Profound Medical (PROF) risk factors, FY2024 10-K

Other

1. 01Our business is capital intensive and requires significant investment to increase our commercial capacity for our approved products, and the resources to do so may not be available in amounts or on terms acceptable to us, if at all
2. 02We are exposed to foreign currency risk, which exposure will increase as we commercialize our approved products in the United States; to date, we have not hedged against risk associated with foreign exchange rate exposure

Risks Related to Our Business and Growth Strategy

1. 03We currently rely on our collaborative partners, and we may rely on additional collaborative partnerships, to assist in the sales and marketing and/or distribution of our approved products
2. 04We may not achieve our commercialization and future product development goals in the time frames expected, or at all
3. 05Our products, including the TULSA-PRO system, may not achieve or maintain expected levels of market acceptance
4. 06a material adverse effect on our business, financial condition and results of operations and it could cause the market value of our Common Shares to decline
5. 07Successful commercialization of our approved products, including the TULSA-PRO system, and future product development depends upon our maintaining strong working relationships with physicians/clinicians
6. 08Physicians/clinicians misuse could result in negative publications, negative sentiment or adverse events, thereby limiting market acceptance and future sales of our products
7. 09We rely on the compatibility of our products with MRI scanners in the successful commercialization of our products
8. 10Successful commercialization of our authorized products will also depend on the cost of the system and the availability of coverage and adequate reimbursement coverage from third-party payers
9. 11We intend to rely primarily on our in-house sales and marketing capabilities for our commercialization strategy, which will require substantial build-up and commitment of resources
10. 12We may experience manufacturing scaling issues in connection with our commercialization strategy, as we have limited experience assembling and testing our approved products, including the TULSA-PRO system, at a significant scale
11. 13We rely on third parties to manufacture and supply components of our systems
12. 14We depend on single-source suppliers for some of the components in our systems
13. 15We face significant competition in the markets for our products, and in particular, there are numerous devices and procedures that compete with our TULSA-PRO system
14. 16Data from our clinical trials may not support regulatory approvals or clearances and/or reimbursement coverage for our products
15. 17clinical trials prior to obtaining reimbursement coverage for the TULSA-PRO system and other authorized products, which would likely involve significant time and expense, and may have a material adverse effect on our business, results of operations and financial condition
16. 18We depend on key managerial personnel for our continued success
17. 19Research and development carries substantial risk and we may not be able to expand our product portfolio
18. 20We may be subject to product liability claims, which can be expensive, difficult to defend and may result in large judgments or settlements, and/or warranty claims on our products
19. 21Rising insurance costs could negatively impact our profitability
20. 22We are increasingly dependent on sophisticated information technology systems to operate our business and if we fail to properly maintain the integrity of our data or we experience a cyber-attack or other breach of these systems, our business could be adversely affected
21. 23A portion of our employees are unionized, and our good labor relations may not continue
22. 24If our facilities are damaged or destroyed, we may experience delays that could negatively impact our revenues
23. 25We face risks associated with acquisition of businesses and technologies

Risks Relating to Regulation of the Company and Our Products

1. 26Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business
2. 27We may be unable to obtain, or experience significant delays in obtaining, FDA clearances or other regulatory authorizations for our product candidates and/or enhancements to our approved or cleared products
3. 28Our ability to continue sales of our product in the EU may be materially impaired if we do not take necessary steps to comply with the certification requirements of the new EU Medical Devices Regulation
4. 29Seeking, obtaining and maintaining certification in the EU under the MDR, with the CE-Mark to be re-certified before December 31, 2027, can be an uncertain process and Notified Bodies have limited resources and may experience backlogs
5. 30The overall backlogs experienced by the Notified Bodies having already been re-designated might have a negative impact on the re-certification of our TULSA-PRO and Sonalleve systems. We believe, however, that we are on track to meet the new requirements by the deadlines set forth in the New EU MDR
6. 31If clinical trials are conducted in a manner that fails to meet all FDA requirements, the FDA may delay our clearances or approvals, or the deficiencies may be so great that the FDA could refuse to accept all or part of our data or trigger enforcement action
7. 32Attracting patients to perform clinical trials and meeting clinical trial objectives can be more costly and time-consuming than expected and could be adversely affected by another health crisis
8. 33other clinical trials competing for the same target patients as those of our clinical trials
9. 34If we or our suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements or if we experience unanticipated problems with our authorized products, we could be subject to restrictions or withdrawal from the market
10. 35imposition of administrative or criminal penalties
11. 36We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label” uses or engaged in false or misleading promotion
12. 37Compliance with regulations for quality systems for medical device companies is difficult, time consuming and costly
13. 38Modifications to our cleared or approved products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until such additional clearances or approvals are obtained
14. 39Our contract manufacturers are subject to regulatory compliance by the FDA, Health Canada and regulatory authorities in the EU and other jurisdictions
15. 40Our products may in the future be subject to product recalls that could harm our reputation, business and financial results
16. 41If our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, and such events can result in voluntary corrective actions or agency enforcement actions
17. 42Legislative or regulatory reform of the healthcare systems in which we intend to operate may affect our ability to sell our products profitably and could adversely affect our business
18. 43Other legislation or regulatory proposals may adversely affect our revenues and profitability
19. 44Our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
20. 45Compliance with environmental laws and regulations could be expensive, and failure to comply with these laws and regulations could subject us to significant liability
21. 46If we breach any of the agreements under which we license rights to our technology from third parties, we could lose license rights that are important to our business. Certain of our license agreements may not provide an adequate remedy for their breach by the licensor
22. 47Our proprietary rights may not adequately protect our technologies
23. 48We may not be able to protect our intellectual property rights throughout the world
24. 49The patent protection for our technologies may expire before we are able to maximize our commercial value which may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue
25. 50We may incur substantial costs as a result of litigation or other proceedings relating to enforcement of our or our licensors’ patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology
26. 51We may be subject to lawsuits from, liable for damages to, or be required to enter into license agreements with, a third-party that claims we infringed its patents or otherwise misused its proprietary information

Risks Relating to the International Scope of our Business

1. 52Our business, financial condition, cash flows and results of operations are subject to risks arising from our international operations
2. 53Future sales or the issuances of our securities may cause the market price of our Common Shares to decline
3. 54The market price of securities of many companies, particularly development and early commercial stage medical device companies, experience wide fluctuations in price that are not necessarily related to the operating performance, underlying asset values or prospects of such companies
4. 55The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation
5. 56We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our common shares less attractive to investors
6. 57If equity research analysts research or reports about our business or if they issue unfavorable commentary or downgrade our Common Shares, the price of our Common Shares could decline
7. 58We may be subject to securities litigation, which is expensive and could divert management attention
8. 59We have never paid dividends on our Common Shares and we do not anticipate paying any dividends in the foreseeable future. Consequently, any gains from an investment in our Common Shares will likely depend on whether the price of our Common Shares increases
9. 60If we are unable to satisfy the requirements of Sarbanes-Oxley, or our internal controls over financial reporting are not effective, the reliability of our financial statements may be questioned
10. 61Any default under our existing debt that is not waived by the applicable lender could materially adversely impact our results of operations and financial results and may have a material adverse effect on the trading price of our Common Shares
11. 62As a foreign private issuer whose shares are listed on Nasdaq, we intend to follow certain home country corporate governance practices instead of certain Nasdaq requirements
12. 63We will incur significantly increased costs and devote substantial management time as a result of operating as a U.S. public company
13. 64We may lose foreign private issuer status in the future, which could result in significant additional costs and expenses
14. 65It may be difficult for United States investors to effect service of process or enforcement of actions against us or certain of our directors and officers under U.S. federal securities laws
15. 66We do not believe that we are an “investment company” under the Investment Company Act, but we can provide no assurance that we will not be deemed an “investment company” in the future