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Financial report summary
?Competition
Alkermes • Vanda Pharmaceuticals • VistaGen Therapeutics • Alkermes • Abbvie • Allergan • Karuna Therapeutics • ATAI Life SciencesRisks
- Risks Related to Our Business
- In order to execute our business plan and achieve profitability, we need to effectively expand the commercialization of CAPLYTA, which has been approved by the FDA for the treatment of schizophrenia in adults and for the treatment of bipolar depression in adults.
- If we do not obtain regulatory approval of lumateperone for other indications in the United States, or for any indication in foreign jurisdictions, we will not be able to market lumateperone for other indications or in other jurisdictions, which will limit our commercial revenues.
- If the sales and marketing capabilities we have established or our third-party relationships for the commercialization of CAPLYTA are not effective, CAPLYTA may not be successfully commercialized.
- We have generated revenues from product sales but there is no guarantee that our revenues from the sale of CAPLYTA will result in us achieving profitability.
- There is no guarantee that our planned clinical trials for lumateperone or our other product candidates will be successful.
- We expect our net losses to continue and are unable to predict the extent of future losses or when we will become profitable, if ever.
- We may require additional funding, which may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit, reduce or cease our operations.
- Our management has broad discretion over the use of our cash and we may not use our cash effectively, which could adversely affect our results of operations.
- Delays, suspensions and terminations in our clinical trials or the need to conduct additional clinical trials or non-clinical studies could result in increased costs to us, delay our ability to generate product revenues and therefore may have a material adverse effect on our business, results of operations and future growth prospects.
- Even though the FDA has granted approval of CAPLYTA for the treatment of schizophrenia and bipolar depression, the terms of the approval may limit its commercial potential. Additionally, CAPLYTA is still subject to ongoing regulatory requirements.
- Safety issues with our product candidates or approved product, or with product candidates or approved products of third parties that are similar to our product candidates, could give rise to delays in the regulatory approval process, restrictions on labeling or product withdrawal after approval.
- If we seek to enter into strategic alliances for our drug candidates, but fail to enter into and maintain successful strategic alliances, we may have to reduce or delay our drug candidate development or increase our expenditures.
- To the extent we are able to enter into collaborative arrangements or strategic alliances, we will be exposed to risks related to those collaborations and alliances.
- Preliminary and interim data from our clinical trials that we may announce or publish from time to time may change as more patient data become available.
- We rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costs and delays that prevent us from successfully commercializing our product candidates.
- Our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
- Even if we successfully complete the clinical trials of one or more of our product candidates, the product candidates may fail for other reasons.
- We are subject to ongoing regulatory obligations and restrictions with regard to CAPLYTA and, following regulatory approval of any of our product candidates, we will be subject to ongoing regulatory obligations and restrictions with regard to such product candidates, which may result in significant expense and limit our ability to commercialize lumateperone and our other potential products.
- CAPLYTA and our product candidates, if approved, may not gain acceptance among physicians, patients, or the medical community, thereby limiting our potential to generate revenues, which will undermine our future growth prospects.
- The failure to attract and retain skilled personnel and key relationships could impair our drug development and commercialization efforts.
- We rely on third-party manufacturers to manufacture and supply lumateperone and our other product candidates for us. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face significant delays in our clinical trials, regulatory approvals and product introductions and commercialization.
- As our business expands and evolves, we may find that our staffing is not adequate in size or capability to manage these changes and to perform under the new circumstances.
- Our ability to generate product revenues will be diminished if lumateperone or any of our other potential products do not sell for adequate prices, receive coverage from payers or if patients are unable to obtain adequate levels of reimbursement.
- Health care legislation may make it more difficult to receive revenues from CAPLYTA or future products.
- We currently have limited experience as a company in marketing and distributing pharmaceutical products and rely on third-party distributors to distribute CAPLYTA. If we are unable to continue to effectively commercialize CAPLYTA, we may not be able to generate adequate product revenues.
- There are possible limitations on our use of net operating losses.
- Changes in tax laws could adversely affect our business and financial condition.
- Cybersecurity incidents, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information, impact our ability to manufacture, distribute and sell CAPLYTA and any future products, or expose us to liability and reputational harm. Any of these risks could adversely affect our business and our reputation.
- Our business is subject to complex and evolving U.S. federal and state, and foreign laws and regulations, imposing obligations on how we collect, use disclose, store and process personal data. We are also subject to information security policies and contractual obligations relating to privacy and data protection, including the use, processing, and cross-border transfer of personal data. The actual or perceived failure by us, or vendors to comply with these laws and regulations, policies and contractual obligations could harm our business and/or reputation, and subject us to significant fines and liability.
- Public health threats could have a material impact on our business, financial condition and results of operations, including our commercial operations and sales, clinical trials and non-clinical studies.
- Risks Related to Our Intellectual Property
- Our ability to compete may be undermined if we do not adequately protect our proprietary rights.
- CAPLYTA and future product candidates for which we obtain approval may face competition sooner than anticipated.
- Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual property, which could limit our ability to compete.
- A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business.
- The patent applications of pharmaceutical and biotechnology companies involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position.
- We may not be able to protect our intellectual property and proprietary rights throughout the world, which could negatively impact our business.
- Risks Related to Our Industry
- We are subject to stringent regulation in connection with the marketing of CAPLYTA and any other products derived from our product candidates, which could delay the development and commercialization of our products.
- Many of our competitors have greater resources and capital than us, putting us at a competitive disadvantage. If our competitors develop and market products that are more widely accepted in the marketplace than lumateperone or our other product candidates, they may negatively affect or eliminate our commercial opportunity.
- Our business involves the use of hazardous materials, and we and our third party manufacturers and suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do, or interrupt, our business. Any claims relating to improper handling, storage, or disposal of biological, hazardous, and radioactive materials used in our business could be costly and delay our research and development and commercial efforts.
- We are subject, directly and indirectly, to federal, state and foreign healthcare laws and regulations, including healthcare fraud and abuse laws, false claims laws, physician payment transparency laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
- If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of lumateperone or any other product for which we obtain regulatory approval, or development or commercialization of our product candidates.
- Unfavorable domestic or global economic conditions could adversely affect our business, financial condition, or results of operations.
- Risks Related to Owning Our Common Stock
- Numerous factors could result in substantial market volatility in the trading price of our common stock.
- Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights.
- We incur substantial costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could harm our operating results.
- If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investors’ views of us.
- If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
- Provisions of the Delaware law, our restated certificate of incorporation and our restated bylaws may delay or prevent a takeover which may not be in the best interests of our stockholders.
- We do not anticipate paying cash dividends in the foreseeable future.
- CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Management Discussion
- Net product sales were approximately $462.2 million for the year ended December 31, 2023 and $249.1 million for the year ended December 31, 2022. Net product sales for the periods presented are comprised of sales of CAPLYTA for the treatment of schizophrenia and bipolar depression.
- Cost of product sales was approximately $33.7 million and $20.4 million for the years ended December 31, 2023 and 2022, respectively. Cost of product sales consisted primarily of product royalty fees, overhead and direct costs. Drug product costs, including certain direct, indirect, and overhead costs, for product sales through December 31, 2023 were previously charged to research and development expense prior to FDA approval in December 2019 and are not a component of cost of product sales. This minimal cost drug product had a positive impact on our cost of product sales and related product gross margins for the years ended December 31, 2023 and 2022.
- We expect our net product sales in future quarters will continue to be impacted by lower cost of product sales that excludes the cost of the drug product that was incurred prior to FDA approval until our sales of CAPLYTA include drug product that is entirely manufactured after the FDA approval. We expect that this will continue to be the case for the near-term and, as a result, our cost of product sales will be less than we anticipate it will be in future periods. We expect cost of product sales will increase in future quarters as minimum sales thresholds are met, resulting in royalty payment increases under the BMS License Agreement.