Edesa Biotech (EDSA) risk factors, FY2025 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
2. 02We will need substantial additional funding to finance our operations through regulatory approval of one or more of our product candidates. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs, commercialization efforts or other operations
3. 03If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and any of our other current or future product candidates, we may not be successful in commercializing the applicable product candidate if it receives marketing approval
4. 04We will be dependent on third parties for manufacturing, including optimization, technology transfers and scaling up of clinical scale quantities of all of our product candidates
5. 05We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such clinical trials
6. 06Even if we obtain marketing approval for our product candidates, the terms of approvals and ongoing regulation of our products may limit how we manufacture and market our products, and compliance with such requirements may involve substantial resources, which could materially impair our ability to generate revenue
7. 07The ownership of our common shares is highly concentrated, which may prevent you and other shareholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our common shares price to decline

Risks Related to Our Business, Financial Position and Capital Requirements

1. 08We are a late-stage biopharmaceutical company with no products approved for commercial sale, and we have incurred significant losses since our inception and expect to continue to incur losses and may never generate profits from operations or maintain profitability
2. 09Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern
3. 10Raising additional capital may cause dilution to our investors, restrict our operations or require us to relinquish rights to our technologies or product candidates61% rewritten
4. 11Changes in the U.S. political and regulatory environment could affect availability of government funding that we or our third party collaborators may rely on, which could negatively impact the development of our product candidatesNew
5. 12Any failures on our part to satisfy any of our obligations under the above agreements could adversely affect or terminate our development of EB05
6. 13maintaining an acceptable safety profile of the product candidate following approval
7. 14Deterioration in general economic conditions in the U.S., Canada and globally, including the effect of prolonged periods of inflation on our suppliers, third-party service providers and potential partners, could harm our business and results of operations
8. 15International trade policies, including tariffs, sanctions and trade barriers may adversely affect our current and future business, financial condition, results of operations and prospectsNew
9. 16Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability
10. 17We are exposed to risks related to currency exchange rates
11. 18If 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
12. 19Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading, which could cause significant liability for us and harm our reputation
13. 20We expect to expand our capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
14. 21Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
15. 22We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively

Risks Related to Clinical Development, Regulatory Approval and Commercialization

1. 23Interim results, top-line, initial data may not accurately reflect the complete results of a particular study or trial
2. 24Any product candidate we advance into and through clinical trials may cause unacceptable adverse events or have other properties that may delay or prevent their regulatory approval or commercialization or limit their commercial potential
3. 25If clinical trials for our product candidates are prolonged or delayed, we may incur additional costs, and may not be able to commercialize our product candidates on a timely basis or at all
4. 26the lack of adequate funding to continue clinical trials
5. 27The clinical trial designs, endpoints and outcomes that will be required to obtain marketing approval for our drug candidates are uncertain. We may never receive marketing approval for our drug candidates
6. 28If the commercial opportunity in vitiligo, chronic ACD, ARDS, or pulmonary fibrosis is smaller than we anticipate, our future revenue from our drug candidates will be adversely affected and our business will suffer
7. 29While we have chosen to test our product candidates in specific clinical indications based in part on our understanding of their mechanisms of action, our understanding may be incorrect or incomplete and, therefore, our product candidates may not be effective against the diseases tested in our clinical trials86% rewritten
8. 30A successful sPLA2, anti-TLR4 or anti-CXCL10 drug has not been developed to date and we can provide no assurances that we will be successful or that there will be no adverse side effectsNew
9. 31We face substantial competition, which may result in others discovering, developing or commercializing products to treat our target indications or markets before or more successfully than we do
10. 32Even if we are able to commercialize one of our product candidates, the product may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business
11. 33Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop
12. 34The manufacturing of our monoclonal antibody candidates is complex and subject to a multitude of risks. These manufacturing risks could substantially increase our costs and limit supply of these drug candidates for clinical development, and commercialization
13. 35If we are not able to establish or maintain additional partnerships or collaborations, we may have to alter our development and commercialization plans
14. 36We may not be able to obtain or maintain orphan drug designation or exclusivity for our product candidatesNew
15. 37Increasing use of social media platforms could give rise to liability, breaches of data security and privacy laws, or reputational damage

Risks Related to Our Intellectual Property

1. 38We are dependent on license relationships with third parties for our key drug development programs
2. 39We may become involved in lawsuits or other enforcement proceedings to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and potentially unsuccessful
3. 40Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business
4. 41Intellectual property litigation could cause us to spend substantial resources and could distract our personnel from their normal responsibilities
5. 42If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed

Risks Related to Owning Our Securities

1. 43The price of our common shares may continue to be volatile
2. 44the loss of any of our key scientific or management personnel
3. 45Our common shares are listed on The Nasdaq Capital Market. We must satisfy the continued listing requirements of Nasdaq, to maintain the listing of our common shares on The Nasdaq Capital Market
4. 46We do not currently intend to pay dividends on our common shares in the foreseeable future, and consequently, any gains from an investment in our common shares will likely depend on appreciation in the price of our common shares
5. 47A sale of a substantial number of our common shares in the public market could cause the market price of our common shares to drop significantly, even if our business is doing well
6. 48If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common shares, the price of our common shares could decline
7. 49Our directors, executive officers and certain other holders of our securities have control over us and could delay or prevent a change of corporate control48% rewritten
8. 50Our Articles allow for our board of directors to create new series of preferred shares without further approval by the shareholders, which could adversely affect the rights of the holders of our common shares24% rewritten
9. 51Our common shares rank junior to our preferred shares in the event of a liquidation, dissolution or winding-up of the Company39% rewritten
10. 52Any issuance of our common shares upon conversion of our preferred shares will cause dilution to our then existing stockholders and may depress the market price of our common shares40% rewritten
11. 53We may incur future indebtedness that will rank senior to our preferred shares or issue additional series of preferred shares that rank on a parity with, or senior to, the preferred shares as to dividend payments and liquidation preference
12. 54Failure to maintain effective internal control over financial reporting could have a material adverse effect on our share price
13. 55We may be deemed a passive foreign investment company, and as a result, U.S. shareholders may be subject to special taxation rules that restrict capital gains treatment, unless the shareholders make a timely tax election to treat the company as a qualified electing fund