FATE Therapeutics (FATE) risk factors, FY2024 10-K

Risks Related to the Discovery, Development and Regulation of Our Product Candidates

1. 01If we fail to complete the preclinical or clinical development of, or to obtain regulatory approval for, our product candidates, our business would be significantly harmed
2. 02difficulty establishing predictive preclinical models for demonstration of safety and efficacy of a product candidate in one or more potential therapeutic areas for clinical development
3. 03which termination took effect on April 3, 2023. As a result of the termination, we discontinued the development of two product candidates that had been expected to enter the clinic in 2023
4. 04We may face delays in initiating, conducting or completing our clinical trials, and we may not be able to initiate, conduct or complete them at all
5. 05of regulatory approval of our product candidates. Any of these occurrences would significantly harm our business, prospects, financial condition, results of operations, and market price of shares of our common stock
6. 06A disruption to our manufacturing operations, or the inability by us or our third-party suppliers or manufacturers to manufacture sufficient quantities of our product candidates at acceptable quality levels or costs, or at all, would materially and adversely affect our business
7. 07Because our approach to the development of product candidates is based on novel and unproven technologies, it is subject to a substantial degree of technological uncertainty and we may not succeed in developing any of our product candidates
8. 08be uneconomical to commercialize or fail to achieve market acceptance
9. 09We anticipate that our current product candidates and any future product candidates may be used in combination with third-party drugs or biologics, some of which may still be in development, and we have limited or no control over the supply, regulatory status, or regulatory approval of such drugs or biologics
10. 10If we encounter difficulties enrolling patients in our clinical trials, including as a result of challenges in identifying and recruiting eligible patients to participate in our trials or competition for patients, our clinical development activities could be delayed or otherwise adversely affected
11. 11the proximity and availability of clinical trial sites for prospective patients
12. 12The clinical development of our product candidates could be substantially delayed if we are required to conduct unanticipated studies, including preclinical studies or clinical trials, or if the FDA imposes other requirements or restrictions including on the manufacture, of our product candidates
13. 13in the event a product candidate is approved, have regulatory authorities withdraw their approval of the product or impose restrictions on its use
14. 14Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval
15. 15confirm these determinations, if they occur. Drug-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims
16. 16modifications or changes could delay or prevent our ability to develop, manufacture, obtain regulatory approval or commercialize our product candidates, which would adversely affect our business, financial condition and results of operations
17. 17Preliminary data and interim results we disclose may change as more patient data becomes available or as we make changes to our protocols or manufacturing processes, and such interim results and results from earlier studies may not be predictive of the final results, or of later studies or future clinical trials
18. 18safety issues or adverse events in patients who enroll in our current or future clinical trials
19. 19Results of clinical testing of any of our existing or future product candidates may fail to show the necessary safety and efficacy required for regulatory approval
20. 20Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny
21. 21We may seek regenerative medicine advanced therapy (RMAT) designation for certain of our product candidates, but such designation may not actually lead to a faster development or regulatory review or approval process and we may be unable to obtain or maintain the benefits associated with such designation
22. 22We may rely on orphan drug status to develop and commercialize certain of our product candidates, but orphan drug designations may not confer marketing exclusivity or other expected commercial benefits and we may not be able to obtain orphan drug designations for our other product candidates
23. 23We may seek designation for our cell programming technology as a designated platform technology, but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process
24. 24We may seek approval of one or more of our product candidate into real-time oncology review (RTOR). This program may not lead to a faster regulatory review or approval process and does not increase the likelihood that our product candidate(s) will receive marketing approval
25. 25A variety of risks associated with conducting research and clinical trials abroad and marketing our product candidates internationally could materially adversely affect our business
26. 26business interruptions resulting from ongoing and emerging geopolitical tensions, including wars, armed conflicts or acts of terrorism
27. 27To date, we have only conducted clinical trials in the United States. However, we may in the future choose to conduct one or more of our clinical trials or include sites in current or future clinical trials outside the United States
28. 28Existing regulatory policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates

Risks Related to Our Financial Condition

1. 29Our ongoing and planned operations, including the development of our product candidates, will require substantial additional funding, without which we will be unable to complete preclinical or clinical development of, or obtain regulatory approval for, or commercialization of our product candidates
2. 30our ability to establish and maintain strategic arrangements and alliances with third-party collaborators including our existing collaborations with Ono Pharmaceutical Co., Ltd. (Ono), the University of Minnesota, and MSKCC, to advance the research, development and commercialization of therapeutic products
3. 31We have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future
4. 32We have broad discretion over the use of our cash, cash equivalents, and investments and may not use them effectively

Risks Related to Our Reliance on Third Parties

1. 33We are, and expect to continue to be, dependent on third parties to conduct some or all aspects of manufacturing of our product candidates for use in clinical trials and for commercial sale, if approved. Our business could be harmed if those third parties fail to perform satisfactorily
2. 34As a result, we may not be able to conduct such corporate collaborations in the manner or on the time schedule we currently contemplate, which may negatively impact our business operations
3. 35uses our proprietary information or intellectual property in such a way as to jeopardize our rights in such property
4. 36If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to implement our strategies

Risks Related to Our Intellectual Property

1. 37If we are unable to protect our intellectual property, or obtain and maintain patent protection for our technology and product candidates, other companies could develop products based on our discoveries, which may reduce demand for our products and harm our business
2. 38We depend on our licensors to prosecute and maintain patents and patent applications that are material to our business. Any failure by our licensors to effectively protect these intellectual property rights could adversely affect our business and operations
3. 39If we fail to comply with our obligations under our license agreements, we could lose rights to our product candidates or key technologies
4. 40We are and may become involved in litigation or other proceedings from time to time relating to the enforcement or defense of patent and other intellectual property rights, which could cause us to divert our resources and could put our intellectual property at risk
5. 41We or our strategic partners may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing, or increase the costs of commercializing, our product candidates
6. 42We may not be successful in obtaining or maintaining necessary rights to product components and processes for development or manufacture of our product candidates which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated
7. 43Intellectual property rights do not necessarily address all potential threats to our competitive advantage
8. 44we may fail to adequately protect and police our trademarks and trade secrets; and
9. 45We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed alleged trade secrets
10. 46We may be subject to claims challenging the inventorship of our patents and other intellectual property
11. 47Proprietary information and invention assignment agreements with our employees and third parties may not prevent unauthorized disclosure of our trade secrets and other proprietary information
12. 48We may not be able to protect our intellectual property rights throughout the world
13. 49Changes in the patent law in the United States could diminish the value of patents in general, thereby impairing our ability to protect our product candidates and technology
14. 50The term of our patents may not be sufficient to effectively protect our market position and products

Risks Related to the Commercialization of Our Product Candidates

1. 51We do not have experience marketing any product candidates and do not have a sales force or distribution capabilities, and if our products are approved, we may be unable to commercialize them successfully
2. 52The commercial success of our product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payers and others in the medical community
3. 53sufficient third-party insurance coverage or governmental reimbursement, which may depend on our ability to provide compelling evidence that a product meaningfully improves health outcomes to support such insurance coverage or reimbursement
4. 54We expect to face uncertainty regarding the pricing of our existing product candidates and any other product candidates that we may develop. If pricing policies for our product candidates are unfavorable, our commercial success will be impaired
5. 55The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our product revenues
6. 56Healthcare legislative or regulatory reform measures may have a negative impact on our business and results of operations
7. 57the availability of capital

Risks Related to Our Business and Industry

1. 58The success of our existing product candidates is substantially dependent on developments within the field of cellular immunotherapy, and specifically developments relating to the use of pluripotent or genome edited cells for the manufacture of cellular therapeutics, the majority of which are beyond our control
2. 59therapy, such as FDA’s investigation into CAR T-cell therapies and other similar actions, could negatively affect our ability to develop and commercialize our product candidates
3. 60Our ability to compete effectively with other biotechnology and pharmaceutical companies depends on our ability to distinguish our company and our product candidates from our competitors and their product candidates
4. 61The loss of any member of our senior management team or our inability to attract and retain key personnel and consultants could adversely affect our business
5. 62If we engage in an acquisition, reorganization or business combination, we will incur a variety of risks that could adversely affect our business operations or our stockholders
6. 63merge with, or otherwise enter into a business combination with, another company in which our stockholders would receive cash or shares of the other company on terms that certain of our stockholders may not deem desirable
7. 64We face potential product liability exposure far in excess of our limited insurance coverage
8. 65Our insurance policies are expensive and protect us from only some risks, which leaves us exposed to significant uninsured liabilities
9. 66Our employees or third party service providers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading
10. 67We face risks of potential liability related to the privacy of personal information, including health information we utilize in the development of our products, as well as information we obtain from clinical trials sponsored by us from research institutions and directly from individuals
11. 68Certain state laws may be more stringent or broader in scope than the CCPA, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts
12. 69be sufficient to adequately protect us from any such liabilities and losses, and we may be unable to enforce any such contractual protections
13. 70The increasing use of artificial intelligence-based software (including machine learning) may result in reputational harm or liability or could otherwise adversely affect our business
14. 71Our internal computer systems, or those used by our third-party research institution collaborators, CROs or other contractors or consultants, may fail or suffer security breaches

Risks Related to the Ownership of Our Common Stock

1. 72Our stock price has been and may continue to be volatile or may decline regardless of our operating performance
2. 73general economic and market conditions, including inflationary pressures and stock market volatility
3. 74$20.0 million in November 2021; however, uncertainty of the price of our common stock results in an inability to ascertain the precise timing of any remaining future milestone payments in advance
4. 75Our principal stockholders and management own a significant percentage of our stock and may be able to exercise significant control over our company
5. 76A significant portion of our total outstanding shares may be sold into the market in the near future, which could cause the market price of our common stock to drop significantly
6. 77Provisions of Delaware law or our charter documents could delay or prevent an acquisition of our company, and could make it more difficult for you to change management
7. 78the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine
8. 79Our amended and restated bylaws designate the Court of Chancery of the State of Delaware and the U.S. federal district courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to litigate disputes with us in a different judicial forum
9. 80A sustained decline in our stock price may result in an impairment indication which could have an adverse impact on our results of operations
10. 81We currently qualify as a “smaller reporting company” and a “non-accelerated filer,” and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to such companies could make our common shares less attractive to investors
11. 82Our ability to use our net operating loss carryforwards and certain other tax benefits may be limited and, as a result, our future tax liability may increase
12. 83We are and could be further subject to securities class action litigation and other types of stockholder litigation
13. 84Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations
14. 85Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
15. 86Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations
16. 87respond to competitive pressures
17. 88Increasing scrutiny and changing expectations from governments and third-parties relating to environmental, social and governance (ESG) policies and practices may cause us to incur additional costs, expose us to additional risks or impact our reputation
18. 89Delayed or lost access to, or reductions in borrowings available under working capital sources and/or delays, inability or reductions in our ability to refund, roll over or extend the maturity of, or enter into new working capital resources
19. 90Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations
20. 91Geopolitical risks associated with ongoing wars and armed conflicts could have an adverse impact on our business, financial condition and results of operations, including our clinical trials
21. 92We or the third parties upon whom we depend may be adversely affected by earthquakes, wildfires, power outages, or other natural disasters, including public health crises, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
22. 93If we fail to maintain an effective system of disclosure controls and procedures and internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired
23. 94If we fail to comply with environmental, health, and safety laws and regulations, including regulations governing the handling, storage or disposal of hazardous materials, we could become subject to fines or penalties or incur costs that could harm our business
24. 95Changes in tax law may adversely affect us or our investors