Fractyl Health (GUTS) risk factors, FY2025 10-K

Risks Related to Our Financial Condition and Capital Requirements

1. 01We have incurred significant net losses since inception, we expect to continue to incur significant net losses for the foreseeable future and may never achieve or sustain profitability, and we have identified conditions and events that raise substantial doubt about our ability to continue as a going concern75% rewritten
2. 02Reprioritization we paused additional investment in our Revita programs for T2D, which consist of the REVITALIZE-1 study and the Germany Real-World Registry study99% rewritten
3. 03operate as a public company73% rewritten
4. 04offerings or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investmentNew
5. 05the cost of operating as a public company
6. 06Our Credit Agreement contains restrictive and financial covenants that may limit our operating flexibility
7. 07Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates on unfavorable terms to us
8. 08Our ability to utilize our net operating loss carryforwards, research and development tax credit carryforwards, and certain other tax attributes to offset taxable income or taxes may be limited

Risks Related to Development, Regulatory Approval and Commercialization

1. 09changes in the approval or certification policies or regulations that render our preclinical and clinical data insufficient for approval or certification
2. 10Clinical studies are expensive, time-consuming, difficult to design and implement, and have an uncertain outcome. Further, we may encounter substantial delays in our clinical studies
3. 11failure to manufacture sufficient quantities of product candidates for use in clinical studies
4. 12have the product removed from the market after obtaining marketing approval or certification
5. 13We currently conduct and may in the future conduct clinical studies for our product candidates outside the United States, and the FDA or comparable foreign regulatory authorities may not accept data from such studies24% rewritten
6. 14We may not be able to submit IDEs or IDE supplements or comparable documents in foreign jurisdictions to commence additional clinical studies on the timelines we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed21% rewritten
7. 15the monitoring and review of the investigation59% rewritten
8. 16Delays or disruptions in regulatory, permit or governmental approval processes may impact our businessNew
9. 17Interim, topline and preliminary data from our clinical studies that we announce or publish from time to time may change as more participant data become available and are subject to audit and verification procedures that could result in material changes in the final data65% rewritten
10. 18approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial conditionNew
11. 19Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved or certified, and could seriously harm our business
12. 20Although Revita has received Breakthrough Device designation, there can be no guarantee that the designation will benefit the development and regulatory approval process
13. 21If healthcare providers are unable to obtain coverage or adequate reimbursement for procedures performed with our products, if approved, such products will not likely be widely used
14. 22existing and future products. Neither hospitals nor physicians are likely to use our product, if approved, and any future products if they do not receive adequate reimbursement for the procedures utilizing such products
15. 23Additional time may be required to develop and obtain regulatory approval or certification for our Rejuva gene therapy candidates because we expect them to be regulated as a combination product
16. 24Obtaining and maintaining regulatory approval or certification of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval or certification of our product candidates in other jurisdictions
17. 25injunctions or the imposition of civil or criminal penalties
18. 26We expect our Rejuva gene therapy candidates will be, and future gene therapy candidates may be, regulated as biological products, or biological product-device combination products, and therefore may be subject to competition sooner than anticipated
19. 27In addition, the approval of a biologic product biosimilar to one of our product candidates could have a material adverse impact on our business as it may be significantly less costly to bring to market and may be priced significantly lower than our products
20. 28A recall of our products, if approved, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us
21. 29If we obtain approval or certification of any of our product candidates, we may be subject to enforcement action if we engage in the off-label promotion of our products
22. 30Our current and potential future use of artificial intelligence technologies may not be successful and presents new risks and challenges to our businessNew

Risks Related to Our Business and Strategy

1. 31our ability to compete with other therapies
2. 32any potential interruptions or delays resulting from factors related to any future public health crises, including epidemics and pandemics
3. 33We have not yet studied the ability of Revita to be used in repeated procedures. If we are unable to demonstrate the safety and improved glycemic effects of Revita for repeat use, it could have a material adverse effect on the clinical utility and commercial adoption of the device
4. 34We have never obtained marketing authorization for a product candidate in the United States and we may be unable to obtain, or may be delayed in obtaining, marketing authorization for any product candidate in the United States79% rewritten
5. 35If Revita, our Rejuva gene therapy candidates, or any of our other future product candidates is approved or certified and fail to achieve and sustain sufficient market acceptance, we will not generate expected revenue and our business may be harmed
6. 36the additional time commitment that may be required for training
7. 37Our future growth depends on physician awareness and adoption of the Revita DMR procedure52% rewritten
8. 38The training required for endoscopists to use Revita could reduce the market acceptance of our products
9. 39We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators
10. 40better-established, larger-scale and lower-cost manufacturing capabilities and supplier relationships
11. 41technical superiority of the Revita DMR procedure in comparison to current treatment options75% rewritten
12. 42a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidatesNew
13. 43We may not be able to develop new product candidates or enhance the capabilities of our existing product candidates to keep pace with our industry’s rapidly changing technology and customer requirements, which could have a material adverse impact on our revenue, results of operations and business
14. 44If the market opportunity for any product candidate that we develop is smaller than we believe, our revenue may be adversely affected and our business may suffer48% rewritten
15. 45Our sales cycle will be lengthy and variable, which makes it difficult for us to forecast revenue and other operating results
16. 46The medical community and third-party payors may choose not to use or cover the DMR procedure using Revita or they may require extensive and/or independently performed clinical studies prior to covering or maintaining coverage of the DMR procedure using Revita
17. 47We depend on our information technology systems, and any failure of these systems could harm our business

Risks Relating to Our Dependence on Third Parties

1. 48If we decide to establish new collaborations in the future, but are not able to establish those collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans
2. 49We may enter into collaborations in the future with third parties for the development and commercialization of product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates
3. 50Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements

Risks Related to Manufacturing

1. 51geopolitical or macroeconomic factors50% rewritten
2. 52If we or our suppliers fail to comply with the FDA’s good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner
3. 53Any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition
4. 54We depend on third-party sole-source suppliers for certain sub-assembly components of Revita, and any interruption in our relationship with such third-party sole-source suppliers may materially adversely affect our business
5. 55Changes in methods of our Rejuva gene therapy candidates’ manufacturing or formulation may result in additional costs or delay58% rewritten
6. 56If our facilities are damaged or become inoperable, we will be unable to continue to research, develop and manufacture our product candidates and, as a result, there will be an adverse impact on our business until we are able to secure a new facility

Risks Related to Legal and Regulatory Compliance Matters

1. 57We face the risk of product liability claims that could be expensive, divert management’s attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance
2. 58We are subject to applicable fraud and abuse, transparency, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties
3. 59Healthcare reform initiatives and other administrative and legislative proposals in the United States may adversely affect our business, financial condition, results of operations and cash flows62% rewritten
4. 60providers of, on average, 2% per fiscal year, which went into effect on April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2032, unless additional congressional action is takenNew
5. 61We may not be able to successfully commercialize our product candidates due to unfavorable pricing regulations or third-party coverage and reimbursement policies, which could make it difficult for us to sell our product candidates profitably39% rewritten
6. 62neither experimental nor investigational
7. 63Changes in and actual or perceived failures to comply with U.S. and foreign privacy and data protection laws, regulations and standards may adversely affect our business, operations and financial performance75% rewritten
8. 64We are subject to complex and changing laws and regulations, which exposes us to potential liabilities, increased costs and other adverse effects on our business
9. 65Damage to our reputation or brand image could adversely affect our sales and results of operations

Risks Related to Our Intellectual Property

1. 66rights may represent alternative or pre-existing technologies not protected by our own intellectual property that could be used to compete with usNew
2. 67We 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 protection51% rewritten
3. 68sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countriesNew
4. 69Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities
5. 70Our commercial success depends significantly on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property rights of third parties
6. 71relinquish rights associated with one or more of our patent claims, if our claims are held invalid or unenforceable
7. 72Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future product candidates and technologies
8. 73Obtaining and maintaining 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
9. 74Patent terms may not be sufficient to effectively protect our product candidates and business for an adequate period of time
10. 75If 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
11. 76If we are unable to protect the confidentiality of our trade secrets and other proprietary information, our business and competitive position may be harmed
12. 77We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property
13. 78We may enter into licenses to intellectual property. If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing a product candidate, if approved, that relied on such licensed intellectual property21% rewritten
14. 79the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners
15. 80Numerous factors may limit any potential competitive advantage provided by our intellectual property rights

Risks Related to Employee Matters and Managing Our Growth

1. 81If we are unable to establish sales or marketing capabilities or enter into agreements with third parties to sell or market our product candidates, we may not be able to successfully sell or market our product candidates that obtain regulatory approval
2. 82Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees
3. 83In order to successfully implement our plans and strategies, including our Strategic Reprioritization we will need to grow the size of our organization, and we may experience difficulties in managing this growth
4. 84improving our operational, financial and management controls, reporting systems and procedures37% rewritten

Risks Related to Ownership of Our Common Stock

1. 85The price of our stock may be volatile, and you could lose all or part of your investment21% rewritten
2. 86If securities or industry analysts do not publish research or reports, or if they publish adverse or misleading research or reports, regarding us, our business or our market, our stock price and trading volume could decline
3. 87Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval27% rewritten
4. 88Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall35% rewritten
5. 89We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation of the value of our common stock
6. 90Provisions in our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the market price of our common stock
7. 91require a super-majority vote of stockholders to amend some provisions described above

General Risks

1. 92Our operations are vulnerable to interruption by fire, severe weather conditions, power loss, telecommunications failure, terrorist activity, future pandemics and other events beyond our control, which could harm our business
2. 93We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors
3. 94We cannot predict if investors will find our common stock less attractive because we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile
4. 95We 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. 96The requirements of being a public company may strain our resources, result in more litigation and divert management’s attention
6. 97Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations38% rewritten
7. 98If our product candidates are authorized or approved, we expect to generate a portion of our future revenue internationally and are subject to various risks relating to international operations, which could adversely affect our operating results
8. 99existence of additional third-party intellectual property rights of potential relevance
9. 100New tax legislation may impact our results of operations and financial condition57% rewritten
10. 101Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations