Zenas BioPharma (ZBIO) risk factors, FY2025 10-K

Risks Related to Our Financial Position and Need for Capital

1. 01We are a clinical stage biopharma company with a limited operating history and no products approved for commercial sale; we have incurred substantial losses since our inception, and we anticipate incurring substantial and increasing losses for the foreseeable future24% rewritten
2. 02We will require substantial additional financing to achieve our goals, and failure to obtain additional capital when needed, or on acceptable terms, would cause us to delay, limit, reduce or terminate our product development efforts41% rewritten
3. 03Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concernNew
4. 04Raising additional capital may cause dilution to our stockholders, impose restrictions on our operations or require us to relinquish rights to our product candidates64% rewritten

Risks Related to Product Candidate Development and Commercialization

1. 05When we conduct preclinical and clinical research in collaboration with other academic, pharmaceutical and biotechnology entities, we risk additional delays due to the frequent need to align on decisions
2. 06Delays or difficulties in the enrollment and dosing of patients in clinical trials, delay or prevent receipt of necessary regulatory approvals
3. 07Any significant adverse events or undesirable side effects caused by our product candidates may delay or prevent regulatory approval or market acceptance of our product candidates, or result in significant negative consequences following marketing approval, if any52% rewritten
4. 08AEs and SAEs may be deemed to be related to our product candidates. Such a determination may require longer and more extensive clinical development, or regulatory authorities may increase the amount of data and information required to approve, market or maintain approval of our product candidatesNew
5. 09Risks associated with the in-licensing or acquisition of product candidates could cause substantial delays in the preclinical and clinical development of our product candidates79% rewritten
6. 10Interim , initial, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time are subject to audit and verification procedures and may differ materially from final data as more patient data become available
7. 11Our clinical trials of our product candidates, even if successfully completed, may not be sufficient for marketing approval for the applicable indication
8. 12Although obexelimab has been granted orphan drug designation by the FDA for IgG4-RD, such designation does not guarantee that any regulatory authority will accept fewer trials, accelerate regulatory review of, or ultimately approve obexelimab for IgG4-RD34% rewritten
9. 13We may not realize the benefits of our current or future collaborations or licensing arrangements and may be unsuccessful in consummating future partnerships
10. 14Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize any product candidate in the U.S. or any other jurisdiction, and any such approval may be for a more narrow indication than we seek
11. 15We 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
12. 16We are currently conducting, and may in the future conduct, clinical trials for current or future product candidates outside the U.S., and the FDA and comparable foreign regulatory authorities may not accept data from such trials
13. 17Even if we receive marketing approval for our current or future product candidates in the U.S., we may never receive regulatory approval to market outside of the U.S
14. 18We may not be able to obtain or maintain orphan drug designations for certain of our product candidates, and we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity
15. 19We may seek accelerated approval for some of our product candidates but may not be able to obtain it as the sufficiency of our clinical trial results for accelerated approval are subject to the FDA’s discretion

Risks Related to Our Business and Operations

1. 20Our business depends entirely on the success of our product candidates, and we may fail to successfully develop, receive regulatory approval for, or successfully commercialize any or all of our product candidates
2. 21We have never submitted a BLA or NDA for our product candidates to the FDA, or a similar marketing application to a comparable foreign regulatory authority, and our current or any future product candidates may not be successful in clinical trials or receive regulatory approval
3. 22We are dependent on the services of our senior management and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer
4. 23We will need to grow our organization, and we may experience difficulties in managing our growth and expanding our operations, which could adversely affect our business
5. 24Revenue from our product candidates, if approved, will be limited if the product does not achieve broad market acceptance
6. 25Misconduct or other improper actions, including noncompliance with regulatory standards and requirements, by our employees, independent contractors, consultants, commercial partners and vendors exposes us to potential noncompliance with regulatory standards and requirements
7. 26Commercial opportunities for product candidates and forecasts of market growth may prove to be smaller than we believe, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all
8. 27Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
9. 28Strategic transactions could impact our liquidity, increase our expenses and present significant distractions to our management31% rewritten
10. 29In the ordinary course of our business, we, and the third parties upon which we rely, process sensitive data and as a result, we and the third parties upon which we rely face a variety of evolving threats which could cause security incidents69% rewritten
11. 30Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could adversely affect our business, financial condition, results of operations and prospects
12. 31Public opinion and scrutiny of I&I treatments may impact public perception of our company and product candidates, or may adversely affect our ability to conduct our business and our business plans

