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Item 1A. Risk Factors

2023-02-16 compared with 2022-02-16 · 256 added, 174 removed, 402 unchanged (52% of the section changed)

You should consider carefully the risks described below in addition to the financial and other information contained in this Annual Report, including the matters addressed under the caption “Cautionary Note Concerning Forward-Looking Statements.” If any events described by the following risks actually occur, they could materially adversely affect our business, financial condition, cash flows or results of operations.

You should consider carefully the risks described below in addition to the financial and other information contained in this Annual Report, including our financial statements and related notes hereto and the matters addressed under the caption “Cautionary Note Concerning Forward-Looking Statements,” and in our other public filings with the SEC.

If any events described by the following risks actually occur, they could materially adversely affect our business, financial condition, cash flows or results of operations.

This could cause the market price of our ordinary shares to decline.

Risks Related to the Potential Separation of Our Oncology Business

The potential separation of our neuroscience and oncology businesses, including a potential separation of our oncology business into an independent, publicly-traded company, is subject to various risks and uncertainties and may not be completed on the timeline currently contemplated or at all, and will involve significant time, effort and expense, which could disrupt or adversely affect our business and our financial condition, results of operations and cash flows.

In November 2022, we announced our intent, as approved by our board of directors, to explore a separation of our neuroscience business and oncology business.

We are exploring a separation of the oncology business into an independent, publicly-traded company (referred to in this Annual Report as “Oncology Co.”) as part of an ongoing review of strategic alternatives.

Our business may face significant risks and uncertainties as a result of the exploration and/or execution of the potential separation, including, without limitation:

the diversion of management’s attention from operating our neuroscience and oncology businesses and the overall disruption of, and impact on, our businesses;

potential difficulty in maintaining employee morale and retaining and/or recruiting key management and other employees;

potential difficulty in separating our oncology business from our neuroscience business, including allocation of operations, services, products and personnel;

difficulty and/or delays in obtaining regulatory approvals related to the potential separation of the businesses, including any approvals needed to effect the separation and/or those related to ongoing clinical trials of our oncology products;

the need to obtain third-party consents related to the potential separation of the businesses, which may be difficult to obtain and/or cause delay in our intended timelines for the separation or disrupt third-party relationships that are important to our business;

foreseen and unforeseen dis-synergy costs, costs of restructuring transactions (including potential taxes) and other significant costs and expenses, including costs related to the capitalization of Oncology Co.;

potential negative reactions from the financial markets, including reactions related to the proposed structure or other details of the potential separation or any potential delay or failure in completing the potential separation.

No assurance can be given as to whether we will be successful in managing these or any other significant risks that we may encounter in the potential separation of our businesses, and any of these risks could have a material adverse effect on our businesses, financial condition, results of operations, cash flows and/or the market price of our ordinary shares.

We have already incurred certain expenses, and expect to incur significant additional expenses, in connection with the exploration and potential consummation of a separation, and such costs and expenses may be greater than we anticipate, and may not yield the benefits that we or others may anticipate.

Adverse market conditions or tax consequences, litigation or other legal proceedings that may arise as a result of the potential separation, or delays or difficulties effecting the potential separation, including possible delays in obtaining any necessary stock exchange, regulatory or other approval or the failure to obtain any such approvals, possible delays in obtaining any required tax opinions or rulings or the failure to obtain any such tax opinions or rulings, changes in relevant law and other challenges, could delay, prevent or otherwise adversely impact the anticipated benefits of the potential separation.

No assurance can be given as to whether we will complete any separation on our anticipated timeline or at all.

Any of the foregoing may result in our not achieving the operational, financial, strategic and other benefits we anticipate realizing as a result of the potential separation, and in each case, our business, results of operations and financial condition and/or the market price of our ordinary shares could be adversely affected.

We may fail to realize some or all of the anticipated benefits of the potential separation of our neuroscience and oncology businesses and the market price of our ordinary shares may fluctuate significantly in connection with the potential separation.

Even if a separation of our neuroscience and oncology businesses is completed, the anticipated operational, financial, strategic and other benefits of a potential separation may not be achieved.

These anticipated benefits are based on a number of assumptions and uncertainties, which may prove to be incorrect or incomplete.

Furthermore, if separated, the two independent businesses will be smaller and less diversified than the combined company, with a narrower business focus, and may be more vulnerable to changing market conditions.

In addition, the market price of our ordinary shares may experience volatility around the time of announcements of plans for the potential separation, consummation of the potential separation and thereafter.

We also cannot predict the effect of a completed separation on the market price of our ordinary shares, which, following a separation, may be less than, equal to or greater than the market price of our ordinary shares prior to the separation.

Further, the combined value of our ordinary shares and those of Oncology Co.

may not be equal to or greater than what the value of our ordinary shares would have been had the separation not occurred.

The combined value of the ordinary shares of the two companies could be lower than anticipated for a variety of reasons, including, but not limited to, a failure of Oncology Co.

to operate and compete effectively as an independent company.

We continue to assess the tax consequences of potential structures for the separation of our oncology business from our neuroscience business, including a potential separation of the oncology business into an independent, publicly-traded company.

If such a separation does not qualify as a transaction that is generally tax-free for U.S.

federal and Irish tax purposes, we and/or our shareholders could be subject to significant tax liabilities.

In connection with the potential separation, we may seek a private letter ruling from the IRS (the “IRS Ruling”) and/or an opinion from our U.S.

tax advisor (the “U.S.

Tax Opinion”) regarding U.S.

federal and state income tax consequences of the separation, including that, among other things, the separation would generally qualify as tax-free for U.S.

federal income tax purposes under Sections 368(a)(1)(D) and 355 of the U.S.

Internal Revenue Code of 1986, as amended (the “Code”).

The IRS Ruling and/or the U.S.

Tax Opinion would be based on and rely on, among other things, certain facts, assumptions, representations, and undertakings from us and Oncology Co., including those relating to past and future conduct of the companies’ respective business operations and other matters .

If any of these facts, assumptions, representations, statements or undertakings are, or become, inaccurate or incomplete, or if we or Oncology Co.

breach any of our respective covenants in the separation documents, the IRS Ruling and/or the U.S.

Tax Opinion may be invalid and the conclusions reached therein could be jeopardized.

Notwithstanding a U.S.

Tax Opinion or IRS Ruling, the U.S.

Internal Revenue Service, or the IRS, could determine that a distribution or any related transaction is taxable for U.S.

federal income tax purposes if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the U.S.

Tax Opinion will not be binding on the IRS or the courts.

Accordingly, the IRS or the courts may challenge the conclusions stated in the U.S.

Tax Opinion and such challenge could prevail.

If the potential separation transaction is ultimately determined to be taxable, we and/or our shareholders that are subject to U.S.

federal income tax could incur significant tax liabilities.

Furthermore, in connection with the potential separation, we may seek an opinion from our Irish tax advisor (the “Irish Tax Opinion”) regarding the Irish tax consequences of the separation.

The Irish Tax Opinion would be based on and rely on, among other things, certain facts, assumptions, representations, and undertakings from us, including those relating to past and future conduct of our business operations and other matters.

If any of these facts, assumptions, representations, statements or undertakings are, or become, inaccurate or incomplete the Irish Tax Opinion may be invalid and the conclusions reached therein could be jeopardized.

The Irish Tax Opinion will not be binding on the Irish Tax Authority or the Irish courts.

Accordingly, the Irish Tax Authority or the Irish courts may challenge the conclusions stated in the Irish Tax Opinion and such challenge could prevail.

In such an event, we and/or our shareholders could incur significant tax liabilities.

Risks Related to Our Business and Our Industry

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Outbreaks of contagious diseases and other adverse public health developments affecting us and/or the third parties on which we rely, could have a material and adverse effect on our business, financial condition and results of operations .

The COVID-19 pandemic has impacted, and is continuing to impact, many aspects of society, including the operation of healthcare systems, global travel, supply and labor markets and other business and economic activity worldwide.

The COVID-19 pandemic has impacted, and may continue to impact, many aspects of society, including the operation of healthcare systems, global travel, supply and labor markets and other business and economic activity worldwide.

Ireland, all U.S.

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The COVID-19 pandemic has had, and may continue to have, an adverse impact on our financial condition and results of operations.

For example, commercial sales of the medicines from which we derive revenue— including injectable medications administered by healthcare professionals—have been, and we expect will continue to be, adversely impacted as a result of developments that have transpired, and may continue to transpire, related to this pandemic, including travel restrictions, quarantine, testing and/or vaccine mandates and other protocols, and labor shortages, many of which have contributed to limited access to, or reduced willingness to access, healthcare providers and locations where injectable medications may be administered.

Further, this pandemic and measures to mitigate the spread of COVID-19 have had, and may continue to have, an adverse effect on global economic conditions, which could have an adverse effect on our business and financial condition, including the demand for, and ability of patients to access, our and our licensees’ medicines, or our ability to obtain financing, if needed, on favorable terms or at all.

For example, commercial sales of the medicines from which we derive revenue— including injectable medications administered by healthcare professionals—have been, and we expect may continue to be, adversely impacted as a result of COVID-19-related restrictions, labor shortages and other developments that have transpired, and may continue to transpire, many of which have contributed to limited access to, or reduced willingness to access, healthcare providers and locations where injectable medications may be administered.

Further, this pandemic has had, and may continue to have, an adverse effect on global economic conditions, which could have an adverse effect on the demand for, and ability of patients to access, our and our licensees’ medicines, reimbursement for our products and for services related to the use of our products , or our ability to obtain financing, if needed, on favorable terms or at all.

The COVID-19 pandemic has caused, and may continue to cause, varying degrees of disruption to our employees, our communities and our business operations.

While we have continued to operate our manufacturing facilities and to supply our medicines without interruption throughout the pandemic, any prolonged labor or supply chain shortages at our manufacturing facilities could impact our ability to manufacture our products and the third-party products from which we receive revenue in a timely matter or at all.

While we have continued to operate our manufacturing facilities and to supply our medicines without interruption throughout the pandemic, we have, at times during the pandemic, experienced labor or supply chain delays or disruptions at our manufacturing facilities, and may continue to experience such delays or disruptions while the pandemic persists, which could impact our ability to manufacture our products and the third-party products from which we receive revenue in a timely matter or at all.

In addition, while we have continued to conduct our R&D activities, including our ongoing clinical trials, the COVID-19 pandemic has, at times, impacted the timelines of certain of our early-stage discovery efforts and clinical trials, and may continue to impact such timelines while the pandemic persists.

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The COVID-19 pandemic has, to varying degrees, disrupted the business operations of the third parties on which we rely, including our suppliers, packagers, distributors, contract research organizations, customers, clinical site investigators, community advocacy partners, and others, and may continue to do so for so long as the pandemic and its impacts persist.

For example, the third-party sites and investigators involved in our clinical trials have experienced, and may continue to experience, interruptions which have impacted, and may continue to impact, the conduct of our clinical trials and our ability to complete them in a timely manner or at all.

For example, the third-party sites and investigators involved in our clinical trials have experienced, and may continue to experience, interruptions which have impacted, and may continue to impact, the conduct of our clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites, and monitoring of data, and our ability to complete them in a timely manner or at all.

If our clinical programs are significantly delayed as a result of such impacts, there could be adverse effects on our expected timelines for regulatory review and potential approval of our product candidates.

Any prolonged material disruption to these or other third parties on which we rely could negatively impact our ability to conduct business in the manner and on the timelines presently planned, which could have a material adverse impact on our business, results of operations and financial condition.

For example, travel restrictions, social distancing, quarantine protocols and other protective measures may impact the timelines and manner in which the FDA, the HPRA and other regulatory agencies conduct regulatory activities, which may, in turn, negatively impact expected timelines for regulatory review and approval of our product candidates, which could have an adverse effect on our business and the market price for our ordinary shares.

The degree to which the ongoing COVID-19 pandemic may continue to impact our employees, business, financial condition and results of operations will depend on the ultimate severity and duration of the pandemic and the manner in which it continues to evolve, including the emergence, prevalence and severity of new COVID-19 variants, and future developments in response thereto, which are highly uncertain and cannot be predicted as of the date of this Annual Report and which may include, among other things, governmental, business or other actions that have been, are being or will be taken in response to this pandemic, such as restrictions on travel and mobility, business closures and operating restrictions, the imposition of vaccine and masking mandates and/or mandatory testing protocols.

We are unable to predict the impacts of the pandemic and of actions taken in response to the pandemic, on our employees, including with regard to their health, safety, wellbeing and job performance, or on the labor market and our ability to attract and retain employees;

impacts of the pandemic on the vendors or distribution channels in our supply chain and on our ability to continue to manufacture and supply our products;

impacts of the pandemic on the conduct of our clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites, and monitoring of data;

impacts of the pandemic on healthcare systems that serve people living with opioid dependence, alcohol dependence, schizophrenia and bipolar I disorder;

impacts of the pandemic on the regulatory agencies with which we interact in the development, review, approval and commercialization of our medicines;

impacts of the pandemic on reimbursement for our products, including our Medicaid rebate liability, and for services related to the use of our products;

and impacts of the pandemic on the U.S., Irish and global economies more broadly.

The COVID-19 pandemic has also impacted, and may continue to impact, the regulatory agencies with which we interact in the development, manufacture, regulatory review and commercialization of our medicines, including the FDA, the HPRA and other regulatory agencies, which may, in turn, negatively impact expected timelines for regulatory interactions related to, and/or review and approval of, our product candidates, which could have an adverse effect on our business and the market price of our ordinary shares.

The degree to which the ongoing COVID-19 pandemic may continue to impact our employees, business, financial condition and results of operations will depend on the ultimate severity and duration of the pandemic and the manner in which it continues to evolve, including the emergence, prevalence and severity of new COVID-19 variants, and future developments in response thereto, including developments in the labor market and market practices related to remote work and our ability to attract and retain employees, which are highly uncertain and cannot be predicted as of the date of this Annual Report.

We receive substantial revenue from our key proprietary products and our success depends on our ability to successfully manufacture and commercialize such products.

Sales of our proprietary products comprise an increasingly significant portion of our revenues.

We developed and exclusively manufacture VIVITROL for the treatment of alcohol dependence and opioid dependence, ARISTADA for the treatment of schizophrenia, ARISTADA INITIO for initiation onto ARISTADA for the treatment of schizophrenia, and LYBALVI for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder, as a maintenance monotherapy or for the acute treatment of manic or mixed episodes, as monotherapy or an adjunct to lithium or valproate, and we exclusively commercialize these products in the U.S.

We developed and exclusively manufacture VIVITROL for the treatment of adults with alcohol dependence and opioid dependence, ARISTADA for the treatment of adults with schizophrenia, ARISTADA INITIO for initiation onto ARISTADA for the treatment of adults with schizophrenia, and LYBALVI for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder, and we exclusively commercialize these products in the U.S.

Our success depends in large part on our ability to continue to successfully manufacture and commercialize such products in the complex markets into which they are sold.

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Such disputes may delay related development programs, impact commercialization or manufacturing activities for the related products, impact the timing or amount of revenue that we receive in respect of such products, or result in expensive arbitration, litigation or other dispute resolution, which may not be resolved in our favor and may adversely impact our financial condition.

Further, certain of our license agreements may be terminated, with or without cause, or assigned in connection with a change in control, and we cannot guarantee that any of these relationships will continue or that our licensees will be able or willing to continue to perform their obligations, including development, commercialization or payment obligations, under such agreements.

Any significant negative developments relating to our relationships with our licensees or our collaborative arrangements could have a material adverse effect on our business, financial condition, cash flows and results of operations.

For example, in November 2021 we received notice of partial termination in the U.S.

of our license agreement with Janssen related to INVEGA SUSTENNA, INVEGA TRINZA, and INVEGA HAFYERA.

The basis for this termination is Janssen’s assertion that it does not utilize our NanoCrystal technology licensed under the license agreement.

We strongly disagree with Janssen’s position and are prepared to pursue all options at our disposal to enforce our contractual rights and address any unauthorized use of our intellectual property;

however, the announcement of Janssen’s partial termination and expectations regarding the loss of royalty revenues from U.S.

sales of such products in early 2022 resulting from such termination, caused the market price of our ordinary

shares to decline significantly, and any actual losses of royalty revenues that result from such termination, and/or prolonged discussions, dispute resolution efforts or commercial arbitration or litigation in respect of such royalty revenues, could have a material adverse effect on our business, financial condition, cash flows and results of operations .

For these and other reasons that may be outside of our control, our revenues from products sold by our licensees may fall below our expectations, the expectations of our licensees or those of our shareholders, which could have a material adverse effect on our results of operations and the market price of our ordinary shares.

Further, certain of our license agreements may be terminated, with or without cause, or assigned in connection with a change in control or other event, and we cannot guarantee that any of these relationships will continue or that our licensees will be able or willing to continue to perform their obligations, including development, commercialization or payment obligations, under such agreements.

For example, in November 2021 we received notice of partial termination of an exclusive license agreement with Janssen.

Under this license agreement, we provided Janssen with rights to, and know-how, training and technical assistance in respect of, our small particle pharmaceutical compound technology, known as NanoCrystal technology, which was used to develop INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, and INVEGA HAFYERA/BYANNLI.

When the partial termination became effective in February 2022, Janssen ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA in the U.S.

The announcement of Janssen’s partial termination, expectations regarding the loss of royalty revenues from U.S.

sales of such products resulting from such termination, and actual losses of royalty revenues that have resulted from such termination, caused the market price of our ordinary shares to decline significantly.

In April 2022, we commenced binding arbitration proceedings related to, among other things, Janssen’s partial termination of this license agreement and Janssen’s royalty and other obligations under the agreement.

On December 21, 2022, we received an Interim Award in these proceedings from the Tribunal, in which the Tribunal agreed with our position that, while Janssen may terminate the agreement, it may not continue to sell Products (as defined in the agreement) developed during the term of the agreement without paying royalties pursuant to the term of the agreement.

This award is not yet final.

We will engage with Janssen and the Tribunal in additional proceedings prior to the Tribunal’s issuance of a final award and cannot be certain of the outcome of the final award or the impact that such final award may have on our business, financial condition, cash flows and results of operations.

For these and other reasons that may be outside of our control, our revenues from products sold by our licensees, and related commercial milestone payments, may fall below our expectations, the expectations of our licensees or those of our shareholders, which could have a material adverse effect on our results of operations and the market price of our ordinary shares.

We face competition in the biopharmaceutical industry.

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In addition, there are many companies developing generic versions of our products, or products with similar technologies to ours or for use in similar indications with whom we and our licensees compete, many of whom are larger and have significantly greater financial and other resources than we do.

Other smaller or earlier stage companies may also prove to be significant competitors, particularly through focused development programs and collaborative arrangements with large, established companies.

Some of the products being developed by our competitors are being designed to work differently than our products and may turn out to be safer or more effective than our products, which may render our products or technology platforms obsolete or noncompetitive.

Other smaller or earlier stage companies may

also prove to be significant competitors, particularly through focused development programs and collaborative arrangements with large, established companies.

Some of t he products being developed by our competitors are being designed to work differently than our products and may turn out to be safer or more effective than our products , which may render our products or technology platforms obsolete or noncompetitive .

For a detailed discussion of the competition that we face with respect to our current marketed products, technology platforms and product indications, please see the section entitled “ Competition ” in “Item 1—Business” in this Annual Report.

If we are unable to compete successfully in this highly competitive biopharmaceutical industry, our business, financial condition, cash flows and results of operations could be materially adversely affected.

Our revenues may decrease or grow at a slower than expected rate due to many factors.

If we are unable to compete successfully in th is highly competitive biopharmaceutical industry, our business, financial condition, cash flows and results of operations could be materially adversely affected.

Our revenues from sales of our products may decrease or grow at a slower than expected rate due to many factors.

We cannot be assured that our products will be, or will continue to be, accepted in the U.S.

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the unfavorable outcome of investigations, arbitrations, litigation or other legal proceedings, including government requests for information regarding VIVITROL, securities litigation, IP litigation, including so-called “Paragraph IV” litigation relating to VIVITROL and other products from which we receive revenue, litigation or other proceedings before the U.S.

Patent and Trademark Office’s (the “USPTO”) Patent Trial and Appeal Board (the “PTAB”) or its equivalent in other jurisdictions outside of the U.S., including opposition proceedings in the EU relating to RISPERDAL CONSTA and any other litigation or arbitration related to any of our products;

Patent and Trademark Office’s (the “USPTO”) Patent Trial and Appeal Board (the “PTAB”) or its equivalent in other jurisdictions outside of the U.S., including opposition proceedings in the EU and any other litigation or arbitration related to any of our products;

regulatory developments and actions related to the manufacture, commercialization or continued use of our products, including FDA actions such as the issuance of a REMS or warning letter, or conduct of an audit by the FDA or another regulatory authority in which a manufacturing or quality deficiency is identified;

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and global political changes and/or instability, and any related changes in applicable laws and regulations, that may impact resources and markets for our products;

the impact that the ongoing COVID-19 pandemic may have on the manufacture and commercialization of our products;

the impacts that the ongoing COVID-19 pandemic may have on the development, manufacture and commercialization of our products;

any other material adverse developments with respect to the commercialization of our products.

Revenues generated by sales of our products depend on the availability from third-party payers of reimbursement for our products and the extent of cost-sharing arrangements for patients (e.g., patient co-payment, co-insurance, deductible obligations) and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’ financial obligation to payers could result in decreased sales of our products and/or decreased revenues.

markets, sales of our products depend, in part, on the availability of reimbursement from third-party payers such as state and federal governments, including Medicare and Medicaid in the U.S.

Revenues generated by sales of our products depend, in part, on the availability from third-party payers of reimbursement for our products and the extent of cost-sharing arrangements for patients (e.g., patient co-payment, co-insurance, deductible obligations) and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’ financial obligation to payers could result in decreased sales of our products and/or decreased revenues.

markets, sales of our products depend, in part, on adequate coverage, pricing and reimbursement from third-party payers such as state and federal governments, including Medicare and Medicaid in the U.S.

and similar programs in other countries, managed care providers and private insurance plans.

Deterioration in the timeliness, certainty and amount of reimbursement for our products, the existence of barriers to coverage of our products (such as prior authorization, criteria for use or other requirements), increases in our financial obligation to payers, including government payers, limitations by healthcare providers on how much, or under what circumstances, they will prescribe or administer our products or unwillingness by patients to pay any required co-payments, or deductible amounts, could reduce the use of, and revenues generated from, our products and could have a material adverse effect on our business, financial condition, cash flows and results of operations.

In addition, when a new product is approved, the availability of government and private reimbursement for that product and coverage restrictions that may be imposed for such product, are uncertain, as is the amount for which that product will be reimbursed.

We cannot predict the availability or amount of reimbursement for, or the prevalence and extent of other access barriers to, our products.

In the U.S., federal and state legislatures, health agencies and third-party payers continue to focus on containing the cost of healthcare, including by comparing the effectiveness, benefits and costs of similar treatments.

Any adverse findings for our products from such comparisons may reduce the extent of reimbursement for our products.

Economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs, including but not limited to price control initiatives, discounts and other pricing-related actions.

In November 2021, the U.S.

House of Representatives passed the BBBA.

The BBBA includes several provisions that may impact our business, including provisions that create an out-of-pocket cap for seniors, impose new manufacturer financial liability (including in Medicare Part D), allow the U.S.

government to negotiate prices for some drugs covered under Medicare Part B and Part D, require inflation rebates to limit annual increases in drug prices in Medicare and private insurance, and repeal the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries.

While the BBBA has not yet been, and may not in its current form be, signed into law, such provisions, if enacted, could adversely impact our business and financial results.

Over the past several years, a number of states have enacted drug pricing transparency laws that require companies to report on drug price increases and justify how drug prices were set and we expect additional state drug pricing initiatives to be proposed and enacted in the future.

In addition, state Medicaid programs are increasingly requesting that manufacturers pay supplemental rebates and requiring prior authorization by the state program for use of any drug.

The availability of government and private reimbursement for our products and coverage restrictions that may be imposed for our products are uncertain, as is the amount for which our products will be reimbursed.

Pricing and reimbursement for our products may be adversely affected by a number of factors, including:

changes in, and implementation of, federal or state government regulations or private third-party payors’ reimbursement policies;

pressure by employers on private health insurance plans to reduce costs;

and consolidation and increasing assertiveness of payors seeking price discounts or rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value.

We cannot predict the availability, amount, or consistency of reimbursement for, or the prevalence and extent of other access barriers to, our products.

In the U.S., federal and state legislatures, health agencies and third-party payers continue to focus on containing the cost of healthcare.

In August 2022, the Inflation Reduction Act was signed into law.

The Inflation Reduction Act includes several provisions that will impact our business to varying degrees, including those that impose new manufacturer financial liability on all drugs in Medicare Part D beginning in 2025, allow the U.S.

government to negotiate prices for some drugs covered under Medicare Part D beginning in 2026 and Medicare Part B in 2028, and require companies to pay rebates to Medicare beginning in 2023 for drug prices that increase faster than inflation.

In addition, economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs, including but not limited to price control initiatives, discounts and other pricing-related actions.

State Medicaid programs are increasingly requesting that manufacturers pay supplemental rebates and are requiring prior authorization by the state program for use of any drug.

Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on the coverage of particular drugs.

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This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our products.

Furthermore, we may face uncertainties as a result of continued federal and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of PPACA, the outcome of existing litigation related to PPACA, and potential reforms and changes to government negotiation or regulation of drug pricing.

PPACA significantly expanded coverage of mental health and substance use disorders and provided federal parity protections to such coverage benefits.

If successful, such efforts and proposed legislation or other future federal or state legislative or administrative changes relating to healthcare reform and drug pricing could

adversely affect our business and financial results.

In addition, the outcome or settlement of litigation could impact the practices of healthcare providers and patients, and the policies and practices of third-party payers, including Medicare, Medicaid, managed care providers and private insurance plans, in a manner detrimental to our products, which in turn could materially and adversely affect our business and financial condition.

For example, one or more defendants in the opioid multi-district litigation has offered large volumes of generic buprenorphine free of charge to state plaintiffs as settlement compensation, which, if agreed to and approved, could negatively impact state reimbursement policies, healthcare provider practices, and patient access to alternative FDA-approved medications to generic buprenorphine, which includes VIVITROL, for the treatment of opioid dependence.

In Europe and many other countries, government-sponsored healthcare systems are the primary payers for healthcare expenditures, including payment for drugs and biologics.

We expect that countries may take actions to reduce expenditure on drugs and biologics, including mandatory price reductions, patient access restrictions, suspensions of price increases, increased mandatory discounts or rebates, preference for generic products, reduction in the amount of reimbursement and greater importation of drugs from lower-cost countries.

Any such cost-control measures would likely reduce our revenues.

In addition, certain countries set prices by reference to the prices in other countries where our products are marketed.

Thus, the inability to secure adequate prices in a particular country may not only limit the marketing of products within that country, but may also adversely affect the ability to obtain acceptable prices in other markets.

Furthermore, we may face uncertainties as a result of efforts to repeal, substantially modify or invalidate some or all of the provisions of the PPACA, whether by legislative means or through litigation, and further potential reforms to government negotiation or regulation of drug pricing.

The PPACA significantly expanded coverage of mental health and substance use disorders and provided federal parity protections to such coverage benefits.

If successful, such efforts and proposed legislation or other future federal or state legislative or administrative changes relating to healthcare reform and drug pricing could adversely affect our business and financial results.

Additional discounts, rebates, coverage or plan changes, restrictions or exclusions as described above could have a material adverse effect on sales of our affected products.

Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenue and results of operations.

Many payors continue to adopt benefit plan changes that shift a greater portion of prescription costs to patients, including more limited benefit plan designs, higher patient co-pay or co-insurance obligations and limitations on patients' use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs).

Significant consolidation in the health insurance industry has resulted in a few large insurers and pharmacy benefit managers exerting greater pressure in pricing and usage negotiations with drug manufacturers, significantly increasing discounts and rebates required of manufacturers and limiting patient access and usage.

In addition, pharmacy benefit managers have combined with specialty and mail order pharmacies and provider groups.

Further consolidation among insurers, pharmacy benefit managers, other entities in the pharmaceutical supply chain and other payors would increase the negotiating leverage such entities have over us and other drug manufacturers.

In the U.S., to help patients afford our approved products, we may utilize programs to assist them, including patient assistance programs and co-pay programs for eligible patients.

Government enforcement agencies have shown increased interest in pharmaceutical companies' product and patient assistance programs, including reimbursement support services, and a number of investigations into these programs have resulted in significant civil and criminal settlements.

Our co-pay programs could become the target of similar insurer actions.

In addition, in November 2013, CMS issued guidance to the issuers of qualified health plans sold through the PPACA’s marketplaces encouraging such plans to reject patient cost-sharing support from third parties and indicating that

CMS intends to monitor the provision of such support and may take regulatory action to limit it in the future.

CMS subsequently issued a rule requiring individual market qualified health plans to accept third-party premium and cost-sharing payments from certain government-related entities.

In September 2014, the O ffice of I nspector G eneral of the U.S.

D epartment of H ealth and H uman S ervices issued a Special Advisory Bulletin warning manufacturers that they may be subject to sanctions under the federal anti-kickback statute and/or civil monetary penalty laws if they do not take appropriate steps to exclude Part D beneficiaries from using co-pay programs .

It is possible that changes in insurer policies regarding co-pay programs and/or the introduction and enactment of new legislation or regulatory action could restrict or otherwise negatively affect these patient support programs, which could result in fewer patients using affected products, and therefore could have a material adverse effect on our sales, business, and financial condition.

Clinical trials for our products are expensive, may take several years to complete, and their outcomes are uncertain.

In order to obtain regulatory approvals for the commercial sale of any products, we or our licensees must demonstrate, through preclinical testing and clinical trials, that our products are safe and effective for use in humans.

In order to obtain regulatory approvals for the commercial sale of any product, we or our licensees must demonstrate, through preclinical testing and clinical trials, that such product is safe and effective for use in humans.

Designing, conducting and completing a clinical development program is often a lengthy, time-consuming and expensive process.

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an inability to manufacture or obtain sufficient quantities of materials used for clinical trials;

unforeseen governmental or regulatory issues or concerns, including those of the FDA, DEA and other regulatory agencies;

unforeseen governmental or regulatory issues or concerns, including those of the FDA and other regulatory agencies;

impacts of the potential separation of our neuroscience and oncology businesses;

global instability, including instability relating to political events or a global pandemic or other contagious disease, such as COVID-19, in or near the countries in which we conduct our clinical trials.

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A number of products have shown promising results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data in later clinical trials to obtain necessary regulatory approvals.

If a product fails to demonstrate safety and efficacy in clinical trials, or if third parties fail to conduct clinical trials in accordance with their obligations, the development, approval and commercialization of our products may be delayed or prevented, and such events could materially adversely affect our business, financial condition, cash flows and results of operations.

If a product fails to demonstrate safety and efficacy in clinical trials, or if we and/or third parties fail to manage or conduct clinical trials in a timely manner or in accordance with study protocols or obligations, the development, approval and commercialization of our products may be delayed or prevented, and such events could materially adversely affect our business, financial condition, cash flows and results of operations.

Preliminary, topline or interim data from our clinical trials that we may announce, publish or report from time to time may change as more patient data become available or based on subsequent audit and verification procedures, and may not be indicative of final data from such trials, data from future trials or real-world results.

From time to time, we may announce, publish or report preliminary, topline or interim data from our clinical trials, including those we are conducting in oncology.

Such data are subject to the risk that one or more of the clinical outcomes may materially change as patients continue progressing through the study (for example, in oncology studies, a patient may progress from a complete or partial response to progressive disease), as patient enrollment continues and/or as more patient data become available, and such data may not be indicative of final data from such trials, data from future trials or real-world results.

be indicative of final data from such trials , data from future trials or real-world results .

In addition, such data may remain subject to audit confirmation and verification procedures that may result in the final data being materially different from the preliminary, topline or interim data disclosed.

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adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that a program be terminated or placed on clinical hold, even if other studies or trials relating to the program are successful.

In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our company or our products, including those relating to COVID-19 or other political or economic conditions, could cause delays to the regulatory approval process for our products.

In June 2020, the FDA noted that it was continuing to ensure timely review of applications for medical products during the COVID-19 pandemic in line with its user fee performance goals;

however, if a prolonged U.S.

government shutdown occurs as a result of political or economic conditions or if the COVID-19 pandemic increases in severity or impact, the FDA’s ability to timely review and process regulatory submissions could be significantly impacted.

In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our company or our products, including those relating to COVID-19, a prolonged U.S.

government shutdown, or other political or economic conditions, could cause delays to the regulatory approval process for our products.

Any failure to obtain, or delay in obtaining, regulatory approval for our products will prevent or delay their commercialization and could have a material adverse effect on our business, financial condition, cash flows and results of operations.

In addition, any failure to obtain, or delay in obtaining, approval for our products could have a material impact on our shareholders’ confidence in the

strength of our development capabilities and/or our ability to generate significant revenue from our development program and could result in a significant decline in our share price.

In addition, any failure to obtain, or delay in obtaining, approval for our products could have a material impact on our shareholders’ confidence in the strength of our development capabilities and/or our ability to generate significant revenue from our development programs and could result in a significant decline in our share price.

The FDA or other regulatory agencies may impose limitations or post-approval requirements on approvals for our products.

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Our business could be seriously harmed if we do not complete these post-approval requirements and, as a result, the FDA or other regulatory agencies require us to change the label for such product, or if such post-approval requirements significantly restrict the marketing, sale or use of such product.

Further, if a product for which we obtain regulatory approval is a controlled substance, it will not become commercially available until after the DEA provides its final schedule designation for the product, which may take longer and may be more restrictive than we expect or may change after its initial designation.

In addition, a final designation that is more restrictive than we expect could adversely affect our ability to commercialize such product and could materially adversely affect our business, financial condition, cash flows and results of operations.

In addition, legislation and regulatory policies relating to post-approval requirements and restrictions on promotional activities for pharmaceutical products, or FDA, DEA or other regulatory agency regulations, guidance or interpretations with respect to such legislation or regulatory policy, may change, which may impact the development and commercialization of our products.

In addition, legislation and regulatory policies relating to post-approval requirements and restrictions on promotional activities for pharmaceutical products, or FDA or other regulatory agency regulations, guidance or interpretations with respect to such legislation or regulatory policy may change, which may impact the development and commercialization of our products .

We are subject to risks related to the manufacture of our products.

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failures relating to materials, manufacturing equipment or processes, quality deviations or safety issues, vendor error, operator error, labor shortages or disputes, utility or transportation disruptions, or physical or electronic security breaches;

site-specific incidents (such as fires), environmental incidents, natural disasters and other severe weather events, including those that may occur as a result of climate change , or global disruptions such as the current global pandemic;

site-specific incidents (such as fires), environmental incidents, natural disasters and other severe weather events, including those that may occur as a result of climate change, or global disruptions such as the current global pandemic and the ongoing war in Ukraine;

and many other factors.

Any such problems with manufacturing processes, whether at our facilities or those of our licensees or other third parties that manufacture or package products or components of products on our behalf, could result in product defects or shortages, manufacturing failures or products not being manufactured to their applicable specifications, which could require us to delay shipment of products or recall products previously shipped, or could impair our ability to receive regulatory approval for a product, commercially launch a product, expand into new markets or supply products in existing markets.

Any such problems with manufacturing processes, whether at our facilities or those of our licensees or other third parties that manufacture or package products or components of products on our behalf, could result in product defects or shortages, manufacturing failures or products not being manufactured to their applicable specifications, which could require us to delay shipment of products or recall products previously shipped, or could impair our or our licensees’ ability to receive regulatory approval for a product, commercially launch a product, expand into new markets or supply products in existing markets.

We may not be able to resolve any such issues in a timely manner, or at all, which could result in declines in sales and reputational damage as well as significant remediation costs to address any issues that arise.

We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of RISPERDAL CONSTA, VIVITROL, ARISTADA, ARISTADA INITIO and LYBALVI and on our manufacturing facility in Athlone, Ireland for the manufacture of AMPYRA, FAMPYRA, VUMERITY, other products using our NanoCrystal or OCR technologies and certain of our other products in development.

We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of RISPERDAL CONSTA, VIVITROL, ARISTADA, ARISTADA INITIO and LYBALVI and on our manufacturing facility in Athlone, Ireland for the manufacture of FAMPYRA, VUMERITY, other products using our NanoCrystal or OCR technologies and certain of our other products in development.

Due to regulatory and technical requirements, we have limited ability to shift production among our facilities or to outsource any portions of our manufacturing to third parties in the event of an interruption in manufacturing or demand for manufacturing that exceeds our capacity at the applicable facility.

Any need to shift production among our facilities or transition our manufacturing processes, or portions thereof, to a third party, whether due to an interruption in our manufacturing or to demand for a product that exceeds our manufacturing capacity, could take a significant amount of time and money, may not be successful, and could cause significant delay in our ability to supply product.

Any interruption in supply, whether resulting from issues with equipment, materials, personnel, manufacturing processes, or internal or external quality audits or reviews, could result in delays in meeting our contractual obligations and could damage our relationships with our licensees, including the loss of manufacturing and supply rights and/or revenues.

Any interruption or delay in supply, whether resulting from issues with equipment, materials, personnel, manufacturing processes, or internal or external quality audits or reviews, could result in delays in meeting our contractual obligations and could damage our reputation and relationships with our licensees, including the loss of manufacturing and supply rights and/or revenues.

Our manufacturing facilities also require specialized personnel and are expensive to operate and maintain.

Any interruption in manufacturing, delay in a regulatory approval or commercial launch, or recall or suspension of sales of products manufactured in our facilities, may cause operating losses as we continue to operate these facilities and retain the required specialized personnel.

In addition, any significant personnel shortages at our manufacturing facilities, whether temporary or prolonged, including shortages resulting from impacts of the COVID-19 pandemic and related mandates, testing protocols or restrictions, or shortages related to the labor market more broadly, may cause significant interruptions to our manufacturing facilities and to our supply of products.

In addition, any significant personnel shortages at our manufacturing facilities, whether temporary or prolonged, including shortages resulting from impacts of the COVID-19 pandemic or related to the labor market more broadly, may cause significant interruptions to our manufacturing facilities and to our supply of products.

We are also dependent in certain cases on third parties who manufacture or distribute certain products from which we receive revenue.

Supply or manufacturing issues related to such products could materially and adversely affect sales of such products, and in

turn our revenue from such products .

Supply or manufacturing issues related to such products could materially and adversely affect sales of such products, and in turn our revenue from such products.

We rely on third parties to provide goods and services in connection with the manufacture and distribution of the products we manufacture.

We rely on third parties for the timely supply of goods and services that play a role in our manufacturing activities, including, among others, specified raw materials, equipment, contract manufacturing, formulation and packaging services, storage and product distribution services, customer service activities and product returns processing, and some of these goods and services for our products are currently only available from a single source or a limited number of qualified sources.

Although we actively manage these third-party relationships to ensure continuity, quality and compliance with applicable regulations, events beyond our control could result in the complete or partial failure of these goods and services.

Although we actively manage these third-party relationships to ensure continuity, quality and compliance with applicable regulations, events beyond our control, including natural disasters and other severe weather events, including those that may occur as a result of climate change, or global disruptions such as the current global pandemic and the ongoing war in Ukraine, could negatively impact the continuity of supply of such materials and/or services, their quality and their compliance with applicable standards.

Any such failure could materially adversely affect our business, financial condition, cash flows and results of operations.

The manufacture of products and product components, including the procurement of bulk drug product and other materials used in the manufacture, packaging, storage and distribution of our products, requires successful coordination among us and multiple third-party providers.

Lack of capacity available at such third-party providers or any other issues with the quality or operations of these third-party providers, including any issues related to regulatory permits, audits or requirements, could require us to delay shipment of saleable products, recall products previously shipped or impair our ability to supply products at all.

Lack of capacity available at such third-party providers or any other issues with the quality or operations of these

third-party providers, including any issues related to regulatory permits, audits or requirements, could require us to delay shipment of saleable products, recall products previously shipped or impair our ability to supply products at all.

We endeavor to qualify and register new vendors and to develop contingency plans so that production is not materially impacted by third-party provider issues.

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standards in the manufacture of our products or components of our products.

In addition, in the U.S., the DEA and state-level agencies heavily regulate the manufacturing, holding, processing, security, recordkeeping and distribution of substances, including controlled substances.

If any of our products or components of our products are scheduled by the DEA as controlled substances, we would be subject to such DEA regulations.

We and our third-party providers are subject to unannounced inspections by the FDA, the DEA and comparable U.S.

state and non-U.S.

agencies in other jurisdictions to confirm compliance with all applicable laws.

If any of our products or components of our products in the U.S.

are scheduled by the DEA as controlled substances, we would also be subject to DEA regulations.

We and our third-party providers are subject to unannounced inspections by the FDA and other agencies to confirm compliance with all applicable laws.

Any changes to our suppliers or modifications of methods of manufacturing require submission of amendments to our NDAs or other marketing applications to the FDA or other applicable regulatory agencies, and ultimate acceptance by such agencies of such amendments, prior to release of product to the applicable marketplace.

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Any third party we use to manufacture bulk drug product for use in the U.S.

must be licensed by the FDA and, for controlled substances, the DEA.

Failure by us or our third-party

providers to gain or maintain regulatory compliance with and approvals from the FDA or other regulatory agencies could materially adversely affect our business, financial condition, cash flows and results of operations .

Adverse market conditions may exacerbate certain risks inherent to our business, including risk of payment from licensees and customers and reimbursement for our products.

Adverse market conditions may cause disruptions or delays to our business or to the businesses of third parties from whom we receive revenues, or reductions in the availability or extent of reimbursement available to us.

must be licensed by the FDA.

Failure by us or our third-party providers to gain or maintain regulatory compliance with and approvals from the FDA or other regulatory agencies could materially adversely affect our business, financial condition, cash flows and results of operations.

Adverse market conditions may exacerbate certain risks inherent to our business, including risk of non-payment from licensees and customers and reimbursement for our products.

Adverse market conditions or other business developments may cause disruptions, delays or significant financial impact to our business or to the businesses of third parties from which we receive revenues, or reductions in the availability or extent of reimbursement available to us.

For example, we depend on our licensees and customers for substantial portions of our revenue, and the contracts with our licensees and customers pursuant to which we supply product, or under which we are eligible for certain development or sales milestones or royalties related to products that incorporate our proprietary technologies, may not be secured by collateral or other security.

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federal and state health authorities may reduce the extent of their reimbursements (including Medicare and Medicaid reimbursements in the U.S.) or payments, and private insurers may increase their scrutiny of claims.

If such licensees or other third parties are unable or unwilling to pay amounts owed to us or satisfy their commitments to us, or if there are reductions to such payments or commitments, our business, financial condition, cash flows and results of operations may be materially adversely affected.

licensees or other third parties are unable or unwilling to pay amounts owed to us or satisfy their commitments to us, or if there are reductions to such payments or commitments, our business, financial condition, cash flows and results of operations may be materially adversely affected .

Our success largely depends upon our ability to attract, recognize and retain key personnel.

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We face intense competition for employees, due, among many factors, to the geographic locations in which we operate and the competitive benefits and compensation practices in our industry, and in recent years, new competition as employees are increasingly able to work remotely.

Government vaccine or masking mandates, testing protocols, or other restrictions that apply to us may have an impact on employee performance, retention and recruitment, particularly for those employees who perform essential tasks in our laboratories and manufacturing facilities and cannot perform their jobs remotely.

The loss of key personnel due to any of these factors or our inability to hire and retain personnel who have technical, scientific, manufacturing, management, regulatory, compliance or commercial backgrounds could materially adversely impact our business, including the achievement of our manufacturing, research and development, commercial, financial and other operational and strategic business objectives.

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Patent protection provides rights of exclusivity for the term of the patent.

We are able to protect our proprietary rights from

unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We are able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

In this regard, we try to protect our proprietary position by filing patent applications in the U.S.

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The patent holder may not grant us a license on reasonable terms, or it may refuse to grant us a license at all.

This could delay or prevent us from developing, manufacturing, selling or importing those of our products that would require the license.

could delay or prevent us from developing, manufacturing, selling or importing those of our products that would require the license.

Claims of IP infringement may also require that we redesign affected products, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our products.

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We may have to expend considerable time, effort and resources to defend such actions, and litigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights.

In addition, we may need to enforce our IP rights against third parties who infringe our patents and other IP or challenge our patents, patent applications or trademark applications.

Litigation and trial proceedings, such as so-called Paragraph IV litigation and IPRs, concerning patents and other IP rights may be expensive, protracted and distracting to management, with no certainty of

In addition, we may need to enforce our IP rights against third parties who infringe on our patents and other IP or challenge our patents, patent applications or trademark applications.

As a result, we may at times give up certain rights with respect to our IP in order to avoid or resolve timely and costly IP litigation or IPR proceedings.

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In September 2020, we initiated a Paragraph IV lawsuit against Teva to dispute such claims.

A trial is scheduled to begin on February 16, 2023.

Although we intend to vigorously defend our IP rights, and we expect our licensees to do the same, there can be no assurance that we or our licensees will prevail.

Our and our licensees’ existing patents could be invalidated, found unenforceable or found not to cover generic forms of our or our licensees’ products.

If Teva or other ANDA filers were to receive FDA approval to sell generic versions of our products or the products from which we receive revenue and/or prevail in any patent litigation with respect to such products, such products would become subject to increased competition, and our business, financial condition, cash flows and results of operations could be materially adversely affected.

If Teva or other ANDA filer s were to receive FDA approval to sell generic version s of our products or the products from which we receive revenue and/or prevail in any patent litigation with respect to such products , such products would become subject to increased competition , and our business, financial condition, cash flows and results of operations could be materially adversely affected .

Risks Related to Regulatory or Legal Matters

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Moreover, if any of such legal proceedings were to result in an adverse outcome, such outcome could have a material adverse effect on our business, financial condition, cash flows and results of operations.

We have been, and may continue to be, the subject of certain government inquiries or requests for documentation.

For example, we have received a subpoena and civil investigative demands from U.S.

state and federal authorities for documents related to VIVITROL.

We are cooperating with the government in each instance.

If, as a result of government requests, proceedings are initiated, including under the U.S.

federal anti-kickback statute and False Claims Act and state False Claims Acts or other laws, and we are found to have violated one or more applicable laws, we may be subject to significant liability, including without limitation, civil fines, criminal fines and penalties, civil damages and exclusion from U.S.

federal funded healthcare programs such as Medicare and Medicaid, and may be required to enter into a corporate integrity or other settlement with the government, any of which could materially affect our reputation, business, financial condition, cash flows and results of operations.

Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by such conduct.

In addition, if any of our existing business practices, including those of our sales force, are challenged as unlawful, we may have to change those practices, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Further, our liability insurance coverage may not be sufficient to satisfy, or may not cover, any expenses or liabilities that may arise.

Additionally, regardless of whether or not there is merit to the claims underlying any lawsuits or government inquiries of which we are subject, or whether or not we are found as a result of such lawsuits or inquiries to have violated any applicable laws, such lawsuits and inquiries can be expensive to defend or respond to, may divert the attention of our management and other resources that would otherwise be engaged in managing our business, and may further cause significant and potentially irreparable harm to our public reputation.

Additionally, regardless of whether or not there is merit to the claims underlying any legal proceedings to which we are subject, or whether or not we are found as a result of such lawsuits to have violated any applicable laws, such lawsuits and inquiries can be expensive to defend or respond to, may divert the attention of our management and other resources that would otherwise be engaged in managing our business, and may further cause significant and potentially irreparable harm to our public reputation.

We have been, and may again be, the subject of citizen petitions that request that the FDA refuse to approve, delay approval of, or impose additional approval requirements on our NDAs.

If successful, such petitions can significantly delay, or even prevent, the approval of the NDA in question.

Even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while

it considers and responds to the petition, or may impose additional approval requirements as a result of such petition.

Even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition, or may impose additional approval requirements as a result of such petition.

These outcomes and others could adversely affect our share price as well as our ability to generate revenues from the commercialization and sale of our products and products using our proprietary technologies.

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Additionally, incidents of product misuse may occur.

These events, among others, could result in product recalls or additional regulatory controls (including additional regulatory scrutiny, REMS programs, and requirements for additional labeling) or product liability actions.

These events, among others, could result in product recalls or additional regulatory controls (including additional regulatory scrutiny, REMS programs, and/or requirements for additional labeling) or product liability actions.

As our development activities progress and we continue to have commercial sales, our product liability insurance coverage may be inadequate to satisfy liabilities that arise, we may be unable to obtain adequate coverage at an acceptable cost or at all, or our insurer may disclaim coverage as to a future claim.

This could prevent or limit the development or commercialization of our products.

In addition, the reporting of adverse safety events involving our products, including instances of product misuse, and public rumors about such events could cause our product sales or share price to decline or experience periods of volatility.

In addition, the reporting of adverse safety events involving our products, including instances of product misuse, and public perceptions about such events could cause our product sales or share price to decline or experience periods of volatility.

These types of events could have a material adverse effect on our business, financial condition, cash flows and results of operations.

If there are changes in, or we fail to comply with, the extensive legal and regulatory requirements affecting the healthcare industry, we could face costs, penalties and business losses.

If there are changes in, or we fail to comply with, the extensive legal and regulatory requirements affecting the healthcare industry, we could face litigation, costs, penalties and business losses.

Our activities, and the activities of our licensees and third-party providers, are subject to extensive government regulation.

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Government regulatory actions, including audits, records requests and inspections of manufacturing facilities, can result in delay in the release of products, seizure or recall of products, suspension or revocation of the authority necessary for the manufacture and sale of products, and other regulatory enforcement actions, including the levying of civil fines or criminal penalties, the issuance of a warning letter, or the imposition of an injunction.

Biopharmaceutical companies also have been the target of government lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for government reimbursement, antitrust violations and violations related to environmental matters.

Biopharmaceutical companies also have been the target of government lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for government reimbursement, antitrust violations and violations related to environmental matters.

We have been, and may continue to be, the subject of certain government inquiries or requests for documentation.

For example, we have received a subpoena and civil investigative demands from U.S.

state and federal authorities for documents related to VIVITROL.

We are cooperating with the government in each instance.

If, as a result of government requests, proceedings are initiated, including under the U.S.

federal funded healthcare programs such as Medicare and Medicaid, any of which could materially affect our reputation, business, financial condition, cash flows and results of operations.

Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by such conduct.

Additionally, regardless of whether or not there is merit to claims underlying any investigation or legal proceedings to which we are subject, or whether or not we are found as a result of such investigations or lawsuits to have violated any applicable laws, such lawsuits and inquiries can be expensive to defend or respond to, may divert the attention of our management and other resources that would otherwise be engaged in managing our business, and may further cause significant and potentially irreparable harm to our public reputation.

While we have implemented numerous risk mitigation measures, we cannot guarantee that we, our employees, our licensees, our consultants or our contractors are, or will be, in compliance with all applicable laws, regulations or interpretations of the applicability of these laws to our products, operations and marketing practices.

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Changes affecting the healthcare industry, including new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to patent protection and enforcement, access to healthcare, environmental issues or product pricing and marketing, could also adversely affect our revenues, our public reputation or our potential to be profitable.

For example, the costs of prescription pharmaceuticals in the U.S.

have been the subject of considerable discussion in the U.S.

and the government may seek to address such costs through new legislative and/or administrative measures.

Such changes in laws, regulations or decisions or in the interpretation of existing laws, regulations and decisions could have a material adverse effect on our business, financial condition, cash flows and results of operations.

For example, and as discussed above, the Inflation Reduction Act, signed into law in August 2022, includes several provisions that will impact our business to varying degrees, including those that impose new manufacturer financial liability on all drugs in Medicare Part D beginning in 2025, allow the U.S.

government to negotiate prices for some drugs covered under Medicare Part B and Part D beginning in 2026, and require companies to pay rebates to Medicare beginning in 2023 for drug prices that increase faster than inflation.

This law and any further changes in laws, regulations or decisions or in the interpretation of existing laws, regulations and decisions could have a material adverse effect on our business, financial condition, cash flows and results of operations.

If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

We participate in the Medicaid Drug Rebate Program, the 340B program, the U.S.

Department of Veterans Affairs, FSS pricing program, and the Tricare program, and have obligations to report the average sales price for certain of our drugs to the Medicare program.

For calendar quarters beginning January 1, 2022, manufacturers will need to start reporting the average sales price for drugs under the Medicare program regardless of whether they are enrolled in the Medicaid Drug Rebate Program.

Currently, only manufacturers participating in the Medicaid Drug Rebate Program are obligated to do so.

Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies and the courts, which can change and evolve over time.

In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are generally obligated to resubmit the corrected data for up to three years after those data originally were due.

Such restatements and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program and could result in an overage or underage in our rebate liability for past quarters.

Price recalculations also may affect the ceiling price at which we are required to offer our products under the 340B program and give rise to an obligation to refund entities participating in the 340B program for overcharges during past quarters impacted by a price recalculation.

Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price.

The CMS could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

We cannot assure you that our submissions will not be found by CMS to be incomplete or incorrect.

Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental programs could negatively impact our financial results.

CMS issued a final regulation, which became effective in April 2016, to implement the changes to the Medicaid Drug Rebate Program under the Affordable Care Act.

In December 2020, CMS issued a final regulation that modified prior Medicaid Drug Rebate Program regulations to permit reporting multiple best price figures with regard to value - based purchasing arrangements (beginning in 2022);

and provided definitions for “line extension,” “new formulation,” and related terms, with the practical effect of expanding the scope of drugs considered to be line extensions that are subject to an alternative rebate formula (beginning in 2022).

Regulatory and legislative changes, and judicial rulings relating to the Medicaid Drug Rebate Program and related policies (including coverage expansion), have increased and will continue to increase our costs and the complexity of compliance, have been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS or another agency challenges the approach we take in our implementation.

The HRSA issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities, which became effective in January 2019.

Implementation of this regulation could affect our obligations and potential liability under the 340B program in ways we cannot anticipate.

We are also required to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes them to 340B covered entities.

Any charge by HRSA that we have violated this regulation or other requirements of the program could negatively impact our financial results.

Moreover, HRSA newly established an administrative dispute resolution (“ADR”) process under a final regulation effective January 2021, for claims by covered entities that a manufacturer engaged in overcharging, including claims that a manufacturer limited the ability of a covered entity to purchase the manufacturer’s drugs at the 340B ceiling price, and by manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts.

Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court.

This ADR regulation has been challenged in separate litigation instituted by PhRMA and by pharmaceutical manufacturers in multiple federal courts.

Under the ADR final rule which became effective in January 2021, an ADR proceeding could potentially subject us to discovery by covered entities and other onerous procedural requirements and could result in additional liability.

HRSA could also decide to terminate a manufacturer’s agreement to participate in the 340B program for a violation of that agreement or other good cause shown, in which case the manufacturer’s covered outpatient drugs may no longer be eligible for federal payment under the Medicaid or Medicare Part B program.

In November 2022, HRSA issued a proposed rule to revise the ADR procedures contained in its January 2021 final regulation for disputes arising under the 340B drug pricing program between covered entities and manufacturers.

Further, legislation may be introduced that, if passed, would, among other things, further expand the 340B program to additional covered entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in an inpatient setting, and any additional future changes to the definition of average manufacturer price or the Medicaid rebate amount could affect our 340B ceiling price calculations and negatively impact our results of operations.

Additionally, certain pharmaceutical manufacturers are involved in ongoing litigation regarding contract pharmacy arrangements under the 340B Program.

The outcome of those judicial proceedings and the potential impact on the way in which manufacturers extend discounts to covered entities through contract pharmacies remain uncertain.

We have obligations to report the average sales price for certain of our drugs to the Medicare program.

Statutory or regulatory changes or CMS guidance could affect the average sales price calculations for our products and the resulting Medicare payment rate, and could negatively impact our results of operations.

Pursuant to applicable law, knowing provision of false information in connection with price reporting under the U.S.

Department of Veterans Affairs, FSS or Tricare programs can subject a manufacturer to civil monetary penalties.

These program obligations also contain extensive disclosure and certification requirements.

If we overcharge the government in connection with our arrangements with FSS or Tricare, we are required to refund the difference to the government.

Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations.

Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Our business involves environmental, health and safety risks.

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In addition to significant remediation costs, contamination can give rise to third-party claims for fines, penalties, natural resource damages, personal injury and damage (including property damage).

The costs of compliance with environmental, health and safety laws and

regulations are significant.

The costs of compliance with environmental, health and safety laws and regulations are significant.

We have developed and implemented a proprietary risk mitigation program to preemptively identify and address environmental, health, safety and security risks;

however, there can be no assurance that a violation of current or future environmental, health or safety laws or regulations will not occur.

Any violations, even if inadvertent or accidental, or the cost of compliance with any resulting order , fine or liability that may be i mposed, could materially adversely affect our business, financial condition, cash flows and results of operations.

Any violations, even if inadvertent or accidental, or the cost of compliance with any resulting order, fine or liability that may be imposed, could materially adversely affect our business, financial condition, cash flows and results of operations.

Risks Related to our Financial Condition and Tax Matters

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Factors that may impact our future spend, and in turn our future profitability, include:

the scope of our research and development activities, including the number of products, indications or new technologies that we may pursue, and our ability to share development costs through potential collaborations;

the scope of our research and development activities, including the number of products, indications or new technologies that we may pursue, and our ability, if sought, to share development costs through potential collaborations;

the time and expense required to pursue FDA and/or other regulatory approvals for our products;

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the costs of defending against potential or actual proxy contests or other activist shareholder actions;

the costs associated with recruiting, compensating and retaining a highly skilled workforce in an environment where competition for such employees is intense.

the costs associated with the planning for and/or execution of the potential separation of our neuroscience and oncology businesses;

the costs associated with recruiting, compensating and retaining a highly-skilled workforce in an environment where competition for highly-skilled employees is intense.

holders of our ordinary shares may suffer adverse tax consequences if any of our non-U.S.

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The impact of this change on certain holders of our ordinary shares is uncertain and could be adverse, including potential income inclusions and reporting requirements for U.S.

persons (as defined in the Internal Revenue Code) who are treated as owning (directly or indirectly) at least 10% of the value or voting power of our shares.

persons (as defined in the Code) who are treated as owning (directly or indirectly) at least 10% of the value or voting power of our shares.

The determination of CFC status is complex and includes attribution rules, the application of which are not entirely certain.

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subsidiaries will be classified as a CFC.

Existing and prospective investors should consult their tax advisers regarding the potential application of these rules to their investments in us.

Existing and prospective investors should consult their tax advisers regarding the potential application of these rules to their investments in our securities.

See “ Certain Irish and United States Federal Income Tax Considerations – United States Federal Income Tax Considerations ” in our Form S-1/A, filed with the SEC on February 29, 2012, for additional discussion with respect to other potential U.S.

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Changes in tax rules and regulations, or interpretations thereof, may adversely affect our financial condition.

Effective January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct R&D expenses in the year incurred and instead requires taxpayers to capitalize, and subsequently amortize such expenses over five years for research activities conducted in the U.S.

and over fifteen years for research activities conducted outside of the U.S.

As such, we expect a material decrease in cash flows provided from operations and a material increase in our net deferred tax assets over these amortization periods.

The actual impact of this change will depend on multiple factors, including the amount of R&D expenses incurred and whether the research activities are performed within or outside of the U.S.

Effective January 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct R&D expenses in the year incurred and instead requires taxpayers to capitalize, and subsequently amortize such expenses over five years for research activities conducted in the U.S., and over fifteen years for research activities conducted outside of the U.S.

As such, we expect a material decrease in cash flows provided from operations and a material increase in our net deferred tax assets over the next number of years.

Unless the U.S.

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Congress, there will be a material increase in our U.S.

income tax liability over these amortization periods.

income tax liability over the next number of years.

Our deferred tax assets may not be realized.

As of December 31, 2022, we had $115.6 million of net deferred tax assets in the U.S.

Included in this amount was approximately $1.7 million of U.S.

federal net operating loss (“NOL”) carryforwards and $38.5 million of research and development tax credit carryforwards that can be used to reduce U.S.

taxable income or offset federal tax in future periods.

These carryforwards will expire within the next twenty years.

It is possible that some or all of the deferred tax assets will not be realized, especially if we incur losses in the U.S.

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Unless we are able to generate sufficient taxable income in the future, a substantial valuation allowance to reduce the carrying value of our U.S.

deferred tax assets may be required, which would materially increase our expenses in the period the valuation allowance is recognized and materially adversely affect our business, financial condition and results of operations.

deferred tax assets may be required, which would materially increase our expenses in the period the valuation allowance is recognized and materially adversely affect our financial condition and results of operations.

Furthermore, we have included within our U.S.

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Because we are incorporated in Ireland, we should be deemed an Irish corporation under these general rules.

However, Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”) generally provides that a corporation organized outside the U.S.

However, Section 7874 of the Code generally provides that a corporation organized outside the U.S.

that acquires substantially all of the assets of a corporation organized in the U.S.

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We do not believe that either of these limitations should apply as a result of the Business Combination.

However, the U.S.

Internal Revenue Service (the “IRS”) could assert a contrary position, in which case we could become involved in tax controversy with the IRS regarding possible additional U.S.

However, the IRS could assert a contrary position, in which case we could become involved in tax controversy with the IRS regarding possible additional U.S.

tax liability.

If we were to be unsuccessful in resolving any such tax controversy in our favor, we could be liable for significantly greater U.S.

federal and state income tax than we anticipate being liable for through the Business Combination, which would place further demands on our cash needs.

federal and state income tax than we anticipate being liable for as a result of the Business Combination, which would place further demands on our cash needs.

Our level of indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business.

In March 2021, we amended and refinanced our existing term loan (the “2023 Term Loans”), in order to, among other things, provide for a new class of replacement term loans equal to $300.0 million;

In March 2021, we amended and refinanced our then-existing term loan (the “2023 Term Loans”), in order to, among other things, provide for a new class of replacement term loans equal to $300.0 million;

extend the due date of the loan from March 26, 2023 to March 12, 2026;

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Uncertainty as to the nature of such potential discontinuation, reform or replacement may negatively impact the volatility of LIBOR rates, liquidity, or our access to funding required to operate our business.

In addition, SOFR is a relatively new reference rate and its composition and characteristics are not the same as LIBOR.

Given SOFR’s very limited history and potential volatility as compared to other benchmark or market rates, the future performance of SOFR cannot be predicted based on historical performance.

The consequences of using SOFR could include an increase in the cost of our variable rate indebtedness.

We are monitoring these transition efforts and, although the 2026 Term Loans contain provisions designed to accommodate an alternate reference rate, we may need to amend these and other contracts to accommodate any replacement rate.

Our business strategy may involve future transactions which may harm the market price of our ordinary shares or require us to seek additional funds , and such funding may not be available on commercially favorable terms or at all and may cause dilution to our existing shareholders.

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The source, timing and availability of any financings will depend on global economic conditions, credit and financial market conditions, interest rates and other factors.

If we issue additional equity securities or securities convertible into equity securities, our shareholders will suffer dilution of their investment, and it may adversely affect the market price of our ordinary shares.

If we issue additional equity securities or securities convertible into equity securities, our shareholders would suffer dilution of their investment, and it may adversely affect the market price of our ordinary shares.

In addition, under Irish law, the directors of an Irish public limited company must have specific authority, as approved by the company’s shareholders, to allot and issue any ordinary shares (other than pursuant to employee equity plans) and, if such directors desire to allot and issue ordinary shares for cash, such shares must first be offered on the same or more favorable terms to the company’s existing shareholders on a pro-rata basis, unless this statutory pre-emption right is disapplied by approval of the company’s shareholders.

In May 2017, our shareholders authorized our Board to issue ordinary shares up to our maximum authorized but unissued share capital and to issue such ordinary shares for cash on a non-pre-emptive basis;

however, in accordance with Irish law, these share issuance authorities may only be granted for a maximum of five years, at which point they lapse unless renewed by our shareholders.

If we are unable to obtain renewal of these existing share issuance authorities from our shareholders, or are otherwise limited by the terms of new share issuance authorities approved by our shareholders, our ability to use our authorized but unissued share capital to effect or to fund acquisition or other transaction opportunities, or to otherwise raise capital, could be adversely affected .

In July 2022, our shareholders authorized our board of directors to allot and issue ordinary shares in an amount equal to approximately 33% of our issued share capital (at the date of such authorization), and to issue ordinary shares for cash on a non-pre-emptive basis in an amount equal to approximately 5% of our issued share capital (at the date of such authorization) or in an amount equal to approximately 10% of our issued share capital (at the date of such authorization) under certain specified circumstances;

however, these share issuance authorities were granted for eighteen months only, at which point they lapse unless renewed by our shareholders.

If we are unable to obtain renewal of share issuance authorities from our shareholders, or are otherwise limited by the terms of new share issuance authorities approved by our shareholders, our ability to use our authorized but unissued share capital to effect or to fund acquisition or other transaction opportunities, or to otherwise raise capital, could be adversely affected .

In addition, future investors or lenders may demand, and may be granted, rights superior to those of existing shareholders.

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We conduct a large portion of our business in international markets.

For example, we derive a majority of our RISPERDAL CONSTA revenues and all of our FAMPYRA, XEPLION and TREVICTA revenues from sales in countries other than the U.S., and these sales are denominated in non-U.S.

For example, we derive a majority of our RISPERDAL CONSTA revenues and all of our FAMPYRA, XEPLION, TREVICTA and BYANNLI revenues from sales in countries other than the U.S., and these sales are denominated in non-U.S.

dollar (“USD”) currencies.

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See “Item 7A—Quantitative and Qualitative Disclosures about Market Risk” in this Annual Report for additional information relating to our foreign currency exchange rate risk.

If we identify a material weakness in our internal control over financial reporting, our ability to meet our reporting obligations and the trading price of our ordinary shares could be negatively affected.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

Accordingly, a material weakness increases the risk that the financial information we report contains material errors.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies.

In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.

Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

If we, or our independent registered public accounting firm, determine that our internal controls over financial reporting are not effective, or we discover areas that need improvement in the future, these shortcomings could have an adverse effect on our business and financial results, and the price of our ordinary shares could be negatively affected.

If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in the trading price of our ordinary shares.

Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by Nasdaq or the SEC or other regulatory authorities.

Risks Related to our Ordinary Shares

The market price for our ordinary shares has been volatile and may continue to be volatile in the future, and could decline significantly.

The market price for our ordinary shares has fluctuated significantly from time to time.

The market price of our ordinary shares has been volatile and may continue to be volatile in the future, and could decline significantly.

The market price of our ordinary shares has fluctuated significantly from time to time.

During the year ended December 31, 2022, the closing price of our ordinary shares on the Nasdaq Global Select Market ranged from $21.94 to $31.87 per share.

The market price of our ordinary shares is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and industry factors, our results of operations, our ability to maintain and increase sales of our products, the success of our key development programs, our ability to achieve profitability, and other factors, including the risk factors described in this Annual Report.

The stock market in general, including the market for biopharmaceutical companies, has experienced extreme price and trading volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

In particular, negative publicity regarding pricing and price increases by pharmaceutical companies, and potential legislation to regulate drug pricing, has negatively impacted, and may continue to negatively impact, the market for biopharmaceutical companies.

These broad market and industry factors have harmed, and in the future may seriously harm, the market price of our ordinary shares, regardless of our operating performance.

We have also experienced significant volatility in the market price of our ordinary shares based on our business performance, including in relation to our commercial sales and the financial guidance that we issue for such sales, results from our clinical development programs, and events relating to regulatory actions and interactions related to our product candidates and commercial products.

For example, a series of adverse actions by the FDA in 2018 relating to our NDA for ALKS 5461, our investigational product for the treatment of major depressive disorder, caused the market price of our ordinary shares to decline significantly.

In addition, t he stock market in general, including the market for biopharmaceutical companies, has experienced extreme price and trading volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

In particular, negative publicity regarding pricing and price increases by pharmaceutical companies , and potential legislation to regulate drug pricing, has negatively impacted, and may continue to negatively impact, the market for biopharmaceutical companies.

These broad market and industry factors have harmed, and in the future may harm, the market price of our ordinary shares, regardless of our operating performance.

Our business could be negatively affected as a result of the actions of activist shareholders.

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Activist shareholders may agitate, either publicly or privately, for changes to a company’s board of directors, management, structure, spend or strategic direction, among other things.

Such actions may cause significant disruption to a company’s operations and cause a company to expend a significant amount of time and resources in responding to their requests.

In late 2020 and early 2021, we engaged in extensive dialogues with two distinct activist shareholders, resulting in our entry into an agreement with each activist in which we agreed on certain matters relating to our Board and, in the case of one of the agreements, affirmed our commitment to, and plans for, meeting financial profitability targets over a multi-year period.

These discussions resulted in the expenditure of significant time and energy by management and our Board and required dedication by the Company of significant resources.

We have undertaken, and will continue to implement, several initiatives in order to drive profitability and value creation for our shareholders, but there is no assurance that we will achieve such objectives, or that such achievement and the measures we have taken and will continue to take will decrease the likelihood of activist shareholder engagement in the future.

In addition, in January 2022, we received notice from one of these shareholders of its intent to nominate two directors to our Board at our 2022 annual general meeting of shareholders.

We have engaged, and plan to continue to engage, with this shareholder in respect of these nominations.

If faced with a proxy contest or other shareholder action or request, we may not be able or willing to respond successfully to the contest, action, or request, which could be significantly disruptive to our business.

Even if we are successful, our business could be adversely affected by any proxy contest or activist shareholder action or request involving us because:

responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees, and can lead to uncertainty;

perceived uncertainties as to the future direction of the Company or its business may result in the loss of potential acquisitions, collaborations or in-licensing opportunities, and may make it more difficult to attract and retain qualified personnel and business partners;

if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our strategic plan in a timely manner and create additional value for our shareholders.

Any such activist shareholder contests, actions or requests, or the mere public presence of activist shareholders among our shareholder base, could cause the market price for our ordinary shares to experience periods of significant volatility.

Since 2021, we have engaged in extensive dialogue with principals of Sarissa Capital Offshore Master Fund LP and its affiliates.

These engagements and activities related to these engagements required the expenditure of significant time and energy by management and our board of directors.

Proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees, and can lead to perceived uncertainties as to the future direction of the Company or its business that may result in the loss of potential acquisitions, collaborations or in-licensing opportunities and make it more difficult to attract and retain qualified personnel and business partners.

In addition, if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our strategic plan in a timely manner and create additional value for our shareholders.

Any such activist shareholder contests, actions or requests, or the mere public presence of activist shareholders among our shareholder base, could cause the market price of our ordinary shares to experience periods of significant volatility.

Risks Related to Information Security and Data Privacy

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In the ordinary course of our business, we collect and store sensitive data, including IP, our proprietary business information and that of our suppliers and partners, as well as personally identifiable information of patients, clinical trial participants and employees.

In addition, the COVID-19 pandemic has required us to implement, and to adapt over time, global remote work flexibility for certain of our employees who are able to work remotely.

In recent years, we have implemented additional remote work flexibility for certain of our employees who are able to work remotely.

Our partners and third-party providers also possess certain of our sensitive data.

The secure maintenance of all such information and the secure performance of our information technology (“IT”) systems are critical to our operations and business strategy.

As the dependency on our IT systems increases, the confidentiality, integrity and availability of systems and the data that they store is critical to managing our business.

As our dependency on, and the complexity of, our IT systems increases, the confidentiality, integrity and availability of our IT systems and the data that they store is critical to managing our business.

While we take prudent measures to secure our IT systems, the risk still exists that such systems may become compromised by successful breaches, malfeasance, human error or technological fault.

Moreover, the prevalent use of mobile devices to access confidential information increases the risk of security breaches.

Cyber-attacks have increased in frequency, persistence, sophistication and intensity, often conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage, hactivists and organized come).

In addition to the extraction of important information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of our information.

Certain types of attacks or breaches on our IT systems or infrastructure may go undetected for a prolonged period.

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Any failure to comply with the requirements of GDPR and applicable national data protection laws of EU member states could lead to regulatory enforcement actions and significant administrative and/or financial penalties against us (fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher), and could adversely affect our business, financial condition, cash flows and results of operations.

General Risk Factors

Accordingly, a material weakness increases the risk that the financial information we report contains material errors.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies.

In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.

Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by Nasdaq or the SEC or other regulatory authorities.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors