PepGen (PEPG) risk factors, FY2024 10-K

Risks Related to Our Financial Position and Need for Additional Capital

1. 01We have incurred significant losses since our inception, have no products approved for sale and we expect to incur losses for the foreseeable future
2. 02add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and future commercialization efforts, as well as to support our operations as a public company
3. 03We have never generated revenue from product sales and may never achieve or maintain profitability
4. 04satisfying any post-marketing requirements
5. 05We will need to raise substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, scale back or discontinue our product development programs or future commercialization efforts
6. 06offering, or the Follow-on Offering, resulting in net proceeds of $76.4 million after deducting underwriters' fees of $3.7 million. Net proceeds from the ATM program and Follow-on Offering, after deducting underwriters' fees and costs of the offerings, were $86.3 million
7. 07the costs of operating as a public company
8. 08Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability

Risks Related to Discovery, Development, Preclinical and Clinical Testing

1. 09establishment and maintenance of healthcare coverage and adequate reimbursement by payors
2. 10Our approach to the discovery and development of product candidates based on our EDO platform is unproven, and we may not be successful in our efforts to identify, discover or develop potential product candidates
3. 11If we are unable to identify and discover suitable product candidates for clinical development, this would adversely impact our business strategy and our financial position and share price and could potentially cause us to cease operations
4. 12Furthermore, product candidates are subject to continued preclinical safety studies, which may be conducted concurrently with our clinical testing. The outcomes of these safety studies may delay the launch of, or enrollment in clinical trials and could impact our ability to continue to conduct our clinical trials
5. 13lack of diminished revenue potential of the program(s) due to competition
6. 14In addition, disruptions caused by the effects of any epidemics or pandemics may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials
7. 15experience damage to our reputation
8. 16The outcome of preclinical studies and earlier-stage clinical trials may not be predictive of future results or the success of later preclinical studies and clinical trials
9. 17If we experience delays or difficulties in the enrollment of patients in clinical trials, our ability to complete clinical trials may be adversely impacted
10. 18other factors outside of our control, such as the potential effects of any epidemics, pandemics or health crisis
11. 19Interim, initial, “topline”, and preliminary data from our preclinical studies or clinical trials that we announce or publish from time to time 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
12. 20We may expend our limited resources to pursue a particular program, product candidate or indication and fail to capitalize on programs, product candidates or indications that may be more profitable or for which there is a greater likelihood of success
13. 21The increasing use of social media platforms presents new risks and challenges
14. 22Clinical trial and product liability lawsuits against us could divert our resources, could cause us to incur substantial liabilities and could limit commercialization of our product candidates
15. 23the inability to commercialize our product candidates
16. 24We intend to conduct certain clinical trials for our product candidates outside of the U.S. However, the FDA and comparable foreign regulatory authorities may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business

Risks Related to Our Dependence on Third Parties

1. 25We rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily
2. 26form relationships with other entities, some of which may be our competitors
3. 27We currently depend on a small number of third-party suppliers to supply the product candidates that we are evaluating in our research programs. The loss of these or future third-party suppliers, or their inability to provide us with sufficient supply, could harm our business
4. 28regulations and operational risks to which our third-party suppliers are subject. If we are not successful in building these capabilities or complying with the regulations or otherwise operating our manufacturing function, our commercial supply could be disrupted and our business could be materially harmed
5. 29in the event of approval to market and commercialize any product, an inability to meet commercial demands for the product
6. 30We do not currently have arrangements in place for redundant supply or a second source for all required raw materials. If our existing or future third-party manufacturers cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all
7. 31to contract with new vendors, which could result in supply delays or shortages, clinical trial delays and the need to engage new vendors in a competitive marketplace
8. 32We may from time to time be dependent on single-source suppliers for some of the components and materials used in our product candidates
9. 33We may enter into collaborations with third parties for the research, development and commercialization of certain of our product candidates. If any such collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates
10. 34collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all
11. 35If conflicts arise between us and our potential collaborators, these parties may act in a manner adverse to us and could limit our ability to implement our strategies
12. 36If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans
13. 37Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators
14. 38We are dependent on third-party vendors to provide certain licenses, products and services and our business and operations, including clinical trials, could be disrupted by any problems with our significant third-party vendors

Risks Related to Regulatory Approval and Other Regulatory and Legal Compliance Matters

1. 39expectations of robust splicing correction and improved functional outcomes will be reflected in continued clinical evaluation of PGN-EDODM1 in DM1 patients, including in our ongoing FREEDOM2 MAD study
2. 40may not file a submission due to, among other reasons, the content or formatting of the submission
3. 41A marketing application for a product candidate with RPDD, if approved, may not meet the eligibility criteria for a Priority Review Voucher, or PRV, or the RPDD program may sunset before the FDA is able to consider eligibility for a voucher
4. 42We may seek designation for our EDO platform as a designated platform technology, but we might not receive such designation, and even if we do, such designation may not lead to a faster regulatory review or approval process
5. 43The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity
6. 44We and our contract manufacturers are subject to significant regulation. The manufacturing facilities on which we rely may not continue to meet regulatory requirements, which could materially harm our business
7. 45temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business
8. 46If 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 significant costs
9. 47Healthcare legislative reform discourse and potential or enacted measures may increase the difficulty and cost for us and any future collaborators to obtain marketing approval of and commercialize our product candidates and affect the prices we, or they, may obtain
10. 48the availability of capital
11. 49Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
12. 50Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and selling certain product candidates outside of the U.S. and require us to develop and implement costly compliance programs
13. 51We are subject to stringent data protection, privacy, and security laws, regulations, standards and contractual obligations and actual or perceived failure to comply with such requirements could have a material adverse effect on our business, financial condition, results of operations or prospects
14. 52If any of our product candidates obtains regulatory approval and does not receive appropriate periods of non-patent exclusivity, competitors could enter the market with generic versions of such products more quickly than we expect, which may result in a material decline in sales of our products

Risks Related to Commercialization

1. 53We face substantial competition, which may result in others discovering, developing or commercializing products before us or more successfully than we do
2. 54S.p.A., with Duvyzat, an oral histone deacetylase, or HDAC inhibitor, that reduces fibrosis in patients with DMD and was approved by the FDA in March of 2024 for the treatment of DMD in patients six years of age and older, and is under review by the EMA
3. 55Even if one or more of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success
4. 56any restrictions on the use of our products, if approved, together with other medications
5. 57The estimates of market opportunity and forecasts of market growth included in this 10-K, if any, may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all
6. 58not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment. For more information, see “Business – Healthcare Regulation – Coverage and Reimbursement” in this 10-K
7. 59neither experimental nor investigational
8. 60If we are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates if any are approved
9. 61unforeseen costs and expenses associated with creating an independent sales and marketing organization

Risks Related to Our Intellectual Property

1. 62and our product candidates. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects
2. 63the priority of invention of patented technology
3. 64use such patent and other intellectual property rights in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and our product candidates
4. 65We may not be able to protect our intellectual property rights throughout the world
5. 66We may be involved in lawsuits to protect or enforce our patents or other intellectual property or the intellectual property of our licensors, which could be expensive, time-consuming, and unsuccessful
6. 67Changes in patent law in the U.S. or worldwide could diminish the value of patents in general, thereby impairing our ability to protect our product candidates and our technology
7. 68Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
8. 69We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses
9. 70Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or before administrative bodies in the U.S. or abroad
10. 71If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
11. 72Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could harm our business
12. 73Intellectual property litigation or other proceedings could cause us to spend substantial resources and distract our personnel from their normal responsibilities
13. 74We 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
14. 75If we do not obtain patent term extension for our product candidates, our business may be harmed
15. 76We may be subject to claims challenging the inventorship or ownership of our patent and other intellectual property rights
16. 77If 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
17. 78Intellectual property rights do not necessarily address all potential threats
18. 79Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor or other third party will discover our trade secrets or that our trade secrets will be misappropriated or disclosed

Risks Related to Employee Matters, Managing Growth and Other Operational Matters

1. 80Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
2. 81We expect to expand our headcount to support our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
3. 82Our international activities subject us to various risks, and our failure to manage these risks could adversely affect our results of operations
4. 83Future acquisitions or strategic alliances could disrupt our business and harm our financial condition and results of operations
5. 84litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties
6. 85Our operations or those of the third parties upon whom we depend might be affected by the occurrence of a natural disaster, pandemic or other catastrophic event
7. 86The effects of the COVID-19 pandemic, or a future pandemic, epidemic or outbreak of an infectious or highly contagious disease, may materially and adversely affect our business and financial results and could cause a disruption in the development of our product candidates

Risks Related to Ownership of Our Common Stock

1. 87The stock price of our common stock has been and may continue to be volatile or may decline regardless of our operating performance and prospects
2. 88Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates
3. 89If securities or industry analysts do not continue to publish research or reports or publish inaccurate or unfavorable research or reports about our business, our stock price and trading volume could decline
4. 90The price of our common stock is volatile and fluctuates substantially, which could result in substantial losses for holders of our common stock
5. 91the other factors described in this “Risk factors” section
6. 92Unfavorable global economic conditions could adversely affect our business, financial condition, stock price and results of operations
7. 93Our executive officers, directors and principal shareholders, if they choose to act together, will continue to have the ability to significantly influence all matters submitted to stockholders for approval
8. 94Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain
9. 95The sale of a significant number of shares of our common stock, or the perception that such sales could occur, could cause the market price of our common stock to drop significantly, even if our business is doing well
10. 96We 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
11. 97exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved
12. 98We cannot predict whether investors will find our common stock less attractive if 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
13. 99We incur substantial costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives and corporate governance practices
14. 100Anti-takeover provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current directors and members of management
15. 101require the approval of the holders of at least 66.7% of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws
16. 102by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers and employees
17. 103any action asserting a claim arising pursuant to any provision of our certificate of incorporation or bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine
18. 104We may not be able to continue to satisfy listing requirements of the Nasdaq Global Select Market or maintain a listing of our common stock on the Nasdaq Global Select Market
19. 105Changes in tax laws or regulations or in their implementation or interpretation may adversely affect our business and financial condition
20. 106not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid
21. 107Tax authorities may disagree with our positions and conclusions regarding certain tax positions, or may apply existing rules in an unforeseen manner, resulting in unanticipated costs, taxes or non-realization of expected benefits
22. 108Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be subject to limitations
23. 109Any restructuring or change in the nature of our operations of our company may give rise to tax liabilities and/or restrictions in the amount and/or availability of tax attributes
24. 110Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
25. 111As a public company, we may be at an increased risk of securities class action litigation
26. 112We may be exposed to significant foreign exchange risk