Avalo Therapeutics (AVTX) risk factors, FY2024 10-K

Risks Related to Our Financial Position and Capital Needs

1. 01We may need to seek additional funds sooner than anticipated through public or private equity offerings, debt financings, collaborations, licensing agreements, or other sources. Such financing could dilute our shareholders, and failure to secure adequate funding may limit our operational activities
2. 02We have incurred significant net losses in most periods since our inception and we expect to continue to incur net losses in the future
3. 03We face risks associated with short-term liquid investments
4. 04Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
5. 05Our operating results fluctuate from quarter to quarter and year to year, making future operating results difficult to predict
6. 06Our role as a guarantor of certain obligations assigned to Aytu exposes us to risk of loss or illiquidity
7. 07We have no approved commercial products
8. 08produce revenues for the foreseeable future, or at all, which might harm our ability to obtain additional financing and might require us to reduce or discontinue our operations

Risks Related to Development of Our Product Candidates

1. 09We are substantially dependent on the success of AVTX-009, and our ongoing and anticipated clinical trials of AVTX-009 may not be successful
2. 10If we experience delays in clinical testing, we will be delayed in obtaining regulatory approvals and commercializing our product candidates, our costs may increase and our business may be harmed
3. 11If we are unable to enroll appropriate subjects in clinical trials or retain patients in the clinical trials we perform, we may not be able to complete these trials on a timely basis, or at all
4. 12We may fail to successfully identify, in‑license, acquire, develop or commercialize potential product candidates
5. 13Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their marketing approval, limit the commercial profile of an approved label, or result in significant negative consequences following any marketing approval
6. 14Changes in product candidate manufacturing or formulation may result in additional costs or delay
7. 15Our product candidate, AVTX-009, is a biologic. The process of manufacturing biologics and their components is complex, expensive, highly-regulated and subject to multiple risks
8. 16We face substantial competition and rapid technological change and the possibility that others may discover, develop or commercialize products before or more successfully than us
9. 17Our competitors will also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs
10. 18Our products might not achieve adequate market acceptance among physicians, patients, third‑party payors and others in the medical community necessary for commercial success
11. 19We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. Our focus and reliance on AVTX-009 increases the risk of such exposure
12. 20Our focus and reliance on AVTX-009 exposes us to risk if AVTX-009 does not perform in clinical trials or receive FDA approval and market acceptance

Risks Related to Regulatory Approval of Our Product Candidates

1. 21The marketing approval processes of the FDA and other regulatory authorities are lengthy, time‑consuming, costly and inherently unpredictable. Our inability to obtain regulatory approval for our product candidates would substantially harm our business
2. 22Even if we complete the necessary clinical trials, we cannot predict when or if we will obtain marketing approval to commercialize a product candidate or the approval may be for a narrower indication than we expect
3. 23The occurrence of any event or penalty described above may inhibit our ability to continue our development programs, commercialize our products and generate revenue
4. 24We are conducting clinical trials for AVTX-009 at sites in foreign jurisdictions, and the FDA might not accept data from trials conducted in such locations
5. 25Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States, which would limit our market opportunities and adversely affect our business

Risks Related to the Commercialization of Our Product Candidates

1. 26We might not be successful in our efforts to develop and commercialize our product candidates
2. 27If we obtain approval to commercialize our product candidates, the markets in which we will be selling are highly competitive and we might be unable to compete successfully against new entrants or established companies
3. 28If we obtain approval to commercialize our product candidates outside of the United States, a variety of risks associated with international operations could materially adversely affect our business
4. 29Even if we commercialize any of our product candidates, these products may become subject to unfavorable third‑party coverage and reimbursement policies, healthcare reform initiatives, or pricing regulations, any of which could negatively impact our business
5. 30Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any product candidates that we may develop
6. 31If, in the future, we are unable to establish sales, marketing and distribution capabilities or enter into licensing or collaboration agreements for these purposes, we might not be successful in commercializing our product candidates

Risks Related to Our Dependence on Third Parties

1. 32We rely on third parties to conduct and monitor our clinical trials. The failure of these third parties to successfully carry out their contractual duties or meet expected deadlines could hinder our ability to commercialize or obtain marketing approval for our product candidates in a timely manner or at all
2. 33We do not own or operate, and have no plans to establish, any manufacturing facilities for our product candidates. We have limited personnel with experience in drug manufacturing and we lack the resources and the capabilities to manufacture any of our product candidates on a clinical or commercial scale
3. 34We might not succeed in establishing and maintaining development collaborations, which could adversely affect our ability to develop and commercialize product candidates

Risks Related to Intellectual Property

1. 35and other intellectual property rights, such rights may be reduced or eliminated. If our licensors, licensees or collaborators are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised
2. 36As appropriate, we intend to seek all available periods of regulatory exclusivity for our product candidates. However, there is no guarantee that we will be granted these periods of regulatory exclusivity or that we will be able to maintain these periods of exclusivity
3. 37If we breach the license and development agreements related to our product candidates, we could lose the ability to develop and commercialize our product candidates
4. 38We may be required to make significant payments in connection with our license and development agreements
5. 39Obtaining 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
6. 40We 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
7. 41Our inability to protect our confidential information and trade secrets would harm our business and competitive position
8. 42Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates
9. 43We might not be able to protect our intellectual property rights throughout the world

Risks Related to Legal Compliance

1. 44Ongoing changes to healthcare laws and regulations may increase the difficulty of and costs associated with commercializing our products and may affect the prices we are paid for those products
2. 45The Patient Protection and Affordable Care Act increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud, waste, abuse and to provide access to increased health coverage
3. 46of 2003, and the FDA’s implementing regulations. It is unclear the extent to which any of these policies will continue under the new administration
4. 47State and federal healthcare program reform measures are ongoing, any of which could limit the amounts that we receive for our product candidates, result in reduced demand for our product candidates, if approved

Risks Related to Employee Matters and Managing Our Growth

1. 48If we fail to attract and keep management and other key personnel, as well as our board members, we may be unable to develop our product candidates or otherwise implement our business plan
2. 49We may encounter difficulties in managing our growth, including the focus on AVTX-009 and the resources necessary for its development, and expanding our operations successfully
3. 50Our Chief Executive Officer has interests in the development of AVTX-006 pursuant to a royalty agreement that may conflict with interests of stockholders
4. 51We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property

Risks Related to our Stock

1. 52Conversion of the outstanding shares of our preferred stock will dilute the percentage ownership of the holders of our common stock
2. 53Future sales and issuances of shares of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall
3. 54If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market, Nasdaq could delist our common stock
4. 55Low trading volume of our common stock on the Nasdaq Capital Market may increase price volatility
5. 56Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock
6. 57If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our securities prices and trading volume could decline
7. 58Because we do not intend to declare cash dividends on our shares of common stock in the foreseeable future, stockholders must rely on appreciation of the value of our common stock for any return on their investment
8. 59We incur increased costs and obligations as a result of being a public company
9. 60Some provisions of our charter documents and Delaware law may have anti‑takeover effects that could discourage an acquisition of us by others, even if an acquisition would benefit our stockholders and may prevent attempts by our stockholders to replace or remove our current management
10. 61Our business and operations could suffer in the event of computer system failures, cyber-attacks or deficiencies in our cyber-security
11. 62We may be subject to future litigation against us, which could be costly and time‑consuming to defend
12. 63We may be subject to numerous and varying privacy and security laws, and our failure to comply could result in penalties and reputational damage