Nautilus Biotechnology (NAUT) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We are a development stage company that has incurred net losses in every period to date, has not yet commercialized any products, and expects to continue to incur significant losses as we develop our business. We may never achieve profitability
2. 02We have not yet commercially launched our Nautilus platform. We may not be able to launch our Nautilus platform successfully and even if it is successful, we may experience material delays in our commercialization program relative to current expectations
3. 03Even if we are successful in entering into collaborations, the success of such collaborations will depend heavily on the efforts and activities of our collaborators
4. 04Even if we are able to complete development of our Nautilus platform, we may not achieve or maintain significant commercial market acceptance
5. 05If we are unable to establish an effective commercial organization, including effective distribution channels and sales and marketing functions, we may not be successful in commercializing our Nautilus platform
6. 06The size of the markets for our Nautilus platform may be smaller than estimated, and new market opportunities may not develop as quickly as we expect, or at all, limiting our ability to successfully sell our products
7. 07We are dependent on single source suppliers for some of the components and materials used in our Nautilus platform, and the loss of any of these suppliers could harm our business
8. 08The life sciences technology market is highly competitive. If we fail to compete effectively, our business and results of operation will suffer
9. 09Even if our Nautilus platform is commercialized and achieves broad scientific and market acceptance, if we fail to improve it or introduce compelling new products, our revenue and our prospects could be harmed
10. 10We rely on third parties for development of certain aspects of the Nautilus platform, and any failure of these third parties to perform their respective obligations in a timely manner or to our specifications could negatively impact our timelines, costs or product performance
11. 11Our business will depend significantly on research and development spending by pharmaceutical companies as well as by academic and other research institutions. Any reduction in spending could limit demand for our products and adversely affect our business, results of operations, financial condition and prospects
12. 12Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
13. 13We have a limited operating history, which may make it difficult to evaluate our current business and the prospects for our future viability, and to predict our future performance
14. 14We expect that we will need to raise additional capital to fund our development and commercialization plans

Risks Related to Our Intellectual Property

1. 15The U.S. law relating to the patentability of certain inventions in the life sciences technology industry is uncertain and rapidly changing, which may adversely impact our existing patents or our ability to obtain patents in the future
2. 16and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects
3. 17Filing, prosecuting and defending patents on our Nautilus platform in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States
4. 18In addition, if we resort to legal proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of the intellectual property or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail
5. 19Issued patents covering our products could be found invalid or unenforceable if challenged
6. 20If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected, and our business could be harmed
7. 21We may be subject to claims challenging the inventorship of our patents and other intellectual property
8. 22We may not be able to protect and enforce our trademarks and trade names or build name recognition in our markets of interest thereby harming our competitive position
9. 23Patent terms may be inadequate to protect our competitive position on our Nautilus platform for an adequate amount of time
10. 24Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
11. 25We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed trade secrets of our former employers
12. 26If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new products in the future
13. 27Our use of open source software and failure to comply with the terms of the underlying open source software licenses could impose limitations on our ability to commercialize our products and provide third parties to our proprietary software
14. 28Intellectual property rights do not necessarily address all potential threats

Risks Related to Litigation

1. 29Our products could have unknown defects or errors, which may give rise to claims against us and adversely affect market adoption of our Nautilus platform
2. 30If we are sued for product liability, we could face substantial liabilities that exceed our resources

Risks Related to Regulatory and Legal Compliance Matters

1. 31enforcement actions, including warning letters and adverse publicity, fines, injunctions, and civil penalties; recall or seizure of products; operating restrictions; and criminal prosecution
2. 32practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business.
3. 33Our use of artificial intelligence and machine learning technologies may result in reputational harm or liability
4. 34If we commercialize our Nautilus platform outside of the United States, our international business could expose us to business, tax, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States
5. 35If one or more of these risks occurs, it could require us to dedicate significant resources to remedy such occurrence, and if we are unsuccessful in finding a solution, our financial results will suffer
6. 36Environmental and health safety laws may result in liabilities, expenses and restrictions on our operations. Failure to comply with environmental laws and regulations could subject us to significant liability
7. 37Our employees, independent contractors, consultants, commercial partners, distributors and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
8. 38Demand for our technology could be reduced by legal, social and ethical concerns surrounding the use of genetic information and biological materials
9. 39Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition could have an adverse effect on our business and financial condition

Risks Related to our Operations

1. 40If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected
2. 41We may be unable to manage our anticipated growth effectively
3. 42Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel, particularly Sujal Patel, one of our founders and our Chief Executive Officer, and Parag Mallick, one of our founders and our Chief Scientist
4. 43We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results
5. 44Global supply chain interruptions could adversely affect our ability to develop and commercialize our products
6. 45Our Seattle, Washington, facility primarily houses our corporate executive team and our software development operations, while our facilities in San Carlos and San Diego, California primarily house our research and development teams
7. 46We use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly

Risks Related to Our Common Stock

1. 47An active trading market for our Common Stock may never develop or be sustained
2. 48The market price of our Common Stock has been and may continue to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control
3. 49There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq
4. 50Our principal stockholders and management own a significant percentage of our Common Stock and will be able to exercise significant influence over matters subject to stockholder approval
5. 51Sales of a substantial number of shares of our Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Common Stock
6. 52We will have broad discretion over the use of the proceeds to us from our “at the market” equity offering program and may apply the proceeds to uses that do not improve our operating results or the value of your securities
7. 53We do not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment
8. 54Delaware law and provisions in our certificate of incorporation and bylaws might 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
9. 55We will continue to incur significant increased costs and management resources as a result of operating as a public company
10. 56We have broad discretion in the use of the net proceeds from the Business Combination and the PIPE Financing and may not use them effectively
11. 57Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be subject to certain limitations
12. 58Changes in tax laws could have a material adverse effect on our future business, cash flows, results of operations or financial condition
13. 59If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which would harm our business
14. 60An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not identify. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation
15. 61We are an “emerging growth company” and a “smaller reporting company” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our Common Stock less attractive to investors
16. 62Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common shares
17. 63Increased scrutiny of our environmental, social or governance responsibilities may result in additional costs and risks, and may adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us