Dermata Therapeutics (DRMA) FY2025 10-K Risk Factors: 43 New, 43 Dropped

What the changes say

Dermata shifted focus from prescription clinical trials to launching its Tome skincare line using OTC monograph pathways.
The company relies heavily on a Russian supplier for raw materials under existing supply agreements.
Cash runway is now projected to last into the first quarter of 2027.

What changed since the prior 10-K

New

NewRisks Related to Our Financial Position and Need for Capital
Disruptions to our distribution operations could adversely affect our ability to deliver our products to consumers and customers
Distribution and manufacturing disruptions, labor shortages, or shipping failures could delay timely delivery of our skincare products to customers.
NewRisks related to the skincare industry
Our shift from an Rx regulatory framework to OTC monograph pathways could introduce significant regulatory risks that could delay or prevent product launches, require reformulation or relabeling, restrict indications or target populations, and materially increase costs
Shifting from a prescription framework to FDA OTC monograph pathways introduces strict GRASE compliance risks that could force product reformulation or relabeling.
NewRisks related to the skincare industry
The skincare industry is highly competitive, and if we are unable to compete effectively, our results will suffer
Intense competition from multinational consumer brands and new AI-driven disruptors in the skincare industry could hurt our market share.
NewRisks related to the skincare industry
Our business is dependent on the commercial success and our ability to launch and sell Tome skincare products, including our Foundational Treatment. If we are unable to successfully launch, commercialize and sell our Foundational Treatment, our results of operations and financial condition will be materially harmed
Our revenue depends entirely on the successful commercial launch and consumer adoption of the Tome Foundational Treatment.
NewRisks related to the skincare industry
Our new product launch may not be as successful as we anticipate
Rapidly shifting beauty trends and potential failure of our marketing strategies could cause new product launches to underperform.
NewRisks related to the skincare industry
We believe that developing and maintaining our brand is critical and that our financial success is directly dependent on consumer perception of our brand. Furthermore, the importance of brand recognition may become even greater as our competitors offer more products that are similar to our products
Low brand awareness requires us to maintain high ethical and environmental standards and reliable e-commerce platforms to protect our reputation.
NewRisks related to the skincare industry
Our success depends, in part, on the quality, efficacy and safety of our products
Product contamination, quality failures, or false claims could trigger costly recalls and tarnish consumer confidence in our skincare products.
NewRisks related to the skincare industry
The illegal distribution and sale by third parties of counterfeit versions of our products or the unauthorized diversion by third parties of our products could have an adverse effect on our net sales and a negative impact on our reputation and business
The proliferation of counterfeit versions or unauthorized diversion of our products to unapproved sales outlets could harm our brand reputation.
NewRisks related to the skincare industry
Demand for our products may not increase as rapidly as we anticipate due to a variety of factors, including a weakness in general economic conditions and resistance to non-traditional treatment methods
General economic downturns and reduced consumer spending on elective esthetic treatments could depress demand for our products.
NewRisks related to the skincare industry
We may experience declines in average selling prices of our products which may decrease our net revenues
Subscription discount programs, regional price variations, and promotional rebates could decrease our average selling prices and net revenues.
NewRisks related to our growth and profitability
We may not be able to successfully implement our growth strategy
Executing our growth strategy requires costly upfront investments in brand awareness and digital capabilities that may dilute near-term earnings.
NewRisks related to our growth and profitability
Our growth and profitability are dependent on a number of factors
Unforeseen supply disruptions, regulatory actions by the FTC or FDA, or brand damage could prevent us from achieving profitability.
NewRisks related to our growth and profitability
We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and results of operations
NewRisks related to our growth and profitability
Acquisitions or investments could disrupt our business and harm our financial condition
NewRisks related to our growth and profitability
If we are unable to address these difficulties and challenges or other problems encountered in connection with any acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment and we might incur unanticipated liabilities or otherwise suffer harm to our business generally
NewRisks related to our growth and profitability
We expect our future quarterly and annual operating results to fluctuate for a variety of reasons, particularly as we focus on increasing consumer demand for our products. Volatility in the financial markets could also have a material adverse effect on our business
NewRisks related to our business operations
A disruption in our operations could materially and adversely affect our business
NewRisks related to our business operations
Our success depends, in part, on our retention of key members of our senior management team, whose continued service is not guaranteed, and ability to attract and retain qualified personnel
NewRisks related to our business operations
We also partially rely on providers and aestheticians to promote our treatments, but they are not under any contractual obligations to do so or continue to do so
NewRisks related to our business operations
We rely on third-party delivery service providers
NewRisks related to our business operations
A disruption in the operations of our primary freight carrier or higher shipping costs could cause a decline in our net revenues or a reduction in our earnings
NewRisks related to our business operations
If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected
NewRisks related to our business operations
In order to build market penetration and raise awareness of our brand and products, we will have to spend substantial cash on marketing activities, which may not ultimately prove successful or an effective use of our resources
NewRisks related to our business operations
Any skincare professionals we may engage in the future will likely not be under any obligation to purchase any product from us, and business challenges at one or more of these providers could adversely affect our results of operations
NewRisks Related to Consumer Use Studies and Product Testing
Any of the foregoing risks could materially and adversely affect our business, financial condition, results of operations, and reputation
NewRisks Related to Consumer Use Studies and Product Testing
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenues
NewRisks related to evolving laws and regulations and compliance with laws and regulations
New laws, regulations, enforcement trends or changes in existing regulations governing the introduction, marketing and sale of our products to consumers could harm our business
NewRisks related to evolving laws and regulations and compliance with laws and regulations
New laws, regulations, enforcement trends, or changes in existing regulations could affect the ability of our aesthetician providers in certain states to provide our treatments to consumers, any of which could have a material adverse effect on our business, financial condition, and results of operation
NewRisks related to evolving laws and regulations and compliance with laws and regulations
Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products. If we fail to comply with federal, state and foreign regulations, our manufacturing operations could be halted, and our business would suffer
NewRisks related to evolving laws and regulations and compliance with laws and regulations
Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition and results of operations
NewRisks related to evolving laws and regulations and compliance with laws and regulations
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
NewRisks related to evolving laws and regulations and compliance with laws and regulations
As compliance with healthcare regulations becomes more costly and difficult for us or our customers, we may be unable to grow our business
NewRisks related to evolving laws and regulations and compliance with laws and regulations
If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties
NewRisks related to evolving laws and regulations and compliance with laws and regulations
Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operations
NewRisks related to evolving laws and regulations and compliance with laws and regulations
Unforeseen side effects from any of our products could arise after the product has been marketed
NewRisks related to marketing activities
Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties
NewRisks related to marketing activities
We expect that our business will rely heavily on email and other messaging services, and any restrictions on the sending of emails or messages or an inability to timely deliver such communications could materially adversely affect our net revenue and business
NewRisks related to marketing activities
Changes in the laws or regulations that limit our ability to send such communications or impose additional requirements upon us in connection with sending such communications would also materially adversely impact our business
NewRisks Related to Managing Our Growth, Our Employees and Our Operations
Further, any product that we acquire may require additional development efforts prior to commercial sale. In addition, we cannot provide assurance that any commercial products that we acquire will be manufactured or sold profitably or achieve market acceptance
NewRisks Related to Managing Our Growth, Our Employees and Our Operations
The increasing use of artificial intelligence (“AI”) in our operations and by third-party partners may create operational, compliance, and reputational risks that could adversely affect our business and results of operations
NewRisks Related to Our Intellectual Property
any patents we obtain may not be valid or enforceable; and
NewRisks Related to Termination of License Agreement
The termination of our license agreement with Villani could negatively impact our operations
NewRisks Related to Termination of License Agreement
Although the license agreement has been terminated, the termination has not eliminated the risk of disputes with the licensor, and such disputes could have a material adverse effect on our business, financial condition, results of operations and cash flows

