Axogen (AXGN) risk factors, FY2024 10-K

Risks Related to Our Business and Strategy

1. 01Approximately 60% of our total revenues are from sales of Avance Nerve Graft and any adverse decision from the FDA would negatively impact our operations and financial condition
2. 02Our revenue growth depends on our ability to increase distribution and sales to existing customers and develop new customers, domestically and abroad, and there can be no assurance that these efforts will result in significant increases in sales
3. 03Our revenue depends on a limited number of products
4. 04We are highly dependent on the continued availability of our facilities and could be harmed if we continue to experience operating challenges with our APC Facility or if any of our facilities are unavailable for any prolonged period of time
5. 05There may be significant fluctuations in our operating results
6. 06Macroeconomic trends, such as the inflationary pressure, and political instability could continue to have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments
7. 07Our operating results could be adversely impacted if we are unable to effectively manage and sustain our future growth or scale our operations
8. 08We have a history of net losses and have not consistently experienced positive cash flow from operations, and our ability to achieve consistent positive cash flow will depend on increasing revenue from distribution of our products, which may not be achievable
9. 09Failure to successfully manage the transition associated with the recent management changes could have an adverse impact on our business
10. 10Loss of key members of management, who we need to succeed, could adversely affect our business
11. 11Our success will be dependent on continued acceptance of our products by the medical community
12. 12Delays, interruptions, or the cessation of production by our third-party suppliers, including products supplied by single suppliers, of important materials may prevent or delay our ability to manufacture or process the final products
13. 13Technological change and competition for newly developed products could reduce demand for our products
14. 14We may not be successful in our efforts to build a pipeline of additional product candidates
15. 15We must maintain high quality processing of our products
16. 16Our revenue depends upon prompt and adequate reimbursement from public and private insurers and national health systems
17. 17Negative publicity concerning methods of donating human tissue and screening of donated tissue may reduce demand for our products and negatively impact the supply of available donor tissue
18. 18The failure of third parties to perform many necessary services for the commercialization of our products, including services related to recovery/acquisition, sterilization, distribution, and transportation, would impair our ability to meet commercial demand
19. 19We are dependent on our relationships with independent agencies to generate a material portion of our revenue
20. 20If we do not manage product inventory in an effective and efficient manner, it could adversely affect profitability
21. 21We may be unsuccessful in commercializing our products outside the U.S
22. 22We may seek to expand our business in ways that could result in diversion of resources and extra expenses
23. 23We may be subject to future product liability litigation, which could be expensive, and our insurance coverage may not be adequate
24. 24Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates
25. 25Our failure to protect our technology systems and comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our business, results of operations, financial condition, and prospects
26. 26We are dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact our business and results of operations
27. 27Our business and financial performance could be adversely affected, directly or indirectly, by natural or man-made disasters or other similar events
28. 28Changes in the tax code could have a material adverse effect on our results of operations, financial condition, liquidity, and capital investments
29. 29We may have exposure to additional tax liabilities as a result of our foreign operations
30. 30Our business and stock price may be adversely affected if our internal controls are not effective
31. 31We incur costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives
32. 32Our business, results of operations, financial condition, and prospects could be adversely affected, directly or indirectly, by the effects of a focus on environmental, social and governance issues

Risks Related to the Regulatory Environment in which We Operate

1. 33Our business is subject to continuing regulatory compliance by the FDA and other authorities, which is costly and could result in negative effects on our business
2. 34Failure to obtain regulatory and pricing approvals in foreign jurisdictions after BLA approval for Avance Nerve Graft or our other products could delay or prevent commercialization of our products abroad
3. 35The use, misuse or off-label use of our products may harm our reputation and the reputation of our products, which could result in injuries leading to product liability suits, and could be costly to our business, and/or result in FDA sanctions
4. 36false claims for reimbursement, or exclusion from participation in federal health programs. In that event, our reputation could be damaged, and our products’ use in the marketplace could be impaired
5. 37U.S. governmental regulation could restrict the use of our Avance Nerve Graft product, restrict our procurement of tissue or increase costs
6. 38BLA approval for Avance Nerve Graft could result in different protocol to hospitals access for the product, as well as different reimbursement protocols, both of which may negatively affect surgeons’ access to, revenues derived from and profitability of Avance Nerve Graft
7. 39Our Axoguard products are subject to FDA and international regulatory requirements
8. 40Our operations must comply with FDA and other governmental requirements
9. 41Our business is subject to continuing compliance with standards set by various accreditation and registration bodies, which is costly, and loss of accreditation or registration could result in negative effects on our business
10. 42Defective products could lead to recall or other negative business conditions
11. 43Clinical trials can be long and expensive, and results are ultimately uncertain
12. 44We rely on third parties to conduct our clinical trials, and they may not perform as contractually required or expected
13. 45Healthcare law and policy changes may have a material adverse effect on us
14. 46We could be subject to civil or criminal penalties if we are found to have violated laws protecting the confidentiality of health information, which could increase our liabilities and harm our reputation or our business

Risks Related to Our IP

1. 47Failure to protect or maintain our IP rights could result in costly and time-consuming litigation and our loss of any potential competitive advantage
2. 48Future protection for our proprietary rights is uncertain and may impact our ability to successfully compete in our industry
3. 49Others may claim an ownership interest in our IP or claim that we infringe on their IP rights, which could expose us to litigation and have a significant adverse effect on our prospects
4. 50Our trademarks are valuable, and our business may be adversely affected if trademarks are not adequately protected
5. 51Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents

Risks Related to Financing Our Business

1. 52extended period of time and are subject to acceleration in specified circumstances, which may result in Oberland Capital taking possession and disposing of any collateral
2. 53We may need to raise additional funds to finance our future capital or operating needs, which could have adverse impacts on our business, results of operations and the interests of our shareholders

Risks Related to Our Common Stock

1. 54An active trading market in our common stock may not be maintained
2. 55The price of our common stock could be volatile due to a number of factors, which could lead to losses by investors and costly securities litigation
3. 56We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause a decline in our stock price
4. 57We do not anticipate paying any cash dividends in the foreseeable future
5. 58Our management has broad discretion in the use and placement of our cash and cash equivalents and, despite management’s efforts, cash and cash equivalents may be used in a manner that does not increase the value of shareholders’ investments or placed in otherwise reputable financial institutions that fail