Regulatory Environment - The company operates in China, facing complex and rapidly evolving laws and regulations that may adversely affect its business operations and financial results [32]. - Recent regulatory developments in China may impose additional oversight and restrictions on the company's ability to raise capital outside of the PRC, potentially leading to a significant decline in the value of its securities [40]. - The pharmaceutical industry in China is highly regulated, and changes in regulations may affect the approval and commercialization of the company's products [32]. - The regulatory approval processes for drug candidates are lengthy and unpredictable, and failure to obtain approvals could substantially harm the company's business [34]. - The company may be subject to sanctions for failing to comply with new PRC regulations regarding overseas listings, which could adversely affect its operations and financial condition [45]. - Changes in the regulatory framework for the pharmaceutical industry in China may lead to increased compliance costs and potential delays in product development and commercialization [62]. - The company is closely monitoring regulatory developments in China that may affect its ability to list on U.S. exchanges in the future [48]. - The 2022 Cybersecurity Review Measures require internet platform operators with over one million users to file for cybersecurity review before listing abroad [53]. - The company believes its strategy aligns with PRC government regulatory policies, but future changes may impact this alignment [62]. - The Measures for the Security Assessment of Cross-border Data Transfer, effective September 1, 2022, may impose additional requirements on data transfers [59]. Financial Condition - The company incurred net losses of $94.8 million and $240.8 million for the years ended December 31, 2021 and 2022, respectively [111]. - The company expects to continue incurring net losses for the foreseeable future, with anticipated increases as it expands drug development and seeks regulatory approvals [112]. - The company may require additional cash resources to meet operating cash requirements, especially for R&D activities and commercialization expenses if regulatory approvals are obtained [121]. - The company may seek additional funding through equity offerings, debt financings, or strategic partnerships if financial resources are insufficient to meet cash requirements [122]. - The company is classified as an "emerging growth company" and intends to take advantage of exemptions from certain reporting requirements until it exceeds a market value of $700 million or total annual gross revenue of $1.235 billion [198]. Operational Risks - The company has a limited operating history, which may complicate the evaluation of its current business and future performance [34]. - The company relies on third parties for manufacturing and importing clinical and commercial drug supplies, which poses risks if those parties fail to meet quality or quantity requirements [36]. - The company relies on third-party CROs for conducting preclinical studies and clinical trials, which may impact the timelines and costs of drug development [114]. - The company faces risks related to undesirable side effects of its drug candidates, which could delay or prevent regulatory approval and limit commercial potential [104]. - The company has no track record in launching and marketing drug candidates, which may hinder its ability to generate product sales revenue [127]. - The company may need to enter into license agreements for certain intellectual property rights, which could delay product launches until December 2026 if not secured [130]. - The company faces significant demands on capital and resources as it pursues growth strategies, which may affect its financial condition and operational results [135]. Compliance and Legal Risks - The company is subject to various cybersecurity and data protection laws, and any non-compliance could materially impact its business and financial condition [32]. - The PRC Data Security Law and Personal Information Protection Law impose significant obligations on data handling, with potential fines up to 5% of annual turnover for violations [58]. - The company is subject to stringent privacy laws and regulations, and failure to comply could result in significant penalties and damage to its reputation [167]. - The company is subject to various data protection laws in the U.S., including the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), which impose significant compliance obligations and potential penalties for violations [172]. - The General Data Protection Regulation (GDPR) in Europe imposes fines of up to €20 million or 4% of total worldwide annual turnover for serious offenses, increasing the financial risks associated with non-compliance [173]. - The U.K. GDPR allows for penalties of up to £17.5 million or 4% of worldwide revenue, creating additional compliance challenges following the U.K.'s exit from the EU [174]. Market and Economic Risks - The PRC government continues to exert significant control over economic growth, impacting capital investments and tax regulations, which could adversely affect the company's financial condition and results of operations [79]. - Fluctuations in Renminbi exchange rates expose the company to exchange rate volatility, potentially affecting results of operations and cash flows [93]. - Changes in international trade policies, particularly between the U.S. and China, could disrupt operations and increase costs, adversely impacting financial results [97]. - The ongoing military conflict between Russia and Ukraine has led to volatility in the global supply of agricultural commodities, resulting in higher food prices and increased energy costs [125]. - The ongoing conflict in Ukraine may lead to broader sanctions and geopolitical shifts that could adversely affect the company's financial condition and results of operations [154]. Strategic Partnerships and Collaborations - The company has entered into collaborations and may seek additional strategic alliances, but the benefits of such arrangements are not guaranteed [36]. - Collaboration with biotechnology companies is planned for launching drug candidates, but the company has yet to demonstrate its capability to commercialize independently [127]. - Strategic alliances, acquisitions, or licensing arrangements may not yield expected benefits and could introduce operational and financial risks [185]. Clinical Development Challenges - Drug candidates are in preclinical or clinical development, with high risks of failure and uncertain timelines for obtaining marketing approval [204]. - Delays in clinical trials or additional testing may increase costs and hinder the ability to commercialize drug candidates [209]. - The company faces risks related to regulatory approvals and the need for extensive clinical trials to demonstrate safety and efficacy [208]. - The design and execution of clinical trials are critical for marketing approval, and flaws may not be apparent until trials are advanced or completed [221]. - The company may experience difficulties in securing financing on acceptable terms due to broader market conditions and investor concerns [203]. Human Resources and Talent Management - Retaining key executives and qualified personnel is critical for the company's success, and competition for such talent is intense [136]. - Increased labor costs in the global pharmaceutical market may adversely affect the company's operations and profitability, as competition for qualified employees intensifies [178]. Insurance and Liability Risks - The company currently maintains liability insurance for clinical trials, but coverage limitations may expose it to significant financial risks [147]. - The company does not maintain product liability insurance, which may expose it to substantial costs in case of claims exceeding its coverage [151]. - Product liability exposure related to drug candidates poses a risk, with potential substantial liabilities if claims are not successfully defended [145].
APOLLOMICS INC.(APLM) - 2022 Q4 - Annual Report