What changed in this filing

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Item 1A. Risk Factors

2026-08-05 compared with 2026-05-01 · 112 added, 91 removed, 281 unchanged (42% of the section changed)

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On July 4, 2025, OB3 was enacted and included several changes to Medicare, Medicaid and Affordable Care Act policies, including provisions affecting eligibility, that, when implemented, are expected to adversely affect coverage and reimbursement for our products.

On May 12, 2025, the Administration issued the Most-Favored-Nations (MFN) Prescription Drug Pricing Executive Order (MFN EO) aimed at using price benchmarks from other developed countries to set U.S.

On May 12, 2025, the Administration issued the Most-Favored-Nation (MFN) Prescription Drug Pricing Executive Order (MFN EO) aimed at using price benchmarks from other developed countries to set U.S.

pricing targets.

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business relies on reimbursement from federal government healthcare programs and commercial insurance plans regulated by federal and state governments.

See Part I, Item 1.

Business—Reimbursement, of our Annual Report on Form 10-K for the year ended December 31, 2025.

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Depending on the growth and success of our medicines, other of our medicines may also be subject to selection by CMS in the next, or in a future, cycle of mandatory Medicare price setting, and we may be required to accept a price set by the government for Medicare using the process that was applied to ENBREL and Otezla.

Further, CMS has issued guidance that allows for the re-setting of prices for drugs for which it previously set a price.

Further, CMS has issued policies that allow for the re-setting of prices for drugs for which it previously set a price.

On April 15, 2025, the Administration issued an executive order (the April 2025 EO) that, among other directives, directs HHS to work with Congress to align the treatment of small molecule drugs and biologics in the Medicare price setting program under the IRA.

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We also announced the expansion of our direct-to-patient program.

While this development reflects ongoing engagement on pricing policy, the ultimate effects on our pricing, reimbursement, net sales and profitability remain uncertain in light of evolving regulatory and policy expectations.

As part of the Administration’s MFN pricing initiative, CMS announced the GENEROUS Model, under which we and other participating manufacturers will provide additional supplemental rebates for certain drugs to participating state Medicaid programs designed to align Medicaid net prices with prices paid in select other countries for drugs covered under the model.

While these developments reflect ongoing engagement on pricing policy, the ultimate effects on our pricing, reimbursement, net sales and profitability remain uncertain in light of evolving regulatory and policy expectations.

We also face risks related to the reporting of pricing data that affects reimbursement of and discounts provided for our products.

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At the state level, legislation, government actions and ballot initiatives can also affect how our products are covered and reimbursed and/or create additional pressure on our pricing decisions.

Existing and proposed state pricing laws, which may

move forward more rapidly than similar efforts at the federal level, have added complexity to the pricing of drugs.

A number of states have adopted, and many other states are considering, PDABs, drug importation programs, reference pricing schemes and other drug pricing actions, including proposals designed to require biopharmaceutical manufacturers to report to the state proprietary pricing information or provide advance notice of certain price increases.

Existing and proposed state pricing laws, which may move forward more rapidly than similar efforts at the federal level, have added complexity to the pricing of drugs.

A number of states have adopted, and a number of other states continue to consider, PDABs, drug importation programs, reference pricing schemes and other drug pricing actions, including proposals designed to require biopharmaceutical manufacturers to report to the state proprietary pricing information or provide advance notice of certain price increases.

States continue to pursue laws related to price controls, referencing the IRA and seeking to regulate and prohibit restrictions on the 340B Program.

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Seven states (Colorado, Maine, New Jersey, Maryland, Minnesota, Oregon and Washington) currently use PDABs to identify drugs that pose affordability challenges, and four such states include authority for the state PDABs to set upper payment limits on certain drugs for in-state patients, payers and providers.

In 2025, Maryland expanded the scope of its PDAB law to include the commercial market.

The seven states with enacted PDAB laws are in various phases of implementation, with Colorado’s PDAB being the furthest along.

The Colorado PDAB deemed three of five drugs “unaffordable,” including ENBREL, and in October 2025 the Colorado PDAB established an Upper Payment Limit (UPL) substantially lower than the wholesale acquisition cost of ENBREL that would be generally applicable to all formulations of ENBREL, effective no earlier than January 1, 2027, and will be reviewed annually.

The Colorado PDAB deemed three of five drugs “unaffordable,” including ENBREL, and in 2025 the Colorado PDAB established an Upper Payment Limit (UPL) substantially lower than the wholesale acquisition cost of ENBREL that would be generally applicable to all formulations of ENBREL, effective no earlier than January 1, 2027, and will be reviewed annually.

Although implementation of the ENBREL UPL is preliminarily enjoined, the matter remains subject to ongoing litigation and potential appeal, and similar state actions could adversely affect access to, pricing of and sales of our products.

On July 16, 2025, Washington state’s PDAB selected ENBREL for one of its first affordability reviews.

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However, the Washington state PDAB may not establish a UPL for any prescription drug before January 1, 2027.

Further, inappropriate expanded utilization of the 340B Program from broadened application of the 340B discounts has had, and is expected to continue to have, a negative impact on the Company’s product sales, business and results of operations including by increasing the risk of duplicate discounts and/or the application of 340B discounts to ineligible patients or settings.

These risks may be heightened where claims-level data, claims modifiers or other information needed to evaluate 340B eligibility are delayed, incomplete or unavailable, or where legal, legislative or regulatory developments reduce transparency in 340B channels or otherwise limit manufacturers’ ability to identify, prevent or remedy discounts that are not consistent with 340B Program requirements.

Twenty-two states (Louisiana, Arkansas, West Virginia, Minnesota, Mississippi, Missouri, Maryland, Kansas, North Dakota, South Dakota, Utah, Nebraska, New Mexico, Colorado, Tennessee, Oregon, Vermont, Hawaii, Oklahoma, Rhode Island, Maine and Washington) have enacted laws with mandates on manufacturers participating in the 340B Program, and, in 2026, no fewer than 16 states have introduced similar legislation.

These bills vary, but typically include provisions restricting a manufacturer’s ability to direct drugs in 340B channels, recognizing 340B contract pharmacies and a prohibition on requiring the inclusion of 340B claims modifiers.

These bills vary, but typically include provisions restricting a manufacturer’s ability to direct drugs in 340B channels, requiring manufacturers to recognize or provide access to 340B contract pharmacies, and prohibiting manufacturers from requiring the inclusion of 340B claims modifiers.

With OB3’s reductions to federal Medicaid funding to states, increased pressure is anticipated for providers to find and preserve existing revenue sources at the state level, which may result in increased use of 340B contract pharmacy mandates.

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Certain appellate courts have issued decisions both upholding certain state 340B statutes and affirming the denial of preliminary injunctive relief to manufacturers, while litigation and appeals concerning the validity, interpretation, and enforcement of these laws remain ongoing.

Additionally, in 2024, the FDA authorized Florida to move forward with its importation program proposal, though the state has not yet completed any significant steps towards importation within the two-year authorization window.

Colorado, Maine, New Hampshire, New Mexico, Texas and Vermont have also enacted state importation laws, and some have submitted plans for approval to the FDA.

The Administration has also taken steps to streamline the drug importation program and ease the process for states to obtain FDA authorization.

In June 2026, the FDA authorized Colorado’s drug importation program.

Maine, New Hampshire, New Mexico, Texas and Vermont have also enacted state importation laws, and some have submitted plans for approval to the FDA.

Other states could adopt similar approaches or could pursue different policy changes in a continuing effort to reduce their costs.

Further, the April 2025 EO also directs HHS to, within 90 days, streamline and improve the drug importation program to ease the process for states to obtain drug importation approvals.

On May 21, 2025, the FDA issued a press release indicating it was taking steps to enhance state importation programs and would offer individual states and tribes the opportunity to submit draft proposals for pre-review and to meet with the agency to obtain initial feedback prior to formally submitting importation proposals.

Previously, in 2024, the FDA authorized Florida to move forward with its importation program proposal, though the state has not yet completed any significant steps towards importation within the two-year authorization window.

While under federal law biologics remain exempt from such state importation activities, our small molecule products could be impacted by these initiatives.

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Further, government regulation of payers may affect these trends.

Payers, including PBMs, have sought, and

continue to seek, price discounts or rebates in connection with the placement of our products on their formularies or those they manage, and to also impose restrictions on access to, or usage of, our products (such as Step Therapy), require that patients receive the payer’s prior authorization before covering the product, and/or to exclude certain indications for which our products are approved.

Payers, including PBMs, have sought, and continue to seek, price discounts or rebates in connection with the placement of our products on their formularies or those they manage, and to also impose restrictions on access to, or usage of, our products (such as Step Therapy), require that patients receive the payer’s prior authorization before covering the product, and/or to exclude certain indications for which our products are approved.

Further, significant consolidation in the health insurance industry has resulted in a few large insurers and PBMs, which places greater pressure on pricing and usage negotiations with biopharmaceutical manufacturers, significantly increasing discount and rebate requirements and limiting patient access and usage.

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Outside the United States, we expect countries will also continue to take actions to reduce their drug expenditures and to reduce intellectual property protections.

See Part I, Item 1.

Business—Reimbursement, of our Annual Report on Form 10-K for the year ended December 31, 2025.

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In late 2020, SolarWinds Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems.

We also rely on third-party providers for certain identity, authentication and access management services.

We also rely on third-party providers for certain identity, authentication and access management

In the past, a security incident affecting such a third-party provider exposed several hundred corporate customers to potential unauthorized access to systems and data.

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In some cases, we use third-party service providers to collect, process, store, manage or transmit such data, which has increased our risk.

As our use of cloud-hosted environments and services has increased, we and others have experienced incidents in which threat actors accessed, copied or exfiltrated data stored in such environments by compromising credentials, access keys, tokens, accounts, configurations or permissions, including cases that did not involve a prior compromise of the corporate network or other on-premises systems, such as the cybersecurity incident we disclosed under Item 1.05 of our Current Report on Form 8-K filed on July 31, 2026.

Intentional or inadvertent data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers (including providers of information technology-specific services), business partners, nation states (including groups associated with or supported by foreign intelligence agencies), organized crime organizations, “hacktivists” or others, create risks that our sensitive data may be exposed to unauthorized persons, our competitors or the public.

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insurance claim and co-pay card processing clearinghouse, experienced a ransomware attack that has caused significant disruptions to healthcare provider and pharmacy operations.

While Change Healthcare does not directly provide us with services, disruptions to co-pay card support, insurance billing and Medicaid rebate processing led to lost sales and required us to take action to help patients access their medications and to provide extended payment terms to certain customers.

While Change Healthcare does not directly provide us with services, disruptions to co-pay card support, insurance billing and

Medicaid rebate processing led to lost sales and required us to take action to help patients access their medications and to provide extended payment terms to certain customers.

Although services have been rerouted and restored, and the impact on our business was immaterial, similar disruptions may occur in the future stemming from the interconnectedness of the U.S.

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Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.

Our sales and operations are subject to the risks of doing business internationally, including in new or emerging markets.

As we continue our expansion efforts in emerging markets around the world, through acquisitions and licensing transactions as well as through the development and introduction, both independently and through collaborations such as our collaboration with BeOne, of our products in new markets, we face numerous risks to our business.

There is no guarantee that our efforts and strategies to expand sales in new or emerging markets will succeed.

Our international business, including in China and emerging market countries, may be especially vulnerable to periods of global, national, and local political, legal, regulatory and financial instability, including issues of geopolitical relations, the imposition of international sanctions in response to certain state actions and/or sovereign debt issues, and management of health and healthcare policies.

For example, the BIOSECURE Act, signed into law in December 2025 and subject to phased implementation over the next several years through agency guidance and rulemaking, prohibits federal contracting with companies that have commercial connections with enumerated “biotechnology companies of concern” located in certain geographies, including China, could restrict our ability to

contract or collaborate with such biotechnology companies in the future.

If relations between the United States and other governments deteriorate, our business and investments in such markets may also be adversely affected.

We may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements, including those previously utilized by companies we partner with or acquire in emerging markets.

See our Annual Report on Form 10-K for the year ended December 31, 2025, Part I, Item 1A.

Risk Factors— We must conduct clinical trials in humans before we commercialize and sell any of our product candidates or existing products for new indications .

Our expansion efforts in China and new and emerging markets around the world are dependent upon the existence or establishment of an environment that is predictable, navigable and supportive of biopharmaceutical innovation, sustained access for our products and predictable pricing controls.

China has implemented and enforced regulations governing human genetic resources, including strict requirements with respect to the collection, use and transmission of Chinese human genetic materials and data, and has expanded regulations on the conduct of biotechnology R&D activities in China.

For example, between 2020 and 2022, we experienced delays in our applications to the Human Genetic Resources Administration of China that sought approval to conduct clinical trials in China.

Further, recent increases in tariffs imposed on certain goods imported into the United States, including inputs relevant to biopharmaceutical manufacturing, have raised our production costs to a limited degree in 2025, and, going forward, such tariffs, together with the imposition of tariffs from agreements the Administration has made with other countries and other potential future tariffs, could further increase our production costs and/or potentially disrupt the operation of our supply chain.

See Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Our international operations and business may also be subject to less protective intellectual property or other applicable laws, diverse data privacy and protection requirements, changing tax laws and tariffs, trade restrictions or other barriers designed to protect industry in the home country against foreign competition, far-reaching antibribery and anticorruption laws and regulations and/or evolving legal and regulatory environments.

For example, cross-border data transfer compliance requirements in China, as well as the U.S.

Department of Justice final rule on preventing access to Americans’ bulk sensitive personal data by “countries of concern,” may also impose additional costs of doing business, including costs associated with localizing operations.

In response to the ongoing armed conflict in Ukraine, the U.S.

government, numerous state governments, the EU and other countries in which we conduct business have imposed a wide range of economic sanctions that restrict commerce and business dealings with Russia, certain regions of Ukraine and certain entities and individuals.

Additionally, the ongoing conflict in the Middle East has caused regional disruptions to economic activity and broader volatility across global energy, transportation, trade and financial markets.

These developments have resulted in increased costs and, in some cases, disruptions and delays in shipping, airspace closures, and the need to reroute logistics, which may negatively affect sales of our medicines in that region as well as the availability and timely delivery of materials, components, services and personnel needed for our operations.

For a description of the conflict’s impact on our third-party contract manufacturing of KRYSTEXXA, see our Annual Report on Form 10-K for the year ended December 31, 2025, Part I, Item 1A.

Risk Factors— Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales .

These conflicts, in addition to other geopolitical tensions, may also precipitate or amplify the other risks described herein, including risks relating to global economic conditions, cybersecurity, clinical trials and supply chains, which could adversely affect our business, operations and financial condition and results.

We are subject to fluctuations in foreign currency exchange rates relative to the U.S.

dollar in the non-U.S.

jurisdictions where we do business.

While we have a program in place that is designed to reduce our exposure to foreign currency exchange rate fluctuations through foreign currency hedging arrangements, our hedging efforts do not completely offset the effect of these fluctuations on our revenues and earnings.

Overall, the legal and operational challenges of our international business operations, along with government controls, the challenges of attracting and retaining qualified personnel and obtaining and/or maintaining necessary regulatory or pricing approvals of our products, may result in material adverse effects on our international product sales, business and results of operations.

In addition, pricing pressures and price controls in non-U.S.

jurisdictions could adversely affect our sales and revenues, and further, to the extent that such pricing is included in MFN calculations, this inclusion has affected and may continue to affect our strategy with respect to sales of our products and product candidates in such jurisdictions.

Our current products and products in development cannot be sold without regulatory approval.

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The sanctions could include the FDA’s or ex-U.S.

regulatory authorities’ refusals to approve pending applications, delays in obtaining or

withdrawals of approvals, delays or suspensions of clinical trials, warning letters, product recalls or seizures, total or partial suspensions of our operations, injunctions, fines, civil penalties and/or criminal prosecutions.

regulatory authorities’ refusals to approve pending applications, delays in obtaining or withdrawals of approvals, delays or suspensions of clinical trials, warning letters, product recalls or seizures, total or partial suspensions of our operations, injunctions, fines, civil penalties and/or criminal prosecutions.

Obtaining and maintaining regulatory approvals have been, and will continue to be, increasingly difficult, time-consuming and costly.

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There may also be situations in which demonstrating the efficacy and safety of a product candidate may not be sufficient to gain regulatory approval unless superiority to other existing treatment options can be shown.

The imposition of additional requirements or our inability to meet them in a timely fashion, or at all, has delayed, and may in the future delay, our clinical development and regulatory filing efforts, delay or prevent us from obtaining regulatory approval for new product candidates or new indications for existing products, or prevent us from maintaining our current product labels.

The imposition of additional requirements or our inability to meet them in a timely fashion, or at all, has delayed, and may in the future delay, our clinical

development and regulatory filing efforts, delay or prevent us from obtaining regulatory approval for new product candidates or new indications for existing products, or prevent us from maintaining our current product labels.

Some of our products have been approved by U.S.

regulatory authorities on an accelerated or conditional basis with full approval conditioned upon fulfilling the requirements of regulators.

For example, the FDA has approved LUMAKRAS under accelerated approval for the treatment of adult patients with KRAS G12C-mutated local advanced or metastatic non-small cell lung cancer.

For example, the FDA has approved LUMAKRAS under accelerated approval for the treatment of adult patients with KRAS G12C-mutated local advanced or metastatic non-small cell lung cancer (NSCLC).

Following our submission of the LUMAKRAS/LUMYKRAS CodeBreaK 200 Phase 3 confirmatory data in March 2023 to the FDA and EMA, we received a Complete Response Letter from the FDA and a new postmarketing requirement for an additional confirmatory study to support full approval.

Regulatory authorities are placing greater focus on whether the sponsors of products originally approved on an accelerated or conditional basis have met the conditions of the accelerated or conditional approvals.

If we are unable to fulfill the regulators’ requirements that were

conditions of a product’s accelerated or conditional approval and/or if regulators reevaluate the data or risk-benefit profile of our product, the conditional approval may not result in full approval or may be revoked or not renewed.

If we are unable to fulfill the regulators’ requirements that were conditions of a product’s accelerated or conditional approval and/or if regulators reevaluate the data or risk-benefit profile of our product, the conditional approval may not result in full approval or may be revoked or not renewed.

Alternatively, we may be required to change the product’s labeled indications, conduct an additional confirmatory clinical trial, or even withdraw the product from the market.

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VBDS has been fatal in some of these patients.

On April 29, 2026, the Company submitted a CBE-30 supplement to the FDA.

The CBE-30 filing amends the hepatotoxicity warning language in the label to provide more information on cases of VBDS that have been observed in the postmarketing setting, including that cases with fatal outcomes have been reported, and modifies language regarding liver panel testing and treatment discontinuation rules.

On April 29, 2026, the Company submitted a CBE-30 supplement to the FDA and, in May 2026, the U.S.

label was updated to amend the hepatotoxicity warning language in the label to provide more information on cases of VBDS that have been observed in the postmarketing setting, including that cases with fatal outcomes have been reported, and modified the language regarding liver panel testing and treatment discontinuation rules.

On April 27, 2026, CDER issued a proposal to withdraw approval of TAVNEOS, alleging that there is new information indicating lack of substantial evidence of effectiveness for the drug and that ChemoCentryx’s application that resulted in FDA approval contained untrue statements of material facts.

ChemoCentryx, as the U.S.

marketing authorization holder, may request a hearing on this proposal, after which the FDA will determine whether there is a genuine and substantial issue of fact that requires a hearing.

If a hearing is not granted, the FDA may enter summary judgment and ultimately withdraw approval.

On April 30, 2026, the FDA posted a notice in the Federal Register that proposes to withdraw approval of TAVNEOS and announced an opportunity for ChemoCentryx to request a hearing on this proposal.

The Company intends to engage with the FDA, continues to believe that TAVNEOS demonstrates effectiveness and a favorable benefit-risk profile, and intends to follow the appropriate process to support its position.

On June 1, 2026, we requested a hearing on this proposal and subsequently submitted information supporting our request on July 23, 2026, including additional real world evidence data and data from an independent, blinded re-adjudication of certain study data that supported the FDA’s approval of TAVNEOS (the ADVOCATE Data).

If a hearing is not granted, the FDA may enter summary judgment and ultimately withdraw approval.

We cannot predict whether, or the extent to which, the FDA will consider the information we submitted sufficient to address its stated concerns regarding the reliability of the ADVOCATE data or the evidence supporting TAVNEOS’s effectiveness.

In addition, recommendations to or decisions by regulatory bodies outside the United States, such as a recent recommendation by the Committee for Medicinal Products for Human Use (CHMP), could adversely affect regulatory assessments in other jurisdictions.

The Company has engaged with regulatory authorities, continues to believe that TAVNEOS demonstrates clinical effectiveness and a favorable benefit-risk profile, and intends to follow the appropriate process to support its position.

As the FDA’s statement reporting its proposal indicates, TAVNEOS will remain on the market during the pendency of this process.

We cannot predict the outcome of these interactions with the FDA on this matter, and the FDA may require additional actions, including further labeling changes, warnings, monitoring, restrictions on use, postmarketing commitments or studies, and any such action or any withdrawal of regulatory approval for TAVNEOS could adversely affect our product sales of TAVNEOS, business and results of operations.

Regulatory authorities can also impose postmarketing pediatric study requirements.

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Risk Factors— Some of our products are used with drug delivery or companion diagnostic devices that have their own regulatory, manufacturing and other risks .

If regulatory agencies determine that we or other parties (including our clinical trial investigators, those operating our patient support programs or licensees of our

products) have not complied with the applicable reporting, other pharmacovigilance or other safety or quality assessment requirements, we may become subject to additional inspections, warning letters or other enforcement actions, including fines, marketing authorization withdrawal and other penalties.

If regulatory agencies determine that we or other parties (including our clinical trial investigators, those operating our patient support programs or licensees of our products) have not complied with the applicable reporting, other pharmacovigilance or other safety or quality assessment requirements, we may become subject to additional inspections, warning letters or other enforcement actions, including fines, marketing authorization withdrawal and other penalties.

Our product candidates and marketed products can also be affected by safety problems or signals occurring with respect to products that are similar to ours or that implicate an entire class of products.

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In addition, if we are unable to bring our biosimilar products to market on a timely basis and secure “first-to-market” or other advantageous positions, our future biosimilar sales, business and results of operations could be materially and adversely affected.

Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Our operations and performance have been affected, and may continue to be affected, by uncertain global economic conditions, including those arising from geopolitical and trade policy tensions and market volatility.

In addition, fiscal and budgetary pressures in the United States and other jurisdictions, including uncertainty around, or reprioritization of, government funding and constrained government resources, may disrupt government operations and regulatory activities and increase

pressure on healthcare budgets and reimbursement policies.

See Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability .

Further, the ongoing conflict in the Middle East may negatively affect our sales in that region and has increased volatility in energy and transportation markets, resulting in higher costs and, in some cases, disruptions and delays in shipping and travel, which has increased, and may continue to increase, our costs, disrupt the supply of materials, components, services and personnel needed for our operations, and the conflict has also heightened corporate security and cybersecurity risks, which could adversely affect our operations and results.

As a result of global economic conditions, some third-party payers may delay or be unable to satisfy their reimbursement obligations.

Job losses or other economic hardships (including inflation) may also affect patients’ ability to afford healthcare as a result of increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare insurance coverage or for other reasons.

We believe such conditions have led and could continue to lead to reduced demand for our products, which could have a material adverse effect on our product sales, business and results of operations.

Our operational costs, including the cost of materials, labor, distribution, energy and our other operational and facilities costs are subject to market conditions and may be impacted by the effects of the current conflict in the Middle East.

Although we monitor our distributors’, customers’ and suppliers’ financial condition and their liquidity to mitigate our business risks, some of our distributors, customers and suppliers may become insolvent, which could have a material adverse effect on our product sales, business and results of operations.

A significant worsening of global economic conditions could precipitate or materially amplify the other risks described herein.

Ongoing changes to U.S.

trade and tariff policies, including the imposition, modification, suspension and threatened expansion of tariffs on imported goods, as well as retaliatory measures by foreign governments, have increased uncertainty in the overall business and operating environment, and have, to a limited extent, adversely affected our operating costs.

In October 2025 the Administration initiated a Section 301 investigation relating to China’s implementation of the Economic and Trade Agreement between the U.S.

and Chinese governments, and while no new tariff action has been announced in connection with that investigation, it or similar investigations could lead to additional trade measures in the future.

Given the many uncertainties and variables, including the scope of exemptions, company-specific arrangements, future trade agreements, and the potential for retaliatory measures or additional trade actions, it remains unclear the extent, and degree, to which existing and future tariffs will disrupt and adversely affect our business activities (including product sales, and conduct of clinical trial and research and development activities), and the global economic environment, and/or amplify the other risks described herein.

We maintain a significant portfolio of investments on our consolidated balance sheets.

Global capital markets have experienced, and may continue to experience, periods of volatility and disruption, including as a result of interest rate fluctuations, inflation, liquidity conditions, credit market stress and geopolitical events.

Certain of our assets, including equity investments, are exposed to market fluctuations that, in a sustained or recurrent series of market disruptions, could result in impairments or losses on sale.

The value of our investments may also be adversely affected by interest rate fluctuations, inflation, downgrades in credit ratings, illiquidity in the capital markets, geopolitical events and other factors that may result in other-than-temporary declines in the value of our investments.

Any of those events could cause us to record impairment charges with respect to our investment portfolio or to realize losses on sales of investments.

We also maintain a majority of our cash and cash equivalents in accounts with major multi-national financial institutions, and our deposits at these institutions exceed insured limits.

Market conditions can adversely affect the viability of these institutions.

In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.

Inability to access, or a delay in accessing these funds, could adversely affect our business and financial position.

Manufacturing difficulties, disruptions or delays could limit supply of our products and limit our product sales.

Manufacturing biologic and small molecule human therapeutic products is difficult, complex and highly regulated.

We manufacture many of our commercial products and product candidates internally.

In addition, we use third-party contract manufacturers to produce, or assist in the production of, a number of our products, and we currently use contract manufacturers to produce, or assist in the production of, a number of our late-stage product candidates and drug delivery devices.

The number of third-party contract manufacturers that we use has increased with our acquisition of Horizon, as Horizon required contract manufacturers for all of its products.

See our Annual Report on Form 10-K for the year ended December 31, 2025, Part I, Item 1.

Business—Manufacturing, Distribution and Raw Materials— Manufacturing ;

and Part I, Item 1A.

Risk Factors— Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions .

Our ability to adequately and timely manufacture and supply our products (and product candidates to support our clinical trials) is dependent on the uninterrupted and efficient operation of our facilities and those of our third-party contract manufacturers.

For example, our acquisition of Horizon resulted in the addition of more than 30 contract manufacturing organizations (CMOs) to our operations, many of which are single-source suppliers, including the CMO that produces TEPEZZA drug substance and the CMO that produces all of our KRYSTEXXA drug substance in Israel, which is affected by the current conflict in the Middle East, including the conflict with Iran.

Our manufacturing and supply operations may be affected by:

• capacity of manufacturing facilities;

• contamination by microorganisms or viruses, or foreign particles from the manufacturing process;

• natural or other disasters, including hurricanes, earthquakes, volcanoes or fires;

• labor disputes or shortages, including the effects of health emergencies (such as novel viruses or pandemics) or natural disasters;

• compliance with regulatory requirements;

• changes in forecasts of future demand;

• timing and actual number of production runs and production success rates and yields;

• updates of manufacturing specifications;

• contractual disputes with our suppliers and contract manufacturers;

• timing and outcome of product quality testing;

• power failures and/or other utility failures;

• cyberattacks on supplier systems;

• breakdown, failure, substandard performance or improper installation or operation of equipment (including our information technology systems and network-connected control systems or those of our contract manufacturers or third-party service providers);

• delays in the ability of the FDA or foreign regulatory agencies to provide us necessary reviews, inspections and approvals, including as a result of a subsequent extended U.S.

federal or other government shutdowns;

• tariffs or other trade barriers that increase costs, limit availability, or disrupt the flow of goods;

• geopolitical conflicts (such as the ongoing conflicts in Ukraine and the Middle East).

If any of these or other problems affect production in one or more of our facilities or those of our third-party contract manufacturers, or if we do not accurately forecast demand for our products or the amount of our product candidates required in clinical trials, we may be unable to start or increase production in our unaffected facilities to meet demand, particularly where such facilities are operating at or near capacity.

If the efficient manufacture and supply of our products or product candidates is interrupted, we may experience delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends, contract disputes and/or recalls of our products.

From time to time, we have initiated recalls of certain lots of our products.

For example, in June 2026, we initiated recalls of certain lots of KYPROLIS distributed in Türkiye and certain lots of Corlanor and Sensipar distributed in the United States.

Although these recalls have not had a significant impact on our business, future recalls may be more significant and could adversely affect our ability to supply affected products, result in regulatory actions or reputational harm, and/or reduce demand for affected products, or increase our costs.

If we are at any time unable to provide an uninterrupted supply of our products to patients, we may lose patients and physicians may elect to prescribe competing therapeutics instead of our products, which could have a material adverse effect on our product sales, business and results of operations.

We are expanding our manufacturing capabilities to support current and anticipated demand for our products and product candidates.

These expansion efforts are complex, capital-intensive and subject to significant risks, including construction, validation and quality assurance challenges;

delays or unfavorable outcomes from regulatory inspections or approvals;

labor availability and workforce readiness issues;

supply chain disruptions;

and contractual disputes with suppliers or contractors.

These expansion efforts may not alleviate capacity constraints when needed or provide capacity that is available, approved, operating at expected yields or suitable for the products, processes or geographies where demand or supply needs arise, which may limit our ability to absorb demand increases, production disruptions, quality events or delays at other facilities or contract manufacturers.

We may be unable to realize anticipated efficiencies or returns on our investments if there are delays or failures of our product development programs or our receipt of regulatory approvals, if our new or expanded facilities require extended periods to achieve planned production capacity or expected yields, or if demand for our products or product candidates changes or fails to materialize.

These efforts often rely on a single or limited number of vendors and suppliers, and identifying or qualifying alternatives may not be feasible or may require significant time and expense due to the specialized nature of our manufacturing requirements.

In addition, tariffs on imported equipment, construction materials or key inputs increased our costs, to a limited extent, in 2025, and, going forward, such tariffs, or other tariffs imposed in the future, could further increase costs, potentially disrupt supply chains, and put at risk the timely and cost-effective execution of these projects.

Our manufacturing processes, those of our third-party contract manufacturers and those of certain of our third-party service providers must undergo regulatory approval processes and are subject to continued review by the FDA and other regulatory authorities.

It can take longer than five years to build, validate and license another manufacturing plant, and it can take longer than three years to qualify and license a new contract manufacturer or service provider.

If we elect or are required to make changes to our manufacturing processes because of new regulatory requirements, new interpretations of existing requirements or other reasons, this could increase our manufacturing costs and result in delayed shipments, delays in our clinical trials, supply constraints, stock-outs, adverse event trends or contract negotiations or disputes.

Such manufacturing challenges may also occur if our existing contract manufacturers are unable or unwilling to timely implement such changes, or at all.

In addition, regulatory agencies conduct routine monitoring and inspections of our manufacturing facilities and processes as well as those of our third-party contract manufacturers and service providers.

If regulatory authorities determine that we or our third-party contract manufacturers or certain of our third-party service providers have violated regulations, they may mandate corrective actions and/or issue warning letters, or even restrict, suspend or revoke our prior approvals, prohibiting us from manufacturing our products or conducting clinical trials or selling our marketed products, either until we or the affected third-party contract manufacturers or third-party service providers comply, or indefinitely.

See our Annual Report on Form 10-K for the year ended December 31, 2025, Part I, Item 1A.

Risk Factors— Our current products and products in development cannot be sold without regulatory approval.

Such issues may also delay the approval of product candidates we have submitted for regulatory review, even if such product candidates are not directly related to the products, devices or processes at issue with regulators.

Regulatory authorities may also interpret issues identified with respect to a single manufacturing line as reflecting broader quality or procedural concerns that apply to other lines or facilities, which could delay approvals or adversely affect operations at other facilities.

Because our third-party contract manufacturers and certain of our third-party service providers are subject to the FDA and foreign regulatory authorities, alternative qualified third-party contract manufacturers and third-party service providers may not be available on a timely basis, or at all.

If we or our third-party contract manufacturers or third-party

service providers cease or interrupt production or if our third-party contract manufacturers and third-party service providers fail to supply materials, products or services to us, we may experience delayed shipments, delays in our clinical trials, supply constraints, contract disputes, stock-outs and/or recalls of our products.

Additionally, we distribute a substantial volume of our commercial products through our primary distribution centers in Louisville, Kentucky for the United States and in Breda, Netherlands for Europe and much of the rest of the world.

We also conduct most of the labeling and packaging of our products distributed in Europe and much of the rest of the world in Breda.

Our ability to timely supply products is dependent on the uninterrupted and efficient operations of our distribution and logistics centers, our third-party logistics providers and our labeling and packaging facility in Breda.

Further, we rely on commercial transportation, including air and sea freight, for the distribution of our products to our customers, which has been negatively affected by pandemics, labor unrest, natural disasters and geopolitical security threats.

Changes in laws or regulations with respect to the use and/or presence of certain chemicals in our products or the components used in the research, development, manufacture and/or packaging of our products could also disrupt or restrict our ability to develop, produce or sell our products.

For example, the EU, Canada, the U.S.

Congress, the U.S.

Environmental Protection Agency, and several U.S.

states are considering legislation and/or policies to address the reporting, presence, and/or use, of certain chemicals in certain of the components used in the manufacture or packaging of commercial products, including chemicals known as per- and polyfluorinated substances (PFAS).

In 2024, Canada (through Environment and Climate Change Canada) issued a notice requiring reporting on PFAS manufacture, import, and use in Canada.

In addition, proposed legislation in several jurisdictions is under consideration to prohibit or otherwise regulate the importation, manufacture, or distribution of goods containing PFAS, and some such proposals do not provide exemptions for drug products, medical devices, their packaging, or the materials used in the research, development, or manufacture of such products or devices.

For example, the EU is considering a ban on PFAS in the manufacturing and packaging of pharmaceutical products that could affect pharmaceutical research and development activities and commercial distribution.

Some proposals, if enacted without exemptions for pharmaceutical products, and materials used in their research, development, and manufacture, or without adequate time to research and develop or otherwise identify alternative materials or suppliers, may cause significant disruptions to our ability to manufacture and supply products to the affected jurisdictions, potentially resulting in a material adverse effect on our business.

There have also been legislative and administrative proposals seeking to incentivize greater drug manufacturing in the United States with the stated goal of improving supply reliability in the United States.

For example, one legislative proposal would have prohibited the U.S.

Department of Veterans Affairs from purchasing certain drugs that have active pharmaceutical ingredients manufactured outside the United States.

While we perform a substantial majority of our commercial manufacturing activities in the United States, including in the U.S.

territory of Puerto Rico, and a substantial majority of our clinical manufacturing activities at our facility in Thousand Oaks, California, the passage of such legislation could result in foreign governments enacting retaliatory legislation or regulatory actions, which may have an adverse effect on our product sales, business and results of operations.

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-Q

Item 1A. Risk Factors