Item 1A. Risk Factors
Item 1A. Risk Factors.
The risk factors set forth below update, and should be read in conjunction with, the risk factors previously disclosed in the section entitled "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 7, 2023 and in the sections entitled "Risk Factors" of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023 filed with the SEC on May 11, 2023 and August 9, 2023, respectively.
Risks Related to Preclinical and Clinical Development
Interim, topline and preliminary 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.
From time to time, we may publicly disclose preliminary or topline data from our clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the topline or preliminary data we previously reported. As a result, topline and preliminary data should be viewed with caution until the final data are available.
From time to time, we disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse changes between interim data and final data could significantly harm our business and prospects. Further, additional disclosure of interim data by us or by our competitors in the future could result in volatility in the price of our common stock.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is typically selected from a more extensive amount of available information. Others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. If the interim, preliminary or topline data that we report differ from later, final or actual results, or if others, including the FDA and comparable foreign regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
Risks Related to our Reverse Stock Split
The reverse stock split may not increase the market price per share of our common stock meaningfully or at all, and any such increase may not be sustained or may be insufficient to generate increased investor interest, maintain liquidity for our stockholders, or maintain our market capitalization.
On November 6, 2023, our stockholders approved amendments to our Amended and Restated Certificate of Incorporation to effect a reverse stock split to all of the outstanding shares of our common stock at a ratio ranging from any whole number between 1-for-5 and 1-for-25, or the reverse stock split, subject to our board of directors’
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authority to elect, without further action on the part of our stockholders, whether to effect the reverse stock split and, if so, to determine the reverse stock split ratio from among the approved range. While we anticipate that the reverse stock split will result in an increase in the market price per share of our common stock, we cannot be assured that such increase will occur or, if it does, that such increase will result in any permanent or sustained increase in the market price of our common stock, which is dependent upon many factors, including our business and financial performance, general market conditions and our prospects for future success.
Even assuming an increase in the market price per share of our common stock occurs as a result of the reverse stock split, there is no guarantee that such increase will enhance the level of investment in our common stock by institutional investors or increase analyst and broker interest in our company. In addition, it is possible that the reverse stock split may adversely affect our stockholders’ liquidity by reducing the number of shares outstanding after the reverse stock split, particularly if the price of our common stock does not increase as a result of the reverse stock split, or if it does not increase in proportion to the reduction in the number of shares of our common stock outstanding immediately before the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for our common stock, thus reducing our stockholders’ liquidity.
Furthermore, should the per share market price of our common stock fail to increase in proportion to the reverse stock split ratio, or should the overall value of our common stock decline, after the reverse stock split, then the value of the shares of our common stock held by our stockholders will also decrease. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of our common stock will remain the same after the reverse stock split is effected.
Any of the foregoing would have an adverse effect on our common stock and could adversely affect our business.
The reverse stock split may not result in more normalized trading in our common stock or decrease the market volatility of our common stock and could result in increased trading costs for our stockholders.
Reverse stock splits can be viewed negatively by the market and it is difficult to predict how the market will respond to a reverse stock split of our common stock. Due to the smaller number of shares of our common stock that will be outstanding after the reverse stock split, trading in our common stock may decrease and, due to the decrease in trading volume, smaller trades in our common stock could result in increased volatility as compared to the trading volume and volatility of our common stock prior to the reverse stock split.
The reverse stock split will also increase the number of stockholders who own “odd lots” of less than 100 shares of our common stock. A purchase or sale of less than 100 shares (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of our common stock following the reverse stock split may be required to pay higher transaction costs if they sell their shares of our common stock.
The authorized shares of common stock that will become available as a result of the reverse stock split may not be sufficient to fulfill our current and anticipated corporate purposes.
Because the reverse stock split will decrease the number of outstanding shares of our common stock by a ratio in the range of 1-for-5 to 1-for-25 but would not effect a decrease to the number of shares of common stock that we are authorized to issue, the reverse stock split will result in a relative increase in the number of unissued shares of our common stock. Such relative increase in the number of unissued shares of our common stock may not be sufficient to fulfill our current and anticipated corporate purposes, including financing activities, public or private offerings of common stock, issuance of options and other equity awards pursuant to our incentive plans, and strategic business development transactions. If the increase in the number of unissued shares of our common stock generated by the reverse stock split proves insufficient to fulfill our corporate purposes, we may need to delay corporate activities and incur additional expenses in order to obtain stockholder approval to increase our authorized shares of common stock, or we may have to abandon such activities entirely. Accordingly, we may be prevented from acting promptly, or at all, to fulfill our corporate purposes, which could adversely affect our business and prospects.
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.