AYTU Biopharma (AYTU) risk factors, FY2024 10-K

Risks Related to Our Business and Financial Position

1. 01We have incurred losses to date and can give no assurance of profitability
2. 02We have not established sources of ongoing revenue sufficient to cover operating costs
3. 03We may not have cash available to us in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due
4. 04The terms of our loan agreement place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our operating and financial flexibility
5. 05We are actively engaged in discussions regarding a potential strategic transaction. There can be no assurance that this process will result in the pursuit or consummation of any potential transaction
6. 06we may experience difficulties in preserving the commercially sensitive information that may need to be disclosed to third parties during this process or in connection with an assessment of our strategic options
7. 07Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
8. 08If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired
9. 09We have been and, in the future, may become a defendant in one or more stockholder derivative, class-action, and other litigation, and any such lawsuits may adversely affect our business, financial condition, results of operations and cash flows
10. 10See Part I, Item 3, Legal Proceedings for more information on these lawsuits

Risks Related to Commercialization

1. 11We are heavily dependent on the commercial success of our commercial products. To date, we have not generated sufficient revenues from the sales of these products to achieve companywide profitability and we may never achieve or maintain profitability
2. 12We have incurred, and anticipate continuing to incur, significant costs associated with commercialization of our approved products and, if approved, any other product candidates that we may develop. It is possible that we will never attain sufficient product sales revenues to achieve profitability
3. 13Our pharmaceutical products may prove to be difficult to effectively commercialize as planned or on the timeframes we announce and expect
4. 14We rely on limited sources of supply for our products, and any disruption in the chain of supply may impact production and sales of our products, and cause delays in developing and commercializing our currently manufactured and commercialized products
5. 15We rely on third parties to manufacture certain products, and third-party manufacturing risks and inefficiencies may result in costs and delays that prevent us from successfully commercializing products and adversely affect our ability to produce our products
6. 16possible termination or non-renewal of agreements by third parties, based on their own business priorities, at times that are costly or inconvenient for us
7. 17Any of these actions, in combination or alone, could prevent us from marketing, distributing or selling our products, and would likely harm our business
8. 18If we do not secure collaborations with strategic partners to test, commercialize and manufacture products, we may not be able to successfully develop products and generate meaningful revenues
9. 19As a result, collaboration agreements may not lead to development or commercialization of our products in the most efficient manner or at all
10. 20We face substantial competition, including the introduction of generics, from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for, or commercializing products before or more successfully than us
11. 21obtain patent and/or other proprietary protection for our products
12. 22Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenues
13. 23the availability of capital
14. 24Our financial results will depend on the acceptance among clinicians, third-party payors and the medical community of our products
15. 25general economic conditions
16. 26If third-party payors do not reimburse our customers for the products we sell or if reimbursement levels are set too low for us to sell one or more of our products at a profit, our ability to sell those products and our results of operations will be harmed
17. 27neither experimental nor investigational
18. 28Reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental drug pricing programs are complex and may involve subjective decisions. Any failure to comply with those obligations could subject us to penalties and sanctions
19. 29Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
20. 30We are subject to United States and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business
21. 31We are subject to various health care fraud and abuse and reimbursement laws pertaining to the marketing of our approved products
22. 32Adzenys and Cotempla contain controlled substances, and their manufacture, use, sale, importation, exportation, prescribing and distribution are subject to regulation by the DEA
23. 33Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, activity and controlled substance schedule
24. 34The design, development, manufacture, supply and distribution of our products are technically complex and require regulatory compliance
25. 35There is a risk we may be unable to sell and distribute certain of our products if we cannot continue to comply with the serialization requirements of the Drug Quality and Security Act within the necessary time frames
26. 36Failure to comply with health and data protection laws and regulations could lead to United States federal and state government enforcement actions, including civil or criminal penalties, private litigation, and adverse publicity and could negatively affect our operating results and business
27. 37We may use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time-consuming and costly

Risks Related to Our Intellectual Property

1. 38We are dependent on our relationships and license agreements, and we rely on the intellectual property rights granted to us pursuant to the license agreements
2. 39The expiration or loss of patent protection may adversely affect our future revenues and operating results
3. 40Our ability to compete may decline if we do not adequately protect or enforce our intellectual property rights
4. 41If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
5. 42We may not be able to enforce our intellectual property rights throughout the world
6. 43A dispute concerning the infringement or misappropriation of our proprietary rights, or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business
7. 44injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, and sell products; or

Risks Related to Our Organization, Structure and Operation

1. 45Our efforts to expand and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected
2. 46difficulties due to lack of or limited prior experience in any new markets we may enter
3. 47We may have difficulties integrating acquired products and businesses and as a result, our business, results of operations and/or financial condition may be materially adversely affected
4. 48In fiscal 2024, the great majority of our gross revenue and gross accounts receivable were due to three significant customers, the loss of which could materially and adversely affect our results of operations
5. 49Our accounts receivable subjects us to credit risk
6. 50We depend on key personnel and attracting qualified management personnel and our business could be harmed if we lose personnel and cannot attract new personnel
7. 51Product liability and other lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of our products
8. 52We may be subject to legal or administrative proceedings and litigation other than product liability lawsuits which may be costly to defend and could materially harm our business, financial condition and operations
9. 53Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to the Company
10. 54we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents
11. 55Public concern over the abuse of medications that are controlled substances, including increased legislative, legal and regulatory action, could negatively affect our business
12. 56Certain of our stockholders own a significant percentage of our stock and may and their interests may conflict with yours
13. 57Our business could be negatively affected as a result of the actions of activist stockholders
14. 58if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders

Risk Related to Securities Markets and Investment in Our Securities

1. 59Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock
2. 60Effecting a reverse stock split, if determined by the Board in its discretion, may not achieve one or more of our objectives
3. 61Our share price is volatile and may be influenced by numerous factors, some of which are beyond our control
4. 62other events or factors, many of which are beyond our control
5. 63If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and any trading volume could decline
6. 64Some provisions of our charter documents and applicable Delaware law may discourage an acquisition of us by others, even if the acquisition may be beneficial to some of our stockholders
7. 65establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon at stockholder meetings
8. 66We do not intend to pay cash dividends on our capital stock in the foreseeable future
9. 67We are and may continue to be subject to short selling strategies
10. 68Our business and operations would suffer in the event of system failures, cybersecurity attacks, data leakages or other security breaches
11. 69Major bank failure or sustained financial market illiquidity, could adversely affect our business, financial condition and results of operations
12. 70We may be unable to access funds in our deposit accounts on a timely basis. Any resulting need to access other sources of liquidity or short-term borrowing would increase our costs
13. 71Deterioration in general economic conditions in the United States and globally, including the effect of prolonged periods of inflation on our customers and suppliers, could harm our business and results of operations