GRAIL (GRAL) risk factors, FY2024 10-K

Risks Relating to Our Business and Industry

1. 01We operate in a rapidly evolving field and have a limited operating history, which makes it difficult to evaluate our current business and predict our future performance
2. 02We have incurred significant net losses in each period since our inception and anticipate that we will continue to incur net losses for the coming years
3. 03of our future expenditures and our ability to generate additional revenue. Moreover, our net losses may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good or reliable indication of our future performance
4. 04of our PMA submission for Galleri, which would negatively impact our business, financial condition, results of operations, and growth prospects
5. 05validating or generating revenue from our precision oncology offering, and we could experience reputational or other harms
6. 06A substantial majority of our revenue is generated from sales of Galleri and we are highly dependent on it for our success
7. 07Our commercial products may fail to achieve the degree of market acceptance necessary for commercial success
8. 08Failure to achieve broad market acceptance of our products would materially harm our business, financial condition, and results of operations
9. 09We may be unable to develop and commercialize new products, including enhanced versions of current products
10. 10If similar third-party products are developed and do not perform as intended or cause harm or injury to patients, the market for our products could be impaired
11. 11If we fail to obtain additional financing, we may be unable to expand our commercialization efforts with respect to Galleri and any other products that we successfully develop and commercialize, or to develop additional products
12. 12If our products result in direct or indirect participant or patient harm or injury, we could be subject to significant reputational and liability risks
13. 13require us to supplement or revise the information contained in any PMA or other application, which could increase our costs and delay our efforts to obtain approval for Galleri, and could delay our implementation of the material into our workflow
14. 14If our facilities become inoperable, our ability to provide our products will be significantly impaired and our business will be harmed
15. 15We depend on third parties for information technology, telecommunication systems, the collection, processing, transport, and storage of sample, and other patient-facing services. Any disruption in these services or operations could materially adversely harm our business and operations
16. 16If we are unable to scale our operations successfully to support demand for our products, our business could suffer
17. 17Our business and results of operations will suffer if we fail to perform effectively
18. 18If we cannot maintain our current collaborations or partnerships and enter into new collaborations or partnerships in a timely manner and on acceptable terms, our efforts to develop and commercialize our products could be delayed or adversely affected
19. 19diagnostic development and commercialization. Our reliance on certain of these third parties reduces our control over our product development activities
20. 20We are highly dependent on our key personnel. If we are not successful in attracting, motivating, and retaining highly qualified personnel, we may not be able to successfully implement our business strategy
21. 21Our business is subject to economic, political, regulatory, and other risks associated with international operations
22. 22Our information technology systems, or those used by our third-party collaborators or other contractors or consultants, may fail or suffer cybersecurity incidents or cyberattacks
23. 23If we are sued for product or professional liability, we could face substantial liabilities that exceed our resources and insurance coverage
24. 24Our quarterly results of operations may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline
25. 25Acquisitions or other strategic transactions may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks
26. 26In addition, as our strategy evolves, we may opt to discontinue, deprioritize, or dispose of assets, technologies, or acquired businesses

Risks Relating to Regulation and Legal Compliance

1. 27Liechtenstein, and also generally applicable in Türkiye). Non-compliance with the above requirements would also prevent us from selling our products in these three countries
2. 28If we or our partners fail to comply with federal, state, and foreign laboratory and other applicable licensing and registration requirements, we could be prevented from performing our tests or experience disruptions to our business
3. 29Data from our clinical trials that we announce or publish from time to time before our trials are complete may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
4. 30Bioresearch Monitoring (“BIMO”) program, of our studies or associated data, can require substantial amounts of time, personnel, and other resources to comply with, and may not be anticipated
5. 31Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations
6. 32intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EU for in vitro diagnostic medical devices and ensure a high level of safety and health while supporting innovation
7. 33To obtain and maintain FDA approvals or clearances, our products will need to be manufactured in accordance with federal and state regulations, and we could be forced to recall our devices or terminate production if we or our partners fail to comply with these regulations
8. 34Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs
9. 35Healthcare reform and data protection measures, including legislation reforming the U.S. healthcare system, could cause significant harm to our business, operations and financial condition
10. 36expand access to our products beyond our existing sales channels will be limited and our overall commercial success will be limited.”
11. 37Obtaining and maintaining regulatory authorization of our products in one jurisdiction does not mean that we will be successful in obtaining regulatory authorization of our products in other jurisdictions
12. 38Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
13. 39If we fail to comply with healthcare and other applicable laws and regulations, we could face substantial penalties and our business, reputation, and operations and financial condition could be adversely affected
14. 40If we or any contract manufacturers and suppliers we engage 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
15. 41otherwise prevent new or modified products from being developed, approved, certified, or commercialized in a timely manner or at all
16. 42Our business activities are subject to the FCPA and similar anti-bribery and anti-corruption laws
17. 43The biopharmaceutical and medical device industries are subject to extensive regulatory obligations and policies that may be subject to significant and abrupt change, including due to judicial challenges, election cycles, and resulting regulatory updates and changes in policy priorities

Risks Relating to Intellectual Property

1. 44If 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
2. 45Our use of open-source software could subject our proprietary technology to unwanted open-source license conditions that could negatively impact our business
3. 46Developments in patent law could have a negative impact on our business
4. 47Patent terms may be inadequate to protect our position on our products for an adequate amount of time
5. 48Issued patents covering our products and other technologies could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States and abroad
6. 49We may not be able to protect our intellectual property rights throughout the world
7. 50We may be subject to claims by third parties asserting that our employees or we have infringed or misappropriated intellectual property rights, or to assertions by third parties or employees claiming ownership of what we regard as our own intellectual property
8. 51If we are unable to protect the confidentiality of our trade secrets, our business and market position would be harmed
9. 52Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common stock to decline
10. 53We may become involved in lawsuits to protect or enforce or defend our patents, which could be expensive, time-consuming, and unsuccessful
11. 54If 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 Relating to the Spin-Off

1. 55We could have an indemnification obligation to Illumina if the Distribution were determined not to qualify for non-recognition treatment for U.S. federal tax purposes
2. 56We have agreed to numerous restrictions to preserve the non-recognition treatment of the Spin-Off, which may reduce our strategic and operating flexibility
3. 57Our historical financial data is not necessarily representative of the results that we would have achieved if we had been a separate, publicly traded company and may not be a reliable indicator of our future results

Risks Relating to Our Common Stock

1. 58Prior to June 24, 2024, no market for our common stock existed and an active trading market may not be sustained after the Spin-Off. Our stock price has fluctuated and may fluctuate significantly
2. 59an active market may make it more difficult for shareholders to sell our shares and could lead to our share price being depressed or volatile
3. 60If securities analysts publish negative evaluations of our stock, the price of our stock could decline
4. 61Raising additional capital may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish rights to our technologies or our products
5. 62We are an emerging growth company and the information we provide shareholders may be different from information provided by other public companies, which may result in a less active trading market for our common stock and higher volatility in our stock price
6. 63Substantial sales of our common stock by Illumina or other significant shareholders could cause our stock price to decline
7. 64We do not expect to pay any dividends for the foreseeable future
8. 65We will incur increased costs as a result of operating as a public company. Our management will be required to devote substantial time to new compliance initiatives and corporate governance practices
9. 66Certain provisions in our Certificate of Incorporation and Bylaws and Delaware law may 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
10. 67We could be subject to additional securities class action litigation