Transcode Therapeutics (RNAZ) risk factors, FY2024 10-K

Risks related to our financial position and need for additional capital

1. 01We have incurred significant losses since inception, and we expect to incur losses over the next several years and may not be able to achieve or sustain revenues or profitability in the future
2. 02Ø operate as a public company
3. 03We have never generated any revenue from product sales and may never be profitable
4. 04Ø attracting, hiring, and retaining qualified personnel
5. 05We will need to raise substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, scale back or discontinue some of our therapeutic candidate development programs or commercialization efforts
6. 06Ø the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals to market our current or future therapeutic candidates
7. 07Any additional fundraising efforts may divert our management from other day-to-day activities, which may adversely affect our ability to develop and commercialize our current or future therapeutic candidates
8. 08The amount of our future losses is uncertain, and our 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
9. 09Ø future accounting pronouncements or changes in our accounting policies

Risks related to research and development and the biopharmaceutical industry

1. 10Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability
2. 11Because our therapeutic candidates are in an early stage of development, there is a high risk of failure, and we may never succeed in developing marketable products or generating therapeutic revenues
3. 12Ø being unable to manufacture or supply, or have manufactured or supplied on our behalf, approved products cost-effectively
4. 13Our therapeutic candidates may cause undesirable side effects or death or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences
5. 14Clinical development involves a lengthy, complex and expensive process, with an uncertain outcome, and the results of preclinical studies and early-stage clinical trials of our therapeutic candidates may not be predictive of the results of later-stage clinical trials
6. 15Ø the proprietary rights of others and their competing products and technologies that may prevent one of our therapeutic candidates from being commercialized
7. 16Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their therapeutic candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their products
8. 17We may experience negative or inconclusive results, which may result in our deciding, or our being required by regulators, to conduct additional clinical studies or trials or abandon some or all of our product development programs, which could have a material adverse effect on our business
9. 18being materially different from the topline data we previously published. As a result, preliminary and topline data should be viewed with caution until the final data are available
10. 19If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected
11. 20Our preclinical studies of, and clinical trials, if any, with, any of our therapeutic candidates may fail to demonstrate adequately the safety, potency, purity and efficacy necessary for continued and timely development, regulatory approval and commercialization
12. 21Due to our limited resources and access to capital, we must make decisions on the allocation of resources to certain programs and therapeutic candidates; these decisions may prove to be wrong and may adversely affect our business
13. 22We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of TTX-MC138 or any of our other therapeutic candidates in development
14. 23There is no assurance that we will not experience additional or other delays
15. 24Ø the FDA or other comparable foreign regulatory authorities may require us to submit additional data such as long-term toxicology studies or may impose other requirements before permitting us to initiate a clinical trial
16. 25Changes in methods of therapeutic candidate manufacturing or formulation may result in additional costs or delay
17. 26Quality problems could delay or prevent delivery of our products to clinical trials or the market
18. 27We are required to comply with FDA’s good clinical practice, or GCP, regulations for our clinical programs
19. 28We may not be successful in our efforts to identify or discover additional therapeutic candidates in the future
20. 29Ø potential therapeutic candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance
21. 30We face an inherent risk of product liability once we begin testing TTX-MC138 and any of our other therapeutic candidates in clinical trials and will face an even greater risk if we commercialize any products
22. 31Ø decline in our share price

Risks related to regulatory approval, healthcare regulations and ongoing regulatory compliance

1. 32Ø the results of our clinical trials may not demonstrate the safety or efficacy required by the FDA for approval; or
2. 33Ø the FDA may find deficiencies in our manufacturing processes or facilities; and the FDA’s approval policies or regulations may significantly change in a manner rendering our clinical data insufficient for approval
3. 34Ø civil and criminal penalties and fines
4. 35We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants or if preliminary data demonstrate that our products are unlikely to receive regulatory approval or unlikely to be successfully commercialized
5. 36ingredient for use in treating the same indication or disease. Furthermore, the FDA can waive Orphan Drug Exclusivity if we are unable to manufacture sufficient supply of the approved product
6. 37A Breakthrough Therapy designation by FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval
7. 38A Fast Track designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive marketing approval
8. 39Accelerated approval by FDA, even if granted for TTX-MC138 or any other future therapeutic candidate, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our therapeutic candidates will receive marketing approval
9. 40Ø consent decrees or injunctions or the imposition of civil or criminal penalties
10. 41If any of these events were to occur, our business would be harmed, possibly materially
11. 42Obtaining and maintaining regulatory approval for our therapeutic candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval for that or of any of our other therapeutic candidates in other jurisdictions
12. 43Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations
13. 44Additionally, on July 9, 2021, then President Biden issued an executive order directing the FDA to, among other things, continue to clarify and improve the approval framework for generic drugs and identify and address any efforts to impede generic drug competition
14. 45Healthcare reform in the U.S. and other countries may materially and adversely affect us
15. 46Ø the level of taxes that we are required to pay
16. 47Prescription Drug Pricing Reduction Act
17. 48We are subject to geopolitical risks, economic volatility, anti-corruption laws, export and import restrictions, local regulatory authorities and the laws and medical practices in foreign jurisdictions
18. 49commercial success will be determined by, among other things, our ability to obtain acceptable pricing for approved products which will be subject to, among other things, the factors described above

Risks related to commercialization

1. 50Coverage and reimbursement may be limited or unavailable in certain market segments for our therapeutic candidates, if approved, which could make it difficult for us to sell any therapeutic candidates profitably
2. 51In the United States and in other countries, patients who are prescribed treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment
3. 52Ø neither experimental nor investigational
4. 53Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors
5. 54We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do
6. 55Potential competitors also include academic institutions, government agencies, and other public and private research organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization
7. 56Ø unforeseen costs and expenses associated with creating an independent sales and marketing organization
8. 57Sales of our products may involve a lengthy sales cycle

Risks related to third-parties and suppliers

1. 58We expect to rely on third-party manufacturing and supply vendors, and our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality
2. 59Ø reliance on the third-party for regulatory compliance, quality assurance and safety reporting
3. 60future dependence upon others for manufacturing may adversely affect our timelines, our future profit margins or our ability to commercialize any therapeutic candidates that receive marketing approval on a timely and competitive basis
4. 61If any of our relationships with these third-party CROs or others terminate, we may not be able to enter into arrangements with alternative CROs or other third-parties or to do so on commercially reasonable terms
5. 62Parties conducting some or all of our product manufacturing may not perform satisfactorily
6. 63We are highly dependent on others to provide services for certain core aspects of our business
7. 64If our third-party manufacturers use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages
8. 65We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize products
9. 66If we fail to establish and maintain strategic partnerships related to our therapeutic candidates, we will bear all of the risk and costs related to the development and commercialization of our therapeutic candidates

Risks related to managing our business and operations

1. 67We face risks related to health epidemics, pandemics and other widespread outbreaks of contagious disease, including a pandemic, which could significantly disrupt our operations, impact our financial results or otherwise adversely affect our business
2. 68Ø interruption or delays to our sourced discovery and clinical activities
3. 69We will need to grow the size of our organization, and we may experience difficulties in managing this growth
4. 70Ø improving our operational, financial and management controls, reporting systems and procedures
5. 71Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
6. 72The estimates of market opportunity and forecasts of market growth included in this annual report or that we may otherwise provide 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
7. 73We may be exposed to significant foreign exchange risk
8. 74Compliance with governmental regulations regarding the treatment of animals used in research could increase our operating costs, which would adversely affect the commercialization of our products
9. 75Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation

Risks related to intellectual property

1. 76Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection
2. 77We cannot be certain that we were the first to file any patent application related to our technology, including our therapeutic candidates, and, if we were not, we may be precluded from obtaining patent protection for our technology, including our therapeutic candidates
3. 78which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim
4. 79Ø the patents of others may have an adverse effect on our business
5. 80Third-party claims of intellectual property infringement may be costly and time consuming to defend, and could prevent or delay our product discovery, development and commercialization efforts
6. 81administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions
7. 82Ø the need to redesign our therapeutic candidates or processes so they do not infringe, which may not be possible or may require substantial monetary expenditures and time
8. 83If we are not able to obtain and enforce patent and other intellectual property protection for our technologies, development and commercialization of our therapeutic candidates may be adversely affected and our business materially harmed
9. 84Intellectual property litigation and administrative patent office patent validity challenges in one or more countries could cause us to spend substantial resources and distract our personnel from their normal responsibilities
10. 85Confidentiality agreements with employees and others may not prevent unauthorized disclosure of proprietary information
11. 86Third-parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets
12. 87Patent terms may be inadequate to protect our competitive position on our therapeutic candidates for an adequate amount of time
13. 88Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our current or future therapeutic candidates
14. 89If we are unable to adequately protect and enforce our trade secrets, our business and competitive position would be harmed
15. 90Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us
16. 91We may initiate, become a defendant in, or otherwise become party to lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and unsuccessful
17. 92Our internal computer systems, or those of our third-party CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our current or future therapeutic candidates’ development programs
18. 93We may be unable to adequately protect our information systems from cyberattacks, which could result in the disclosure of confidential or proprietary information, including personal data, damage our reputation, and subject us to significant financial and legal exposure
19. 94such security or data privacy breaches, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business
20. 95We or the third-parties upon whom we depend may be adversely affected by earthquakes, other natural disasters, or political and military events, and our business continuity and disaster recovery plans may not adequately protect us from any such serious disaster
21. 96Our employees, principal investigators, clinical trial sites, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
22. 97Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price
23. 98Current economic circumstances may harm our business, financial condition and results of operations
24. 99Rising inflation rates have increased our operating costs and could negatively impact our operations
25. 100We may incur substantial costs in our efforts to comply with evolving global data protection laws and regulations, and any failure or perceived failure by us to comply with such laws and regulations may harm our business and operations
26. 101We or any future strategic partners may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights
27. 102We incur significant costs as a result of operating as a public company, and our management devotes substantial time to compliance activities and investor relations
28. 103The increasing use of social media platforms presents new risks and challenges

Risks related to our Common Stock

1. 104There is no public market for any of our pre-funded warrants or our common stock purchase warrants
2. 105Pre-funded warrants and common stock purchase warrants are speculative in nature
3. 106The price of our common stock may be volatile or may decline regardless of our operating performance, shareholders may not be able to resell their shares at or above the price at which they purchase those shares
4. 107The price of our common stock may fluctuate substantially, which could result in substantial losses for purchasers of our common stock
5. 108Ø the other factors described in this “Risk Factors” section
6. 109Securities sales practice requirements may limit a stockholder’s ability to buy and sell our securities
7. 110Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or current or future therapeutic candidates
8. 111Identifying potential current or future therapeutic candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve drug sales
9. 112Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our current or future therapeutic candidates
10. 113We 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 less attractive to investors
11. 114If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline
12. 115We do not intend to pay cash dividends on our common stock, so any returns will be limited to the value of our stock
13. 116Ø assessing significant accounting transactions and other technical accounting and financial reporting issues, preparing accounting memoranda addressing these issues and maintaining these memoranda in our corporate records
14. 117Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control, which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management
15. 118Ø the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock