Principia Biopharma (PRNB) Financial Report Summaries

Risks

• Risks Related to Limited Operating History and Financial Position
• We are a late-stage biopharmaceutical company with a limited operating history. We have never generated any revenue from product sales and may never be profitable.
• We will require substantial funding to finance our operations, complete the development and any commercialization of our drug candidates and evaluate future drug candidates. If we are unable to raise funding when needed, we may be forced to delay, reduce or eliminate our product development programs or other operations.
• Risks Related to the Development and Commercialization of our Drug Candidates
• Clinical drug development is a lengthy, expensive and uncertain process. The results of preclinical studies and early clinical trials are not always predictive of future results. Any drug candidate that we advance into clinical trials may not achieve favorable results in later clinical trials, if any, or receive marketing approval.
• Enrollment and retention of subjects in clinical trials is expensive and time consuming and could result in significant delays and additional costs in our product development activities, or in the failure of such activities.
• As a company, we have never completed a Phase 3 program or obtained marketing approval for any drug candidate and we may be unable to successfully do so for any of our drug candidates.
• Our Tailored Covalency platform is novel and unproven, and our strategy relies on discovering, developing and commercializing highly differentiated small molecules using this platform. We may be unable to identify biological targets that work well with our platform or discover and develop new small molecules utilizing our platform.
• If clinical trials of our drug candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates.
• We may announce preliminary, interim or top-line data from our clinical trials that may change as more patient data become available, and as the data are subject to typical audit procedures that could result in material changes in the final data.
• Serious adverse events, undesirable side effects or toxicities, or other unexpected properties of our drug candidates could limit the commercial potential of such drug candidates.
• We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates.
• The design or our execution of clinical trials may not support regulatory approval.
• Certain of our current clinical trials are being conducted outside the United States, which subjects us to additional requirements and exposes us to additional risks, for example the FDA may not accept data from trials conducted in foreign locations.
• We may seek one or more special designations from regulatory authorities, including orphan drug designation, breakthrough therapy designation, or fast track designation. We may not be able to obtain or maintain such designations, and, even if we do obtain any such designation, it may not lead to a faster development or regulatory review or approval process.
• Even if any of our drug candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success.
• Even if any of our drug candidates receive marketing approval, their labeling may contain unanticipated limitations and they will be subject to other regulatory requirements including significant post-marketing regulatory requirements.
• We currently have a limited commercial team and no sales force. If we are unable to establish effective commercial capabilities or enter into agreements with third parties to sell or market our drug candidates, we may not be able to effectively sell or market our drug candidates, if approved, or generate product revenue.
• Even if we obtain FDA approval of any of our drug candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential.
• Risks Related to our Business Operations
• We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.
• We expect to continue expanding our development, regulatory and operational capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
• Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.
• Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory requirements and other risks and uncertainties.
• We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us.
• Our internal information technology systems, or those of our third-party CROs or other contractors or consultants, may fail or suffer security breaches, loss or leakage of data, and other disruptions, which could potentially expose us to liability or otherwise adversely affect our business.
• The 2017 comprehensive tax reform bill and possible future changes in tax laws or regulations could adversely affect our business and financial condition.
• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
• Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts.
• Our business, operations and clinical development plans and timelines, including the manufacturing, clinical trial and other business activities performed by us or by third parties we rely upon, could be adversely affected by the effects of the current COVID-19 pandemic and other future health epidemics.
• We rely on third parties to conduct our clinical trials and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.
• We contract with third parties for the manufacture and supply of drug candidates for use in preclinical testing and clinical trials, which supply may become limited or interrupted or may not be of satisfactory quality and quantity.
• We, or our third-party manufacturers, may be unable to successfully scale-up the manufacturing process for our drug candidates to provide sufficient quality and quantity, which would delay or prevent us from conducting clinical trials, developing our drug candidates and commercializing our drugs.
• Existing or changes in methods of drug candidate manufacturing or formulation may result in additional costs or delays.
• Our employees, clinical trial investigators, CROs, consultants, vendors and any potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
• Risks Related to our Licensing and Other Strategic Agreements
• We may not realize the benefits of any collaborations or strategic alliances that we have entered into or may enter into in the future for the development and commercialization of our drug candidates.
• Risks Related to our Intellectual Property
• If we are unable to obtain and maintain sufficient intellectual property protection for our drug candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.
• If we fail to comply with our obligations in our intellectual property licenses from third parties, we could lose license rights that are important to our business.
• Our 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.
• In the future, we may need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated.
• We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop and market our products.
• We cannot ensure that patent rights relating to inventions described and claimed in our pending patent applications will issue or that patents based on our patent applications will not be challenged and rendered invalid and/or unenforceable.
• If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our drug candidates.
• We may become involved in lawsuits to defend or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
• Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.
• We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
• We may not be able to protect our intellectual property rights throughout the world.
• Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our drug candidates.
• We may become subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
• Patent terms may be inadequate to protect our competitive position on our drug candidates for an adequate amount of time.
• Risks Related to our Industry
• Product liability lawsuits against us could cause us to incur substantial liabilities and could limit our commercialization of any drug candidates that we may develop.
• Failure to comply with existing or future health and data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal fines or penalties), private litigation, other liabilities, and/or adverse publicity. Compliance or the failure to comply with such laws and regulations could increase the costs of our products and services, could limit their use or adoption, and could otherwise negatively affect our operating results and business.
• Changes in healthcare law and implementing regulations, as well as changes in healthcare policy, may impact our business in ways that we cannot currently predict, and may have a significant adverse effect on our business and results of operations.
• We may be subject to applicable fraud and abuse, transparency, government price reporting, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
• We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. We can face serious consequences for violations.
• Our business activities may be subject to the Foreign Corrupt Practices Act (“FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”), and other similar anti-bribery and anti-corruption laws of other countries in which we operate.
• If 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.
• The withdrawal of the United Kingdom (the “U.K.”) from the European Union (the “E.U.”), commonly referred to as “Brexit,” may adversely impact our ability to obtain regulatory approvals of our drug candidates in the E.U., result in restrictions or imposition of taxes and duties for importing our drug candidates into the E.U., and may require us to incur additional expenses in order to develop, manufacture and commercialize our drug candidates in the E.U.
• The stock price of our common stock has been and is likely to continue to be volatile or may decline regardless of our operating performance and you could lose all or part of your investment.
• Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.
• We will have broad discretion in the use of our cash and cash equivalents and may not use them effectively.
• Our failure to meet the continued listing requirements of the Nasdaq Global Select Market could result in a delisting of our common stock.
• We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
• If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could result in sanctions or other penalties that would harm our business.
• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
• We do not intend to pay dividends for the foreseeable future.
• The concentration of our stock ownership will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval.
• Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.
• Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.