Cue Biopharma (CUE) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern
2. 02We are a clinical-stage biopharmaceutical company, have no history of generating commercial revenue, have a history of operating losses and may never achieve or maintain profitability
3. 03We currently do not have, and may never develop, any FDA-approved or commercialized products
4. 04rapid technological change may make our technology and drug product candidates obsolete
5. 05We have limited experience in conducting clinical trials and no history of commercializing biologic products, which may make it difficult to evaluate the prospects for our future viability
6. 06varying interpretations of data by the FDA and foreign regulatory authorities
7. 07regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug product candidates
8. 08Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials
9. 09We plan to continue to seek collaborations or strategic alliances. However, we may not be able to establish such relationships, and relationships we have established may not provide the expected benefits
10. 10our collaborators may own or co-own intellectual property covering our potential products that results from our collaboration with them, and in such case, we would not have the exclusive right to commercialize such intellectual property without our collaborators’ involvement and consent
11. 11Our collaboration agreement with LG Chem contains exclusivity provisions that restrict our research and development activities
12. 12We may not be successful in our efforts to identify additional drug product candidates. Due to our limited resources and access to capital, we must prioritize the development of certain drug product candidates; these decisions may prove to be wrong and may adversely affect our business
13. 13success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities
14. 14We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. Our competitors may be able to develop other compounds or drugs that are able to achieve similar or better results than our drug product candidates
15. 15If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify and develop new or next generation drug product candidates will be impaired, could result in loss of markets or market share and could make us less competitive
16. 16no assurance that we could find satisfactory replacements for our current and future key scientific and management employees on terms that would not be unduly expensive or burdensome to us
17. 17Our internal computer systems, or those used by third-party CROs, manufacturers or other contractors or consultants, may fail or suffer security breaches
18. 18War, terrorism, other acts of violence, or natural or manmade disasters may affect the markets in which we operate, our patients and resources required in our research and development activities

Risks Related to Our Reliance on Third Parties

1. 19We rely completely on third parties to manufacture our preclinical and clinical drug supplies for our drug product candidates
2. 20We rely on certain sole or limited sources of supply for our drug product candidates and disruptions in the chain of supply have in the past, and may in the future, cause delays in developing, obtaining approval for, and commercializing our drug product candidates

Risks Related to Intellectual Property and Other Legal Matters

1. 21If we or our licensor(s) are unable to protect our or its intellectual property, then our financial condition, results of operations and the value of our technology and potential products could be adversely affected
2. 22If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and potential products could be adversely affected
3. 23If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are important to our business
4. 24If we are unable to patent and protect the intellectual property used in our potential products, others may be able to copy our innovations, which may impair our ability to compete effectively in our markets
5. 25If we are the target of claims by third parties asserting that our potential products or intellectual property infringe upon the rights of others, we may be forced to incur substantial expenses or divert substantial employee resources from our business
6. 26Patent terms may be inadequate to protect our competitive position on our drug product candidates for an adequate amount of time
7. 27If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our drug product candidates
8. 28the inability to commercialize any product candidate

Risks Related to Government Regulation

1. 29We are subject to regulation in respect of our research and federal funding
2. 30Failure to obtain marketing approval in foreign jurisdictions would prevent any of our drug product candidates from being marketed in such jurisdictions, which, in turn, would materially impair our ability to generate revenue
3. 31We may seek orphan drug designation for one or more of our drug product candidates, but even if such designation is granted, we may be unable to maintain any benefits associated with orphan drug designation, including market exclusivity that prevents the FDA or the EMA from approving other competing products
4. 32If approved, our drug product candidates that are licensed and regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway
5. 33We may in the future, conduct clinical trials for certain of our drug product candidates at sites outside the United States. The FDA may not accept data from trials conducted in such locations and the conduct of trials outside the United States could subject us to additional delays and expense
6. 34To obtain the necessary approval of our potential products, as a precondition, we will need to conduct various preclinical and clinical tests, all of which will be costly and time consuming, and may not provide results that will allow us to seek regulatory approval
7. 35change their approval policies or adopt new regulations
8. 36approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product
9. 37issue injunctions or impose civil or criminal penalties
10. 38Any regulatory approval to market our products will be limited by indication. If we fail to comply or are found to be in violation of FDA regulations restricting the promotion of our products for unapproved uses, we could be subject to criminal penalties, substantial fines or other sanctions and damage awards
11. 39If commercial third-party payors or government payors fail to provide coverage or adequate reimbursement, our revenue and prospects for profitability would be harmed
12. 40Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our drug product candidates and affect the prices we may obtain for any products that are approved in the United States or foreign jurisdictions
13. 41The prices of prescription pharmaceuticals in the United States and foreign jurisdictions are subject to considerable legislative and executive actions and could impact the prices we obtain for our products, if approved
14. 42Compliance with the HIPAA security, privacy and breach notification regulations may increase our costs
15. 43the protection of computing systems maintaining electronic PHI
16. 44individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects
17. 45Our employees, principal investigators, consultants, and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
18. 46Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and selling certain drug product candidates outside of the United States and require us to develop and implement costly compliance programs
19. 47If 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 Our Financial Results, Our Need for Financing and Owning Our Common Stock

1. 48We anticipate future losses and negative cash flow, and it is uncertain if or when we will become profitable
2. 49the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights
3. 50We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts, and our liquidity and operations could be adversely affected if a financial institution holding such funds fails
4. 51We have a loan agreement that requires us to meet certain operating covenants and place restrictions on our operating and financial flexibility
5. 52negative pledge, and certain other customary exclusions. Because of the security interest, SVB’s rights to repayment from a liquidation of the assets subject to that security interest would be senior to the rights of other creditors
6. 53We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
7. 54Our stock price can be volatile and fluctuate significantly, and our stockholders may have difficulty selling their shares and/or suffer substantial losses
8. 55general economic and market conditions, including recent adverse changes in the domestic and international financial markets, the impacts of inflation and the implementation of trade barriers and tariffs and government action in response thereto
9. 56If we fail to comply with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted
10. 57We may be subject to securities litigation, which is expensive and could divert management attention
11. 58If securities or industry analysts do not publish research reports about our business, or if they issue an adverse opinion about our business, the price of our securities and trading volume could decline
12. 59We have not paid dividends in the past and have no immediate plans to pay dividends
13. 60Our ability to use net operating loss carryforwards and research and development tax credits to reduce future tax payments may be limited or restricted
14. 61We incur significant costs as a result of being a public company and our management is required to devote substantial time to meet compliance obligations
15. 62Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable
16. 63provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal claims
17. 64The choice of forum provisions will not apply to claims arising under the Securities Act of 1933, as amended, or the Securities Act, the Exchange Act, or any other claim for which federal courts have exclusive jurisdiction
18. 65If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities may decrease
19. 66If a significant number of our total outstanding shares are sold into the market, the market price of our common stock could drop significantly, even if our business is performing well
20. 67In addition, we have filed registration statements registering all shares of common stock that we may issue under our equity compensation plans. These shares can be freely sold in the public market upon issuance, subject to black-out periods and volume limitations applicable to affiliates
21. 68than 4.99% of our outstanding common stock immediately after exercise, which limitation we refer to as the November 2022 Beneficial Ownership Limitation. The holders may increase or decrease their November 2022 Beneficial Ownership Limitation to a percentage not in excess of 19.99% by giving notice to us