RISK FACTORS FOR EARLY STAGE LIFE SCIENCE COMPANIES
AN INVESTMENT IN THE SECURITIES OF AN EARLY STAGE LIFE SCIENCE IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. ONLY THOSE INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT SHOULD PARTICIPATE.
In addition to the other information provided in companies’ offering materials, potential investors should carefully consider the following risk factors in evaluating an investment in the Company. These are not the only risk factors faced by early stage life science companies (See offering materials for additional information).
- The Company may not raise the full amount of the proposed financing. Capital raised may not be sufficient to achieve regulatory approval for the Company’s products, reach an exit or a follow-on financing. In that event, the Company may have to cut back operations and may be unable to pay license fees to intellectual property (“IP”) holders or meet other important obligations.
- The Company may fail to attract the talent it needs to achieve its objectives.
- The Company’s IP may infringe on others’ patents or it may not be sufficient to protect the Company against competition.
- The Company may not have commissioned a freedom-to-operate opinion; it is possible the Company’s IP infringes on someone else’s patent estate.
- The Company may need to assert its IP rights against other parties and the IP may not prove adequate to block imitators.
- The Company’s products may fail in clinical trials due to safety problems or failure to demonstrate efficacy sufficient to gain approval from the FDA.
- The products may not receive favorable reimbursement treatment from public and/or private insurers.
- Most Companies rely heavily on third parties for product development and manufacturing expertise; those third parties may not deliver or may insist on unaffordable payment.
- The Company may not be able to raise additional capital if needed, or on terms that would be acceptable to existing owners.
- The Company may need more money than anticipated to complete regulatory requirements and the costs of launching its products.
- Capital may need to be raised at a lower valuation, diluting existing owners.
- Competing products or technologies may emerge which are superior to the Company’s products and technologies.
- The target markets for the Company’s products may not materialize or may diminish in unanticipated ways.
- The Company may not be adept at marketing its products and may not be able to partner with a marketing company to do so.