Rallybio (RLYB) FY2025 10-K Risk Factors: 28 New, 13 Dropped

What the changes say

Rallybio added 28 risks driven almost entirely by its proposed merger with Candid.
The company faces severe dilution and retained only 14 employees.

What changed since the prior 10-K

New

NewRisks Related to the Merger
Failure to complete, or delays in completing, the proposed Merger with Candid could materially and adversely affect our results of operations, business, financial results and/or stock price
Failure to complete the proposed merger with Candid could adversely affect our operations, business, and stock price.
NewRisks Related to the Merger
Even if certain of the proposals in the Merger Agreement are approved by our stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. We cannot assure you that all of the conditions will be satisfied or waived
We may owe a termination fee of $1.425 million and face significant transaction costs if the Candid merger fails.
NewRisks Related to the Merger
We are substantially dependent on our remaining employees to facilitate the consummation of the Merger
We are dependent on our remaining 14 full-time employees to consummate the Candid merger and run daily operations.
NewRisks Related to the Merger
The Exchange Ratio will not be adjusted based on the market price of our common stock, so the consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signed
The exchange ratio is fixed, meaning Rallybio securityholders will own just 3.65% of the combined company after the merger.
NewRisks Related to the Merger
The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes and/or other causes
Certain industry-wide changes and macro events will not permit either party to walk away from the merger.
NewRisks Related to the Merger
Some of our executive officers and directors have interests in the Merger that are different from our stockholders and that may influence them to support or approve the Merger without regard to the interests of our stockholders
Executive officers and directors have differing interests in the merger, such as severance and accelerated equity vesting.
NewRisks Related to the Merger
In addition, Robert Hopfner, a current member of our board, is affiliated with an investment fund participating in the Concurrent Financing
Director Robert Hopfner is affiliated with an investment fund participating in the concurrent financing.
NewRisks Related to the Merger
Our stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger
Stockholders may experience ownership dilution without realizing commensurate benefits if the merger underperforms.
NewRisks Related to the Merger
Our equityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Merger as compared to their current ownership and voting interests in the respective companies
Current equityholders will have a drastically reduced voting interest of approximately 3.65% in the combined company.
NewRisks Related to the Merger
Lawsuits may be filed against us and the members of our board of directors arising out of the proposed Merger, which may delay or prevent the proposed Merger
Putative stockholder class action lawsuits could be filed against us and our board, delaying the merger.
NewRisks Related to the Merger
During the pendency of the Merger Agreement, we may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses
Merger covenants prevent us from entering into alternative business combinations or asset sales with other parties.
NewRisks Related to the Merger
Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement
The merger agreement restricts us from soliciting or cooperating with competing acquisition proposals.
NewRisks Related to the Merger
Both we and Candid have also each agreed to reimburse the other party for up to $500,000 for third-party expenses, as applicable, if the Merger Agreement is terminated in certain circumstances
NewRisks Related to the Merger
If the Merger does not qualify as a reorganization under the Code, U.S. holders of our Common Stock may be taxed on the full amount of the consideration received in the Merger
NewRisks Related to the Merger
We or Candid may waive one or more of the conditions to the Merger without recirculation of the related proxy statement/prospectus or resoliciting stockholder approval
NewRisks Related to the Merger
Our stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valueless
NewRisks Related to the Merger
Following the effective time, the combined company will have sole authority over whether and how to monetize the Legacy Assets (if at all), and the combined company’s only obligations will be to carry out the obligations set forth in the CVR Agreement
NewRisks Related to the Merger
The tax treatment of the CVRs is uncertain
NewRisks Related to the Merger
If the Merger is not completed, our stock price may decline significantly
NewRisks Related to the Merger
If we do not complete the Merger, we may face substantial competition for attractive counterparties for any proposed strategic transactions
NewRisks Related to Our Financial Position and Need for Additional Ca pital
market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans
NewRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
recruitment delays often result in increased costs, delays in advancing product development, delays in testing the effectiveness of technologies, delays in obtaining marketing approval or termination of clinical trials
NewRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
safety monitoring or pharmacovigilance, may also result in significant financial penalties, which would adversely affect our business
NewRisks Related to Our Dependence on Third Parties
Our collaborators also may breach their agreements with us or otherwise fail to perform to our satisfaction, which could impact the development timeline of our product candidates
NewRisks Related to Healthcare Laws and Other Legal Compliance Matters
Healthcare reform efforts have been and may continue to be subject to scrutiny, legal challenge and subsequent amendment, creating further uncertainty
NewRisks Related to Our Intellectual Property
negotiate new or reinstated agreements with less favorable terms, which would impede, delay or prohibit the further development or commercialization of any product candidates that rely on such agreements
NewRisks Related to Our Intellectual Property
claims could have a material adverse effect on our business, financial condition, results of operations, and prospects
NewRisks Related to Our Common Stock
On February 24, 2026, we were notified by the Staff of Nasdaq that the closing bid price of our common stock had been $1.00 per share or greater for at least 10 consecutive business days, from February 6, 2026 to February 23, 2026. Accordingly, we have regained compliance with the Bid Price Requirement

Dropped

DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
Preclinical studies and clinical trials are expensive, time consuming and difficult to design and implement, and involve uncertain outcomes. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of our product candidates
DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
result in increased costs or program delays, which could have a harmful effect on our ability to develop our product candidates or could render further development impossible
DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
We have never obtained marketing approval for a product candidate. Any delay in obtaining, or an inability to obtain, marketing approvals would prevent us from commercializing our product candidates, generating revenues, and achieving and sustaining profitability
DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
We may seek Fast Track designation, Breakthrough Therapy designation, or PRIME designation for our product candidates, but we might not receive any such designation, and even if we do, such designation may not actually lead to a faster development or regulatory review or approval process
DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
Although RLYB212 has received FDA designation as a rare pediatric disease drug product, any marketing application we submit for RLYB212 may not qualify for issuance of a rare pediatric disease priority review voucher
DroppedRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
Due to the recent change in presidential administration, we face uncertainty regarding potential regulatory developments that may adversely affect our business
Preclinical and clinical trials are expensive and uncertain.
DroppedRisks Related to Our Dependence on Third Parties
programs in other jurisdictions, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations
DroppedRisks Related to Healthcare Laws and Other Legal Compliance Matters
Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates, if approved, and may affect the prices we may set
DroppedRisks Related to Healthcare Laws and Other Legal Compliance Matters
Our business operations and current and future relationships with contractors, investigators, healthcare professionals, consultants, third-party payors, patient organizations, customers, and others will be subject to applicable healthcare regulatory laws, which could expose us to penalties
DroppedRisks Related to Our Intellectual Property
We may become involved in lawsuits to protect or enforce our patent or other intellectual property rights, which could be expensive, time-consuming and unsuccessful
DroppedRisks Related to Our Employees, Managing Our Growth and Our Operations
We expect to expand our development, regulatory, and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
Adverse events or side effects could halt clinical development.
DroppedRisks Related to Our Common Stock
Our common stock may be delisted from The Nasdaq Global Select Market, which could harm the trading price of our common stock, the liquidity of our common stock, and our ability to raise additional capital
Never obtained marketing approval; rare disease markets may be small.
DroppedRisks Related to Our Common Stock
common stock to a Nasdaq Hearings Panel. There can be no assurance that we will regain compliance with the minimum bid price requirement prior to the Compliance Date, that an additional 180-day period to regain compliance will be granted, or that an appeal would be successful

Reworded

88% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
Enrollment and retention of patients in rare disease clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control
Added conditional phrasing regarding the continued progression of rare disease clinical trial patient enrollment.
86% rewrittenRisks Related to Our Financial Position and Need for Additional Ca pital
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our intellectual property or product candidates
Added conditional framing regarding the ongoing progression of product candidate development before revenue generation.
86% rewrittenRisks Related to Our Common Stock
An active trading market for our common stock may not be sustained
Added specific warnings regarding Nasdaq delisting standards impairing capital-raising ability and going concern status.
82% rewrittenRisks Related to Our Intellectual Property
If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our business may be adversely affected
Removed potential trademark infringement claims brought by owners of other registered trademarks.
78% rewrittenRisks Related to Our Dependence on Third Parties
Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business
Retained identical substantive scope regarding employee and contractor misconduct under FDA and healthcare laws.
72% rewrittenRisks Related to Our Intellectual Property
If we fail to comply with our obligations in our intellectual property licenses with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business
Retained identical risks regarding compliance with third-party intellectual property license agreements.
56% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
If approved, our product candidates that are regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway
Added a specific clause clarifying that FDA approval of biosimilar products cannot be made effective until 12 years from reference product licensure.
42% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
If we continue to progress the development of our product candidates, and are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing any product candidates we develop, if approved
Retained identical language regarding the need to build in-house sales and marketing capabilities for rare diseases.
Was: If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing any product candidates we develop, if approved
31% rewrittenRisks Related to Our Dependence on Third Parties
Our reliance on a central team consisting of a limited number of employees and third parties who provide various administrative, research and development, and other services across our organization presents operational challenges that may adversely affect our business
31% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
obtain marketing approval for, or successfully commercialize our product candidates, or if we experience significant delays in doing so, our business will be materially harmed
Was: We are heavily dependent on the success of RLYB212 and RLYB116, which are in early-stage clinical development. If we are not able to develop, obtain marketing approval for, or successfully commercialize our product candidates, or if we experience significant delays in doing so, our business will be materially harmed
24% rewrittenRisks Related to Healthcare Laws and Other Legal Compliance Matters
Our business operations may subject us to data protection laws, including the GDPR, the UK GDPR, the CCPA and other similar laws
23% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
We face significant competition from biotechnology and pharmaceutical companies, and if we continue to progress the development of our product candidates, our operating results will suffer if we fail to compete effectively
Was: We face significant competition from biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively
22% rewrittenRisks Related to Our Common Stock
A significant portion of our total outstanding shares may be sold into the market, which could cause the market price of our common stock to decline significantly, even if our business is doing well
21% rewrittenRisks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization
If we continue to progress the development of our product candidates, results of preclinical studies, clinical trials or analyses that we may announce or publish from time to time, may not be indicative of results obtained in later trials, and any interim results we may publish could be different than final results
Was: Results of preclinical studies, clinical trials or analyses that we may announce or publish from time to time, may not be indicative of results obtained in later trials, and any interim results we may publish could be different than final results

