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Item 1A. Risk Factors

2021-03-15 compared with 2020-03-16 · 633 added, 559 removed, 708 unchanged (63% of the section changed)

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In that case, the market value of our common stock could decline substantially and you could lose part or all of your investment.

Summary of Risk Factors

Our business is subject to numerous risks and uncertainties that you should consider before investing in our company, as fully described below.

The principal factors and uncertainties that make investing in our company risky include, among others:

● our success depends on our ability to develop and/or acquire and commercialize additional pharmaceutical products;

● our Primatene Mist ® , lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues;

if the sales volume or pricing of our lidocaine, phytonadione, and enoxaparin products decline, or if we are unable to satisfy market demand for these products, they could have a material adverse effect on our business, financial position and results of operations;

● our success depends on the integrity of our supply chain, including multiple single source suppliers, the disruption of which could negatively impact our business;

● our ability to develop new products and additional revenue streams depends upon a variety of factors including being able to invest ongoing revenue and borrow funds or raise additional capital when needed;

● we face significant competition in the pharmaceutical industry with respect to both our proprietary and generic drugs, which may result in others developing or commercializing products before or more successfully than we do, which could significantly limit our growth and materially and adversely affect our financial results;

● health care providers may not be receptive to our products, particularly those that incorporate our proprietary drug delivery platforms;

● sales of our products may be adversely affected by the continuing consolidation of our customer base;

● our business may be adversely affected by the current COVID-19 pandemic or other epidemics;

● we depend upon our key personnel, the loss of whom could adversely affect our operations.

If we fail to attract and retain the talent required for our business, our business could be materially harmed;

● because a portion of our manufacturing takes place in China, a significant disruption in the construction or operation of our manufacturing facility in China, political unrest in China, tariffs, impact of outbreaks of health epidemics, such as the COVID-19 pandemic, or changes in social, political, trade, health, economic, environmental, or climate-related conditions or in laws, regulations and policies governing foreign trade could materially and adversely affect our business, financial condition and results of operations;

● we may be exposed to product liability claims and may not be able to obtain or maintain adequate product liability insurance;

● our ability to enter the market with a generic product can hinge upon the success of litigation – challenging existing patents and negotiating favorable settlements or obtaining favorable results.

Many variables can impact litigation and adverse rulings or unfavorable settlements could delay anticipated market entries and subject us to damages;

● we are exposed to risks related to our international operations and failure to manage these risks may adversely affect our operating results and financial condition;

● the FDA approval process is time-consuming and complicated, and we may not obtain the FDA approval required for a product within the timeline we desire, or at all;

additionally, we may lose FDA approval and/or our products may become subject to foreign regulations;

● the novel use of particle engineering or synthetic APIs for any of our product candidates, may not receive regulatory approval, and without regulatory approval we will not be able to market our product candidates;

● if clinical studies for our product candidates are unsuccessful or significantly delayed, we will be unable to meet our anticipated development and commercialization timelines, which would have an adverse impact on our business;

● if pharmaceutical companies are successful in limiting the use of generics through their legislative, regulatory and/or other efforts, our sales of generic products may suffer;

● our success depends on our ability to detect, protect, and enforce our intellectual property;

● we have a concentration in our ownership held by a few stockholders, which stockholders will be able to exert significant control over matters subject to stockholder approval.

Risks Relating to Our Business and Industry

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Commercialization requires that we successfully and cost-effectively develop, test and manufacture or otherwise acquire both generic and proprietary products.

All of our products must receive regulatory approval and meet (and continue to comply with) regulatory and safety standards.

If health or safety concerns arise with respect to a product, we may be forced to withdraw it from the market.

For example, as a result of environmental concerns over the use of chlorofluorocarbons, or CFCs, the FDA, issued a final rule on January 16, 2009, that required the phase-out of the CFC formulation of our Primatene ®

Mist product by December 31, 2011.

As a result, in order to resume selling Primatene ®

Mist we had to develop a formulation of the product that uses hydrofluoroalkane, or HFA, as the propellant, and obtain FDA approval for the modified product, which took a significant amount of time and was not re-launched until December 2018.

All of our products must receive regulatory approval and meet (and continue to comply with) regulatory standards and requirements, including continued safety and efficacy standards.

If health or safety concerns arise with respect to a product, we may be forced to withdraw it from the market and be exposed to greater liability, including product liability lawsuits.

As a result, in order to resume selling Primatene Mist ® we had to develop a formulation of the product that uses hydrofluoroalkane, or HFA, as the propellant, and obtain FDA approval for the modified product, which took a significant amount of time and was not re-launched until

December 2018.

There can be no guarantee that our investment in research and development activities will result in FDA approval or produce commercially viable new products.

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Necessary regulatory approvals may not be obtained in a timely manner, if at all, and we may not be able to produce and market such products successfully and profitably.

For example, we filed an abbreviated new drug application, or ANDA, for our enoxaparin product in March 2003, but FDA approval was not granted until September 2011 due to delays caused largely by the FDA’s requirement that we perform immunogenicity studies and the receipt of an FDA warning letter and FDA Import Alert by the supplier of the starting material for our enoxaparin product.

For example, we filed an ANDA, for our enoxaparin product in March 2003, but FDA approval was not granted until September 2011 due to delays caused largely by the FDA’s requirement that we perform immunogenicity studies and the receipt of an FDA warning letter and FDA Import Alert by the supplier of the starting material for our enoxaparin product.

Following FDA approval, we became involved in litigation with Momenta Pharmaceuticals, Inc.

and Sandoz Inc., which further delayed the commercial launch of our enoxaparin product until January 2012.

Delays in any part of the process, or our inability to obtain regulatory approval of our products, could adversely affect our operating results by restricting or delaying our introduction of new products, which could cause the market value of our products to decline.

Delays in any part of the process, or our inability to obtain regulatory approval of our products, including litigation with competitors and regulatory compliance of our suppliers and contractors, could adversely affect our operating results by restricting or delaying our introduction of new products, which could adversely impact our ability to market a prospective product.

FDA and similar regulatory agencies may change or impose new regulatory requirements on our products, which could require us to perform additional studies, expand additional resources on regulatory compliance, or delay our commercialization plan.

To the extent that we expend significant resources on research and development efforts and are not able, ultimately, to introduce successful new products as a result of those efforts, our business, financial position and results of operations may be materially and adversely affected, and the market value of our common stock could decline.

Our ability to introduce new generic products also depends upon our success in challenging patent rights held by third

parties or in developing non-infringing products.

Our ability to introduce new generic products also depends upon our success in challenging patent rights held by third parties or in developing non-infringing products.

Due to the emergence and development of competing products over time, our overall profitability depends on, among other things, our ability to introduce new products in a timely manner, to continue to manufacture products cost-effectively and to manage the life cycle of our product portfolio.

If we are unable to cost-effectively maintain an adequate flow of successful generic and proprietary products and new indications and/or delivery methods for existing products sufficient to cover our substantial research and development costs and the decline in sales of older products that either become subject to generic competition, or are displaced by competing products or therapies, it could have a material adverse effect on our business, financial condition or results of operations.

Our lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues.

If the sales volume or pricing of our lidocaine, phytonadione, and enoxaparin products continues to decline, or if we are unable to satisfy market demand for these products, they could have a material adverse effect on our business, financial position and results of operations.

Our Primatene Mist ® , lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues.

If the sales volume or pricing of our lidocaine, phytonadione, and enoxaparin products decline, or if we are unable to satisfy market demand for these products, they could have a material adverse effect on our business, financial position and results of operations.

Sales from our Primatene Mist ® product represented 15%, 6%, and 1% of our total net revenues for the years ended December 31, 2020, 2019, and 2018, respectively.

Sales from our lidocaine products represented 12%, 14%, and 15% of our total net revenues for the years ended December 31, 2020, 2019, and 2018, respectively.

Sales from our phytonadione product represented 12%, 14%, and 14% of our total net revenues for the years ended December 31, 2020, 2019, and 2018, respectively, and sales of our enoxaparin product represented 14%, 13%, and 18% of our total net revenues for the years ended December 31, 2020, 2019, and 2018, respectively.

We are currently experiencing declining revenue from enoxaparin and some of our other existing products and we may operate at a loss in the near term while continuing to invest in developing new products.

We have experienced declining revenue from enoxaparin and some of our other existing products in the past and we may operate at a loss in the near term while continuing to invest in developing new products.

If the sales volume or pricing of enoxaparin continues to decline, or if the sales volume or pricing of lidocaine and phytonadione declines, or if we are unable to satisfy market demand for these products, our business, financial position and results of operations could be materially and adversely affected, and the market value of our common stock could decline.

For example, our enoxaparin product experienced a decline in sales from $53.4 million in 2018 to $42.7 million in 2019 as a result of declining per unit prices as well as lower market share due to intense pricing competition in the pharmaceutical industry.

For example, our enoxaparin product continues to see increased competition in the market, which could result in declining per unit prices as well as lower market share due to intense pricing competition in the pharmaceutical industry.

We have experienced significant declines in the per unit pricing and gross margins attributable to our enoxaparin product since its commercial launch.

Our lidocaine, phytonadione, and enoxaparin products could be rendered obsolete or negatively impacted by numerous factors, many of which are beyond our control, including:

Our Primatene Mist ® , lidocaine, phytonadione, and enoxaparin products could be rendered obsolete or negatively impacted by numerous factors, many of which are beyond our control, including:

● decreasing average sales prices;

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Our business may generate operating losses if we do not successfully commercialize our product candidates, maintain sales of and profits from existing products, and generate sufficient revenues to support our level of operating expenses, especially as we continue our investment in developing new products.

Because of the numerous risks

and uncertainties associated with our commercialization efforts and future product development, we are unable to predict whether we will be able to maintain profitability.

Because of the numerous risks and uncertainties associated with our commercialization efforts and future product development, we are unable to predict whether we will be able to maintain profitability.

Our ability to develop new products and additional revenue streams depends upon our ability to invest ongoing revenue, borrow funds or raise additional capital when needed.

Developing a single product in the pharmaceutical industry is a very expensive proposition with no certainty of regulatory clearance or commercial success.

Considerable amounts are invested into the research and development process.

Our research and development expense was $67.2 million, $68.9 million, and $57.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

As noted elsewhere herein, ongoing revenue from current operations is a critical component of being able to adequately fund ongoing research and development efforts in our product pipeline.

Likewise, the ability to borrow funds at an attractive rate is another factor in being able to fund research and development activities.

Finally, being able to access the raise additional funds through the capital markets is another factor in being able to fund research and development.

If any one, or all, of these sources become unavailable, our research and development projects may become delayed or negatively impacted.

Our success depends on the integrity of our supply chain, including multiple single source suppliers, the disruption of which could negatively impact our business.

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Subsequently, we received FDA approval to make heparin USP from crude heparin using processes at our ANP and IMS facilities.

In 2013, our single source supplier of epinephrine API for our Primatene ®

Mist product received a warning letter from the FDA, which our supplier has since addressed.

In the future, it is possible that our suppliers will receive warning letters from the FDA and be unsuccessful in their efforts to address the issues raised in such warning letters on a timely basis, or at all, or may discontinue production of raw materials, components or APIs used in our products or product candidates and would result in delays in commercialization and/or manufacturing of our products or product candidates if FDA approval for such products or product candidates is received.

In 2013, our single source supplier of epinephrine API for our Primatene Mist ® product received a warning letter from the FDA, which our supplier has since addressed.

discontinue production of raw materials, components or APIs used in our products or product candidates and would result in delays in commercialization and/or manufacturing of our products or product candidates if FDA approval for such products or product candidates is received.

Furthermore, we may be unable to replace such supplier with an alternate supplier on a commercially reasonable and timely basis, or at all.

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However, if market demand decreases or if market supply surpasses demand, whether because of macroeconomic factors, pharmaceutical industry volatility, or deficiencies specific to our customers, we may not be able to reduce manufacturing expenses or overhead costs proportionately.

For example, a significant portion of our manufacturing capacity in our facility in Éragny-sur-Epte, France is utilized for the manufacturing of insulin API for MannKind, and a significant portion of our manufacturing capacity in Rancho Cucamonga is utilized for the manufacture of enoxaparin.

In November 2016, we amended our supply agreement with MannKind, or the Supply Agreement and our option purchase agreement with MannKind, or the Option Agreement, to modify and extend the annual minimum purchase commitments under the Supply Agreement and the Option Agreement to cover calendar years 2014 through 2023.

Additionally, in December 2018, we again amended our supply agreement with MannKind to modify and extend the annual minimum purchase commitments under the Supply Agreement and the Option Agreement to cover calendar years 2019 through 2024.

In August 2019, we amended the Supply Agreement with

MannKind to modify and extend the annual minimum purchase commitment under the Supply Agreement for an additional two years through 2026.

In August 2019, we amended the Supply Agreement with MannKind to modify and extend the annual minimum purchase commitment under the Supply Agreement for an additional two years through 2026.

While the aggregate total purchase commitment remains unchanged, the amendments to the Supply Agreement and the Option Agreement have resulted and will continue to result in reduced sales of API for MannKind on an annual basis.

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The majority of our marketed products are generic products.

We face and will face significant competition for our products and product candidates from pharmaceutical companies that focus on the generic injectable and inhalation markets such as Pfizer, Inc., Sagent Pharmaceuticals, Inc., Akorn, Inc., Sandoz Inc., Mylan Inc., Fresenius Kabi USA, Nexus Pharmaceuticals, Apotex Corp., Amneal Biosciences, American Regent, Inc., Hikma Pharmaceuticals USA, Par Pharmaceuticals, Cipla USA Inc., Meitheal Pharmaceuticals, Dr, Reddy’s Laboratories, Inc.

We face and will face significant competition for our products and product candidates from pharmaceutical companies that focus on the generic injectable and inhalation markets such as Pfizer, Inc., Sagent Pharmaceuticals, Inc., Akorn, Inc., Sandoz Inc., Viatris Inc., Fresenius Kabi USA, Nexus Pharmaceuticals, Apotex Corp., Amneal Biosciences, American Regent, Inc., Hikma Pharmaceuticals USA, Par Pharmaceuticals, Cipla USA Inc., Meitheal Pharmaceuticals, Dr, Reddy’s Laboratories, Inc.

and Teva Pharmaceutical Industries Ltd.

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Many of our competitors have been in business for a longer period of time than us, have a greater number of products on the market and have greater financial and other resources than we do.

Furthermore, recent trends in this industry are toward further market consolidation of large drug companies into a smaller number of very large

entities, further concentrating financial, technical and market strength and increasing competitive pressure in the industry.

Furthermore, recent trends in this industry are toward further market consolidation of large drug companies into a smaller number of very large entities, further concentrating financial, technical and market strength and increasing competitive pressure in the industry.

If we directly compete with large entities for the same markets and/or products, their financial strength could prevent us from capturing a profitable share of those markets.

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ANDAs that contain Paragraph IV certifications challenging patents, however, generally become the subject of patent litigation that can be both lengthy and costly.

There is no certainty that we will prevail in any such litigation, that we will be the first-to-file and granted the 180-day marketing exclusivity period or, if we are granted the 180-day marketing exclusivity period, that we will not forfeit such period.

period, that we will not forfeit such period.

Even where we are awarded marketing exclusivity, we may be required to share our exclusivity period with other ANDA applicants who submit Paragraph IV certifications.

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Brand companies may also reduce the price of their brand product to compete directly with generics entering the market, which similarly would have the effect of reducing gross margins.

Furthermore, timely commencement of litigation by the patent owner imposes an automatic stay of ANDA approval by the FDA for 30 months, unless the case is decided in the ANDA applicant’s favor during that period.

Finally, if the court’s decision is adverse to the ANDA applicant, the ANDA approval will be delayed until the challenged patent expires, and the applicant will not be granted the 180-day marketing exclusivity.

Accordingly, our revenues and future profitability are dependent, in large part, upon our ability or the ability of our development partners to file ANDAs with the FDA timely and effectively or to enter into contractual relationships with other parties that have obtained marketing exclusivity.

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As competing manufacturers receive regulatory approvals on generic products or as brand manufacturers launch generic versions of their products (for which no separate regulatory approval is required), market share, revenues and gross profit typically decline, often significantly and rapidly.

Accordingly, the level of market share, revenue and gross profit attributable to a particular generic product normally is related to the number of competitors in that product’s market and the timing of that product’s regulatory approval and launch, in relation to competing approvals and launches.

For example, enoxaparin is currently marketed by Sanofi, under the brand name Lovenox ®

Sanofi also markets its authorized generic enoxaparin product through its subsidiary, Winthrop, Apotex Corp.

and Teva Pharmaceuticals Industries Ltd.

For example, enoxaparin is currently marketed by Sanofi, under the brand name Lovenox ® .

Sanofi also markets its authorized generic enoxaparin product through its subsidiary, Winthrop, Fresenius Kabi USA, Apotex Corp.

and Meithael Pharmaceuticals, Inc.

also either market or plan to market a generic version of enoxaparin.

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Since the commercial launch of our enoxaparin product, we have experienced significant declines in sales volume, per unit pricing and gross margins attributable to this product.

Consequently, we must continue to develop and introduce new generic products in a timely and cost-effective manner to maintain our

revenues and gross margins.

Consequently, we must continue to develop and introduce new generic products in a timely and cost-effective manner to maintain our revenues and gross margins.

We may have fewer opportunities to launch significant generic products in the future, as the number and size of proprietary products that are subject to patent challenges is expected to decrease in the next several years compared to historical levels.

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Competition in the generic drug industry has also increased due to the proliferation of authorized generic pharmaceutical products.

“Authorized generics”

are generic pharmaceutical products that are introduced by brand companies, either directly or through partnering arrangements with other generic companies.

Authorized generics are equivalent to the brand companies’

brand name drugs, but are sold at relatively lower prices than the brand name drugs.

“Authorized generics” are generic pharmaceutical products that are introduced by brand companies, either directly or through partnering arrangements with other generic companies.

Authorized generics are equivalent to the brand companies’ brand name drugs, but are sold at relatively lower prices than the brand name drugs.

An authorized generic product can be marketed during the 180-day exclusivity granted to the first manufacturer or manufacturers to submit an ANDA with a Paragraph IV certification for a generic version of the brand product.

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This is a significant source of competition for us because brand companies do not face any regulatory barriers to introducing authorized generics of their products.

Because authorized generics may be sold during our exclusivity periods, if any, they can materially decrease the profits that we could otherwise receive as an exclusive marketer of a generic alternative.

Because authorized generics may be sold during our exclusivity periods, if any, they can materially decrease the profits that we could otherwise receive as an exclusive

marketer of a generic alternative.

Such actions have the effect of reducing the potential market share and profitability of our generic products and may inhibit us from developing and introducing generic pharmaceutical products corresponding to certain brand name drugs.

Such competition can also result from the entry of generic versions of another product in the same therapeutic class as one of our drugs, or in another competing therapeutic class, or from the compulsory licensing of our products by governments, or from a general weakening of intellectual property laws in certain countries around the world.

In addition, the goals established under the Generic Drug User Fee Act, and increased funding of the FDA’s Office of Generic Drugs, have led to more and faster generic approvals, and consequently increased competition for some of our products.

The FDA has stated that it has established new steps to enhance competition, promote access and lower drug prices and is approving record-breaking numbers of generic applications.

While these FDA improvements are expected to benefit our generic product pipeline, they will also benefit competitors that seek to launch products in established generic markets where we currently offer products.

If the market for a reference brand product, such as Lovenox ®

, significantly declines, sales or potential sales of our generic and biosimilar products and product candidates may suffer and our business would be materially impacted.

If the market for a reference brand product, such as Lovenox ® , significantly declines, sales or potential sales of our generic and biosimilar products and product candidates may suffer and our business would be materially impacted.

Proprietary products face competition on numerous fronts as technological advances are made or new products are introduced.

As new products are approved that compete with the reference proprietary product to our generic products and generic or biosimilar product candidates, such as Lovenox ®

, which is the reference brand product for our enoxaparin product, sales of the reference brand products may be significantly and adversely impacted and may render the reference brand product obsolete.

As new products are approved that compete with the reference proprietary product to our generic products and generic or biosimilar product candidates, such as Lovenox ® , which is the reference brand product for our enoxaparin product, sales of the reference brand products may be significantly and adversely impacted and may render the reference brand product obsolete.

In addition, brand companies may pursue life cycle management strategies that also impact our generic products.

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● the product labeling approved by the FDA for our products and for competing products;

the willingness of third party payers to reimburse for our prescription products;

● the willingness of third-party payers to reimburse for our prescription products and the level of any reimbursement provided for our prescription products;

● the willingness of pharmacy chains to stock our new products;

● the willingness of consumers to pay for our products;

● legislative and regulatory efforts implemented by federal, state, or foreign governments to contain health care costs and prescription drug pricing, including measures that increase our reporting obligations to regulatory authorities and that impact how our customers purchase our drug products.

Our products, if successfully developed and commercially launched, will compete with both currently marketed products and new products launched in the future by other companies.

Health care providers may not accept or utilize some of our products.

Health care providers may not accept or utilize some of our

Physicians and other prescribers may not be inclined to prescribe our prescription products unless our products demonstrate commercially viable advantages over other products currently marketed for the same indications.

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Many of the existing and potential customers for our products have combined to form group purchasing organizations in an effort to lower costs.

Group purchasing organizations negotiate pricing arrangements with medical supply manufacturers and distributors, and these negotiated prices are made available to a group purchasing organization’s affiliated hospitals and other members.

Group purchasing organizations provide end-users access to a broad range of pharmaceutical products from multiple suppliers at competitive prices and, in certain cases, exercise considerable influence over the drug purchasing decisions of such end-users.

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Maintaining our strong relationships with these group purchasing organizations will require us to continue to be a reliable supplier, offer a broad product line, remain price competitive, comply with FDA regulations and provide high-quality products.

Although our group purchasing organization pricing agreements are typically multi-year in duration, most of them may be terminated by either party with 60 or 90 days ’

Although our group purchasing organization pricing agreements are typically multi-year in duration, most of them may be terminated by either party with 60 or 90 days’ notice.

The group purchasing organizations with which we have relationships may have relationships with manufacturers that sell competing products, and such group purchasing organizations may earn higher margins from these competing products or combinations of competing products or may prefer products other than ours for other reasons.

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hospitals with a number of generic drugs.

In January 2018, Amazon Inc., Berkshire Hathaway Inc.

and JPMorgan Chase & Co., announced that they plan to join forces by forming an independent health care company for their combined one million U.S.

This initiative is expected to further increase competition and enhance price erosion.

These changes to the traditional supply chain could lead to our customers having increased negotiation leverage and to additional pricing pressure and price erosion.

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Pursuant to certain distribution or collaboration agreements, the success of some of our products or product candidates also depends on the success of the collaboration with our business partners, who are responsible for certain aspects of researching, developing, marketing, distributing or commercializing our products or product candidates.

If any such agreement were to be terminated in accordance with its terms, including due to a party’s failure to perform its obligations or responsibilities under the agreement, revenues could be delayed or diminished from these products and our revenues and/or profit share for these products could be adversely impacted.

We depend upon our key personnel, the loss of whom could adversely affect our operations.

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The loss of services from any of these persons may significantly delay or prevent the achievement of our product development or business objectives.

Our officers all serve “at will”

and we or they can terminate their employment with us at any time.

We do not carry key man life insurance on any key personnel.

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Also, to the extent we hire personnel from competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or work product.

Because a portion of our manufacturing takes place in China, a significant disruption in the construction or operation of our manufacturing facility in China, political unrest in China, tariffs, impact of outbreaks of health epidemics, such as the COVID-19 coronavirus outbreak, or changes in social, political, trade, health, economic, environmental, or climate-related conditions or in laws, regulations and policies governing foreign trade could materially and adversely affect our business, financial condition and results of operations.

We currently manufacture the starting material for Amphadase ®

and enoxaparin as well as the APIs for isoproterenol and nitroprusside at our manufacturing facility in China, and we plan to use this facility to manufacture several of the APIs for products in our pipeline.

Additionally, we intend to continue to invest in the expansion of this manufacturing facility.

Our manufacturing facility and operations in China involve significant risks, including:

disruptions in the construction of the manufacturing facility;

interruptions to our operations in China or the inability of our manufacturing facility to produce adequate quantities of raw materials or APIs to meet our needs as a result of natural catastrophic events or other causes beyond our control such as power disruptions or widespread disease outbreaks, including the recent outbreaks that impact animal-derived products, such as the importation of pig-derived crude heparin from countries impacted by the African swine flu, and outbreak of the coronavirus known as COVID-19, which has resulted in and may in the future result in , business closures, transportation restrictions, import and export complications, and otherwise cause shortages in the supply of raw materials or cause disruptions in our manufacturing capability ;

product supply disruptions and increased costs as a result of heightened exposure to changes in the policies of the Chinese government, political unrest or unstable economic conditions in China;

the imposition of tariffs or other trade barriers as a result of changes in social, political, and economic conditions or in laws, regulations, and policies governing foreign trade, including the tariffs previously implemented and additional tariffs that have been proposed by the U.S.

government on various imports from China and by the Chinese government on certain U.S.

goods, the scope and duration of which, if implemented, remain uncertain;

the nationalization or other expropriation of private enterprises or intellectual property by the Chinese government, which could result in the total loss of our investment in China;

interruptions to our manufacturing or business operations resulting from geo-political actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics such as coronavirus, or outbreaks in livestock or animals that impact or restrict importation, use, or distribution of animal-derived products.

Any of these matters could materially and adversely affect our business and results of operations.

These interruptions or failures could impair our ability to operate our business, impede the commercialization of our product candidates or delay the introduction of new products, impact our product quality, or impair our competitive position.

We are actively monitoring and assessing the potential impact of the recent COVID-19 coronavirus outbreak that began in China in December 2019.

This includes evaluating the impact on our employees, suppliers, and logistics providers as well as evaluating governmental actions being taken to curtail the spread of the virus.

The Chinese government has also implemented work restrictions that prohibited many employees from going to work.

At this time, it is unclear if the Chinese government will further extend any of the current restrictions or if further restrictions will be put into place by the government.

In addition, many countries have placed significant bans on travel to and from China, with many countries and airlines suspending flights to and from mainland China.

Any material adverse effect on our employees, suppliers, and logistics providers could have a material adverse effect on our manufacturing operations in China or the supply of raw materials or APIs originating from China.

We are exposed to risks related to our international operations and failure to manage these risks may adversely affect our operating results and financial condition.

We have operations both inside and outside the U.S.

For example, we have suppliers in Asia and Europe, and we own manufacturing facilities in Nanjing, China, and Éragny-sur-Epte, France.

As a result, a significant portion of our

operations is conducted by and/or rely on entities outside the markets in which our products are sold, and, accordingly, we import a substantial number of products into such markets.

We may, therefore, be denied access to our customers or suppliers or denied the ability to ship products from any of our sites as a result of a closing of the borders of the countries in which we sell our products, or in which our operations are located, due to economic, legislative, political and military conditions in such countries.

International operations are subject to a number of other inherent risks, and our future results could be adversely affected by a number of factors, including:

requirements or preferences for domestic products or solutions, which could reduce demand for our products;

differing existing or future regulatory and certification requirements;

management communication and integration problems resulting from cultural and geographic dispersion;

greater difficulty in collecting accounts receivable and longer collection periods;

difficulties in enforcing contracts;

difficulties and costs of staffing and managing non-U.S.

difficulty hiring and retaining appropriate personnel due to intense competition for such resources and resulting wage inflation in the cities where our operations are located;

different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;

the uncertainty of protection for intellectual property rights in some countries and resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties;

tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products;

changes in social, political, and economic conditions or in laws, regulations and policies governing foreign trade, manufacturing, development and investment both domestically as well as in other countries and jurisdictions into which we manufacture or sell our products;

exposure to liabilities under both U.S.

and foreign laws, including export and antitrust regulations, anti-corruption and anti-money laundering laws, including the U.S.

Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions, and any trade regulations ensuring fair trade practices;

uneven electricity supply that can negatively impact manufacturing;

heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

fluctuations in currency exchange rates and regulatory compliance;

delays, inefficiencies, and other challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs;

potentially adverse tax consequences, including multiple and possibly overlapping tax structures;

interruptions to our manufacturing or business operations resulting from trade restrictions, political and economic instability, political unrest, war, terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics such as the coronavirus and African swine flu outbreaks.

Furthermore, weak domestic or global economic conditions or fear or anticipation of such conditions could adversely affect our business, financial condition, results of operations and prospects in a number of ways, including lower prices for our products, reduced sales and lower or no growth.

For example, the global macroeconomic environment could be negatively affected by, among other things, instability in global economic markets resulting from increased U.S.

trade tariffs and trade disputes between the U.S.

and other countries, instability in the global credit markets, the impact and uncertainty regarding global central bank monetary policy, rising interest rates and increased inflation, the instability in the geopolitical environment as a result of the United Kingdom’s “Brexit”

decision to withdraw from the European Union, economic challenges in China and ongoing U.S.

and foreign governmental debt concerns.

Such challenges have caused, and are likely to continue to cause, uncertainty and instability in local economies and in global financial markets, particularly if any future sovereign debt defaults or significant bank failures or defaults occur.

Market uncertainty and instability in Europe or Asia could intensify or spread further, particularly if ongoing stabilization efforts prove insufficient.

Continuing or worsening economic instability could adversely affect sales of our products.

Continued turmoil in the geopolitical environment in many parts of the world may also affect the overall demand for our products.

Although we do not believe that our business, financial condition, results of operations and prospects have been significantly adversely affected by economic and political uncertainty in Europe, Asia or other countries to date, deterioration of such conditions may harm our business, financial condition, results of operations and prospects in the future.

A prolonged period of economic uncertainty or a downturn may also significantly affect financing markets, the availability of capital and the terms and conditions of financing arrangements, including the overall cost of financing.

Circumstances may arise in which we need, or desire, to raise additional capital, and such capital may not be available on commercially reasonable terms, or at all.

In addition, the expansion of our existing international operations, including our facility expansion in Nanjing, China, and entry into additional international markets, including our acquisition of a manufacturing business in Éragny-sur-Epte, France, have required and will continue to require significant management attention and financial resources.

These and other factors could harm our ability to gain future revenues and, consequently, materially impact our business, results of operations and financial condition.

Adverse changes to import restrictions relating to certain animal-derived products or raw materials we use from affected countries could disrupt our supply chain and result in delays in the manufacturing of our products.

Some of our raw materials, such as certain animal-derived materials, sourced from foreign sources are subject to import regulations and permit requirements, including from the USDA.

The APHIS within the USDA has regulatory oversight over certain animals and animal-derived products that could pose a risk to domestic agriculture.

Recently, USDA has increased its African swine flu surveillance efforts, including additional testing and enhanced restrictions on importation of certain porcine products from affected countries, like China.

In February 2020, we received a notice of non-renewal of our permit to import or transport crude heparin USP from one of our third-party heparin supplies in China due to the recent outbreak of the African swine flu in China, requiring additional information on the processing flow providing all treatment parameters and times for the porcine heparin material.

Accordingly, our import permit has expired as of February 2020, but we continue to work with APHIS on renewing our import permit for the importation of heparin USP from China.

We anticipate that our current supply of heparin USP in the United States is useable and sufficient for our manufacturing needs for the foreseeable future, and we are investigating the use of heparin USP produced at ANP.

If we are unable to import raw materials, rely upon existing supplies of raw materials or manufacture raw materials in sufficient amounts for our manufacturing needs, we may be required to find alternative suppliers or sources of such materials, which could disrupt or delay the manufacturing of our products.

The success of our business operations and sales with respect to our heparin products will also depend on our continued efforts to maintain the proper product quality and safety profile of the crude heparin obtained either from China or an alternative source.

Enhanced trade tariffs, import restrictions, export restrictions, Chinese regulations or other trade barriers may materially harm our business.

We are continuing to expand our international operations as part of our growth strategy.

There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, government regulations and tariffs.

The current U.S.

presidential administration has called for substantial changes to U.S.

foreign trade policy with respect to China and other countries, including the

possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the United States.

In September 2018, the U.S.

Trade Representative (the “USTR”) enacted a tariff on the import of other Chinese products, with a combined import value of approximately $200 billion.

The tariff became effective on September 24, 2018, with an initial rate of 10%, which was increased to 25% on May 10, 2019.

Additionally, the Trump Administration continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China.

Tariffs on imports of APIs and starting materials used in our products, or retaliatory trade measures taken by China or other countries, including restricted access to APIs or starting materials used in our products, causing us to raise prices or make changes to our products, could materially harm our business, financial condition and results of operations.

Further, the continued threats of tariffs, trade restrictions, and trade barriers could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales.

Although the United States and China signed a phase one trade deal on January 15, 2020, given the relatively fluid regulatory environment in China and the United States and uncertainty regarding how the U.S.

or foreign governments will act with respect to tariffs, international trade agreements and policies, a trade war, further governmental action related to tariffs or international trade policies, or additional tax or other regulatory changes in the future could occur and could directly and adversely impact our financial results and results of operations.

We could be materially and adversely affected by violations of the U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

Foreign Corrupt Practices Act of 1977, as amended and similar applicable laws and regulations in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S.

officials for the purpose of obtaining or retaining business.

Our policies mandate compliance with these anti-bribery laws, which often carry substantial penalties.

We are currently expanding our operations abroad, including expanding our facilities in China, a country which has experienced governmental and private sector corruption to some degree, and in certain circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices.

Our internal control policies and procedures may not always protect us from acts committed by our affiliates, employees or agents which may violate these laws and regulations.

Violations of foreign and U.S.

laws and regulations could result in fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business and on our ability to offer our products in one or more countries, and could also materially affect our brand, our international growth efforts, our ability to attract and retain employees, our business, and our operating results.

There can be no assurance that our partners, our employees, contractors, or agents will not subject us to potential claims or penalties.

Any violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial position, and results of operations and could cause the market value of our common stock to decline.

Movements in foreign currency exchange rates could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

A portion of our revenues, indebtedness and other liabilities and our costs are denominated in foreign currencies, including the Chinese yuan and the euro.

We report our financial results in U.S.

Our results of operations and, in some cases, cash flows may in the future be adversely affected by certain movements in exchange rates.

From time to time, we may implement currency hedges intended to reduce our exposure to changes in foreign currency exchange rates.

However, any such hedging strategies may not be successful, and any of our unhedged foreign exchange exposures will continue to be subject to market fluctuations.

These risks could cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

The Chinese government may exert substantial influence over the manner in which we conduct our business operations in China.

The Chinese government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership.

Our ability to conduct our proposed manufacturing operations in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property ownership and other matters.

We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements.

However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or entities, including our Chinese operating subsidiary, ANP.

The Chinese legal system can be uncertain and could limit the legal protections available to us.

Unlike common law systems, such as the United States, the Chinese legal system is based on written statutes and decided legal cases have little precedential value.

Our Chinese operating subsidiary, ANP, is subject to laws and regulations applicable to foreign investments in China in general and laws and regulations applicable to foreign invested enterprises in particular.

ANP is also subject to laws and regulations governing the formation and conduct of domestic Chinese companies.

Relevant Chinese laws, regulations and legal requirements may change frequently, and their interpretation and enforcement involve uncertainties.

For example, we may have to resort to administrative and court proceedings to enforce the legal protections under law or contract.

However, since Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory and contract terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and our level of legal protection in China compared to other legal systems.

Such uncertainties, including the inability to enforce our contracts and intellectual property rights, could materially and adversely affect our business and operations.

In addition, confidentiality protections in China may not be as effective as in the U.S.

or other countries.

Accordingly, future developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local requirements by national laws, could limit the legal protections available to us.

Our financial performance is impacted by the financial performance of our Chinese operating subsidiary, ANP.

Because we consolidate ANP’s financial results in our results of operations, our financial performance is impacted by the financial performance of ANP.

ANP’s financial performance may be affected by a number of factors, including, but not limited to:

ANP’s ability to execute on its expansion plans;

the commercial success of ANP’s APIs, starting materials and finished pharmaceutical products;

results of clinical trials of our product candidates or those of ANP’s customers;

pricing actions by competitors;

the timing of orders or any cancellation of orders from ANP’s customers;

manufacturing or supply interruptions;

actions taken by current and potential business partners;

actions by regulatory bodies, such as the FDA or the CFDA;

changes or developments in laws or regulations;

disputes or other developments relating to patents or other proprietary rights;

litigation or investigations involving ANP, our industry, or both;

ANP’s ability to control costs, including its operating expenses.

The United Kingdom’s vote to leave the European Union will have uncertain effects and could adversely affect us.

On January 31, 2020, the United Kingdom, or UK, left the European Union, or EU, (commonly referred to as the “Brexit”).

Brexit creates an uncertain political and economic environment in the UK and potentially across other EU member states for the foreseeable future, including during the transitional period while the UK government continues to negotiate the terms of the UK’s future relationship with the EU, and such uncertainties could impair or limit our ability to transact business in the member EU states.

In the long term, the UK may develop its own legislation that diverges

from that in the EU.

Since the regulatory framework for pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit will materially impact the future regulatory regime which applies to products and the approval of product candidates in the UK.

Further, Brexit could adversely affect European and worldwide economic or market conditions and could contribute to instability in global financial markets, and the value of the British pound sterling currency or other currencies, including the euros .

We are exposed to the economic, market and fiscal conditions in the UK and the EU and to changes in any of these conditions.

Depending on the terms reached regarding Brexit, it is possible that there may be adverse operational implications and disruptions to our commercial and business operations in the UK, including our relationships with potential customers, distribution partners, suppliers and employees.

