Financial Position - As of December 31, 2023, the company's cash and cash equivalents totaled $4.9 million, with an operating loss of $9.7 million for the twelve months ended December 31, 2023[46]. - The company reported negative cash flows from operating activities of $9.3 million, raising substantial doubt about its ability to continue as a going concern[46]. - The current cash position is insufficient to fund planned operations for at least one year beyond the filing date of the financial statements[46]. - The company had $4.9 million in cash and cash equivalents and short-term deposits, with working capital of $3.6 million, which is insufficient to fund projected cash requirements for at least the next 12 months[52]. - As of December 31, 2023, the company had an accumulated deficit of $122.5 million and expects to incur substantial losses for the foreseeable future[51]. Business Strategy and Operations - The company is implementing a cost-saving plan that includes reducing headcount costs and postponing/canceling non-essential capital expenditures[48]. - The company has suspended further development of its COVID-19 NanoAbs program due to changing market conditions and is seeking a partner for future development[34]. - The company is focusing on developing VHH antibodies (NanoAbs) targeting Interleukin-17 (IL-17) for conditions like psoriasis and psoriatic arthritis, having suspended further development of its COVID-19 NanoAb due to decreased market conditions[63]. - The company has licensed anti-COVID-19 NanoAbs and anti-IL-17 NanoAbs, with the latter targeting conditions like psoriasis[34]. - The company is reliant on entering agreements with partners for the development and commercialization of its product candidates[44]. Regulatory and Compliance Risks - The company faces significant challenges in developing and commercializing its product candidates due to regulatory uncertainties and market acceptance issues[66]. - Regulatory approval for current and future product candidates is expensive and time-consuming, with a high rate of attrition in clinical trials[71]. - The FDA or comparable authorities can delay or deny approval for various reasons, which could severely undermine the company's business[72]. - Ongoing regulatory requirements must be met even after obtaining approval, and failure to comply could result in loss of approvals and reduced revenues[74]. - The company must submit an Investigational New Drug application to the FDA before commencing clinical trials, which adds to the regulatory burden[83]. Competition and Market Challenges - The company faces significant competition in the biopharmaceutical sector, particularly in the development of NanoAbs[44]. - The company may face competition from biosimilar products sooner than anticipated, impacting the commercial prospects of its biological products[76]. - Intense competition from larger pharmaceutical companies could reduce the company's commercial opportunities and profitability[135]. - The company faces significant competition from well-established CDMO providers and small biotech firms, which may hinder its planned CDMO business[123]. Financial and Capital Requirements - The company may require additional financing to achieve its goals, and failure to obtain necessary capital could delay or terminate product development efforts[52]. - The company’s ability to execute its business plan is dependent on raising capital through various means, including private or public financings[53]. - The company’s future capital requirements are uncertain and may not be available on favorable terms, impacting its ability to acquire new product candidates and conduct necessary research[55]. - Recent financial market disruptions could affect the company's ability to raise capital on acceptable terms[146]. Intellectual Property Risks - The company faces risks related to the adequacy of its patent protection, which may not sufficiently shield against competitors with similar products and technologies[169]. - There is uncertainty regarding the issuance of patents from pending applications, and existing patents may be challenged or invalidated, impacting the company's competitive position[170]. - The company may incur significant costs and resource diversion due to litigation related to intellectual property rights, which could adversely affect its financial condition[180]. - The company may need to obtain licenses for third-party intellectual property, which could involve significant fees and may not be available on favorable terms[173]. Operational Risks - The company relies on third parties for clinical trials and manufacturing, which increases the risk of delays and impacts on product development[160]. - A disruption to the GMP biologics manufacturing facility in Jerusalem could impede the advancement of NanoAbs programs and CDMO services[164]. - The company may not obtain necessary materials for future clinical trials, which could delay regulatory approvals[167]. - The company has exclusive licenses for its NanoAbs program, and disputes with licensors could adversely affect operations[157]. Geopolitical and Environmental Risks - The company is subject to geopolitical risks that could adversely affect its operations and financial conditions[190]. - The ongoing conflict has led to Moody's downgrading Israel's credit rating from A1 to A2, which could impact the company's ability to raise capital on reasonable terms[200]. - Since October 7, 2023, the IDF has called up more than 350,000 reserve forces, which may affect the company's operations due to potential labor shortages[197]. Nasdaq Compliance and Corporate Governance - The company received a notice of non-compliance from Nasdaq on November 1, 2023, regarding the minimum bid price requirement of $1.00 per share, with a 180-day period to regain compliance[214]. - As of December 31, 2023, the company's shareholders' equity was less than the required minimum of $2,500,000 for continued listing on Nasdaq, posing a risk of delisting[215]. - The company has appealed the delisting determination and requested a hearing, which has temporarily stayed any suspension of trading[214]. - The company follows home country corporate governance practices, which may provide less protection to investors compared to U.S. domestic issuers[221].
Scinai Immunotherapeutics .(SCNI) - 2023 Q4 - Annual Report