InMed Pharmaceuticals (INM) risk factors, FY2024 10-K

Risks Related to our Business and Industry

1. 01Our prospects depend on the success of our Product Candidates which are at early stages of development with a statistically high probability of failure
2. 02Even if our Product Candidates advance through preclinical studies and clinical trials, we may experience difficulties in managing our growth and expanding our operations
3. 03Any actual or threatened delisting of our securities by Nasdaq could have a material and adverse effect on our business, operations and financial condition, and could, among other things, limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
4. 04If we have difficulty enrolling patients in clinical trials, the completion of the trials may be delayed or cancelled
5. 05If we experience delays in clinical testing, we will be delayed in commercializing our Product Candidates, and our business may be substantially harmed
6. 06Our IntegraSyn manufacturing approach may prove unsuccessful in achieving yields and/or cost levels required to be economically competitive with alternative methods of manufacturing
7. 07Negative results from clinical trials or studies of others and adverse safety events involving the targets of our products may have an adverse impact on our future commercialization efforts
8. 08We intend to expend our limited resources to pursue our Product Candidates for certain indications and may fail to capitalize on other Product Candidates or other indications for our Product Candidates that may be more profitable or for which there is a greater likelihood of success
9. 09The regulatory approval processes of the FDA, HC, the EMA and other comparable foreign regulatory 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
10. 10We intend to conduct clinical trials for our Product Candidates in several international jurisdictions, and acceptance by all regulatory authorities for such “international” data is not certain
11. 11Our Product Candidates contain compounds that may be classified as “controlled substances”, the use of which may generate public controversy and restrict their development or commercialization
12. 12If any of our Product Candidates receives marketing approval and we or others later identify undesirable side effects caused by the Product Candidate, our ability to market and derive revenue from the product candidates could be compromised
13. 13Research restrictions, product shipment delays or prohibitions could have a material adverse effect on our business, results of operations and financial condition
14. 14Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain marketing approval of and commercialize our Product Candidates
15. 15Any Product Candidates we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby materially and adversely impacting our business
16. 16Increased scrutiny on drug pricing or changes in pricing regulations could restrict the amount that we are able to charge for our Product Candidates, which could adversely affect our revenue and results of operations
17. 17Negative publicity may adversely affect us and our business
18. 18Even if we are able to commercialize our Product Candidates, they may not receive coverage and adequate reimbursement from third-party payors, which could harm our business
19. 19Failure to comply with the FCPA, the CFPOA, and other global anti-corruption and anti-bribery laws could subject us to penalties and other adverse consequences
20. 20The ongoing trade war between China and the United States and its potential escalation may have an adverse effect on our business operations and revenues
21. 21Federal legislation and actions by state and local governments may permit reimportation of drugs from/to foreign countries where the drugs are sold at lower prices than in the country of origination, which could materially adversely affect our business and financial condition
22. 22We are dependent upon our key personnel to achieve our business objectives
23. 23Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could subject us to significant liability and harm our reputation
24. 24Our internal computer systems, or those of our contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs
25. 25Our insurance may be insufficient to cover losses that may occur as a result of our operations
26. 26Our insurance costs may increase significantly, we may be unable to obtain the same level of insurance coverage and our insurance coverage may not be adequate to cover all possible losses we may suffer
27. 27There may be changes in laws, regulations and guidelines which are material and detrimental to our business
28. 28If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected
29. 29Our proprietary information, or that of our customers, suppliers and business partners, may be lost or we may suffer security breaches
30. 30We expect to face intense competition, often from companies with greater resources and experience than we have
31. 31Industry consolidation may lead to increased competition and costs, and may harm our operating results
32. 32If we receive regulatory approvals, we intend to market our Product Candidates in multiple jurisdictions where we have limited or no operating experience and may be subject to increased business and economic risks that could affect our financial results
33. 33Controlled substance legislation may differ in other jurisdictions and could restrict our ability to market our products internationally, which would result in increased business and economic risks that could affect our financial results
34. 34Product liability lawsuits against us could cause us to incur substantial liabilities
35. 35Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results
36. 36Our failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results
37. 37Our results of operations could be materially and adversely affected if we cannot keep pace with technological changes impacting the development of our products and implementation of our business needs, including with respect to automation and the use of AI
38. 38Growing emphasis by the investment community, regulators and other stakeholders on environmental, social and governance-related matters could impact our business and operations
39. 39Climate change may have an impact on our business
40. 40Our success depends on our ability to continue to innovate and create new products and enhancements to our existing products

Risks Related to our Securities

1. 41The market prices for our Common Shares are volatile and will fluctuate
2. 42Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies or Product Candidates
3. 43Future offerings of debt or equity securities may rank senior to our Common Shares
4. 44Future sales of Common Shares by our officers, directors and affiliates may negatively impact the market price for our Common Shares
5. 45We do not currently pay dividends on our Common Shares and have no intention to pay dividends on our Common Shares for the foreseeable future
6. 46We are exposed to risks related to currency exchange rates
7. 47We may take advantage of these reporting exemptions until we are no longer an emerging growth company
8. 48If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our Common Shares
9. 49Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
10. 50Deficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements
11. 51In connection with the audit of our financial statements as of and for the year ended June 30, 2023, a material weaknesse in our internal control over financial reporting was identified and we may identify additional material weaknesses in the future
12. 52We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management has been required, and will continue to be required, to devote substantial time to new compliance initiatives
13. 53Future sales and issuances of our Common Shares or rights to purchase Common Shares pursuant to our equity incentive plan could result in additional dilution of the percentage ownership of our shareholders and may cause our share price to fall
14. 54Provisions in our corporate charter documents and certain Canadian laws could delay or deter a change of control
15. 55If securities or industry analysts publish inaccurate or unfavorable research about our business, our share price and trading volume may decline
16. 56We are incorporated in Canada, with our assets and officers primarily located in Canada, with the result that it may be difficult for investors to enforce judgments obtained against us or some of our officers

Risks Related to our Financial Position and Capital Needs

1. 57Our operating losses have raised substantial doubt regarding our ability to continue as a going concern
2. 58We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future
3. 59We will require additional capital to fund our operations and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our Product Candidates
4. 60We may have difficulties identifying, successfully completing or integrating acquisitions, or maintaining or growing our acquired businesses
5. 61In addition to the limited revenues from our BayMedica Products, our ability to generate revenue and become profitable depends upon our ability to obtain regulatory approval for, and successfully commercialize, our Product Candidates that we may develop, in-license or acquire in the future
6. 62Changes in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate and ability to achieve profitability
7. 63As of June 30, 2024, we had non-capital loss (“NOL”) carryforwards of approximately $80.2 million available to offset future taxable income in Canada and the United States. These NOL carry-forwards begin to expire in 2026
8. 64Natural disasters, public health crises, political crises, or other catastrophic events may adversely affect our business affairs, results of operations, financial condition, liquidity, availability of credit and foreign exchange exposure
9. 65The ongoing Russo-Ukraine War and the Israel-Hamas conflict, including the actual or perceived threat of an exacerbation of such conflicts, could have a material and adverse effect on our business, operations and financial condition
10. 66High rates of global inflation, the occurrence of a recession and higher interest rates could have a material and adverse impact on our business, results of operations and financial condition

Risks Related to our Intellectual Property

1. 67Our success is largely dependent upon our patents, proprietary technology, and other intellectual property
2. 68Obtaining and maintaining our 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
3. 69We may become subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property
4. 70We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business
5. 71If we are not able to adequately prevent disclosure of trade secrets and other proprietary information, the value of our technology and products could be significantly diminished
6. 72We may not be able to protect our intellectual property rights throughout the world
7. 73Patent terms may be inadequate to protect our competitive position on our Product Candidates for an adequate amount of time
8. 74Intellectual property rights do not necessarily address all potential threats to our competitive advantage

Risks Related to our Third Parties

1. 75We rely heavily on contract manufacturers over whom we have limited control. If we are subject to quality, cost or delivery issues with the preclinical and clinical grade materials supplied by contract manufacturers, our business operations could suffer significant harm
2. 76Our existing collaboration agreements and any that we may enter into in the future may not be successful