Pasithea Therapeutics (KTTA) risk factors, FY2024 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

Risks Related to Our Financial Position and Need for Additional Capital

1. 02We have a limited operating history and have no products or services approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability
2. 03We have a history of losses and may not be able to achieve profitability going forward
3. 04We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our drugs
4. 05Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates
5. 06Changes in U.S. tax law may materially adversely affect our financial condition, results of operations and cash flows
6. 07The Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) modified the section 174 rules and beginning in 2022, taxpayers may no longer currently deduct R&D expenditures but instead must amortize specified R&D expenditures ratably over five years (or 15 years for foreign expenditures)
7. 08Regulatory guidance under the TCJA, the CARES Act, the IRA, and such additional legislation is and continues to be forthcoming
8. 09Our ability to use our net operating losses and other tax attributes may be limited
9. 10Unfavorable global economic conditions and adverse developments with respect to financial institutions and associated liquidity risk could adversely affect our business, financial condition and stock price
10. 11In addition, any further deterioration in the macroeconomic economy or financial services industry, could lead to losses or defaults by our suppliers, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition

Risks Related to Development, Clinical Testing, Manufacturing, Regulatory Approval and Commercialization

1. 12Clinical trials are expensive, time-consuming and difficult to design and implement, and involve an uncertain outcome
2. 13Our industry is subject to extensive regulatory obligations and policies that may be subject to change, including due to judicial challenges
3. 14Our choice of product candidates and our development plans for our product candidates are subject to change based on a variety of factors, some of which may be out of our control, and if we abandon development of a product candidate we may not be able to develop or acquire a replacement product candidate
4. 15The regulatory approval processes of the FDA and comparable foreign 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
5. 16Reductions in staffing and funding at FDA and other federal agencies could cause delays in the development and approval of our products
6. 17Approval may be delayed or denied because we cannot satisfy FDA’s Chemistry, Manufacturing and Control Requirements
7. 18We may encounter substantial delays in our planned clinical trials or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all
8. 19Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all
9. 20We may attempt to secure approval from the FDA or comparable foreign regulatory authorities through an expedited review program, and if we are unable to do so, then we could face increased expense to obtain, and delays in the receipt of necessary marketing approvals
10. 21We may seek Orphan Drug Designation for our product candidates, and we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity
11. 22We may not identify or discover other product candidates and may fail to capitalize on programs or product candidates that may present a greater commercial opportunity or for which there is a greater likelihood of success
12. 23If any of our product candidates are approved for marketing and commercialization and we have not developed or secured third-party marketing, sales and distribution capabilities, we will be unable to successfully commercialize such products and may not be able to generate product revenue
13. 24The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting pre-approval promotion and the promotion of off-label uses
14. 25Our business involves the use of hazardous materials and we and our third-party manufacturers and suppliers must comply with environmental laws and regulations, which can be expensive and restrict how we do business
15. 26Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations
16. 27Pursuant to the AlloMek Agreement, the Sellers have a right to repurchase certain assets and specified intellectual property from us in the event of a change of control and if we fail to meet certain obligations regarding development and commercialization

Risks Related to Our Dependence on Third Parties

1. 28We currently only use one CMO, Wuxi, for the production of PAS-004 drug substance and we utilize the same manufacturer for the production of drug product for our clinical trials. The termination of this relationship would result in a disruption to our product development and our business may be harmed
2. 29If we enter into collaborations with third parties to develop or commercialize our product candidates, our prospects with respect to those product candidates will depend in significant part on the success of those collaborations
3. 30Changes in U.S. and international trade policies, particularly with respect to China, may adversely impact our business and operating results

Risks Related to Our Securities

1. 31The price of our Common Stock and Warrants may be volatile, and you could lose all or part of your investment
2. 32We could be negatively affected as a result of the actions of activists or hostile shareholders
3. 33Our Warrants may not have any value
4. 34A Warrant does not entitle the holder to any rights as common stockholders until the holder exercises the Warrant for a share of our Common Stock
5. 35If 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, the price and trading volume of our Common Stock and Warrants could decline
6. 36Our quarterly operating results 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
7. 37We 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 and Warrants less attractive to investors
8. 38We cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile
9. 39The requirements of being a public company may strain our resources, resulting in more litigation and divert management’s attention
10. 40We may be subject to securities litigation, which is expensive and could divert management attention
11. 41We 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
12. 42Provisions 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 securities
13. 43Certain beneficial owners might have control over us which could delay or prevent a change in corporate control or result in the entrenchment of management and/or the Board
14. 44Exchange rate fluctuations may materially affect our results of operations and financial conditions
15. 45Failure to comply with The Nasdaq Capital Market continued listing requirements may result in our Common Stock and/or Warrants being delisted from The Nasdaq Capital Market