ARS Pharmaceuticals(SPRY) - 2021 Q4 - Annual Report

Intellectual Property Risks - The company relies on a combination of patents, know-how, and confidentiality agreements to protect its intellectual property [314]. - The success of the company is largely dependent on obtaining and maintaining patent protection for its technologies and product candidates [315]. - The patent application process is expensive and time-consuming, with uncertainties regarding the issuance and enforcement of patents [316]. - The company may face challenges in protecting its intellectual property rights globally, particularly in jurisdictions with weaker enforcement [326]. - Competitors may independently develop technologies that the company protects as trade secrets, potentially undermining its competitive advantage [321]. - The patent position of biopharmaceutical companies is highly uncertain and subject to complex legal challenges [319]. - The company may not be able to prevent unauthorized disclosure of its intellectual property, which could adversely affect its market position [321]. - The company faces uncertainties regarding the protection of its intellectual property rights, which may not adequately safeguard its competitive advantage [327]. - There is a risk that pending patent applications may not lead to issued patents, potentially impacting the company's ability to commercialize its product candidates [332]. - The company relies on licensing agreements, and failure to comply with these agreements could result in significant delays and costs in product development [331]. - The company may need to obtain additional licenses for third-party technology, which may not be available on commercially reasonable terms, potentially hindering product development [338]. - The company is exposed to potential litigation regarding intellectual property rights, which could be costly and time-consuming, affecting its ability to commercialize products [342]. - The company may face challenges in enforcing its patent rights, which could lead to competitors marketing similar products [341]. - The company has identified third-party patents that may be asserted against its product candidate SBT8230, which could impact its commercialization efforts [343]. - The company may incur significant royalty obligations on future product sales, which could affect its profitability [336]. - The company may not be aware of all relevant third-party patents, which could lead to unintentional infringement and associated legal challenges [345]. - The company may choose to challenge the validity of third-party patents, but such proceedings are expensive and may divert resources from core business activities [346]. - The company may face significant legal challenges if found to infringe third-party intellectual property rights, potentially leading to substantial monetary damages and operational disruptions [347]. - The company could incur high costs and time delays in enforcing its patents against competitors, which may divert management and scientific personnel's attention [349]. - Changes in U.S. patent law, such as the Leahy-Smith Act, could increase uncertainties and costs related to patent prosecution and enforcement, adversely affecting the company's financial condition [356]. - The company may struggle to maintain patent protection due to procedural non-compliance, which could result in the loss of patent rights [360]. - Reliance on trade secrets and proprietary know-how poses risks, as any disclosure or misappropriation could enable competitors to replicate the company's technological advancements [361]. - The company may face challenges in protecting trade secrets and proprietary information, which could lead to competitors gaining access to critical technology [362]. - There is a risk of claims challenging the inventorship or ownership of patents, which could result in the loss of valuable intellectual property rights [364]. - The company’s licensors may not be the sole owners of in-licensed patents, potentially allowing competitors to market similar products [365]. - Patent terms may be inadequate to protect the company’s competitive position, as patents generally expire 20 years after the first effective filing date [368]. Financial and Market Risks - Future changes in financial accounting standards may lead to unexpected revenue fluctuations and affect reported financial results [311]. - Changes in tax laws could materially impact the company's business operations, cash flow, and financial performance [312]. - The potential for significant one-time charges and increased future tax expenses exists due to changes in tax legislation [312]. - The stock price of the company could be volatile due to various factors, including clinical trial results and regulatory developments [373]. - As of December 31, 2021, the company had 35,133,934 outstanding shares of common stock, which could impact stock price if substantial sales occur [378]. - Economic instability and market conditions, exacerbated by the COVID-19 pandemic, may adversely affect the company’s financial performance and stock price [379]. - The lack of coverage or unfavorable research from analysts could negatively impact the trading price and volume of the company’s common stock [380]. - Future capital raises may lead to substantial dilution for existing stockholders, potentially causing stock price declines [382]. - The 2020 Plan allows for automatic annual increases in the number of shares reserved for issuance, which could further dilute stockholder ownership [383]. - Additional capital may be sought through equity offerings or debt financings, which could adversely affect stockholder rights and operational flexibility [384]. - The company does not intend to pay dividends, limiting returns to stock appreciation [385]. - The company is subject to securities class action litigation, which could result in significant costs and management distraction [386]. - As an "emerging growth company," the company benefits from reduced reporting requirements, which may affect stock attractiveness [387]. - The company has not opted out of Delaware's anti-takeover provisions, which could hinder potential mergers or acquisitions [393]. - Exclusive forum provisions may limit stockholders' ability to bring claims in favorable jurisdictions, potentially discouraging litigation [397]. Cybersecurity and Operational Risks - The company relies on third-party contractors for sensitive data management, which poses risks of data breaches and operational disruptions [399]. - The company faces significant cybersecurity threats, including ransomware attacks and supply-chain vulnerabilities, which could disrupt operations and lead to data loss [400]. - Increased risks to information technology systems are attributed to a remote workforce and potential vulnerabilities from past business transactions [403]. - Security incidents could result in unauthorized access to sensitive information, leading to liability and reputational damage [401]. - The company may incur substantial costs related to data privacy and security obligations, including notifications of security incidents [404]. - Natural disasters pose a risk to the company's headquarters and research facilities, potentially impacting business continuity [406]. - The absence of a comprehensive disaster recovery plan may lead to significant expenses and operational disruptions [406]. - The company does not have earthquake insurance, increasing vulnerability to natural disasters [406]. - The frequency and severity of supply-chain attacks have increased, raising concerns about third-party vulnerabilities [400]. - The company may need to modify business activities to protect against security incidents, which could delay product development [403]. - There are no assurances that contractual limitations of liability will sufficiently protect the company from data privacy and security claims [405].