Upstream Bio (UPB) risk factors, FY2024 10-K

Risks related to our limited operating history, financial condition and need for additional capital

1. 01make milestone, royalty, interest or other payments due under any potential future financing or other arrangements with third parties
2. 02We will require additional funding in order to finance operations. If we are unable to raise capital when needed, or on acceptable terms, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts
3. 03the extent to which we acquire or invest in business, products and technologies
4. 04Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to verekitug or any other potential future product candidates

Risks related to our business

1. 05Verekitug is our only product candidate, and we are dependent on a third party having accurately generated, collected and reported data from certain preclinical studies that were previously conducted for verekitug
2. 06If we are unable to advance verekitug in clinical development for one or more of the indications that we are pursuing, obtain regulatory approval and ultimately commercialize verekitug, or experience significant delays in doing so, our business will be materially harmed
3. 07We are currently conducting, and may in the future conduct, clinical trials for verekitug or any other potential future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials
4. 08The successful development of pharmaceutical products involves a lengthy and expensive process and is highly uncertain
5. 09The length of time necessary to complete clinical trials and submit an application for marketing approval for a final decision by a regulatory authority varies significantly from one product candidate to the next and from one country or jurisdiction to the next and may be difficult to predict
6. 10Certain estimates of market opportunity and forecasts may prove to be smaller than we believe
7. 11If we successfully commercialize verekitug, our results of operations will be affected by the level of royalty payments that we are required to pay to Regeneron
8. 12increased legal and accounting compliance costs
9. 13the UK adequacy decision from the European Commission. This may lead to additional compliance costs and could increase our overall risk
10. 14Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data

Risks related to the discovery and development of verekitug or any other potential future product candidates

1. 15the approval policies or regulations of the FDA, the EMA and the European Commission, or other comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval
2. 16Verekitug represents a novel approach to the treatment of inflammatory diseases, which makes it difficult to predict its likelihood of success and the timing and cost of development and obtaining regulatory approval
3. 17If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize verekitug or any other potential future product candidates
4. 18the potential for approval policies or regulations of the FDA, the EMA, and the European Commission, or the applicable regulatory authorities to significantly change in a manner rendering our clinical data insufficient for approval
5. 19If we fail to achieve announced milestones in the timeframes we expect, the development and commercialization of verekitug or any other potential future product candidates may be delayed, and our business, financial condition, results of operations and growth prospects may be harmed
6. 20Interim, initial, top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available and are subject to audit and verification procedures that could result in material changes in the final data
7. 21If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected
8. 22the risk that patients enrolled in our clinical trials will drop out of the trials before completion
9. 23Verekitug or any other potential future product candidates may cause undesirable side effects or have other properties that could delay or prevent regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if obtained
10. 24If we fail to expand our development of verekitug into additional indications, or discover or acquire, and subsequently develop and commercialize other product candidates, we may be unable to grow our business and our ability to achieve our strategic objectives would be impaired

Risks related to the commercialization of verekitug or any other potential future product candidates

1. 25availability and adequacy of coverage and reimbursement from government payors, managed care plans and other third-party payors
2. 26Any failure by verekitug or any other potential future product candidate that obtains regulatory approval to achieve market acceptance or commercial success would adversely affect our business prospects
3. 27If we are unable to develop our sales, marketing and distribution capability on our own or through collaborations with marketing partners, we will not be successful in commercializing verekitug or any other potential future product candidates
4. 28unforeseen costs and expenses associated with creating an independent sales and marketing organization
5. 29The increasing use of social media platforms presents new risks and challenges

Risks related to employee matters and managing growth

1. 30We expect to expand our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
2. 31Our ability to develop verekitug or any other potential future product candidates and our future growth depends on attracting, hiring and retaining our key personnel and recruiting additional qualified personnel

Risks related to our dependence on third parties

1. 32Our information technology systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches, which could adversely affect our business
2. 33We may seek to establish collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans
3. 34sufficient funds, we may not be able to further develop verekitug or any other potential future product candidates or bring them to market and generate product revenue
4. 35collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidate
5. 36the possible misappropriation of our proprietary information, including our trade secrets and know-how
6. 37If any third-party manufacturer of verekitug or any other potential future product candidates is unable to increase the scale of its production or the product yield of its manufacturing, then our manufacturing costs may increase and commercialization may be delayed
7. 38Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay

Risks related to government regulation

1. 39Obtaining and maintaining regulatory approval of verekitug or any other potential future product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval in other jurisdictions
2. 40Additionally, the FDA and comparable foreign regulatory authorities strictly regulate marketing, labeling, advertising and promotion of products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label
3. 41Verekitug or any other potential future product candidates for which we intend to seek approval as biological products may face competition sooner than anticipated
4. 42We may be unsuccessful in obtaining or may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity
5. 43Coverage and reimbursement may be limited or unavailable in certain market segments for verekitug or any other potential future product candidates, if approved, which could make it difficult for us to sell them profitably
6. 44neither experimental nor investigational
7. 45Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations
8. 46continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement
9. 47Our employees, independent contractors, consultants, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
10. 48Off-label use or misuse of verekitug or any other potential future product candidates may harm our reputation in the marketplace or result in injuries that lead to costly product liability suits
11. 49EU drug marketing and reimbursement regulations may materially affect our ability to market and receive coverage for our products in the EU Member States
12. 50We are subject to export and import controls, economic sanctions, and anti-corruption laws and regulations of the United States and other jurisdictions. We can face criminal liability and other serious consequences for violations of these laws and regulations, which can harm our business
13. 51If we or any third-party manufacturer we engage now or in the future fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs or liabilities that could have a material adverse effect on our business

Risks related to our intellectual property

1. 52Our success is largely based upon our intellectual property and proprietary technologies, and we may be unable to protect and/or enforce our intellectual property
2. 53we may be involved in lawsuits to protect or enforce our patents or the patents we have rights to enforce, which could be expensive, time consuming and/or unsuccessful
3. 54We may be forced to litigate to enforce or defend our intellectual property rights
4. 55If we or our partners are sued for infringing or misappropriating the intellectual property rights of third parties, it could be costly and time consuming, and an unfavorable outcome in any such litigation could have a material adverse effect on our business
5. 56obtain one or more licenses from third parties for an upfront lump sum, an ongoing royalty, or a combination thereof
6. 57Obtaining 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
7. 58Patent terms may be inadequate to protect our competitive position on verekitug or any other potential future product candidates for an adequate amount of time
8. 59If we do not obtain sufficient patent term protections for verekitug or any other potential future product candidates, our business may be materially harmed
9. 60Changes in patent law in the United States and in non U.S. jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our technologies and verekitug or any other potential future product candidates
10. 61If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed
11. 62Third parties may assert that our employees, consultants, or advisors have wrongfully used or disclosed confidential information or misappropriated trade secrets
12. 63Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business
13. 64Intellectual property rights do not necessarily address all potential threats
14. 65the patents of others may prohibit or otherwise harm our business; or

Risks related to ownership of our common stock

1. 66An active trading market for our common stock may not be sustained
2. 67The price of our common stock may be volatile, which could result in substantial losses for our stockholders
3. 68other events or factors, many of which are beyond our control
4. 69Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations
5. 70the level of demand for verekitug or any other potential future product candidates, if approved, which may vary significantly over time
6. 71If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
7. 72Our executive officers, directors, principal stockholders and their respective affiliates own a significant percentage of our common stock and have the ability to exert significant control over matters subject to stockholder approval
8. 73Our common stock price could decline as a result of sales of a large number of shares of common stock or the perception that these sales could occur, which might also make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate
9. 74Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders
10. 75We do not currently intend to pay dividends on our common stock and, consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation of the value of our common stock
11. 76Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current directors and members of management
12. 77require the approval of not less than two-thirds of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our third amended and restated certificate of incorporation or amended and restated bylaws
13. 78We may not be able to continue to satisfy the listing requirements of Nasdaq

Other general risks

1. 79Unfavorable global economic and geopolitical conditions could adversely affect our business, financial condition, stock price, and results of operations
2. 80We, or the third parties upon whom we depend, may be adversely affected by natural disasters, public health crises or other business interruptions and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
3. 81We are eligible to be treated as an “emerging growth company” and a “smaller reporting company” and our election of reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors
4. 82an exemption from compliance with the requirements of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements
5. 83We incur significant 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
6. 84new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate
7. 85Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
8. 86Our ability to use our net operating loss carryforwards and other tax attributes may be limited
9. 87and the state NOLs begin to expire in 2041. As of December 31, 2024, we had federal and state research and development credits of $3.5 million and $0.3 million, respectively, which will, if not utilized, begin to expire in 2043 and 2037, respectively
10. 88Changes in tax law could adversely affect our business and financial condition
11. 89We may become involved in securities class action litigation that could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages