Company Stage and Revenue Generation - The company is at a preclinical stage with no products approved for commercial sale and has not generated any revenue to date[132]. - The company has two product candidates, AL001 and AL002, which require extensive clinical evaluation and regulatory approval before generating revenue[133]. - The company does not anticipate generating revenue for a few years at the earliest and may not achieve profitability for several years after generating material revenue[133]. Financial Obligations and Costs - The company has paid initial license fees of 25,000 in 2023, 70,000 in 2025, while for AL002 they are 40,000 in 2023, and 50,000 for the Pre-IND meeting and $65,000 for the IND application filing[140]. Regulatory Approval and Compliance - The company plans to submit AL001 and AL002 for regulatory approval, which is critical for financing and strategic collaborations[149]. - Regulatory approval for AL001 and AL002 is uncertain and requires significant resources, with potential delays impacting commercialization[166]. - Compliance with FDA regulations and potential changes in laws could impose additional costs and lengthen review times for AL001 and AL002[183]. Clinical Trials and Development Risks - The success of AL001 and AL002 is dependent on timely completion of clinical trials and regulatory approval, as well as market acceptance[150]. - Clinical trials for AL001 and AL002 are expected to be expensive and time-consuming, with potential for delays or cancellations[173]. - There is a high rate of failure for drug candidates in clinical trials, which could significantly impact the company's operations and reputation[171]. Market Competition and Challenges - The company expects substantial competition in the market, which may hinder its ability to successfully develop and commercialize its products[197]. - The company faces significant competition from major pharmaceutical and biotechnology firms, including Celgene, Merck, and Novartis, for its product candidates AL001 and AL002[198]. - Competitors may develop safer, more effective, or less expensive products, potentially reducing the company's market opportunity[199]. Intellectual Property and Legal Risks - The company relies on a combination of patents and trade secrets to protect its intellectual property, which is critical for its product candidates[212]. - There is uncertainty regarding the patentability of the company's product candidates, which could impact its ability to commercialize AL001 and AL002[213]. - The company may face costly litigation to enforce its intellectual property rights, which could distract management and harm its business[203]. Management and Operational Risks - The company is highly dependent on key personnel, and the loss of any senior management or scientific staff could adversely affect product development and commercialization efforts[196]. - The company may experience difficulties in hiring qualified personnel due to intense competition in the biopharmaceutical field[262]. - The company has identified a material weakness in internal control over financial reporting, which could adversely affect investor confidence and the value of common stock[252]. Financial Reporting and Compliance - The company anticipates significant additional costs related to building its accounting and financial infrastructure, which may include professional fees and internal costs[274]. - Failure to comply with Section 404 of the Sarbanes-Oxley Act could result in the inability to produce timely and accurate financial statements, potentially harming the business and investor confidence[276]. - The company expects to incur increased legal, accounting, and compliance costs as a result of operating as a public company, which may impact its financial performance[280]. SEC Investigation and Legal Exposure - The company is currently under investigation by the SEC, the consequences of which remain unknown[223]. - The SEC is conducting an investigation into Ault Global Holdings, Inc. regarding potential violations of the Securities Act and the Exchange Act, with no established timeline for the investigation's conclusion[224]. - The company faces potential product liability exposure related to AL001 and AL002, which could result in substantial liabilities and impact commercialization efforts[227]. Stockholder and Market Considerations - Beneficial ownership of the shares of common stock by directors and executive officers represents approximately 45.76% of the outstanding shares, allowing these stockholders to influence management decisions[229]. - The market price of the company's common stock may be volatile due to various factors, including regulatory approvals and product sales performance[237]. - The concentration of voting power may delay or prevent changes in control of the company, potentially affecting stockholder interests[234].
Alzamend Neuro(ALZN) - 2021 Q4 - Annual Report