9 Meters Biopharma (NMTRQ) Risk Analysis

Our ability to generate product revenues, which may not occur for several years, if ever, currently depends heavily on the successful development and commercialization of vurolenatide. The success of vurolenatide will depend on a number of factors, including the following: - successful completion of clinical development;- receipt of marketing approvals from applicable regulatory authorities;- establishing commercial manufacturing arrangements with third-party manufacturers;- obtaining and maintaining patent and trade secret protection and regulatory exclusivity;- protecting our rights in our intellectual property portfolio;- establishing sales, marketing and distribution capabilities;- launching commercial sales of vurolenatide; if and when approved, whether alone or in collaboration with others;- acceptance of vurolenatide, if and when approved, by patients, the medical community and third-party payors;- effectively competing with other SBS therapies; and - maintaining a continued acceptable safety profile of vurolenatide following approval. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize vurolenatide, which would materially harm our business.

In March 2023, our board approved a reduction in force affecting approximately 52% of our workforce, in order to preserve cash and prioritize investment in our core clinical programs. The reduction in force may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the reduction in force. In addition, while positions have been eliminated, certain functions necessary to our operations, remain, and we might not successfully distribute the duties and obligations of our terminated employees among our remaining employees. The reduction in workforce could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives. If we are unable to realize the anticipated benefits from the reduction in force, or if we experience significant adverse consequences from the reduction in force, our business, financial condition and results of operations may be materially adversely affected.

From time to time, we may publicly disclose interim, top-line or preliminary data from our preclinical studies and clinical trials, based on a preliminary analysis of then-available data. The results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received all data when we publicly disclose such data. As a result, any interim, top-line or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary or top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim, top-line and preliminary data should be viewed with caution until the final data are available. In addition, preliminary or interim data from ongoing clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between any preliminary or interim data we disclose and final data could significantly harm our business prospects. Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed significant by you or others with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. If the interim, top-line or preliminary data that we report differ from final results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, product candidates may be harmed, which could significantly harm our business, financial condition, results of operations and prospects.

We may not be able to commence or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States. In particular, some of our competitors have ongoing clinical trials for drug candidates that treat the same indications as our drug candidates and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors' drug candidates. Patient enrollment, a critical component to successful completion of a clinical study, is affected by many factors, including: - the size of the target population;- other ongoing studies competing for the same patient population;- the eligibility criteria for the clinical trial;- the design of the clinical study;- the perceived risks and benefits of the product candidate under study;- the efforts to facilitate timely enrollment in clinical trials;- the proximity and availability of clinical trial sites for prospective patients;- the frequency of or difficulty in administering our product candidates;- the ability to monitor patients adequately during and after treatment;- delays resulting from the COVID-19 pandemic.

Clinical studies may not commence on time or be completed on schedule, if at all. The commencement and completion of clinical studies can be delayed for a variety of reasons, including: - inability to raise sufficient funding to initiate or to continue a clinical study;- delays in recruiting and enrolling individuals to participate in a clinical study, which historically can be challenging in orphan diseases;- delays in obtaining regulatory approval to commence a clinical study;- delays in identifying and reaching agreement on acceptable terms with prospective CROs and clinical study sites and investigators, which agreements can be subject to extensive negotiation and may vary significantly among study sites;- delays in obtaining regulatory approval in a prospective country;- delays in obtaining ethics committee approval to conduct a clinical study at a prospective site;- delays in reaching agreements on acceptable terms with prospective CMOs or other vendors for the production and supply of clinical trial material and, if necessary, drug administration devices, which agreements can be subject to extensive negotiation;- delays in the production or delivery of sufficient quantities of clinical trial material from our CMOs and other vendors to initiate or continue a clinical study;- delays due to product candidate recalls as a result of stability failure, excessive product complaints or other failures of the product candidate during its use or testing;- invalidation of clinical data caused by premature unblinding or integrity issues;- invalidation of clinical data caused by mixing up of the active drug and placebo through randomization or manufacturing errors;- delays on the part of our CROs, CMOs and other third-party contractors in developing procedures and protocols or otherwise conducting activities in accordance with applicable policies and procedures and in accordance with agreed upon timelines;- delays in identifying and hiring or engaging, as applicable, additional employees or consultants to assist in managing clinical study-related activities;- delays caused by patients dropping out of a clinical study due to side effects, concurrent disorders, difficulties in adhering to the study protocol, unknown issues related to different patient profiles than in previous studies, or otherwise;- delays in having patients complete participation in a clinical study, including returning for post-treatment follow-up, which was made more difficult during the COVID-19 pandemic;- delays resulting from study sites dropping out of a trial, providing inadequate staff support for the study, problems with shipment of study supplies to clinical sites, or focusing our staff's efforts on enrolling studies that compete for the same patient population;- suspension of enrollment at a study site or the imposition of a clinical hold by the FDA or other regulatory authority following an inspection of clinical study operations at study sites or finding of a drug-related serious adverse event; and - delays in quality control/quality assurance procedures necessary for study database lock and analysis of unblinded data. If we experience delays in the completion of a clinical study, if another clinical study is terminated, or if failure to conduct a study in accordance with regulatory requirements or the study's protocol leads to deficient safety and/or efficacy data, the regulatory approval and/or commercial prospects for our product candidates may be harmed and our ability to generate product revenue, if any, will be delayed. In addition, any delays in completing our clinical studies likely will increase our development costs. Further, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may ultimately lead to the denial of regulatory approval of a product candidate.

The success of our business is dependent on our ability to advance the clinical development of our lead product candidate, vurolenatide for the treatment of SBS, as well as NM-136 for rare obesity disorders. We are also developing NM-003 and NM-102 for the treatment of undisclosed rare debilitating digestive diseases with unmet needs and larazotide for the treatment of MIS-C through a collaboration with EBRIS. Clinical studies are expensive, difficult to design and implement, may take many years to complete and outcomes are inherently uncertain. A drug product may fail to demonstrate positive results at any stage of testing despite having progressed satisfactorily through nonclinical testing and initial clinical studies. There is significant risk in clinical development where later stage clinical studies are designed and powered based on the analysis of data from earlier studies, with these earlier studies involving a smaller number of patients and the results of the earlier studies being driven primarily by a subset of responsive patients. Success in pre-clinical studies or completed clinical trials does not ensure that later studies or trials, including continuing pre-clinical studies and large-scale clinical trials, will be successful nor does it predict future results. Favorable results in early studies or trials may not be repeated in later studies or trials, and product candidates in later stage trials may fail to show acceptable safety and efficacy despite having progressed through earlier trials. There is typically a high rate of attrition from the failure of product candidates proceeding through clinical trials. We may be required to demonstrate through large, long-term outcome trials that our product candidates are safe and effective for use in a broad population prior to obtaining regulatory approval. In addition, the placebo rate in larger studies may be higher than expected and some participants in our clinical trials may respond positively to placebo treatment. These participants are commonly known as "placebo responders," making it more difficult to demonstrate efficacy of the trial drug compared to placebo. Further, clinical study data is frequently susceptible to varying interpretations. Medical professionals and/or regulatory authorities may analyze or weigh study data differently than the sponsor company, resulting in delay or failure to obtain marketing approval for a product candidate. Additionally, the possible lack of standardization across multiple investigative sites may induce variability in the results, which can interfere with the evaluation of treatment effects. Because of the developmental nature of our product candidates, we are subject to risks associated with initiating, completing, and achieving positive outcomes from our current and future clinical trials. If any of our product candidates fail to demonstrate sufficient safety and efficacy in any clinical trial, we will experience potentially significant delays and cost increases in, or may decide to abandon development of, that product candidate. For example, in June 2022, we announced the discontinuation of our Phase 3 CeDLara study for patients with celiac disease following an interim analysis conducted by an independent statistician. If we abandon or are delayed, or experience increased costs, in our development efforts related to any of our other product candidates, we may not have sufficient resources to continue or complete development of that product candidate or any other product candidates. We may not be able to generate any revenues, continue our operations and clinical studies, or become profitable. Our reputation in the industry and in the investment community would likely be significantly damaged. Further, it might not be possible for us to raise funds in the public or private markets, and our stock price would likely decrease significantly. Even if we successfully complete the necessary clinical trials for our product candidates, our success will be subject to the risks associated with obtaining regulatory approvals, product launch and commercialization. Many of these clinical, regulatory and commercial matters are beyond our control and are subject to the risks described elsewhere in this "Risk Factors" section. Accordingly, we cannot provide any assurances that we will be able to advance our product candidates further through final clinical development or obtain regulatory approval of, commercialize, or generate significant revenue from them. If we cannot do so, or are significantly delayed in doing so, our business could be materially harmed.

As with many pharmaceutical products, undesirable side effects or adverse events caused by our product candidates could interrupt, delay or halt clinical studies and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all indications, and in turn prevent us from commercializing our product candidates. If undesirable side effects occur, they could possibly prevent approval, which would have a material and adverse effect on our business. If any of our product candidates receive marketing approval and we or others later identify undesirable side effects caused by the product, regulatory authorities may require the addition of labeling statements, such as a "black box" warning or a contraindication or we may be required to change the way the product is administered, conduct additional clinical studies or change the labeling of the product. Depending on the severity of the side effects, regulatory authorities may withdraw approval of the product. Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or could substantially increase the costs and expenses of commercializing the product, which in turn could delay or prevent us from generating significant or any revenue from its sale. In addition, in January 2021, we instituted an Expanded Access Program for larazotide. Information obtained from our Expanded Access Program may not reliably predict the efficacy of our product candidates in company-sponsored clinical trials and may lead to adverse events that could limit our ability to obtain regulatory approval with labeling that we consider desirable, or at all.

Vurolenatide, a long-acting injectable GLP-1 analogue being developed for SBS and NM-003, a long-acting glucagon-like receptor-2 agonist that utilizes our proprietary XTEN technology to extend circulating half-life for the prevention of acute graft versus host disease, have each received Orphan Drug Designation from the FDA. Orphan Drug Designation may provide market exclusivity in the U.S. for seven years if (i) vurolenatide receives market approval before a competitor using a similar mechanism for the same indication, (ii) we are able to produce sufficient supply to meet demand in the marketplace, and (iii) another product with the same active ingredient is not deemed clinically superior. NM-003 and NM-102 are being evaluated for development in other rare and/or orphan indications via an ongoing probability of technical and regulatory success analysis. Obtaining an Orphan Drug Designation from the FDA may not effectively protect our product candidates from competition because different drugs can be approved for the same condition, and orphan drug exclusivity does not prevent the FDA from approving the same or a different drug in another indication. Even after an orphan drug is approved, the FDA can subsequently approve a later application for the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer in a substantial portion of the target populations, more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan-drug-exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to manufacture sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

At any time, we may decide to discontinue the development of any of our product candidates for a variety of reasons, including inadequate financial resources, the appearance of new technologies that render our product candidates obsolete, competition from a competing product or changes in or failure to comply with applicable regulatory requirements. If we terminate a program in which we have invested significant resources, we will not receive any return on our investment and we will have missed the opportunity to allocate those resources to potentially more productive uses. As an example, we discontinued further development of larazotide in celiac disease following an interim analysis of our Phase 3 CeDLara trial.