Xenetic Biosciences (XBIO) risk factors, FY2024 10-K

Risks Related to Our Financial Condition and Capital Requirements

1. 01We will require substantial additional funding to achieve our goals. Failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit or terminate our product development efforts, other operations or commercialization efforts
2. 02Developing drug candidates is an expensive, risky and lengthy process, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical trials of, and seek marketing approval for, our drug candidates
3. 03Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates

Risks Related to the Discovery and Development of our Pharmaceutical Products

1. 04Our business is substantially dependent on the success of the DNase technology
2. 05We are an early stage company in the business of developing pharmaceutical products including drug candidates and technologies. Given the uncertainty of such development, our business operations may never fully materialize and create value for investors
3. 06We may find it difficult to enroll patients in our clinical studies, which could delay or prevent clinical studies of our pharmaceutical products
4. 07If we have difficulty enrolling a sufficient number of patients to conduct our clinical studies as planned, we may need to delay, limit or terminate ongoing or planned clinical studies, any of which would have an adverse effect on our business
5. 08If we complete the necessary preclinical and clinical studies, we cannot predict when or if we will obtain regulatory approval to commercialize a drug candidate, or the approval may be for a more narrow indication than we expect
6. 09If we obtain regulatory approval for a drug candidate, our drug candidate will remain subject to regulatory scrutiny
7. 10The commercial success of any current or future pharmaceutical products will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community
8. 11The commercial potential of a pharmaceutical candidate in development is difficult to predict. If the market size for a new drug candidate or technology is significantly smaller than we anticipate, it could significantly and negatively impact our revenue, results of operations and financial condition
9. 12Failure to obtain or maintain adequate coverage and reimbursement for our drug candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue
10. 13We may use our financial and human resources to pursue a particular research program or drug candidate and fail to capitalize on programs or drug candidates that may be more profitable or for which there is a greater likelihood of success
11. 14We may not be successful in our efforts to identify or discover additional pharmaceutical products
12. 15The market opportunities for our drug candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small
13. 16Clinical trials may fail to demonstrate the safety and efficacy of our pharmaceutical drug candidates and could prevent or significantly delay regulatory approval
14. 17We may fail to obtain orphan drug designations from the FDA for our drug candidates, and even if we obtain such designations, we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity
15. 18In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory enactments in recent years that change the healthcare system in ways that could impact our future ability to sell our drug candidates profitably

Risks Related to Our Reliance on Third-Parties

1. 19If conflicts arise between us and our collaborators or strategic partners, these parties may act in their self-interest, which may limit our ability to implement our strategies
2. 20We expect to rely on third parties to conduct, supervise and monitor our clinical studies, and if these third parties perform in an unsatisfactory manner, it may harm our business
3. 21Our collaborators or strategic partners may decide to adopt alternative technologies or may be unable to develop commercially viable products with our technology, which would negatively impact our revenues and our strategy to develop these products
4. 22We may seek to establish additional collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans
5. 23We are a party to, and may enter into one or more collaborations in the future, pursuant to which we may be required to relinquish important rights to and control over the development of our drug candidates or otherwise be subject to unfavorable terms
6. 24We have no manufacturing, sales, marketing or distribution capabilities, and we may have to invest a significant amount of resources to develop these capabilities
7. 25Our 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
8. 26Our contract manufacturers are subject to significant regulation with respect to manufacturing our products. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity

Risks Related to Our Intellectual Property

1. 27If we fail to adequately protect or enforce our intellectual property rights, we may be unable to operate effectively
2. 28Issued patents covering our drug candidates could be found invalid or unenforceable if challenged in court
3. 29We may not be able to protect our intellectual property rights throughout the world
4. 30If we infringe on the intellectual property rights of others, our business and profitability may be adversely affected
5. 31If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business
6. 32We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers
7. 33We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
8. 34Our inability to protect our confidential information and trade secrets would harm our business and competitive position
9. 35We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful
10. 36Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products
11. 37Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements

Risks Related to Our Business Operations

1. 38We operate in an extremely competitive environment and there can be no assurances that competing technologies would not harm our business development
2. 39Our future success depends on our ability to retain principal members of our executive team, consultants and advisors and to attract, retain and motivate qualified personnel
3. 40We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations
4. 41We are a party to collaboration agreements and other significant agreements which contain complex commercial terms that could result in disputes, litigation or indemnification liability that could adversely affect our business, results of operations and financial condition
5. 42Market conditions and changing circumstances, some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to timely pay collaborators and others
6. 43Potential new accounting standards or legislative actions may adversely impact our future financial position or results of operations

Risks Related to Our Common Stock

1. 44We may not continue to meet the continued listing requirements of Nasdaq, which could result in a delisting of our common shares
2. 45The market price of our securities may be highly volatile, and you may not be able to sell our securities
3. 46Actions of activist shareholders could cause us to incur substantial costs, divert management's attention and resources, and have an adverse effect on our business
4. 47Our preferred stockholders have rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could result in the interests of our preferred stockholders differing from those of our common stockholders
5. 48As of March 7, 2025, we had approximately 1.5 million shares of common stock outstanding, excluding approximately 0.3 million of potentially dilutive common stock related to outstanding preferred stock, warrants and options
6. 49We could be subject to securities class action litigation
7. 50An active, liquid and orderly market for our common stock may not develop
8. 51We have entered into agreements with our stockholders
9. 52We do not intend to pay dividends on our common stock or preferred stock so any returns will be limited to the value of our stock
10. 53Certain provisions of our Articles of Incorporation, Bylaws, and the Nevada Revised States may be deemed to have an anti-takeover effect, which could cause the market price of our common stock to decline
11. 54Our financial condition, results of operations, business and cash flow may be negatively affected by unfavorable U.S. or global economic conditions
12. 55Our ability to use potential future operating losses and our federal and state NOL carryforwards to offset taxable income from revenue generated from operations or corporate collaborations could be limited
13. 56Tax reform may significantly affect the Company and our stockholders
14. 57Governments may impose price controls, which may adversely affect our future profitability
15. 58Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
16. 59Use of our drug candidates could be associated with adverse side effects
17. 60If we 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
18. 61Non-cash charges such as share-based payments may adversely impact our results of operations
19. 62Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
20. 63Failure in our information technology systems or those of our third-party service providers, including by cybersecurity attacks or other data security incidents, could significantly disrupt our operations
21. 64We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors