My Pharma Company

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The Risk Factors

Potential Risk factors (version dated November 10, 2013)

Prior to subscribing to Research & Development projects of Project Owners present on the My Pharma Company website, My Pharma Company users should be aware of potential hazards as defined below. To prepare the present document, My Pharma Company reviewed hazards that might potentially have a significant negative impact on most Projects and Project Owners in the health business field who wish to finance their Research & Development programs on its website : their scientific randomness, their activities, their financial status or their results. My Pharma Company deems to have listed major potential significant hazards, however this list cannot be exhaustive and potential risks specific to Projects identified by My Pharma Company can be reported in the Projects’ documentation available to subscribers.



Many diseases still remain without treatment and the incidence of cancer, for instance, has kept on increasing over the years. Therefore, Project Owners present on My Pharma Company significantly invest in research in order to develop treatments or specific tools able to prevent, diagnose, treat and follow-up patients while limiting the occurrence of adverse events.


Hazards related to clinical development and to utilization of Project Owners’ products


Project owners’ clinical trials may be delayed or may not be completed.

The outcome of Project Owners’ clinical trial is uncertain.

Project Owners conduct pre-clinical and clinical research programs that shall eventually lead to commercialization of new therapeutic solutions. Developing such products is a long and expensive multi-phase process whose outcome is uncertain. The objective is to demonstrate the therapeutic benefit (improved risk-to-benefit ratio) provided for one or more given indications.

At each development step, Project Owners typically present results of clinical studies to authorities in different countries according to their clinical development plan. Additional requirements might then arise for research protocols, patient characteristics, duration of treatment, post-treatment follow-up, discrepancies concerning the interpretation of results, inconsistencies between regulatory agencies in different countries, requests for further studies to clarify specific matters or target specific populations.

Similarly, during clinical trials, rapid patient recruitment is not fully guaranteed, even though research centers and partners are always chosen based on recruitment capabilities. In addition, requests from regulatory authorities may sometimes impact on patient recruitment.

Project Owners may be unable to demonstrate good tolerance, lack of side effects, whether immediate or delayed, or the effectiveness of its therapeutic solution during preclinical phases or in humans. For a given indication, any setback across clinical phases could delay the development, production and marketing of the concerned therapeutic product, or result in the termination of its development.

Similarly, any request from health authorities for additional tests or examinations would likely delay or potentially interrupt product development.

Moreover, the occurrence of delayed effects, or the triggering or worsening of pre-existing diseases or infections that current knowledge does not allow to identify, could delay – if not stop – product development or marketing.

Finally, positive results cannot be guaranteed for preclinical and clinical studies. Favorable results in preclinical studies and early clinical trials may not be confirmed during subsequent clinical trials. Moreover, clinical trials may produce product safety and efficacy results that, although positive, are insufficient to obtain marketing authorization. Obtaining positive results in a clinical trial and / or marketing authorization in a given indication for a given product does not necessarily reflect the product’s effectiveness or safety, nor the granting of an MA in another indication for this product, even in case of a scientifically sound rationale.

To date, Project Owners and My Pharma Company cannot guarantee a successful outcome for the development of the products proposed, let alone within a timeframe compatible with market needs. Any setback or delay in the development of their therapeutic products may significantly and adversely impact the Project Owners’ activity, results, financial situation and prospects.

Moreover, if, after obtaining their CE marking in Europe and/or their marketing authorization (MA) in Europe or the United States, Project Owners’ health devices / products were to cause unacceptable side effects or side effects undetected during clinical trials, it would be impossible to continue marketing these products for all or part of their eligible indications, which may significantly and adversely impact on Project Owners’ activity, prospects, financial conditions, results, growth and return on investment related to their R&D funding.


Regulations on the collection of biological samples are complex

The collection of biological samples is strictly regulated.

Project Owners must conform to current regulations on the collection of biological samples where appropriate. These regulations require, in some cases, obtaining patient's consent, preserving his/her anonymity, obtaining favorable approval of research protocol from (hospital) ethics committees and / or other competent review boards, as well as preliminary issuance of regulatory authorizations where applicable.

Should the Project Owners or their employees fail to comply with these regulations, or if the regulations in question were to be changed unfavorably, their business activity and schedule may be penalized as well as return on investment related to their R&D funding.


Hazards related to the market and competitors


The commercial success of Project owners’ products is not guaranteed

Project Owners may not be able to sell their products.

Even if Project Owners are granted CE marking and / or regulatory approval enabling them to commercialize their products, it may still take some time for them to secure acceptance from patients, the medical community, care prescribers and third party payers.

Acceptance of Project Owners’ products by the market will be subject to several factors, among which


  • perception of therapeutic edge by patients and prescribers;
  • potential for embodiment within current care pathway;
  • cost;
  • reimbursement policies of governments and other third parties;
  • effectiveness of the communication strategy within the scientific community;
  • possible occurrence of adverse events following CE marking and / or marketing authorization;
  • support from relevant key opinion leaders;
  • competition on the market.

Even if a Project Owner’s coming products are likely to outperform current therapeutic responses, poor market penetration, potentially consecutive to one or more of the factors described above, could have an adverse effect on the Project Owner’s business activity, prospects, financial condition, earnings, growth as well as return on investment related to its R&D funding.


Direct or indirect competitors may hinder Project Owners’ business activity or outdate their products

Project owners may be outperformed by competitors.

Many structures, pharmaceutical companies, biotechnology project leaders, institutions, universities and other research organizations, are actively engaged in the discovery, research, development and marketing of new health solutions. A Project Owner’s competitors may benefit from much larger resources or experience in clinical development, management, manufacturing, marketing and scientific research than the Project Owner funded on My Pharma Company.

Despite their best efforts, Project Owners and My Pharma Company cannot guarantee that :

  • clinical developments will lead to securing a manufacturing licence for the molecule / medical device nor to securing a deal or deals with pharmaceutical partners
  • clinical developments will lead to EC marking and / or marketing authorization of health products;
  • competitors will not develop alternative health products, over the same period, rendering obsolete those currently being developed by the Project Owner.

Finally, given the competitive nature of the pharmaceutical industry environment, Project Owners cannot guarantee that their partners and / or employees will not decide to join or work with competitors at some point, nor that their competitors will not be preferred by medical centers, doctors or patients.

The rise in such expenses could adversely impact on their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Hazards related to Project Owners’ business development

Hazards related to failure to achieve key objectives

Project Owners may not achieve objectives they committed to in certain collaborations and partnership agreements

Project Owners are often linked to academic and industrial partners via research funding programs or industrial development agreements. These agreements condition payment of royalties and / or public funding to the achievement of commercial, industrial or other proof of concept objectives.

Thus, failure to meet these goals would likely have a significant adverse impact on Project Owners’ business, financial condition, earnings, growth as well as return on investment related to their R&D funding.


Conferment of marketing authorization is an uncertain process

Project Owners may not be able to obtain all the necessary authorizations required to market their products.

Whether a medical device, molecule or diagnostic tool, Project Owners’ products must be granted CE marking and / or Europe-wide marketing authorization as well as a 510K, a Pre Market Authorization (PMA) or any other applicable certificate required locally. Such regulatory filings are continually taken care of across product development phases, with Project Owners accountable for following good laboratory, manufacturing and clinical practices (GLP, GMP & GCP) consistently in order not to jeopardize their chances when eventually submitting to competing authorities.

Authorization granting depends on several factors, including :

  • possibility of further development for the product currently in preliminary or preclinical phases
  • Project Owners’ (or their subcontractors, i.e. "Contract Research Organizations" or CRO, where appropriate) ability to carry out the clinical trials required, in a timely manner with the necessary human, technical and financial resources.

Without CE marking or marketing authorization, Project Owners’ products cannot be brought to market. Moreover, products may be granted CE marking or marketing authorization limited to a given geographic area only, which would significantly restrict market penetration.

The occurrence of one or more of these risks could adversely impact on Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Pricing terms and reimbursement rates of Project Owners’ products will be key factors to commercial success

Project Owners may obtain an unsatisfactory rate of reimbursement

Project Owners’ business performance depends, in part, on pricing terms for their products negotiated with competent committees and public bodies, and on conditions of reimbursement by social agencies or private insurance companies in targeted countries. In the current context of health costs control and budget crisis, pressure on selling prices and rates of reimbursement is increasing due to :

  • pricing terms fixed by many countries;
  • increasing delisting of given health solutions in the context of current budgetary policies;
  • increasing challenge to achieve and maintain a satisfactory reimbursement rates for drugs.

Altogether, these factors will directly impact Project Owners’ ability to generate profits from their products.

The reimbursement price of Project Owners’ products will be individually negotiated with competent authorities based on results of the "pivotal" clinical study for each of the products concerned, without prejudice to the existence of informal preliminary discussions between Project Owners and competent authorities. Determination of reimbursement rates typically depends on usual prices for standard treatment, but also takes into account the benefit newly provided to patients as seen from clinical results and, more broadly, to the total population that could potentially be concerned.

Health policies are evolving towards greater rigor and the current trend to delist drugs could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Project Owners often have limited sales, marketing and distribution experience

Project Owners may be struggling to enter the market.

Given the stage of development of their project, most Project Owners present on My Pharma Company only have limited experience in the areas of sales, marketing and supply chain. Hence, when obtaining their first clinical results from their products, most Project Owners will have to develop marketing skills and sales force, either alone or with strategic partners. They may thus be required to seek partners for the future commercialization of some of their products, while nevertheless deciding to set up their own sales and marketing infrastructure for their other products. In the latter case, they would likely engage additional expenses, mobilize management resources, implement new capabilities and spend time establishing both the organization and structure appropriate to commercialize given products in conformity with applicable regulations.

Partners with whom Project Owners have signed or will sign license agreements may experience difficulties in technically and / or clinically validating their technology, which in turn may delay or even jeopardize the marketing of the concerned products. It may also happen that these partners do not allocate sufficient resources to achieve the objectives agreed upon contractually with Project Owners. Among other things, budget restrictions or priority given by these partners to other development programs could delay the validation and, possibly, the marketing of Project Owners’ technology. Dissensions may also arise between Project Owners and some of their industrial partners. In particular, Project Owners cannot guarantee that none of their partners will develop or seek to implement a commercial activity using all or part of a competing technology, which would de facto compete against Project Owners’ business (please refer to the above section on risks related to competition).

It may be possible that Project Owners :

(i)                   fail to secure a viable sales and marketing deal for its product or to market themselves or their products effectively, or

(ii)                 suffer delays and / or failures and / or competitive behaviors from their partners.

Such events may adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Project Owners may encounter difficulties in conducting acquisitions

Project owners could take risks performing a merger / acquisition

At this stage, Project Owners probably do not plan any strategic acquisition of companies nor technologies that may facilitate or allow them access to new drugs, new medical devices, new research projects, or new geographical areas, nor that may have synergies with their current activities.

However, should such acquisitions prove necessary, Project Owners may not be able to identify appropriate targets, complete acquisitions under satisfactory terms (including price), nor effectively integrate the newly acquired companies or activities, while achieving their operational objectives, cost savings or expected synergies. In addition, Project Owners may not be able to obtain financing for these acquisitions on favorable terms, and may therefore be required to finance these acquisitions with their own funds unless these were to be allocated to other purposes in the context of current operations.

If Project Owners were to encounter difficulties in the implementation or execution of their external growth strategy, this could affect their ability to achieve their financial goals and develop market share, which could adversely impact their business, financial condition, results, growth as well as return on investment related to their R&D funding.


Hazards related to dependence upon third parties

Hazards related to dependence upon key scientific collaborations

Loss of certain scientific collaborations could hinder Project Owners development.

Project Owners generally rely upon and intend to continue on relying upon collaborations with institutions, including public and private research groups to conduct a significant share of their exploration activities. If one of these collaborations was to ignore or terminate its contract with Project Owners or to, otherwise, no longer work effectively with them, research, development and /or commercialization of products considered in the framework of this collaboration could be delayed or terminated. In the event of termination of Project Owners’ cooperation agreements, or in the event that Project Owners would be unable to renew these collaborations under acceptable terms, their activities may be delayed or penalized and have a negative impact on return on investment related to their R&D funding.


Hazards related to conflicts of interest

A board or scientific committee member could be subjected to a conflict of interest and thus cause prejudice to Project Owners

Board members are subject to regulations and laws pertaining to conflicts of interest. Yet, no measure can replace the ethical conduct of Board members. Hence, Board members may lose their intellectual independence or objectivity in the event of a conflict of interest. Realization of this risk could adversely impact Project Owners’ business, financial condition, results, reputation, growth as well as return on investment related to their R&D funding.

Scientific Advisory Board members usually report their interest(s) contractually. Project Owners then appreciate risks accordingly but are not liable to check the veracity of these statements. In case of omission or fraudulent declaration, Board members may lose their intellectual independence and / or objectivity. Realization of this risk could adversely impact Project Owners’ business, financial condition, results, reputation, growth as well as return on investment related to their R&D funding.


In addition, the Act of 29 December 2011 on the strengthening of drug and health product safety tends to increase the transparency with regards to benefits granted by the pharmaceutical industry so as to avoid conflicts of interest. Following enactment of this decree, Pharmaceutical companies will have to disclose any agreements signed from 1st January 2013 onwards.

Project Owners will therefore need to mobilize internal resources and possibly external management support in order to comply with the provisions of this decree within a relatively short time frame.


Access to raw materials and resources required to manufacture Project Owners’ products and conduct clinical trials is not guaranteed

Project Owners may suffer shortages of raw materials

Key raw materials initially used to manufacture a product or device for clinical trials – and, ultimately, for mass production – might be subject to shortages. Project Owners’ supply may be reduced or interrupted. In such a case, Project Owners may not be able to find other suppliers of materials or products of acceptable quality, in appropriate volumes and at an acceptable cost. If their key suppliers / manufacturers or if their products and materials supply is reduced or interrupted, Project Owners may not be able to continue to develop, produce and market their products in a timely and competitive way. In addition, these materials and products are subject to stringent manufacturing requirements as well as rigorous testing. Delays in completion and validation of outsourced manufacturing processes and facilities for these materials and products could impact on Project Owners’ ability to complete clinical trials and market their products in a profitable and timely way.

To account for this risk, Project Owners search for secondary supply or service alternatives. It is stated that the qualification of raw materials and services is an integral part of the overall qualification of Project Owners’ products.

In the event that Project Owners come to encounter difficulties in the supply of these specific materials or services or, if they were not able to maintain their supply agreements or to establish new agreements in the future, this could adversely impact on their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Project Owners depend on their sub-contractors

Project Owners may be impacted by sub-contractors’ failures.

Project Owners work with sub-contractors, especially for manufacturing batches of finished or semi-finished products intended for clinical trials and / or for the achievement of these clinical trials as they usually do not have, at this stage of their development, sufficient resources to ensure mass production of products required to conduct large-scale clinical trials nor to implement such trials entirely.

Although Project Owners have assumed the risks of sub-contractors’ failures or breach of contract into account and implemented measures to address these risks, any failure could affect the length, or even the continuation of clinical trials, and impact the quality of the resulting data subject to strict standards (Good Clinical Practices, Good Manufacturing Practices) imposed by regulators and thereby potentially delaying the marketing of their products.

Such events could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as R&D funding profitability, insofar as any change of sub-contractors would require new validation, which thus could lead to additional costs and delay before CE marking and /or marketing authorization.



Patent portfolio-related risks

Protection granted by patents and other intellectual property rights is uncertain

Project owners may not be protected by their patents.

Project Owners’ economic plan is partly based on a portfolio of proprietary patents and patent applications. There is no certainty that current and future patent applications made by Project Owners will eventually lead to patent delivery, nor that once granted, these patents are not challenged, invalidated or circumvented nor that they will provide effective protection against competitors or third party patents covering similar compounds. Restricted protection scope, invalidation or circumvention of patents could adversely impact Project Owners. Moreover, commercial success of Project Owners will depend on their ability to develop products and technologies that do not infringe upon third parties’ patents. Project owners cannot be certain of being the first to design an invention and file a patent application because of an 18-month delay for publication of patent applications in most countries which may potentially hide an opposable anteriority in a foreign country.

With regards to success of their business and to commercialization of their products, it is important that Project Owners are able to obtain, maintain and enforce patents and all other rights of intellectual property in the countries in which they operate or plan to operate their projects, and especially in Europe, USA and Asia.

Moreover, Project Owners will continue their protection policy of patented inventions through renewals / new applications at times deemed appropriate.

Nevertheless, it cannot be excluded that :

  • Project Owners fail to develop new patentable inventions.
  • Project Owners’ patents will be challenged and found invalid or they cannot enforce these.
  • Delivery of a patent does not guarantee its validity nor its protection perimeter, and third parties might thus challenge both. Additionally, legal actions or cases dealt with agencies and / or competent courts may be required to enforce Project Owners’ intellectual property rights, protect their commercial confidentiality or determine the validity and scope of their intellectual property rights. Any litigation could lead to substantial costs, adversely impact Project Owners’ results and financial situation and / or not provide the intended protection. Competitors might successfully challenge the validity of Project Owners’ patents in court or via other procedures. This could reduce the scope of these patents and permit circumvention by competitors. Accordingly, Project Owners’ rights over their granted patents may not give the expected protection against competitors.
  • The scope of patent protection is insufficient to protect Project Owners against counterfeit or competitors. Patentability of drugs and medical devices is a very complex mater, raising legal, scientific and factual questions. The three major patent organizations worldwide (United States, Europe and Japan) are working to standardize their patentability approaches in the field of pharmaceuticals and medical devices. Nevertheless, there are still interpretation uncertainties about the scope of claims that may be given, with such questions still being governed by national law. Developments or changes in interpretation of the laws governing intellectual property in Europe, the United States or other countries could affect Project Owners’ legal position as well as their positioning against competitors. Moreover, there are still some countries that do not protect intellectual property rights in the same way as in Europe or the United States, and procedures and rules necessary for the defense of Project Owners’ rights may not exist in such countries.
  • Third parties claim patent or other intellectual property rights that Project Owners hold of their own or jointly, or may be granted license for. Collaborations, contracts for services or outsourcing with third parties expose Project Owners to the risk of third parties claiming the benefit of intellectual property rights on Project Owners’ inventions and may pose a risk to the confidentiality of non-patented innovations or improvements, as well as Project Owners’ know-how. In addition, Project Owners may be required to provide various forms of data or information to third parties with which they collaborate (such as academic institutions and other public or private entities) for research, development, manufacture and marketing of their products. In spite of precautions (including contractual dispositions) taken by Project Owners, these entities could claim ownership of intellectual property rights consecutively to tests carried out by their employees. With regard to intellectual property ownership, these entities may not grant Project Owners with exclusive license on terms acceptable to them.
  • Project Owners’ employees claim rights or payment of additional compensation in exchange for the creation of inventions in which they have participated.

The occurrence of any of these matters on a patent or intellectual property rights could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding. On the day of on-line investment launch, Project Owners assured My Pharma Company that they were faced with none of the situations described above.


Project Owners’ activity may partly depend upon or violate patents’ or / and other third parties’ intellectual property rights

Project owners may unknowingly violate intellectual property rights.

Growth of biotechnology industry and medical technologies, along with the concomitant rise in patent delivery, increases the risk of third parties considering that Project Owners’ products or technologies violate their intellectual property rights.

Typically, patent applications are only made public 18 months after the date of first request. In the US, patent applications are sometimes not published ahead of patent delivery.

Moreover, still in the United States, the current system gives patent rights and protection to the first inventor and not to the first applicant, as in Europe and in the rest of the world. Scientific discoveries are sometimes subject to publication or patent application only months, or even years, later. Project Owners can therefore not be certain that others have not been the first to invent products, create inventions or file patent applications potentially interfering with their own patent applications or used in relation to the products they might sell.

Any dispute or argument brought against Project Owners, regardless of its outcome, could result in substantial costs and affect their reputation. Some competitors with larger resources than those of Project Owners accompanied by My Pharma Company may be better able to bear the costs of a complex legal action. Any such litigation could severely impact Project Owners’ ability to continue their operations and, ultimately, market their products.

In case of disputes over intellectual property rights, Project Owners may be required to :

  • cease developing, selling or using the product or products related to the disputed intellectual property rights
  • acquire a license from actual owners of the disputed intellectual property rights – which may not be obtained or only under economically unfavorable conditions.

The occurrence of any of these events on a patent or intellectual property rights could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding. However, Project Owners assured My Pharma Company being faced with none of the situations described above on the day of on-line investment launch.


Project Owners may not be able to protect the confidentiality of their information and know-how

Project Owners may face difficulties in protecting their intellectual property.

With respect to present or future contract collaborations with researchers in academic institutions as well as in other public or private entities, contractors, or any co-contracting third parties, Project Owners’ information and / or products can be made available to conduct some tests. In these cases, the Project Owners require the signing of confidentiality agreements. Indeed, technologies, processes, know-how and unpatented and / or non-patentable proprietary data are considered trade secrets that Project Owners attempt to protect in part by such confidentiality agreements.

It cannot be excluded that protection agreement procedures and / or Project Owners’ know-how do not provide the protection sought for or are violated, that Project Owners has no appropriate solutions against such violations, nor that their trade secrets get disclosed to competitors or independently developed by them.

More specifically, Project Owners have no control over the conditions under which third parties with whom they contract themselves deal with third parties and protect their confidential information.

The occurrence of one or more of these risks could adversely impact on Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Product-related liability hazards

Product-related liability hazards

Project Owners may engage their liability across clinical development or marketing of their products, particularly with regards to effects, manufacturing and marketing of these therapeutic products in humans and / or animals. They may thus be held accountable for unexpected side effects affecting patients participating in clinical trials wherein Project Owners’ therapeutic products would be administered. Legal proceedings or lawsuits could be filed or initiated against Project Owners by patients, regulatory agencies, pharmaceutical companies and / or other third parties using or marketing their products. Such procedures may include complaints arising consecutive to actions from their partners, licensees and / or sub-contractors, over whom Project Owners exercise little or any control.

Project Owners cannot guarantee that their current insurance coverage is sufficient to meet liabilities that may be brought against them, or to respond to unusual or unexpected situations wherein their responsibility might be engaged. If themselves or their partners, licensees and / or contractors were to be held accountable for, if themselves or their partners, licensees and / or contractors were not able to obtain and maintain appropriate insurance coverage at an acceptable cost, or take any preventive dispositions to protect themselves against liability hazards, this would seriously impact Project Owners’ product marketing and more generally impact their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Regulations surrounding Project Owners’ activity are becoming more stringent

Project Owners may have to adapt to new regulatory requirements

The pharmaceutical industry faces ongoing changes its regulatory environment worldwide as well as increased monitoring from competent authorities and the public, who both require further guarantees about drugs safety and effectiveness. Meanwhile, incentives for research are reduced.

Health authorities, including the Food and Drug Administration (FDA) in the US, require an increased volume of data to demonstrate the efficacy and safety of a given product. Such requirements have reduced the number of new authorizations delivered. Moreover, products that were already commercialized are subject to periodic reassessment of the benefit / risk ratio before their authorization is renewed. Late discovery of problems that were not detected earlier on in the research process may lead to marketing restrictions, or to suspension or withdrawal of the product and to an increased litigation hazards. à la suspension ou au retrait du produit et à un risque de contentieux accru.

Insofar as new regulations lead to greater costs for obtaining and maintaining product marketing authorizations, or restrict the economic value of a new product for its inventor, growth prospects for the pharmaceutical and medical industries as well as of Project Owners may be reduced.

Moreover, any clinical study is subject to foregoing approval from local health authorities and patient protection committees, with a dismissive review potentially hindering or stopping Project Owners’ clinical development program.

In addition, based on information that may be provided to them through the study, such as frequency of serious adverse events, health authorities could decide to suspend or prematurely end the study.

In addition, based on information that may be provided to them through the study, such as frequency of serious adverse events, health authorities could decide to suspend or prematurely end the study.

Finally, while products developed by Project Owners fall under one or more applicable regulatory framework(s) in Europe, it cannot be excluded that recent health scandals should lead competent authorities to reconsider these classifications, thereby requalifying Project Owners’ products into “upper class” drug or medical devices. In such cases, clinical developments could take place in a more complex framework, and therefore take longer and be more expensive than initially expected.

The occurrence of one or more of these risks could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.



Project Owners may lose key employees and not be able to attract new qualified personnel

Project Owners may have difficulties recruiting qualified staff.

Success of My Pharma Company Project Owners depends largely on the work and expertise of their management team. Temporary or permanent unavailability of these people, or of people from the research team, may therefore impair Project Owners’ ability to achieve their objectives, in particular by impacting their know-how and technical capabilities.

Moreover, Project Owners will need to recruit new managers and qualified scientific personnel to support the development of both their activities and growth in areas which will require supplementary skills, such as manufacturing, quality assurance, regulatory affairs, medical affairs and marketing.

Project Owners are in competition with other companies, research organizations and academic institutions to recruit and withhold scientific, technical and highly skilled staff. Insofar as this competition is very intense, Project Owners may not be able to attract or retain key personnel on terms that are acceptable from an economic point of view.

Failure to attract and withhold key personnel may prevent Project Owners from achieving their overall objectives and could adversely impact their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Project Owners’ development will depend on their ability to manage business growth

Project Owners may face difficulties managing business growth

As part of their development strategy, Project Owners shall be required to hire new staff and expand their operational capacity, which could significantly mobilize their internal resources. To this end, Project Owners will have to :

  • train, manage, motivate and retain a growing number of employees;
  • anticipate growth expenses and the associated funding needed;
  • anticipate product demand and the income they could generate;
  • increase the capacity of their existing operational, financial, and management IT systems;
  • manage a process of outsourced production.

Project Owners’ inability to manage growth, or unexpected difficulties encountered during their expansion, could adversely impact their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Hazards related to regulations of health products manufacturing and commercialization

Project Owners’ manufacturing and marketing approvals are uncertain.

Should Project Owners be granted the status of "Pharmaceutical Production Site" and / or that of "Pharmaceutical Operative Site", they can however not be sure that they or their partners will keep this status required to produce and / or commercialize any of their products. Project Owners, as well as their products, are subject to many stringent laws, regulations and controls by the competent administrative authorities, including the National Security Agency of Drugs and Health Products (ANSM), the FDA and the EMA. Regulatory requirements are known, but subject to change. Project Owners must demonstrate that they meet the quality and safety criteria defined by competent authorities.

Any breach of these obligations of conformity may lead to penalties including fines, legal orders, civil penalties, marketing veto, delays, suspension or withdrawal of approvals, seizure or recall of products, restriction of use and criminal prosecution.

If Project Owners or their partners were to loose these statuses, they could not produce and / or sell their products locally, which could adversely impact their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.



Project Owners have taken comprehensive insurance dispositions with coverage amounts that they consider compatible with the nature of their business.

Along with the absence of direct loss or damage indicators in the industry and with their activities essentially focused on research and development at this stage, quantification of potential risks and determination of corresponding insurance costs, including civil liability, is difficult, but Project Owners nonetheless believe that their insurance coverage policies adequately cover risks inherent to their business activities and are consistent with practices in their field.

Project Owners do not foresee any particular difficulties maintaining appropriate insurance coverage within the terms and capacity of the market.



Risks related to historical losses

Because of the central role of their R&D activity, Project Owners accompanied by My Pharma Company usually have a history of operating losses which may persist.

Such losses arise primarily from expenses incurred in connection with research or development of new technologies as well as preclinical studies program and launch of the first clinical trials.

Project Owners might incur increasing operating losses in the years to come as their research and development, along with marketing activities continue, particularly because of

  • ongoing preclinical study and clinical trial programs;
  • the need for further clinical trials to address new applications;
  • all the steps that will be implemented in order to obtain the CE marking and / or marketing authorization and other applications to reimbursement schemes for their products;
  • regulatory strengthening of requirements governing manufacture of their products;
  • marketing and sales expenses to be incurred concomitant with product development;
  • maintaining a policy of active research and development that may, where appropriate, imply acquisition of new technologies, products or licenses.

The rise in such expenses could adversely impact their business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Liquidity risk and need for additional funding

Project Owners may need to strengthen their own capital or to solicit additional funding in order to sustain their development.

Project Owners generally finance their growth by strengthening their own capital via successive capital increases, bond issuance, obtaining grants and other public support for innovation, repayment of debts related to eligible tax credit for research organizations, as well as potentially via contracting bank loans. Accordingly, Project Owners may be exposed to liquidity risk due to the possible anticipated implementation of repayment clauses for such borrowings.

Significant research and development efforts, along with expenditures on research and development projects have generally been initiated since the start of Project Owners’ activity, thereby generating negative operative cash flow.

Project Owners will continue to need substantial funding to develop their products or technologies, to carry on with their clinical development programs, as well as to manufacture and market their products. It could be that Project Owners are unable to self-finance their growth, which would lead them to seek other sources of funding, particularly through new capital increases.

Both the extent and spread over time of Project Owners’ funding requirements depend on factors that are largely beyond their control, such as :

  • higher costs and slower progress than initially expected for their research and development program as well as clinical trials;
  • costs of preparing, filing, defending and conserving their patents and other intellectual property rights;
  • higher costs and longer delays than initially expected to obtain marketing authorization and access to reimbursement schemes for their products, including preparation time to submit regulatory requests to competent authorities; and
  • new opportunities for development of new products or acquisition of technologies, products or Companies.

It may be that Project Owners fail to raise additional capital when required, or that capital may not be available on terms acceptable to them. If such funds were not available, Project Owners may then have to :

  • delay, reduce or eliminate the number or scope of their preclinical and clinical trials program;
  • sell licenses for their technology to partners or third parties; or
  • settle new collaboration agreements on terms less favorable to them than what it could have been in a different context.

Moreover, insofar as Project Owners would raise capital by issuing new shares, participation of their shareholders may be diluted. Debt financing, where available, may also encompass restrictive conditions for Project Owners and their shareholders.

As per agreement with My Pharma Company, it should be noted that as potential royalties are related not to the capital, but to the achievement of developmental milestones or sales related to a given product, these dilutions of capital will not affect the income of My Pharma Company subscribers.

However, the occurrence of one or more of these hazards could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Risks related to eligible tax credit for research organizations

Project Owners may see their eligible tax credit challenged.

To finance their activities, Project Owners may apply for tax credit as part of a subsidized incentive for innovation ("CIR") targeted towards companies making significant investments in research and development. Expenses eligible for the CIR scheme include wages and salaries, research equipment, services outsourced to approved research organizations (public or private) and intellectual property costs.

Tax authorities might challenge Project Owners’ research and development expenditure estimations. Similarly, CIR dispositions might be revised or called into question by tax authorities themselves even though Project Owners fully complied with ongoing requirements. If such a situation were to occur, it could adversely impact Project Owners’ business, prospects, financial condition, results, growth as well as return on investment related to their R&D funding.


Hazards related to changes in tax or social legislation

Project Owners may face adverse legislative changes.

Sources of fiscal risks are manifold. With the exception of deliberate tax law violation (legal or illegality risk), the risks can be current or non-current; they can be of external or internal origin as they can be linked to people, business processes, technology or Project Owners’ procedures of tax management.

Taxation is also an aspect of market risk as a determinant of both cost and price determination.


Transaction risks

Project Owners may be confronted with tax uncertainties.

All transactions are susceptible to taxation. As complexity develops around a transaction, it may generate uncertainties and therefore risk about concomitant taxation. Specific risks may also arise from uncommon, non-routine transactions.


Situational risks

Project Owners could provoke situations leading to tax audits.

Taxation risk depends on both its impact and probability of occurrence. The probability of occurrence depends on the action or reaction of tax authorities. Thus, this probability is higher when Project Owners are in certain situations conducive to a strong tax audit potential such as chronic reporting of VAT or IS credit, especially if during their first restitution claims.


Operational risk

Project Owners may face operational tax risks

Repetitive operations generally resent uncertainties as these may increase risks on ongoing activities. Operational risks involve all services and all those concerned with taxation, not only business tax administration (supply, transit, inventory, staff, cash and finances, sales, invoicing, delivery, transportation, investment, accounting, etc.). Comprehensive training and proper documentation of accountable staff, along with good communication between all parties involved with transactions having a direct fiscal impact, represent a key determinant for the management of operational tax risk.


Risk of retroactivity in law

Project Owners may face retroactivity in law

An efficient way of ensuring tax compliance consists in staying up-to-date and taking administrative doctrine into account, or better yet, in obtaining tax authorities’ approval or agreement with regards to one’s approach to solving a tax issue. Risk exposure by failing doing so is particularly high as tax legislation can be retroactive in time and thereby generate additional costs for Project Owners (eg. BSPCE taxation).


Accounting risks

Project Owners may be confronted with taxation risks.

As a centralization, synthesis and tax base tool, accounting is the primary element of tax control and, therefore, the bottom base for tax litigation. Accounting also embodies management‘s options and associated consequences from a taxation perspective (assignment theory, choice of accounting methods, etc.). Accounting therefore appears as the formalization tool for options susceptible to provide an opportunity for Project Owners. Effective procedures for entry and allocation and analysis, along with accounting justifications and accounting-taxation reconciliations, are likely to reduce tax risks from accounting hazards.


Management risks

Project Owners’ management may miss taxation opportunities.

Few Project Owners document and formalize their management of taxation risk. In this case, the main risk lies in the fact that management of taxation risk is in the responsibility of staff accountable for it. Should these people the company, replacement may be difficult and there is a risk of missing taxation opportunities during the succession. In addition to alternative internal competencies, assistance from external consultants offers a form of stability and continuity and, at least, support for easy matters.


Reputational risks

Project Owners may be faced with bad publicity.

Serious tax issues may severely affect the reputation of a company, its management, staff and followers.


Hazards related to the future use of loss carryforwards

Project Owners may face unfavorable evolution of accounting regulations

In France, allocation of these deficits is capped at 60% of taxable income for the year, with such a limitation applying to benefits in excess of 1 million €. The unused deficit balance remains carry-forwardable over the following years, and is due in the same conditions without limitation in time.

It cannot be excluded that evolution of taxation schemes might challenge, either entirely or partially, the possible allocation of Project Owners’ prior losses to future profits or might limit their allocation time-wise. This could adversely impact return on investment related to their R&D funding.


Risks related to fluctuations in taxes on health products

Project Owners may face new taxes.

The deficit of national mutualization and public healthcare systems in some countries has led and could further lead local governments to impose taxes on activities of companies selling health products. The introduction of such taxes or their increase could adversely impact Project Owners’ business and profitability.


Risks related to access to public loans

Project Owners may have to refund public financial aids.

Project Owners may have received reimbursable aids for innovation from BPIFRANCE. Such aids would need to be repaid.


Foreign exchange risk

Project Owners may be impacted by fluctuating currency rates.

Project Owners may be exposed to foreign exchange risks inherent to purchases made in the United States and charged in U.S. dollars. They may then consider taking appropriate steps to cover these risks.


Credit risk

Project Owners may face cash flow problems.

Project Owners supported by My Pharma Company exercise prudent management of their finances. Cash and cash equivalents include available cash and common financial instruments held by Project Owners.

Credit risk related to cash, cash equivalents and common financial instruments is generally not significant compared to the quality of co-contracting financial institutions.


Interest rate-related risks

Project Owners may be confronted with an increase in interest rates.

The sole exposure to hazards related to interest rates depends on the remuneration of investment securities.

Project Owners may own a debt subject to interests. Debt repayment flows may thus be subject to interest rate risk.


Dilution risk

Project Owners may be required to issue new social shares.

Since their inception, Project Owners have often issued or granted stock warrants and stock purchase warrants.

As part of their incentive scheme for managers and staff members as well as to attract new talents, Project Owners may in the future issue or allot shares or new financial instruments giving access to their capital. This may constitute an additional risk of dilution, potentially significant for current and future Project Owners’ shareholders.

Similarly, the use of additional funds in via issuing new shares could expose current and future Project Owners’ shareholders to an additional risk of dilution.


Hazards related to the financial and economic crisis

Project Owners may be impacted by the effects of the economic crisis.

Project Owners operate in certain geographic areas where the balance of public finances, local currencies or inflation rates could be affected by the crisis, which might erode their products’ competitiveness locally compared to competitors operating in these currencies, or negatively affect Project Owners’ margins in such areas when invoicing in local currency or adversely impact on credit repayments from public or private business partners.

Moreover, in certain geographic areas, patients self-finance the purchase of their drugs in the absence of organized social security systems, and could therefore see their own financial resources reduced because of the financial crisis. Finally, in countries providing public or private social insurance for health expenditures, the impact of the financial crisis could lead payers to increase pressure on drug prices, to increase financial contribution from patients or to become more selective on reimbursement criteria. These risks could altogether affect Project Owners’ future ability to achieve their financial objectives.



Risks related to the use of information systems

Project Owners may be the target of cyber-attacks.

To preserve the security of their information systems and protect their users, Project Owners have formalized rules governing use of such systems (IT charter, internal control procedures) aimed at defining the main precautions and usage recommendations that any user should observe.

However, Project Owners cannot guarantee that users comply with these rules nor that they are sufficient to avoid risks of computer attacks, loss of sensitive data, business discontinuity, or to preserve Project Owners’ liability. Such risks may, if they occur, adversely impact Project Owners’ business, financial condition, results, reputation, growth as well as return on investment related to their R&D funding.


Risk of industrial espionage

Project Owners may be the victims of industrial espionage.

Given their highly technological and innovative business as well as advanced research and development projects which may confer a competitive edge on the market, Project Owners are exposed to the risk of industrial espionage.

Disclosure or theft of their scientific findings would deprive Project Owners from potential revenue and affect their business.

If it were to occur, such a situation would likely adversely impact Project Owners’ business, financial condition, results, growth as well as return on investment related to their R&D funding.


Use of hazardous materials

Project Owners may use hazardous materials.

Project Owners’ activity may involve storage, handling, use and controlled processing of hazardous materials (including radioactive substances), toxins, as well as chemical and biological agents. Both environmental risks relating to environmental contamination and health safety risks (i.e. occupational diseases) relating to manipulation of active or toxic substances by Project Owners’ employees might therefore exist during R&D and manufacturing processes. Such risks would also exist for those whom the Project Owners work with. Any complaint regarding handling, storage or improper processing of these materials could prove costly.

Although Project Owners believe that the safety dispositions they take for handling and processing various materials used in their activities conform to regulatory standards and enable their employees and sub-contractors to operate in safe working conditions, risk of accidental contamination or diseases related to handling of hazardous materials cannot be eliminated completely. In the event of an accident, Project Owners could be held accountable for any resulting damages and their liability may exceed their insurance threshold or may even not be covered by their insurance.


Dependence on manufacturing processes

Project Owners may face an interruption of production.

Project Owners may depend on their internally-developed production processes or on those made available by a sub-contractor to manufacture their products. Project Owners will probably have no control over safeguards implemented currently by their sub-contractors.

Any interruption of manufacturing processes could adversely impact Project Owners’ business, financial condition, results as well as return on investment related to their R&D funding.


Risk analysis of the project and Project Owners

The occurrence of one or more of the above-mentioned potential risks and hazards could adversely impact Project Owners’ business, prospects, financial condition, results, growth, return on investment related to their R&D funding, project success and, thereby, potential royalties for their subscribers.

All these potential risks are reviewed during the audit phase prior to starting fundraising for the Project, such that where appropriate, specific risks are reported in the documentation made available to potential subscribers on the My Pharma Company platform.

Project Owners introduced to potential subscribers by My Pharma Company confirm that none of the aforementioned risks have arisen or are about to arise in a predictable future, and that they have taken all reasonable measures to prevent such risks, ensure their detection, limit their impact and efficiently resolve these where appropriate.


Risks and Opportunities

« A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

Winston Churchill



My Pharma Company would like to thank Erytech Pharma and Nanobiotix for allowing us to compile risk factors present in their Initial Public Offering prospectus.




Preclinical Trial / Study :Before being administered to healthy volunteers or to patients, any new treatment or diagnostic tool developed for marketing purposes in humans must be evaluated preclinically. Set of in vitro (on cells or molecules) or in vivo testing procedures.

Tests on animals : Animal experimentation is a regulatory requirement, alternative methods are increasingly used. It is a tightly regulated activity, animal experimentation can be performed only by qualified personnel approved by competent authorities to handle animals. These animals must be kept on premises approved by local Veterinary Services. Since February 1st, 2013 the law requires that such studies are submitted for approval to an ethics committee for animal experimentation.

Clinical Trial / Study :research conducted on humans to improve knowledge about drugs, diseases, health procedures or treatment protocols. These are generally divided into different phases.

  • Phase I : first administration of the drug in humans. These trials are not generally aimed at testing the drug’s effectiveness, but rather at assessing its tolerance, action on human metabolism, pharmacokinetics, dosage and side effects. Phase I is generally conducted on healthy volunteers. Low doses are administered to begin with, and then gradually increased to determine the maximum tolerable dose for the drug. For some highly toxic substances (cancer), patients may be the first human subjects.
  • Phase II :focuses on a limited number of participants and evaluates the effectiveness of a new drug, its dosage and pharmacodynamics.
  • Phase III or pivotal trial : involves a larger number of patients and evaluates the effectiveness of a new treatment versus a placebo or gold-standard.

Clinical evaluation of medical device :clinical trials are almost unavoidable for potentially risky devices. They are compulsory for new and highly innovative devices (for which no appropriate benchmark exists).

CE marking of medical device :To access the European market, all medical devices (MD) must conform to European Directive requirements. The European Directive describes the requirements for safety and performance, as well as terms that manufacturers must conform to for marketing purposes. MDs fall into four risk categories (Class I, IIa, IIb, III) according to rules set by the Directive and to other hazard criteria. Irrespective of risk level, safety and performance requirements are the same for all categories. The risk category determines marketing modalities, which become more comprehensive as risk level increases. With the exception of Class I MDs, all MDs must be granted a CE certificate issued by an accredited third party (notified body).

Medical devices :health products, including software, claiming usage for medical purposes and whose principal intended mode of action is not obtained by pharmacological, immunological or metabolic means – which would otherwise make the product a drug (Article R5211-2 of the Code of Public Health).

These are aimed at :

  • diagnosis, prevention, monitoring, treatment or alleviation of a disease;
  • diagnosis, prevention, monitoring, treatment, alleviation or compensation for an injury or a handicap;
  • the study, replacement or modification of the anatomy or of a physiological process.

the study, replacement or modification of the anatomy or of a physiological process.

Medical devices other than active implantable medical devices are divided into four categories called class I, class II, class II and class III b (Article R5211-7 of the Code of Public Health), depending on risk level.

Classe I (low risk level) includes :

  • non-invasive devices
  • reusable surgical instruments
  • devices in contact with injured skin surfaces and used as a mechanical barrier or compressive material or to absorb exudates

Examples of Class I MDs : wheelchairs, compression bandages, scalpels, etc.

Classe IIa (medium risk level) includes :

  • diagnostic tools
  • devices intended for channeling or storing blood, fluids or tissues
  • invasive surgical devices

Examples of Class IIa MDs : contact lenses, skin staples, dental crowns, hearing aid devices, devices for long-term maintenance of tissues or cells, ultrasound scanners, etc.

Classe IIb (potentially elevated risk level) includes:

  • long-term surgical implants
  • long-term surgical implants
  • active medical devices intended to control or monitor the administration in the patient's body of a biological fluid or potentially hazardous substance

Examples of Class IIb MDs : haemodialysers, infusion pumps, condoms, internal sutures, radiotherapy systems, etc.

classe III (potentially very high risk level) includes :

  • devices in contact with central nervous system, heart and blood circulation
  • devices incorporating a substance considered as a drug when used separately
  • long-term or biodegradable surgical implants
  • devices incorporating products of animal origin

Examples of Class III MDs : active coronary stent, hip prosthesis, etc.

Drugs : The concept of drug is precisely defined in France by Article L5111-1 of the code of public health : "a drug qualifies as any substance or composition presented as having curative or preventive properties on human and animal diseases, as well as any substance or composition which can be used in humans or animals or which may be administered to them in order to establish a medical diagnosis or to restore, correct or modify their physiological functions via a pharmacological, immunological or metabolic mode of action. In particular, dietary products made of chemical or biological substances not constituting food by themselves, but whose presence confers to such products special therapeutic properties or test meal properties are considered as drugs. Products used for the disinfection of premises and for prosthetic dentistry purposes are not considered as drugs. Where, with regard to all of its characteristics, a product might meet both the definition of drug as in the first paragraph and of the other categories of products covered applicable laws, it is, if in doubt, considered as a drug."

MA : Marketing Authorization It is only after successfully going through the 3 clinical phases aforementioned that a drug candidate might be granted commercialization approval from competent authorities : European Medicines Agency (EMA) in Europe or Food and Drug Administration (FDA) in the US.

510K : The 510 (k) procedure is a North American regulatory disposition granting access to the market for all class I, II and III medical devices (North American classification) as long as applicants are able to demonstrate their substantial equivalence with devices already commercialized ("predicate devices") on the north American territory.

PMA : Pre-Market Authorization is an approval scheme from the Food and Drug Administration required to access the US market. It applies to class III medical devices in the European classification. The PMA procedure requires formal approval from the FDA concerning the safety and effectiveness of the medical device based on examination of scientific and rational data (clinical investigation) submitted.