Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
You should carefully consider the key risks
described below together with all of the other information included in this report and our Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on April 28, 2025, before making an investment decision with regard to our securities. The risks set
forth below and in our Form 10-K are not the only risks facing us. Additional risks and uncertainties may exist that could also adversely
affect our business, prospects or operations. If any of the following risks actually occurs, our business, financial condition or results
of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or a significant
part of your investment.
There is economic
uncertainty concerning economic policies being pursued by the current administration in the United States that may affect the costs and
timing of the process of bringing our products to market through approvals with the FDA.
Our operating results
could be affected by the current political and economic uncertainties related to the economy of the United States, the domestic pharmaceutical
industry and world economies. Future conditions may also adversely affect our pricing strategy, promotional activities and our profitability
and margins. Additionally, many of the effects and consequences of U.S. and global financial and economic conditions could potentially
have a material adverse effect on our liquidity and capital resources, including the ability to raise additional capital, if needed, or
could otherwise negatively affect our business and financial results. Market instability could make it more difficult for us and our suppliers
to accurately forecast future product demand trends. Additionally, inflationary factors such as increases in the costs to purchase products,
acquire product rights and overhead costs may adversely affect our operating results.
In this economic environment,
we are also subject to the risks common to low-revenue start-up enterprises, including, among other factors, undercapitalization, cash
shortages, limitations with respect to personnel, financial and other capital or operating expenditures. Drug development companies typically
incur substantial losses during the product development and FDA testing phase of the business and do not generate revenues until after
the drug has received FDA approval, which cannot be assured, and until the company has started to sell the product. We can give no assurance
that we can or will ever be successful in achieving profitability and the likelihood of our success must be considered in light of our
early stage of operations. We cannot assure you that we will be able to operate profitably or generate positive cash flow. If we cannot
achieve profitability, we may be forced to cease operations and you may suffer a total loss of your investment.
Because we do not have a product we can
market in the United States, we cannot predict when or whether we will operate profitably.
We have not completed the development of our lead
product, which is our abuse deterrent fentanyl transdermal system, and we do not have any product that we can market in the United States.
Because of the numerous risks and uncertainties associated with product development, we cannot assure you that we will be able to develop
and market any products or achieve or attain profitability. If we are able to obtain financing for our operations, we expect that we will
incur substantial expenses as we continue with our product development and clinical trials. Further, if we are required by applicable
regulatory authorities, including the FDA as well as the comparable regulatory agencies in other countries in which we may seek to market
product, to perform studies in addition to those we currently anticipate, our expenses will increase beyond expectations and the timing
of any potential product approval may be delayed. As a result, we could continue to incur substantial losses and negative cash flow as
long as these negative factors continue in effect.
A number of factors, including, but not limited
to the following, may affect our ability to develop our business and operate profitably:
●
our ability to
obtain necessary funding to develop our proposed products;
●
the success of clinical trials for
our products;
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●
our ability to obtain FDA approval
for us to market any proposed product in our pipeline in the United States;
●
any delays in regulatory review
and approval of product in development;
●
if we obtain FDA approval to market
our product, our ability to establish manufacturing and distribution operations or entering into manufacturing and distribution agreements
with qualified third parties;
●
market acceptance of our products;
●
our ability to establish an effective
sales and marketing infrastructure;
●
our ability to protect our intellectual
property;
●
competition from existing products
or new products that may emerge;
●
potential product liability claims
and adverse events;
●
our ability to adequately support
future growth; and
●
our ability to attract and retain
key personnel to manage our business effectively.
Our stock price has
been and is likely to continue to be volatile and you may not be able to resell shares of our common stock at or above the price you paid,
if at all.
The trading price of
our common stock has experienced fluctuations due to the factors discussed in these risk factors. In addition, the stock market in general
has, and the NASDAQ Capital Market and technology companies in particular have, experienced extreme price and volume fluctuations. These
trading prices and valuations may not be sustainable. These broad market and industry factors may decrease the market price of our common
stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market
and the market price of a company’s securities, securities class action litigation has often been instituted against companies
(primarily those that are larger than us) that experienced such volatility. This type of litigation, if instituted against us, regardless
of its outcome, could result in substantial costs and a diversion of our management’s attention and resources.
Stockholders may experience significant
dilution as a result of future equity offerings and other issuances of our common stock or other securities.
We will need to raise substantial funds in order
to develop our products. In order to raise additional capital, we may in the future offer additional shares of our common stock or other
securities convertible into or exchangeable for our common stock at prices that may be based on a discount from market at the time of
issuance. Stockholders will incur dilution upon exercise of any outstanding stock options, warrants or upon the issuance of shares of
common stock under our present and future stock incentive programs. In addition, the sale of shares and any future sales of a substantial
number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the price
of our common stock. We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those
shares of common stock for sale will have on the market price of our common stock.
The drug delivery industry is subject to
rapid technological change, and our failure to keep up with technological developments may impair our ability to market our products.
Our products use technology which we developed
for the transdermal delivery of drugs. The field of drug delivery is subject to rapid technological changes. Our future success will depend
upon our ability to keep abreast of the latest developments in the industry and to keep pace with advances in technology and changing
customer requirements. If we cannot keep pace with such changes and advances, our proposed products could be rendered obsolete, which
would result in our having to cease its operations.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.