Skye Bioscience (SKYE) risk factors, FY2024 10-K

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

1. 01We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future
2. 02We have no products approved for sale and nimacimab is our only product candidate in clinical development. Our business depends entirely on the successful development, clinical testing, and commercialization of nimacimab and any other product candidates we may seek to develop in the future, which may never occur
3. 03We may never generate any revenue or become profitable or, if we achieve profitability, we may not be able to sustain it
4. 04We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations
5. 05Our ability to raise capital may be limited by applicable laws and regulations
6. 06Public opinion and scrutiny of treatments for obesity and overweight may impact public perception of us or nimacimab, or may adversely affect our ability to conduct our business and our business plans

Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

1. 07We may expend our limited resources to pursue a particular product candidate in specific indications and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
2. 08Any difficulties or delays in the commencement or completion, or termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects
3. 09If we experience delays or difficulties in the enrollment of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected
4. 10We cannot assure you that our assumptions used in determining expected clinical trial timelines are correct or that we will not experience delays in enrollment, which would result in the delay of completion of such trials beyond our expected timelines
5. 11As an organization, we have never conducted later-stage clinical trials or submitted an NDA or BLA, and may be unable to do so for any of our product candidates
6. 12Nimacimab is subject to extensive regulation and compliance, which is costly and time consuming, and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize nimacimab
7. 13Preliminary, 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
8. 14The manufacture and maintenance of our clinical product candidates is complex and we may encounter difficulties in production and maintenance, particularly with respect to clinical material inventory, acquisition of materials, process development or scaling-up of our manufacturing capabilities
9. 15Additional time may be required to obtain marketing authorizations for any product candidates that we develop as biologic-device combination products

Risks Related to Our Reliance on Third Parties

1. 16Nimacimab and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP or similar foreign regulations and that might be capable of manufacturing for us
2. 17Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed
3. 18If we fail to enter and maintain successful collaborative arrangements or strategic alliances for our product candidates, we may have to reduce or delay our product candidate development or increase our expenditures
4. 19In addition, these kinds of collaborative arrangements and strategic alliances may place certain aspects of the development of our product candidates outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us

Risks Related to Commercialization

1. 20The 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
2. 21Any product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated
3. 22Even if nimacimab or our future product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success
4. 23The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found or alleged to have improperly promoted off-label uses, we may become subject to significant liability
5. 24If the market opportunities for any of our product candidates are smaller than we estimate, even assuming approval of a product candidate, our future revenue may be adversely affected, and our business may suffer
6. 25Our 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

Risks Related to Our Business Operations and Industry

1. 26If we are not able to attract and retain highly qualified personnel, we may not be able to successfully implement our business strategy
2. 27We may encounter difficulties in managing our growth and expanding our operations successfully
3. 28We are subject to various foreign, federal and state healthcare laws and regulations, and our failure to comply with these laws and regulations could harm our results of operations and financial condition
4. 29Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could have a material adverse effect on our business, financial condition or results of operations
5. 30Our information technology systems, or those of any of our CROs, manufacturers, other contractors or consultants or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our nimacimab development program, which could materially affect our results
6. 31Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize our product candidates and may affect the prices we may set
7. 32If product liability or state consumer protection act lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our products
8. 33Our employees, principal investigators, and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
9. 34We are currently subject to lawsuits, and in the future may be subject to additional lawsuits, that could divert its resources and result in the payment of significant damages and other remedies
10. 35The increasing use of social media platforms presents new risks and challenges

Risks Related to Our Intellectual Property

1. 36Our success depends on our ability to protect our intellectual property and our proprietary technologies, and if we are unable to protect our intellectual property and technologies, our business will suffer
2. 37If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be material and adversely affected
3. 38We 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 court
4. 39Intellectual property rights do not necessarily address all potential threats to our competitive advantage
5. 40Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts
6. 41Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline
7. 42Derivation proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party
8. 43Changes in U.S. patent law, or laws in other countries or jurisdictions, could diminish the value of patents in general, thereby impairing our ability to protect our product candidates
9. 44We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
10. 45Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time
11. 46If we do not obtain patent term extension for our product candidates, our business may be materially harmed
12. 47We may not be able to protect our intellectual property rights throughout the world
13. 48Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
14. 49If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
15. 50We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers

Risks Related to Our Common Stock

1. 51The trading price of our common stock has been volatile with substantial price fluctuations on heavy volume, which could result in substantial losses for purchasers of our common stock and existing stockholders
2. 52Our stock price has been and, in the future, may be subject to substantial volatility. During the fiscal year ended December 31, 2024, the price per share of our common stock has ranged as low as $2.25 and as high as $19.41
3. 53Our failure to meet the continued listing requirements of the Nasdaq could result in a delisting of our Common Stock
4. 54We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock
5. 55Our executive officers, directors and principal stockholders, if they choose to act together, have the ability to control or significantly influence all matters submitted to stockholders for approval
6. 56The consent rights of our January PIPE Investors pursuant to the January 2024 PIPE SPA may adversely affect our ability to pursue certain strategic transactions
7. 57We issued pre-funded warrants as part of our January 2024 financing, which may cause additional dilution to our shareholders
8. 58We have a substantial number of authorized common shares available for future issuance that could cause dilution to our Stockholders’ interest and adversely impact the rights of the holders of our Shares
9. 59The issuance of shares upon exercise of outstanding warrants and options may cause immediate and substantial dilution to our existing stockholders
10. 60Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited
11. 61We are a smaller reporting company within the meaning of the Securities Act, and if we continue to decide to take advantage of certain exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to investors
12. 62We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly
13. 63Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses
14. 64Unfavorable global economic conditions could adversely affect our business, financial condition and stock price
15. 65Changes to tariff and import/export regulations, and trade disputes between the United States and other jurisdictions may have a negative effect on global economic conditions and our business, financial results and financial condition
16. 66If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline
17. 67We engage in transactions with related parties which present possible conflicts of interest that could have an adverse effect on us
18. 68Changes in tax laws may impact our financial condition and results of operations
19. 69We could be subject to securities class action litigation
20. 70If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline
21. 71We incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives
22. 72Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates
23. 73We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management