Risks Related to Our Intellectual Property

1. 32We rely upon a combination of patents, know-how and confidentiality agreements to protect the intellectual property related to our product candidates and to prevent third parties from copying and surpassing our achievements, thus eroding our competitive position in our market
2. 33We have in-licensed patent portfolios, but have no solely owned issued patents relating to our product candidates
3. 34We may not obtain or maintain necessary rights to our product candidates through acquisitions and in- licenses56% rewritten
4. 35Patent rights relating to inventions described and claimed in our or our licensors’ pending patent applications may not issue and patents based on our or our licensors’ patent applications could be challenged and rendered invalid and/or unenforceable
5. 36We may not be able to protect our intellectual property rights throughout the world
6. 37Intellectual property rights do not necessarily address all potential threats to our competitive advantage
7. 38We may be involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful
8. 39Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates
9. 40We may become subject to claims challenging the inventorship or ownership of our or our licensors’ patents and other intellectual property
10. 41Patent terms may be inadequate to protect our competitive position on products or product candidates for an adequate amount of time
11. 42Obtaining and maintaining 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 as a result of noncompliance with these requirements
12. 43If we do not obtain patent term extension for our product candidates, our business may be materially harmed
13. 44If approved, our product candidates may face competition from biosimilar or generic products approved through abbreviated regulatory pathways79% rewritten
14. 45Laws regarding exclusivity protections are complex and continue to be interpreted by the FDA. Any new policies or processes adopted by the FDA could have a material adverse effect on the future commercial prospects for our product candidatesNew
15. 46If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
16. 47If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
17. 48We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property

Risks Related to Government Regulation

1. 49Recently enacted legislation, future legislation and other 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 set84% rewritten
2. 50Healthcare reform efforts have been and may continue to be subject to scrutiny, legal challenge and subsequent amendment, creating further uncertaintyNew
3. 51If we fail to comply with healthcare and other regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected
4. 52Governments outside the U.S. tend to impose strict price controls, which may adversely affect our revenue, if any
5. 53In addition to data privacy and security laws, we are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful49% rewritten
6. 54Significant political, trade, regulatory developments, including changes in relations between the U.S. and China, and other circumstances beyond our control, may adversely impact our business, financial condition, and results of operations45% rewritten

Risks Related to Our Reliance on Third Parties

1. 55We may have conflicts with our current or future licensors or collaborators that could delay or prevent the development or commercialization of our product candidates22% rewritten

Risks Related to Ownership of Our Common Stock

1. 56An active and liquid trading market for our common stock may not be sustained
2. 57The market price of our common stock may be volatile, which could result in substantial losses for investors41% rewritten
3. 58A significant portion of our total outstanding shares may be sold into the market, which could cause the market price of our common stock to decline significantly, even if our business is doing wellNew
4. 59Additionally, holders of an aggregate of 13,046,934 shares of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholdersNew
5. 60Insiders have substantial influence over us, which could limit other stockholders’ ability to affect the outcome of key transactions, including a change of control
6. 61Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be investors’ sole source of gain
7. 62We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors
8. 63(ii) no longer qualify as an emerging growth company. Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies
9. 64These 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
10. 65Our Restated Charter designates specific courts as the sole and exclusive forum for certain claims or causes of action that may be brought by our stockholders, which could discourage lawsuits against us and our directors and officers

Risks Related to Our Indebtedness

1. 66Our indebtedness resulting from our Loan Agreement or future indebtedness could adversely affect our financial condition or restrict our future operationsNew
2. 67Servicing our Loan Agreement requires a significant amount of cash, and we may not have sufficient cash flow to pay our debtNew
3. 68Unstable economic and market conditions may have serious adverse consequences on our business, financial condition and stock price
4. 69If securities or industry analysts cease publishing research or reports about our business, or if they publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
5. 70We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management will continue to be required to devote substantial time to new compliance initiatives and corporate governance practices
6. 71If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stockNew
7. 72Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
8. 73Our insurance policies are expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities
9. 74Securities class action litigation imposes costs on our business 99% rewritten
10. 75Our ability to use our net operating loss carryforwards and other tax attributes to offset future taxable income may be limitedNew
11. 76Changes in tax rates, the adoption of new tax legislation or other exposure to tax liabilities, could harm our business