Cingulate (CING) risk factors, FY2024 10-K

Other

1. 01The following summarizes key risks and uncertainties that could materially adversely affect us. You should read this summary together with the more detailed description of each risk factor contained below

Risks Related to Our Financial Position and Need for Capital

1. 02We are a biopharmaceutical company with a limited operating history
2. 03We have incurred a history of operating losses and expect to continue to incur substantial costs for the foreseeable future. We are not currently profitable, and we may never achieve or sustain profitability
3. 04We will need to raise significant additional capital to continue operations. If we are unable to raise capital, we could be required to seek bankruptcy protection or other alternatives that would likely result in our securityholders losing some or all of their investment in us
4. 05We cannot be certain that additional funding will be available on acceptable terms, or at all
5. 06In addition, future debt financing into which we may enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments and engage in certain merger, consolidation or asset sale transactions
6. 07On December 20, 2024, we entered into a Note Purchase Agreement with Streeterville Capital, LLC, or Lender, pursuant to which we issued and sold to Lender an unsecured promissory note, or Note, in the amount of $5,480,000. The Note bears interest at a rate of 9% per annum and matures 18 months after its issuance date
7. 08Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates
8. 09Changes in tax laws may materially adversely affect our business, financial condition, results of operations and cash flows
9. 10Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
10. 11The report of our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern

Risks Related to Development, Clinical Testing, Manufacturing and Regulatory Approval

1. 12We depend heavily on the success of CTx-1301. If we are unable to generate revenues from CTx-1301, our ability to create stockholder value will be limited
2. 13Premarket review of our product candidates by the FDA or other regulatory authorities is a lengthy and uncertain process and approval may be delayed, limited or denied, any of which would adversely affect our ability to generate operating revenues
3. 14Clinical testing is expensive, difficult to design and implement, can take many years to complete and is outcome uncertain. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the commercialization of our product candidates
4. 15Obtaining regulatory approval for clinical trials of CTx-1301 and CTx-1302 in children and adolescents may require additional studies and/or longer duration of studies since the requirements for regulatory approval for the pediatric populations are more stringent
5. 16Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay
6. 17Our product candidates CTx-1301 and CTx-1302 contain controlled substances, the manufacture, use, sale, importation, exportation, prescribing and distribution of which are subject to regulation by the DEA
7. 18Annual 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
8. 19If we experience delays or difficulties in the enrollment of subjects in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented
9. 20Our product candidates may cause adverse effects or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance, or result in significant negative consequences following marketing approval, if any
10. 21Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or product candidate and could substantially increase the costs of commercializing our products and product candidates
11. 22Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions
12. 23We may be unable to successfully complete our Phase 3 clinical trials for CTx-1301 or any future clinical trials for any other product candidates
13. 24Even if we obtain regulatory approval for CTx-1301, CTx-1302, and/or CTx-2103, such approval may be limited, and we will be subject to stringent, ongoing government regulation
14. 25Our employees, independent contractors, principal investigators, consultants, vendors, CROs, CMOs and any partners with which we may collaborate may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
15. 26We may be required to modify our business practices, pay fines and significant expenses or experience other losses due to governmental investigations or other enforcement activities
16. 27We or our current and prospective partners may be subject to product recalls in the future that could harm our brand and reputation and could negatively affect our business
17. 28We will need to obtain FDA approval of any proposed names for our product candidates that gain marketing approval, and any failure or delay associated with such naming approval may adversely impact our business
18. 29Disruptions at the FDA and other government agencies caused by funding shortages, staffing reductions and changes, and/or global health concerns could delay or block the development and approval of our products
19. 30Government initiatives such as the Make America Healthy Again Commission could affect the development and approval of our product candidates
20. 31Our future growth depends, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
21. 32A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, could cause a disruption to the development of our product candidates

Risks Related to Commercialization

1. 33Recently enacted and future policies and legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the reimbursement made for any product candidate for which we receive marketing approval
2. 34Unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives could harm our business in the future
3. 35We 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
4. 36Our ability to generate product revenue will depend significantly on our ability to successfully obtain final marketing approval for and commercialize our product candidates
5. 37If our drug candidates are approved but fail to achieve an adequate level of acceptance by key market participants, we will not be able to generate significant revenues, and we may not become or remain profitable, which may require us to seek additional financing
6. 38We may face significant competition from other pharmaceutical companies, and our operating results will suffer if we fail to compete effectively
7. 39Social issues around the abuse of opioids and stimulants, including law enforcement concerns over diversion and regulatory efforts to combat abuse, could decrease the potential market for our product candidates

Risks Related to Our Dependence on Third Parties

1. 40If we fail to produce our product or product candidates in the volumes that are required on a timely basis, or fail to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face regulatory penalties and delays in the development and commercialization of our product candidates
2. 41We rely on limited sources of supply for CTx-1301 and/or CTx-1302 as these are scheduled products, and any disruption in the chain of supply may impact production and sales of CTx-1301 and/or CTx-1302 and cause delays in developing and commercializing our product candidates
3. 42Our product candidates and any drugs that we may develop may compete with other product candidates and drugs for access to manufacturing facilities, and we may be unable to obtain access to these facilities on favorable terms
4. 43We expect to rely on third parties to conduct our clinical trials and our regulatory submissions for our product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials and/or regulatory submissions
5. 44We depend on collaborations with third parties for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates
6. 45If we are not able to maintain or establish partnerships or collaborations, we may have to alter our development and commercialization plans
7. 46If we are unable to achieve and maintain adequate levels of coverage and reimbursement for our product candidates, if approved, their commercial success may be severely hindered
8. 47Third-party payors may not adequately cover or reimburse consumers for the purchase of our products
9. 48If we are unable to support demand for CTx-1301, CTx-1302, and/ or CTx-2103, and any future product candidates, including ensuring that we have adequate capacity to meet increased demand, or we are unable to successfully manage the evolution of our drug delivery technology platform, our business could suffer
10. 49Our relationships with customers and third-party payors are subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings
11. 50Product liability lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of our product candidates
12. 51Our product liability insurance coverage may not be adequate to cover any and all liabilities that we may incur
13. 52If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business

Risks Related to Managing Our Growth, Our Employees, and Our Operations

1. 53We will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in executing our growth strategy and managing any growth
2. 54If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and/or sell our product candidates, we may be unable to generate any revenue
3. 55We also may enter into additional strategic partnerships with third parties to commercialize our product candidates
4. 56If we fail to attract and retain management and other key personnel, we may be unable to continue to successfully develop or commercialize our product candidates or otherwise implement our business plan
5. 57Our research and development is focused on discovering and developing product candidates but these product candidates may not make it to the market
6. 58Further, any product candidate that we acquire may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and other regulatory authorities
7. 59Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations
8. 60Our operating results and liquidity needs could be negatively affected by market fluctuations and economic downturn
9. 61Our business and operations would suffer in the event of failures in our internal computer systems
10. 62We are increasingly dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks

Risks Related to Our Intellectual Property

1. 63If our intellectual property related to our products or product candidates is not adequate, we may not be able to compete effectively in our market
2. 64Furthermore, if we encounter delays in our clinical trials or entry onto the market in a particular jurisdiction, the period of time during which we could market a particular product under patent protection would be reduced
3. 65We may not seek to protect our intellectual property rights in all jurisdictions throughout the world, and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection
4. 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
5. 67If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business
6. 68We may be unable to adequately prevent disclosure of trade secrets and other proprietary information
7. 69We 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
8. 70Our decision to seek approval of CTx-1301, CTx-1302, and/or CTx-2103 and other product candidates under 505(b)(2) may increase the risk that patent infringement suits are filed against us, which would delay the FDA’s approval of such product candidates
9. 71Our common stock and warrants are currently listed for trading on The Nasdaq Capital Market. We must satisfy the continued listing requirements of Nasdaq to maintain the listing of our securities on The Nasdaq Capital Market
10. 72An active trading market for our common stock or warrants may not be sustained
11. 73The prices of our securities may be volatile, which could subject us to securities class action litigation and our stockholders could incur substantial losses
12. 74We are an “emerging growth company,” and will be able take advantage of reduced disclosure requirements applicable to “emerging growth companies,” which could make our securities less attractive to investors
13. 75If we are not able to maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be adversely affected
14. 76We will incur significantly increased costs as a result of and devote substantial management time to operating as a public company
15. 77If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
16. 78Future sales of our common stock, warrants, or securities convertible into our common stock may depress our stock price
17. 79Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt
18. 80These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management
19. 81We do not anticipate paying any cash dividends on our common stock in the foreseeable future
20. 82The exclusive forum provision is limited to the extent permitted by law, and it will not apply to claims arising under the Exchange Act or for any other federal securities laws which provide for exclusive federal jurisdiction