Precision Biosciences (DTIL) risk factors, FY2024 10-K

Risks Related to Our Financial Condition, Limited Operating History and Need for Additional Capital

1. 01We have incurred significant operating losses since our inception and expect to continue to incur losses for the foreseeable future. We have not been profitable and may not achieve or maintain profitability
2. 02incur increased costs as a result of operating as a public company
3. 03We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts
4. 04the amount of revenues, if any, received from commercial sales of any products that we develop alone or with collaborators that receive regulatory approval
5. 05Provisions of our debt instruments may restrict our ability to pursue our business strategies, and our ability to access credit on favorable terms, if necessary, for the funding of our operations, trials and programs may be limited due to changes in credit markets
6. 06In addition, the agreements and instruments governing future indebtedness that we may enter into may include such restrictions or additional restrictions and financial covenants. Restrictions in our current and future indebtedness could inhibit our ability to pursue our business strategies
7. 07Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates
8. 08We are a genome editing company with a limited operating history. We formed our company in 2006 and spent the first nine years of our company’s history developing and refining our core technology, and only during the past several years have we focused our efforts on advancing the development of product candidates
9. 09We may expend our limited resources on pursuing particular research programs or product candidates that may be less successful or profitable than other programs or product candidates

Risks Related to the Identification, Development and Commercialization of Our Product Candidates

1. 10ARCUS is a novel technology, making it difficult to predict the time, cost and potential success of product candidate development. We have not yet been able to assess the safety and efficacy of most of our product candidates in humans
2. 11The genome editing field is relatively new and evolving rapidly, and other existing or future technologies may provide significant advantages over our ARCUS platform, which could materially harm our business
3. 12We are heavily dependent on the successful development and translation of ARCUS, and due to the early stages of our product development operations, we cannot give any assurance that any product candidates will be successfully developed and commercialized
4. 13Our research and development programs may not lead to the successful identification, development or commercialization of any products
5. 14the regulatory pathway for a product candidate may be too complex, expensive or otherwise difficult to navigate successfully; or
6. 15If our product candidates do not achieve projected development milestones or commercialization in the announced or expected timeframes, the further development or commercialization of such product candidates may be delayed, and our business will be harmed
7. 16Adverse public perception of genome editing may negatively impact the developmental progress or commercial success of products that we develop alone or with collaborators
8. 17the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute
9. 18Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any products that we develop alone or with collaborators
10. 19large judgments have been awarded in class action lawsuits based on products that had unanticipated adverse effects. If we cannot successfully defend ourselves against claims that product candidates or products we develop alone or with collaborators caused harm, we could incur substantial liabilities
11. 20the inability to further develop or commercialize any products
12. 21The regulatory landscape that will apply to development of therapeutic product candidates by us or our collaborators is rigorous, complex, uncertain and subject to change, which could result in delays or termination of development of such product candidates or unexpected costs in obtaining regulatory approvals
13. 22We may not be able to submit INDs to the FDA or CTAs to comparable foreign authorities to commence clinical trials on the timelines we expect, and even if we are able to, the FDA or comparable foreign authorities may not permit us to proceed
14. 23The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed
15. 24This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects
16. 25Clinical trials are difficult to design and implement, expensive, time-consuming and involve an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business
17. 26unforeseen events, such as natural or manmade disasters, public health emergencies, such as natural catastrophic events
18. 27experience damage to our reputation
19. 28Any product candidates that we or our collaborators may develop will be novel and may be complex and difficult to manufacture, and if we experience manufacturing problems, it could result in delays in development and commercialization of such product candidates or otherwise harm our business
20. 29Any delays or difficulties in our or our collaborators’ ability to enroll patients in clinical trials could delay or prevent receipt of regulatory approvals
21. 30unforeseen events, such as natural or manmade disasters, public health emergencies may impact our operations, or other natural catastrophic events
22. 31the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments
23. 32Results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials. Our product candidates may not have favorable results in later clinical trials, if any, or receive regulatory approval
24. 33product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our industry is high
25. 34Interim, “top-line” and initial data from studies or trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data
26. 35Our product candidates may not work as intended or cause undesirable side effects that could hinder or prevent receipt of regulatory approval or realization of commercial potential for them or our other product candidates and substantially harm our business
27. 36We are subject to federal, state and foreign healthcare laws and regulations relating to our business, and could face substantial penalties if we are determined not to have fully complied with such laws, which would have an adverse impact on our business
28. 37Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements, and the increasing use of social media, could adversely affect our business, results of operations, and financial condition
29. 38Our business and operations may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity
30. 39consultants’, CROs’ and collaborators’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and Confidential Information
31. 40the first applicant cannot supply enough orphan medicinal product
32. 41If the product candidates that we or our collaborators may develop receive regulatory approval in the United States or another jurisdiction, they may never receive approval in other jurisdictions, which would limit market opportunities for such product candidate and adversely affect our business
33. 42Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize any product candidates we or our collaborators develop and may adversely affect the prices for such product candidates
34. 43In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include the American Rescue Plan Act of 2021, which, effective January 1, 2024, eliminated the statutory Medicaid drug rebate cap, which was previously set at 100% of a drug’s average manufacturer price
35. 44Even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements, which may result in significant additional expense
36. 45refuse to allow us or our collaborators to enter into government contracts
37. 46The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found or alleged to have improperly promoted off-label uses, we may become subject to significant liability
38. 47Even if any product we develop alone or with collaborators receives marketing approval, such product may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success
39. 48If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any products we develop alone or with collaborators, the commercialization of such products may not be successful if and when they are approved
40. 49the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement and other acceptance by payors
41. 50If the market opportunities for any products we develop alone or with collaborators are smaller than our estimates, or if we are unable to successfully identify enough patients, our revenues may be adversely affected
42. 51prescription drugs and biologics and surgical procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry of new products
43. 52Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated

Risks Related to Our Organization, Structure and Operations

1. 53We may experience difficulties in managing the needs of our business, which could disrupt our operations
2. 54We may engage in transactions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources
3. 55Our future success depends on our key executives, as well as attracting, retaining and motivating qualified personnel
4. 56We are subject to increased costs as a result of operating as a public company, and our management will be required to devote substantial time to maintaining compliance initiatives and corporate governance practices, including establishing and maintaining proper and effective internal control over financial reporting
5. 57Our business and operations may suffer in the event of information technology system failures, cyber-attacks or deficiencies in our security, which could materially affect our results
6. 58Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities
7. 59If we or any of our contract manufacturers or other suppliers fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur significant costs
8. 60Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our research and product development efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes
9. 61Our business operations, including our current and future relationships with third parties, may expose us to penalties for potential misconduct or improper activity, including non-compliance with regulatory standards and requirements
10. 62We are subject to complex tax rules relating to our business, and any audits, investigations or tax proceedings could have a material adverse effect on our business, results of operations and financial condition
11. 63We may not be able to utilize all, or any, of our net operating loss carryforwards

Risks Related to Our Reliance on Third Parties

1. 64We have entered into significant arrangements with collaborators and expect to depend on collaborations with third parties for certain research, development and commercialization activities, and if any such collaborations are not successful, it may harm our business and prospects
2. 65If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our research, development and commercialization plans
3. 66We rely on third parties for the manufacturing process of product candidates, and failure by those parties to adequately perform their obligations could harm our business

Risks Related to Intellectual Property

1. 67Our ability to compete may decline if we do not adequately protect our proprietary rights, and if our proprietary rights do not provide a competitive advantage
2. 68the growing scientific and patent literature relating to engineered endonucleases, including our own patents and publications, may make it increasingly difficult or impossible to patent new engineered nucleases in the future
3. 69If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business
4. 70the priority of invention of patented technology
5. 71If we do not obtain patent term extension in the United States under the Hatch-Waxman Act and in foreign countries under similar legislation with respect to our product candidates, thereby potentially extending the term of marketing exclusivity for such product candidates, our business may be harmed
6. 72Patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position
7. 73Developments in patent law could have a negative impact on our business
8. 74If we were unable to protect the confidentiality of our trade secrets and enforce our intellectual property assignment agreements, our business and competitive position would be harmed
9. 75addition, these agreements may be held unenforceable and may not effectively assign intellectual property rights to us. If our trade secrets and other unpatented or unregistered proprietary information are disclosed, we are likely to lose such trade secret protection
10. 76We will 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
11. 77We may not be successful in obtaining or maintaining necessary rights to product components and processes for our development pipeline through acquisitions and in-licenses
12. 78If 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

Risks Related to Owning Our Common Stock

1. 79We could be subject to securities class action litigation
2. 80We do not currently intend to pay dividends on our common stock
3. 81Provisions in our amended and restated certificate of incorporation and amended and restated bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and therefore depress the trading price of our common stock
4. 82We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
5. 83We or third parties with whom we have relationships may be adversely affected by natural or manmade disasters, public health emergencies and other natural catastrophic events, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
6. 84Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price
7. 85In addition, there is a risk that one or more of our current service providers, manufacturers or others with whom we have strategic relationships may not survive any difficult economic times, which could directly affect our ability to attain our operating goals
8. 86The market price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock
9. 87general economic, industry and market conditions
10. 88Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock
11. 89If securities or industry analysts issue an adverse or misleading opinion regarding our common stock, our stock price and trading volume could decline