Septerna (SEPN) risk factors, FY2025 10-K

Risks Related to Limited Operating History, Financial Position and Capital Requirements

1. 01We have a limited operating history and have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future
2. 02the impact of global economic uncertainty and geopolitical tensions, which may exacerbate the magnitude of the factors discussed above31% rewritten
3. 03We have never generated revenue from product sales and may never be profitable
4. 04attract, hire and retain qualified personnel

Risks Related to Discovery, Development and Regulatory Approval of Product Candidates

1. 05varying interpretations of our data by the FDA, EMA, and similar foreign regulatory authorities
2. 06Our inability to complete development of, or commercialize our product candidates, or significant delays in doing so due to one or more of these factors, could have a material and adverse effect on our business, financial condition, results of operations and prospects
3. 07the proprietary rights of others and their competing products and technologies that may prevent our product candidates from being commercialized
4. 08changes in regulatory requirements, guidance, or feedback from regulatory agencies that require amending or submitting new clinical protocols or otherwise modifying the design of our clinical trials77% rewritten
5. 09Our product candidates are subject to extensive regulation and compliance obligations, which is costly and time-consuming and which may cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates
6. 10the approval policies or regulations of such authorities may significantly change in a manner rendering our or any of our current or future collaborators’ clinical data insufficient for approval
7. 11Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, which could adversely affect our business, operating results and prospects36% rewritten
8. 12clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies
9. 13injunctions or the imposition of civil or criminal penalties
10. 14If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our therapeutics may be delayed and, as a result, our stock price may decline23% rewritten
11. 15securing product reimbursement32% rewritten
12. 16Results of preclinical studies and early clinical trials on any of our product candidates may not be predictive of results of future clinical trials
13. 17We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
14. 18Preliminary, topline and interim data from our 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
15. 19We may develop our product candidates in combination with other therapies, which would expose us to additional risks

Risks Related to Commercialization, Marketing and Competition

1. 20resources and attention to sell and market our products effectively. If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional lossesNew
2. 21Even if any of our product candidates receive marketing approval, such product candidate may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success, in which case we may not generate significant revenues or become profitable
3. 22any restrictions on the use of the product together with other medications
4. 23We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than us24% rewritten
5. 24EU drug marketing and reimbursement regulations may materially affect our ability to market and receive coverage for our products in the EU Member States
6. 25Obtaining and maintaining marketing approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining marketing approval of our product candidates in other jurisdictions
7. 26Our future growth may depend, in part, on our ability to commercialize products in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
8. 27If the market opportunities for any of our product candidates are smaller than we estimate, even assuming approval of a product candidate, our revenue may be adversely affected, and our business may suffer

Risks Related to Business Operation and Industry

1. 28Our operating results may fluctuate significantly, 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
2. 29the changing and volatile global economic and political environment
3. 30We expect to expand our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
4. 31improve our operational, financial and management controls, reporting systems and procedures
5. 32We are highly dependent on the services of our senior management team and if we are not able to retain these members of our management team and recruit and retain additional management, clinical and scientific personnel, our business will be harmed
6. 33Our employees, independent contractors, principal investigators, CROs, consultants, vendors and collaboration partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
7. 34Changes in U.S. and international trade policies, particularly with respect to China, may adversely impact our business and operating results48% rewritten
8. 35Clinical trial and product liability lawsuits against us could divert our resources, could cause us to incur substantial liabilities and could limit commercialization of any product candidates we may develop
9. 36a decline in price of our common stock
10. 37If 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 costs that could have a material adverse effect on the success of our business
11. 38Our future ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited
12. 39We have and may in the future engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management
13. 40inability to retain key employees of any acquired businesses
14. 41We have conducted and may continue to conduct, clinical trials for our product candidates outside of the United States, and we may do so for our other product candidates. However, conducting trials outside of the United States exposes us to additional risks, which could materially harm our business
15. 42If our information systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences from such compromises, such as damage to our reputation, significant financial and legal exposure, or other adverse effects to our business

Risks Related to Government Regulatory and Legal Requirements

1. 43Over the last several years, including from October 1, 2025 to November 12, 2025, the U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical employees and cease critical activitiesNew
2. 44years if at the end of the fifth year it is determined that a product no longer meets the criteria for orphan designation, including if the product is sufficiently profitable so that market exclusivity is no longer justifiedNew
3. 45Our employees and personnel use generative artificial intelligence technologies to perform their work, and the disclosure and use of personal data in generative artificial intelligence technologies is subject to various privacy laws and other privacy obligations50% rewritten
4. 46Healthcare legislative reform measures may have a negative impact on our business and results of operations
5. 47the availability of capital
6. 48Because of the breadth of these laws and the limited statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws
7. 49Legislation or other changes in U.S. tax law may have a material adverse effect on our business, cash flow, financial condition, or results of operations23% rewritten

Risks Related to Third Party Relationships

1. 50We currently rely on, and may continue to depend on, collaborations with third parties for the discovery, development and commercialization of our product candidates. If any of these collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates38% rewritten
2. 51collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates31% rewritten
3. 52associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budgetNew
4. 53in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our therapeutics84% rewritten
5. 54continue to use WuXi Biologics, WuXi AppTec or other suppliers or partners identified as “biotechnology companies of concern” beyond this grandfathering periodNew
6. 55collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property
7. 56We intend to rely on third parties to conduct, supervise and monitor our preclinical studies and clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business
8. 57We currently depend and in the future may continue to depend on single- or limited-source suppliers for some of the components and materials used in the product candidates we may develop

Risks Related to Intellectual Property

1. 58If we are unable to obtain, maintain, defend and enforce patent or other intellectual property protection for our current or any future product candidates, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets
2. 59whether the patent applications that we own, or may in-license, will result in issued patents with claims that cover our product candidates or uses thereof in the United States or in foreign jurisdictions
3. 60We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
4. 61If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates
5. 62Our technology licensed from various third parties may be subject to retained rights
6. 63We may not be aware of patents or pending or future patent applications that, if issued, would block us from commercializing our product candidates. Thus, we cannot guarantee that our product candidates, or our commercialization thereof, do not and will not infringe any third party’s intellectual propertyNew
7. 64We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses
8. 65the priority of invention of patented technology
9. 66We may be involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful. Further, our issued patents could be found invalid or unenforceable if challenged in court40% rewritten
10. 67it could dissuade companies from collaborating with us to license, develop or commercialize our product candidates. Such a loss of patent protection would have a material adverse impact on our business, financial condition, results of operations and prospectsNew
11. 68We may be subject to claims that we or our employees have misappropriated the intellectual property, including confidential information, know-how or trade secrets, of a third-party, or claiming ownership of what we regard as our own intellectual property
12. 69We may license intellectual property rights from third parties. Such licenses may be subject to early termination if we fail to comply with our obligations in our licenses with third parties, which could result in the loss of rights or technology that are material to our business
13. 70Obtaining 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
14. 71We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business
15. 72If we do not obtain patent term extension and data exclusivity for any product candidates we may develop, our business may be materially harmed
16. 73Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of our trade secrets and other proprietary information. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
17. 74Our intellectual property rights do not necessarily protect against all potential threats to our business
18. 75If 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
19. 76Rights to improvements to our product candidates may be held by third parties

Risks Related to Ownership of Our Common Stock

1. 77We do not know whether a market will be sustained for our common stock or what the market price of our common stock will be, and, as a result, it may be difficult for you to sell your shares of our common stock
2. 78The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares
3. 79the other factors described in this “Risk Factors” section
4. 80Future sales, or the perception of future sales, of our common stock in the public market by existing stockholders could cause our stock price to fall
5. 81We are an “emerging growth company” and a “smaller reporting company,” and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors25% rewritten
6. 82exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved49% rewritten
7. 83We have incurred and will continue to incur significant increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices
8. 84Insiders have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control
9. 85We do not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment
10. 86If we fail to maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed
11. 87Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
12. 88These 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
13. 89Our amended and restated bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees
14. 90Unfavorable global economic conditions, political instability and geopolitical events could adversely affect our business, financial condition, stock price, and results of operations
15. 91termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements
16. 92If 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
17. 93We may become involved in litigation and investigations that could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages51% rewritten
18. 94Our insurance policies are expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities
19. 95Our operations are vulnerable to interruption by disasters, terrorist activity, pandemics and other events beyond our control, which could harm our business
20. 96Increased attention to, and evolving expectations for, environmental, social, and governance initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business
21. 97The increasing use of social media platforms presents risks and challenges