All 78 risk factors

Headings as the filing states them, in filing order.

Risks Related to the Merger

01Failure to complete, or delays in completing, the proposed Merger with Candid could materially and adversely affect our results of operations, business, financial results and/or stock priceNew
02Even if certain of the proposals in the Merger Agreement are approved by our stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. We cannot assure you that all of the conditions will be satisfied or waivedNew
03We are substantially dependent on our remaining employees to facilitate the consummation of the MergerNew
04The Exchange Ratio will not be adjusted based on the market price of our common stock, so the consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signedNew
05The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes and/or other causesNew
06Some of our executive officers and directors have interests in the Merger that are different from our stockholders and that may influence them to support or approve the Merger without regard to the interests of our stockholdersNew
07In addition, Robert Hopfner, a current member of our board, is affiliated with an investment fund participating in the Concurrent FinancingNew
08Our stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the MergerNew
09Our equityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Merger as compared to their current ownership and voting interests in the respective companiesNew
10Lawsuits may be filed against us and the members of our board of directors arising out of the proposed Merger, which may delay or prevent the proposed MergerNew
11During the pendency of the Merger Agreement, we may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businessesNew
12Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger AgreementNew
13Both we and Candid have also each agreed to reimburse the other party for up to $500,000 for third-party expenses, as applicable, if the Merger Agreement is terminated in certain circumstancesNew
14If the Merger does not qualify as a reorganization under the Code, U.S. holders of our Common Stock may be taxed on the full amount of the consideration received in the MergerNew
15We or Candid may waive one or more of the conditions to the Merger without recirculation of the related proxy statement/prospectus or resoliciting stockholder approvalNew
16Our stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valuelessNew
17Following the effective time, the combined company will have sole authority over whether and how to monetize the Legacy Assets (if at all), and the combined company’s only obligations will be to carry out the obligations set forth in the CVR AgreementNew
18The tax treatment of the CVRs is uncertainNew
19If the Merger is not completed, our stock price may decline significantlyNew
20If we do not complete the Merger, we may face substantial competition for attractive counterparties for any proposed strategic transactionsNew

Risks Related to Our Financial Position and Need for Additional Ca pital

21Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our intellectual property or product candidates86% rewritten
22market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plansNew
23We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability
24Our quarterly and annual financial results may fluctuate, which makes our results difficult to predict and may cause our results to fall short of expectations
25Our ability to use our net operating loss and income tax credit carryforwards to offset future income tax liabilities may be subject to certain limitations

Risks Related to Discovery, Development, Clinical Testing, Manufacturing, Marketing Approval and Commercialization

26obtain marketing approval for, or successfully commercialize our product candidates, or if we experience significant delays in doing so, our business will be materially harmed31% rewritten
27endpoints selected, which may require us to complete additional preclinical studies or clinical trials or (iii) impose stricter requirements for approval than we currently expect
28the identification of safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions
29If we continue to progress the development of our product candidates, results of preclinical studies, clinical trials or analyses that we may announce or publish from time to time, may not be indicative of results obtained in later trials, and any interim results we may publish could be different than final results21% rewritten
30Enrollment and retention of patients in rare disease clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control88% rewritten
31recruitment delays often result in increased costs, delays in advancing product development, delays in testing the effectiveness of technologies, delays in obtaining marketing approval or termination of clinical trialsNew
32We face significant competition from biotechnology and pharmaceutical companies, and if we continue to progress the development of our product candidates, our operating results will suffer if we fail to compete effectively23% rewritten
33If we are not able to effectively compete for any of the foregoing reasons, our business will be materially harmed
34Even if we obtain marketing approval for a product candidate in the United States, we or our current or future collaborators may never obtain approval for or commercialize the product candidate in any other jurisdiction, which would limit our ability to realize its full market potential
35safety monitoring or pharmacovigilance, may also result in significant financial penalties, which would adversely affect our businessNew
36If we continue to progress the development of our product candidates, even if a product candidate we develop receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success
37If approved, our product candidates that are regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway56% rewritten
38If we continue to progress the development of our product candidates, and are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing any product candidates we develop, if approved42% rewritten

Risks Related to Our Dependence on Third Parties

39Our reliance on a central team consisting of a limited number of employees and third parties who provide various administrative, research and development, and other services across our organization presents operational challenges that may adversely affect our business31% rewritten
40Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business78% rewritten
41Our collaborators also may breach their agreements with us or otherwise fail to perform to our satisfaction, which could impact the development timeline of our product candidatesNew

Risks Related to Healthcare Laws and Other Legal Compliance Matters

42Healthcare reform efforts have been and may continue to be subject to scrutiny, legal challenge and subsequent amendment, creating further uncertaintyNew
43Our business operations may subject us to data protection laws, including the GDPR, the UK GDPR, the CCPA and other similar laws24% rewritten
44We are subject to environmental, health and safety laws and regulations, and we may become exposed to liability and substantial expenses in connection with environmental compliance or remediation activities

Risks Related to Our Intellectual Property

45For these reasons, our patent portfolio might not provide us with sufficient rights to exclude others from using or commercializing technology and products similar or identical to our technology and product candidates
46Obtaining and maintaining patent protection depends on compliance with various procedural requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
47We may not be able to protect our intellectual property and proprietary rights throughout the world
48Changes to patent laws in the United States and other jurisdictions could diminish the value of our patents, thereby impairing our ability to protect our products
49If we are unable to obtain licenses from third parties on commercially reasonable terms, our business could be harmed
50If we fail to comply with our obligations in our intellectual property licenses with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business72% rewritten
51negotiate new or reinstated agreements with less favorable terms, which would impede, delay or prohibit the further development or commercialization of any product candidates that rely on such agreementsNew
52Patent terms may not protect our competitive position for an adequate amount of time
53If we do not obtain a patent term extension for any product candidates we might develop, our business might be materially harmed
54If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
55If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our business may be adversely affected82% rewritten
56We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
57Third parties may allege that we are violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on our business
58claims could have a material adverse effect on our business, financial condition, results of operations, and prospectsNew
59Intellectual property litigation or other legal proceedings relating to intellectual property could cost substantial resources
60Intellectual property rights do not necessarily address all potential threats

Risks Related to Our Employees, Managing Our Growth and Our Operations

61Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel
62Our business and operations would suffer in the event of system failures
63Our proprietary or confidential information may be lost, or we may suffer security breaches

Risks Related to Our Common Stock

64An active trading market for our common stock may not be sustained86% rewritten
65On February 24, 2026, we were notified by the Staff of Nasdaq that the closing bid price of our common stock had been $1.00 per share or greater for at least 10 consecutive business days, from February 6, 2026 to February 23, 2026. Accordingly, we have regained compliance with the Bid Price RequirementNew
66The market price of our common stock may be volatile, which could result in substantial losses for investors
67If securities analysts stop publishing research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline
68A significant portion of our total outstanding shares may be sold into the market, which could cause the market price of our common stock to decline significantly, even if our business is doing well22% rewritten
69Insiders have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control
70We could be subject to securities class action litigation
71Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain
72We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors
73These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock

General Risks

74A variety of risks associated with operating internationally could materially adversely affect our business
75U.S. federal income tax reform could adversely affect our business and financial condition
76Potential clinical trial or product liability lawsuits against us could cause us to incur substantial liabilities and, if we continue to progress the development of our product candidates, could limit commercialization of any products that we may develop
77Unfavorable global economic conditions and geopolitical instability could adversely affect our business, financial condition or results of operations
78We have incurred, and will incur increased costs as a result of operating as a public company, and our management will continue to be required to devote substantial time to new compliance initiatives and corporate governance practices

Other Rallybio 10-Ks

FY2024 10-K risk factors
63 risks
Rallybio relies heavily on early-stage candidates RLYB212 for FNAIT and RLYB116, operating with a small team of 25 employees. The company faces significant dilution risks due to a lack of committed external funds and no commercial revenue history. Strict healthcare regulations, intellectual property hurdles, and heavy reliance on third-party manufacturers and clinical sites dominate the risk profile.
Filed Mar 13, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.