Dropped

DroppedRisks Related to Our Financial Position and Need for Capital
personnel, facilities and equipment requirements
DroppedRisks Related to Our Financial Position and Need for Capital
the time and costs involved in obtaining regulatory approval for our product candidates;
DroppedRisks Related to Our Financial Position and Need for Capital
market acceptance of our products
DroppedRisks Related to Our Financial Position and Need for Capital
We are exposed to risks related to foreign currency exchange rates
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Our business is dependent on the successful development, regulatory approval and commercialization of our product candidates, in particular XYNGARI™ and DMT410
Funding availability and restrictive debt financing covenants.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
our ability to in-license or acquire additional product candidates or commercial-stage products that we believe we can successfully develop and commercialize
Macroeconomic inflation, rising interest rates, and bank failures.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Clinical drug development for our product candidates is very expensive, time-consuming and uncertain. Our clinical trials may fail to adequately demonstrate the safety and efficacy of our product candidates, which could prevent or delay regulatory approval and commercialization
Cash exhaustion and the need for ongoing operational financing.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Our industry is subject to extensive regulatory obligations and policies that may be subject to change, including due to judicial challenges
DroppedRisks Related to Development, Regulatory Approval and Commercialization
We face risks related to public health emergencies, epidemics and other outbreaks of communicable diseases, which could significantly disrupt our operations, including our clinical trials and preclinical studies, and adversely affect our business and results of operations
Foreign currency exchange rate exposure related to the Euro.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines; and interruptions, difficulties or delays arising in our existing operations and company culture as a result of many of our employees working remotely
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Approval may be delayed or denied because we cannot satisfy FDA’s Chemistry, Manufacturing and Control Requirements
Clinical development of XYNGARI and DMT410 product candidates.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
change its approval policies or adopt new regulations in a manner rendering our clinical data or regulatory filings insufficient for approval
In-licensing or acquiring additional clinical product candidates.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
We have completed enrollment of our first Phase 3 clinical trials for XYNGARI™, but that does not guarantee successful completion. We may be unable to successfully complete it or any future clinical trials
Expensive and uncertain clinical drug development trials.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Even if our current product candidates or any future product candidates obtain regulatory approval, they may fail to achieve the broad degree of physician and patient adoption and use necessary for commercial success
Difficulty in maintaining contact with clinical trial subjects.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
potential product liability claims
Extensive regulatory obligations in the U.S. pharmaceutical industry.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
We intend to seek NCE exclusivity for XYNGARI™ and future product candidates, and we may be unsuccessful in obtaining such exclusivity
Public health emergencies and epidemics disrupting clinical trials.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Our product candidates, if approved, will face significant competition and our failure to effectively compete may prevent us from achieving significant market penetration
FDA review delays and operational impacts of remote work.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
We expect to face generic or similar type of product competition for our product candidates, which could adversely affect our business, financial condition, operating results and prospects
Changes in product candidate manufacturing methods and formulations.
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Any product candidates that we commercialize, or that any partner with which we may collaborate commercializes, will be subject to ongoing and continued regulatory review
DroppedRisks Related to Development, Regulatory Approval and Commercialization
seize or detain products or require us or our partners to initiate a product recall
DroppedRisks Related to Development, Regulatory Approval and Commercialization
We may in the future conduct clinical trials for our product candidates outside the United States and the FDA and applicable foreign regulatory authorities may not accept data from such trials
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Our product candidates may cause undesirable side effects or have other unexpected properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in post-approval regulatory action
DroppedRisks Related to Development, Regulatory Approval and Commercialization
our brand and reputation may suffer
DroppedRisks Related to Development, Regulatory Approval and Commercialization
If we or any partners with which we may collaborate are unable to achieve and maintain coverage and adequate levels of reimbursement for any of our product candidates for which we receive regulatory approval, or any future products we may seek to commercialize, their commercial success may be severely hindered
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Healthcare legislative or regulatory reform measures, including government restrictions on pricing and reimbursement, may have a negative impact on our business and results of operations
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Other examples of proposed changes include, but are not limited to, expanding post-approval requirements, changing the Orphan Drug Act, and restricting sales and promotional activities for pharmaceutical products
DroppedRisks Related to Development, Regulatory Approval and Commercialization
additional recordkeeping
DroppedRisks Related to Development, Regulatory Approval and Commercialization
Development of test methodology for XYNGARI™ presents unique challenges due to the complex mixture of constituents in the product. Determination of appropriate assay(s) for release and quality control evaluations could require significant development time and cost to successfully complete and uncertain
DroppedRisks Related to Our Dependence on Third Parties
other unforeseen geopolitical factors that limit our ability access our supply of raw material
DroppedRisks Related to Our Dependence on Third Parties
discontinue production or manufacturing of necessary drug substances or products
DroppedRisks Related to Our Dependence on Third Parties
Our reliance on contract manufacturers and suppliers further exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may misappropriate our trade secrets or other proprietary information
DroppedRisks Related to Our Dependence on Third Parties
If we are not able to establish and maintain collaborations, we may have to alter our development and commercialization plans
DroppedRisks Related to Our Dependence on Third Parties
Collaborations typically impose detailed obligations on each party. If we were to breach our obligations, we may face substantial consequences, including potential termination of the collaboration, and our rights to our partners’ product candidates, in which we have invested substantial time and money, would be lost
DroppedRisks Related to Managing Our Growth, Our Employees and Our Operations
manage our development efforts effectively while carrying out our contractual obligations to partners and other third parties
DroppedRisks Related to Managing Our Growth, Our Employees and Our Operations
Accordingly, there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, and any transaction that we do complete could harm our business, financial condition, operating results, and prospects
DroppedRisks Related to Managing Our Growth, Our Employees and Our Operations
latent defects that may become apparent after the product has been released and which may result in recall and destruction of product
DroppedRisks Related to Our Intellectual Property
we may not develop additional proprietary technologies that are patentable
DroppedRisks Related to Our Intellectual Property
If we fail to comply with our obligations under our intellectual property license agreements, we could lose license rights that are important to our business
DroppedRisks Related to Our Intellectual Property
redesigning our products or processes so they do not infringe, which may not be possible or may require substantial monetary expenditures and time
DroppedRisks Related to the Securities Markets and Ownership of Our Common Stock and Warrants
general economic, market or political conditions in the United States or elsewhere
DroppedRisks Related to the Securities Markets and Ownership of Our Common Stock and Warrants
proposals for legislation that would place restrictions on the price of medical therapies

Reworded

97% rewritten
Summary of Risks Associated with Our Business
Replaced clinical pre-revenue summary points with commercial skincare risks, highlighting competition, lack of commercial history, and raw material supply.
83% rewrittenRisks related to our business operations
Our business may be affected by new sanctions, import restrictions, and export controls targeting Russia and other responses to Russia’s invasion of Ukraine
Removed specific references to XYNGARI and DMT410 candidate names, replacing them with generic references to raw materials for upcoming product launches.
69% rewrittenRisks Related to Our Intellectual Property
If our patent term expires before or soon after our products available for sale, or if manufacturers of generic or similar products successfully challenge our patents, our business may be materially harmed
Removed specific references to Hatch-Waxman Act patent term extensions and changed biosimilar references to generic similar products.
Was: If our patent term expires before or soon after our products are approved, or if manufacturers of generic or biosimilar drugs successfully challenge our patents, our business may be materially harmed
68% rewrittenRisks Related to Managing Our Growth, Our Employees and Our Operations
Our failure to successfully in-license, acquire, develop, and market additional products would impair our ability to grow our business
Broadened acquisition risks from pharmaceutical product candidates to commercial products and added competition from better-resourced companies.
Was: Our failure to successfully in-license, acquire, develop, and market additional product candidates or approved products would impair our ability to grow our business
65% rewrittenRisks Related to the Securities Markets and Ownership of Our Common Stock and Warrants
The market price of our common stock and Warrants has been volatile and can fluctuate substantially, which could result in substantial losses for holders of our securities
Formatted stock volatility risk factors into a bulleted list for clarity.
Was: The market price of our common stock and Warrants have been volatile and can fluctuate substantially, which could result in substantial losses for holders of our securities
63% rewrittenRisks Related to Managing Our Growth, Our Employees and Our Operations
We 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
Added bulleted formatting to outline organizational growth and commercial capability requirements.
61% rewrittenRisks Related to Our Financial Position and Need for Capital
We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our products
Extended cash sufficiency timeline from third quarter of 2025 to first quarter of 2027 to support the commercial launch of the Tome Foundational Treatment.
Was: We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our product candidates
61% rewrittenRisks Related to Our Financial Position and Need for Capital
We have incurred losses since inception and anticipate that we will continue to incur losses for the foreseeable future. We are not currently profitable, and we may never achieve or sustain profitability
Updated net losses to disclose specific figures of approximately $7.8 million for 2025 and $12.3 million for 2024.
58% rewrittenRisks Related to Managing Our Growth, Our Employees and Our Operations
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations
57% rewrittenRisks related to evolving laws and regulations and compliance with laws and regulations
We may choose not to continue developing or commercializing any of our products at any time during development or after launch, which would reduce or eliminate our potential return on investment for those products
Was: We may choose not to continue developing or commercializing any of our product candidates at any time during development or after approval, which would reduce or eliminate our potential return on investment for those product candidates
56% rewrittenRisks related to our business operations
We are dependent on one supplier for the raw material used to produce the sponge powder used in our products. The termination of this contract would result in a disruption to product development, and our business will be harmed
Was: We are dependent on one supplier for the raw material used to produce XYNGARI™ and DMT410. The termination of this contract would result in a disruption to product development and our business will be harmed
54% rewrittenRisks Related to Our Financial Position and Need for Capital
We are a pre-commercial stage company with a limited operating history
Was: We are a clinical stage pharmaceutical company with a limited operating history
53% rewrittenRisks Related to Our Financial Position and Need for Capital
Changes in tax laws may materially adversely affect our business financial condition, results of operations and cash flows
38% rewrittenRisks Related to Managing Our Growth, Our Employees and Our Operations
We currently have limited marketing capabilities. If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our product candidates or generate product revenue
Was: We currently have limited marketing capabilities and no outside sales organization. If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our product candidates, if approved, or generate product revenue
28% rewrittenRisks related to evolving laws and regulations and compliance with laws and regulations
We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate
27% rewrittenRisks Related to Our Intellectual Property
If 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 could have a material adverse effect on our business
26% rewrittenRisks related to evolving laws and regulations and compliance with laws and regulations
Our 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
23% rewrittenRisks Related to the Securities Markets and Ownership of Our Common Stock and Warrants
We are an “emerging growth company,” and will be able take advantage of reduced disclosure requirements applicable to “emerging growth companies,” which could make our common stock and Warrants less attractive to investors

All 91 risk factors

Headings as the filing states them, in filing order.

Other

01Summary of Risks Associated with Our Business97% rewritten

Risks Related to Our Financial Position and Need for Capital

02We are a pre-commercial stage company with a limited operating history54% rewritten
03We have incurred losses since inception and anticipate that we will continue to incur losses for the foreseeable future. We are not currently profitable, and we may never achieve or sustain profitability61% rewritten
04We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our products61% rewritten
05The reports of our independent registered public accounting firm for the fiscal years ended December 31, 2025, and 2024, contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern
06Changes in tax laws may materially adversely affect our business financial condition, results of operations and cash flows53% rewritten
07Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations
08Disruptions to our distribution operations could adversely affect our ability to deliver our products to consumers and customersNew
09Global conditions, dislocations in the financial markets, any negative financial impacts affecting United States as a result of tax reform or changes to existing trade agreements or tax conventions, may adversely impact our business

Risks related to the skincare industry

10Our shift from an Rx regulatory framework to OTC monograph pathways could introduce significant regulatory risks that could delay or prevent product launches, require reformulation or relabeling, restrict indications or target populations, and materially increase costsNew
11The skincare industry is highly competitive, and if we are unable to compete effectively, our results will sufferNew
12Our business is dependent on the commercial success and our ability to launch and sell Tome skincare products, including our Foundational Treatment. If we are unable to successfully launch, commercialize and sell our Foundational Treatment, our results of operations and financial condition will be materially harmedNew
13Our new product launch may not be as successful as we anticipateNew
14We believe that developing and maintaining our brand is critical and that our financial success is directly dependent on consumer perception of our brand. Furthermore, the importance of brand recognition may become even greater as our competitors offer more products that are similar to our productsNew
15Our success depends, in part, on the quality, efficacy and safety of our productsNew
16The illegal distribution and sale by third parties of counterfeit versions of our products or the unauthorized diversion by third parties of our products could have an adverse effect on our net sales and a negative impact on our reputation and businessNew
17Demand for our products may not increase as rapidly as we anticipate due to a variety of factors, including a weakness in general economic conditions and resistance to non-traditional treatment methodsNew
18We may experience declines in average selling prices of our products which may decrease our net revenuesNew

Risks related to our growth and profitability

19We may not be able to successfully implement our growth strategyNew
20Our growth and profitability are dependent on a number of factorsNew
21We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and results of operationsNew
22Acquisitions or investments could disrupt our business and harm our financial conditionNew
23If we are unable to address these difficulties and challenges or other problems encountered in connection with any acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment and we might incur unanticipated liabilities or otherwise suffer harm to our business generallyNew
24We expect our future quarterly and annual operating results to fluctuate for a variety of reasons, particularly as we focus on increasing consumer demand for our products. Volatility in the financial markets could also have a material adverse effect on our businessNew

Risks related to our business operations

25A disruption in our operations could materially and adversely affect our businessNew
26Our success depends, in part, on our retention of key members of our senior management team, whose continued service is not guaranteed, and ability to attract and retain qualified personnelNew
27We also partially rely on providers and aestheticians to promote our treatments, but they are not under any contractual obligations to do so or continue to do soNew
28We are dependent on one supplier for the raw material used to produce the sponge powder used in our products. The termination of this contract would result in a disruption to product development, and our business will be harmed56% rewritten
29Our business may be affected by new sanctions, import restrictions, and export controls targeting Russia and other responses to Russia’s invasion of Ukraine83% rewritten
30We rely on third-party delivery service providersNew
31A disruption in the operations of our primary freight carrier or higher shipping costs could cause a decline in our net revenues or a reduction in our earningsNew
32If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affectedNew
33In order to build market penetration and raise awareness of our brand and products, we will have to spend substantial cash on marketing activities, which may not ultimately prove successful or an effective use of our resourcesNew
34Any skincare professionals we may engage in the future will likely not be under any obligation to purchase any product from us, and business challenges at one or more of these providers could adversely affect our results of operationsNew

Risks Related to Consumer Use Studies and Product Testing

35Any of the foregoing risks could materially and adversely affect our business, financial condition, results of operations, and reputationNew
36We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenuesNew

Risks related to evolving laws and regulations and compliance with laws and regulations

37New laws, regulations, enforcement trends or changes in existing regulations governing the introduction, marketing and sale of our products to consumers could harm our businessNew
38New laws, regulations, enforcement trends, or changes in existing regulations could affect the ability of our aesthetician providers in certain states to provide our treatments to consumers, any of which could have a material adverse effect on our business, financial condition, and results of operationNew
39Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products. If we fail to comply with federal, state and foreign regulations, our manufacturing operations could be halted, and our business would sufferNew
40Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition and results of operationsNew
41Our disclosure controls and procedures may not prevent or detect all errors or acts of fraudNew
42As compliance with healthcare regulations becomes more costly and difficult for us or our customers, we may be unable to grow our businessNew
43If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penaltiesNew
44Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operationsNew
45Unforeseen side effects from any of our products could arise after the product has been marketedNew
46We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate28% rewritten
47We may choose not to continue developing or commercializing any of our products at any time during development or after launch, which would reduce or eliminate our potential return on investment for those products57% rewritten
48We 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
49We may also be subject to healthcare and consumer-protection laws, regulations and enforcement and our failure to comply with those laws could adversely affect our business, operations and financial condition
50Our employees, independent contractors, consultants, vendors, CROs and any partners with which we may collaborate may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
51Our 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 uncertainties26% rewritten

Risks related to marketing activities

52Use of social media may materially and adversely affect our reputation or subject us to fines or other penaltiesNew
53We expect that our business will rely heavily on email and other messaging services, and any restrictions on the sending of emails or messages or an inability to timely deliver such communications could materially adversely affect our net revenue and businessNew
54Changes in the laws or regulations that limit our ability to send such communications or impose additional requirements upon us in connection with sending such communications would also materially adversely impact our businessNew

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

55We 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 growth63% rewritten
56If we fail to attract and retain management and other key personnel, we may be unable to continue to successfully develop or commercialize our products or otherwise implement our business plan
57We currently have limited marketing capabilities. If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our product candidates or generate product revenue38% rewritten
58Our failure to successfully in-license, acquire, develop, and market additional products would impair our ability to grow our business68% rewritten
59Further, any product that we acquire may require additional development efforts prior to commercial sale. In addition, we cannot provide assurance that any commercial products that we acquire will be manufactured or sold profitably or achieve market acceptanceNew
60Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations58% rewritten
61Our operating results and liquidity needs could be negatively affected by market fluctuations and economic downturn
62Our business and operations would suffer in the event of failures in our internal computer systems
63We are increasingly dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks
64The increasing use of artificial intelligence (“AI”) in our operations and by third-party partners may create operational, compliance, and reputational risks that could adversely affect our business and results of operationsNew

Risks Related to Our Intellectual Property

65We may not be able to obtain or enforce patent rights or other intellectual property rights that cover our products and technologies that are of sufficient breadth to prevent third parties from competing against us
66any patents we obtain may not be valid or enforceable; andNew
67Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our future patents
68We may not be able to protect our intellectual property rights throughout the world
69Obtaining 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
70The complexity and uncertainty of European laws have increased in recent years
71If 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 could have a material adverse effect on our business27% rewritten
72We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive and time-consuming
73We consider proprietary trade secrets or confidential know-how and unpatented know-how to be important to our business. We may rely on trade secrets or confidential know-how to protect our technology, especially where patent protection is believed by us to be of limited value
74We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed to us alleged trade secrets of their former employers or their former or current customers
75If our patent term expires before or soon after our products available for sale, or if manufacturers of generic or similar products successfully challenge our patents, our business may be materially harmed69% rewritten
76If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
77Our proprietary information may be lost, or we may suffer security breaches

Risks Related to Termination of License Agreement

78The termination of our license agreement with Villani could negatively impact our operationsNew
79Although the license agreement has been terminated, the termination has not eliminated the risk of disputes with the licensor, and such disputes could have a material adverse effect on our business, financial condition, results of operations and cash flowsNew

Risks Related to the Securities Markets and Ownership of Our Common Stock and Warrants

80The market price of our common stock and Warrants has been volatile and can fluctuate substantially, which could result in substantial losses for holders of our securities65% rewritten
81Our Warrants may not have any value
82A Warrant does not entitle the holder to any rights as common stockholders until the holder exercises the Warrant for a share of our common stock
83We are an “emerging growth company,” and will be able take advantage of reduced disclosure requirements applicable to “emerging growth companies,” which could make our common stock and Warrants less attractive to investors23% rewritten
84If 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
85Future sales of our common stock, Warrants or securities convertible into our common stock may depress our stock price
86Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock
87Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt
88These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management
89Our ability to use our net operating loss carryforwards may be limited
90We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future
91The exclusive forum provision is limited to the extent permitted by law, and it will not apply to claims arising under the Securities Exchange Act of 1934, as amended, or the Exchange Act, or for any other federal securities laws which provide for exclusive federal jurisdiction

Other Dermata Therapeutics 10-Ks

FY2024 10-K risk factors
91 risks
Dermata Therapeutics is a pre-revenue clinical-stage biopharmaceutical company dependent on cash to Q3 2025. The company's lead products are XYNGARI and DMT410. Independent auditors express substantial doubt about the company's ability to continue as a going concern.
Filed Mar 17, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.