster development or regulatory review or approval process and do not increase the likelihood that our product candidates will receive marketing authorization
19. 33legislation addressing drug or medical safety issues could result in delays in product development or commercialization or increased costs to assure compliance
20. 34We could also be required to conduct post-marketing clinical trials to verify the safety and efficacy of our products in general or in specific patient subsets. An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval
21. 35The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity
22. 36The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses

Risks Related to Commercialization

1. 37If, in the future, we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates we may develop, we may not be successful in commercializing those product candidates if and when they are approved
2. 38unforeseen costs and expenses associated with creating an independent commercialization organization
3. 39The availability of adequate third-party coverage and reimbursement for newly approved drugs is uncertain, and failure to obtain adequate coverage and reimbursement from third-party payers could impede our ability to market any future products we may develop and could limit our ability to generate revenue
4. 40If we fail to comply with healthcare laws, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected
5. 41Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations
6. 42and access to care. Although the effect on our business is currently unknown, any decrease in the number of insured patients or reimbursement levels for our products, if approved, could adversely affect our revenue and commercial prospects
7. 43the availability of capital
8. 44Governments outside the United States may impose strict price controls, which may adversely affect our revenues, if any
9. 45collaborative arrangements in our target markets with leading companies and research institutions
10. 46If the market opportunities for our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer. Our ability to successfully identify patients and acquire a significant market share will be necessary for us to achieve profitability and growth

Risks Related to Reliance on Third Parties

1. 47We may enter into collaborations with third parties for the development and commercialization of product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates
2. 48a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings
3. 49effective allocation of our resources to multiple projects
4. 50We rely on third parties to assist in conducting our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research, or testing
5. 51regulatory proceedings and reputational harm. If this were to occur, we may face serious setbacks for our commercialization process and our financial condition and results of operations would be materially harmed
6. 52the possible termination or non-renewal of the agreement by the third-party at a time that is costly or inconvenient for us
7. 53If the contract manufacturing facilities on which we rely do not continue to meet regulatory requirements or are unable to meet our supply demands, our business will be harmed

Risks Related to Our Intellectual Property

1. 54Our rights to develop and commercialize our product candidates are subject in part to the terms and conditions of licenses granted to us by others, and the patent protection, prosecution and enforcement for some of our product candidates may be dependent on their licensors
2. 55Despite our efforts, our licensors might conclude that we have materially breached our obligations under such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements
3. 56the priority of invention of patented technology
4. 57Third parties may claim that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and may prevent or delay our development and commercialization efforts
5. 58Patent terms may be inadequate to protect our competitive position on product candidates for an adequate amount of time
6. 59If we are not able to obtain patent term extension in the United States under the Hatch-Waxman Amendments and in foreign countries under similar legislation, thereby potentially extending the marketing exclusivity term of our product candidates, our business may be materially harmed
7. 60If 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
8. 61If 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
9. 62We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful and our issued patents covering our product candidates could be found invalid or unenforceable if challenged in courts or patent offices
10. 63Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties
11. 64We may become subject to claims challenging the inventorship or ownership of our patents and other intellectual property
12. 65We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed alleged trade secrets or other confidential information of their current or former employers or other third parties
13. 66Obtaining and maintaining our 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
14. 67We may not be able to protect our intellectual property rights throughout the world
15. 68Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our programs’ ability to protect their products

Risks Related to Our Business and Industry

1. 69Our future success depends on our ability to retain key employees, directors, consultants and advisors and to attract, retain and motivate qualified personnel
2. 70We may need to periodically realign our organization and may experience difficulties in managing either potential growth or reductions in force, which could disrupt our operations
3. 71Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any of our product candidates
4. 72the inability to commercialize our product candidates
5. 73We could experience difficulty enforcing our contracts
6. 74The increasing use of social media platforms presents new risks and challenges
7. 75Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
8. 76Employee litigation and unfavorable publicity could negatively affect our future business
9. 77If we or our third-party manufacturers or suppliers fail to comply with environmental, health and safety laws and regulations, we or our third-party manufacturers or suppliers could become subject to fines or penalties or other sanctions or incur costs that could harm our business
10. 78We or the third parties upon whom we depend on may be adversely affected by a natural or man-made disaster or other catastrophic event and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
11. 79If we are not able to maintain and enhance our reputation and brand recognition, our business, financial condition and results of operations will be harmed

Risks Related to Our International Operations

1. 80Our business is subject to economic, political, regulatory and other risks associated with international operations
2. 81certain expenses including, among others, expenses for travel, translation, and insurance; and
3. 82We are subject to the FCPA and other anti-corruption laws, as well as export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations

Risks Related to Our Common Stock

1. 83The expected benefits of the Redomiciliation Transaction may not be realized
2. 84Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline
3. 85Our operating results and the price of our common stock may be volatile, and the market price of our common stock may drop below the price you pay
4. 86We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors
5. 87As a result, we do not believe our interests in such atai companies will be deemed investment securities for purposes of Section 3(a)(1)(C), Rule 3a-1 and/or Rule 3a-8. Accordingly, we believe that (i) on an unconsolidated basis less than 40% of our total assets (exclusive of U.S
6. 88Evolving global tax legislation could increase our overall tax burden
7. 89We do not anticipate paying any cash dividends in the foreseeable future. If we do pay dividends, we may need to withhold tax on such dividends payable to holders of our common stock
8. 90Our ability to use our net operating loss carryforward and other tax attributes may be limited
9. 91One of our principal shareholders has a significant holding in the company which may give them influence in certain matters requiring approval by shareholders, including approval of significant corporate transactions in certain circumstances
10. 92If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
11. 93additional financial and management resources. Compliance with Section 404 requires that we incur substantial costs and expend significant management efforts
12. 94If we engage in additional acquisitions or strategic partnerships, this may increase our capital requirements, dilute our shareholders, cause us to incur debt or assume contingent liabilities and subject us to other risks
13. 95our incurrence of large one-time expenses and acquisition of intangible assets that could result in significant future amortization expense
14. 96Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
15. 97If securities or industry analysts publish inaccurate or unfavorable research about our business, our share price and trading volume could decline
16. 98We will continue to incur increased costs as a result of operating as a public company and our management team is required to devote substantial time to new compliance initiatives and corporate governance practices
17. 99Scrutiny on environmental, social, and governance (“ESG”) initiatives could increase our costs, harm our reputation and adversely impact our financial results