A significant amount of the regulatory regime that applies to us in the UK is derived from EU directives and regulations.

For so long as the UK remains a member of the EU, those sources of legislation will (unless otherwise repealed or amended) remain in effect.

However, Brexit could change the legal and regulatory framework within the UK where we operate and is likely to lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate.

Consequently, no assurance can be given as to the impact of Brexit and, in particular, no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result.

Our business may be adversely affected by the current COVID-19 pandemic or other epidemics.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus, or COVID-19, as a pandemic, which continues to spread throughout the world, including locations where we operate, such as the United States, China and France.

We have been actively monitoring the COVID-19 pandemic and its impact globally.

In late January 2020, China implemented extensive curfews and travel restrictions to control the outbreak, and started easing these restrictions in March.

In March 2020, France also implemented a stay-at-home order limiting movement and restricting travel.

In March 2020, the Governors of the States of California and Massachusetts declared a health emergency and issued orders to close all nonessential businesses.

As a bio-pharmaceutical company we are deemed to be an essential business.

Since then, the government in the United States, China and France, have re-opened and re-imposed restrictions on travel and business as the pandemic recedes and grows.

Over the ensuring year, this contagious disease outbreak has continued to impact worldwide economic activity and financial markets.

While two vaccines have received Emergency Use Authorization from the FDA, the COVID-19 pandemic remains a challenge to our business until it is abated.

Mass and rapid production of the vaccines, for example, has placed increased pressure on the availability of supplies that are also used in our products, such as glass and needles.

The COVID-19 pandemic is imposing additional burdens on our business to comply with regulations imposed by the State of California.

The COVID-19 pandemic may also disrupt the operations of our customers, suppliers and partners for an indefinite period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows.

Disruptions to our manufacturing partners

and suppliers could result in disruption to the production of our products and failure to satisfy demand.

More generally, the outbreak of COVID-19 could adversely affect economies and financial markets globally and nationally, potentially leading to an economic downturn, which could decrease spending and adversely affect demand for our products and harm our business and results of operations.

Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

Specifically, difficult macroeconomic conditions, increased and prolonged unemployment or a decline in business confidence as a result of the COVID-19 pandemic, could have a continuing adverse effect on the demand for some of our products.

The degree of impact of the COVID-19 pandemic on our business will depend on several factors, such as the duration and the extent of the pandemic, as well as actions taken by governments, businesses, and consumers in response to the pandemic, all of which continue to evolve and remain uncertain at this time.

Some of our ongoing clinical trials have experienced short-term interruptions in the recruitment of patients due to the COVID-19 pandemic, as hospitals prioritize their resources toward the COVID-19 pandemic and governments impose travel restrictions.

Additionally, protocols at certain clinical sites have changed which could slow down the pace of clinical trials and also increase the costs of conducting clinical Trials.

These conditions may in turn delay spending and delay the results of these trials.

Additionally, certain suppliers have delayed shipments to us in 2020.

These delays may have been caused by manufacturing disruptions due to the COVID-19 pandemic.

None of these delays caused delays in our manufacturing to date, but future delays could cause manufacturing disruptions at our factories.

As a result of the consequences of the COVID-19 pandemic, FDA has issued various COVID-19 related guidance documents applicable to biopharmaceutical manufacturers and clinical trial sponsors.

For example, in March 2020, the FDA issued a guidance, which the FDA subsequently updated, on conducting clinical trials during the pandemic, which describes a number of considerations for sponsors of clinical trials impacted by the pandemic, including the requirement to include in the clinical trial report contingency measures implemented to manage the clinical trial, among others.

The FDA also issued a guidance on good manufacturing practice considerations for responding to COVID-19 infection in employees in drug products manufacturing, and a guidance on review timelines for applicant responses to Complete Response Letters when a facility assessment is needed during the COVID-19 public health emergency.

These and future guidance documents and regulatory requirements, including future legislation, may require us to develop and implement new policies and procedures, make significant adjustments to our clinical trials, or increase the amount time and resources needed for regulatory compliance, which may impact our clinical development plans and timelines.

It is not possible at this time to estimate the complete impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.

Infections may resurge or become more widespread and the limitation on our ability to travel and timely sell and distribute our products, as well as any closures or supply disruptions, may be extended for longer periods of time, all of which would have a negative impact on our business, financial condition and operating results.

We will continue to monitor the impact of the COVID-19 pandemic on all aspects of our business.

We may be exposed to product liability claims and may not be able to obtain or maintain adequate product liability insurance.

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Negative publicity could also result in an increased number of product liability claims, whether or not these claims have a basis in scientific fact.

We currently maintain a $10.0 million product liability insurance policy, which covers Amphastar, IMS, Armstrong, and AFP, products, but our insurance coverage is subject to deductibles and may not reimburse us or may not be sufficient to reimburse us for all expenses or losses we may suffer from any product liability claims.

We currently maintain a $10.0 million product liability insurance policy, which covers Amphastar, IMS, Armstrong, and

AFP, products, but our insurance coverage is subject to deductibles and may not reimburse us or may not be sufficient to reimburse us for all expenses or losses we may suffer from any product liability claims.

Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses.

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It is possible that the integration of some acquired technologies, information systems and data could increase our risk of experiencing a data security or privacy incident.

In addition, in connection with acquisitions, we could experience disruption in our business, technology and information systems, customer or employee base, including diversion of management’s attention from our continuing operations.

There is also a risk that key employees of companies that we acquire or key employees necessary to successfully commercialize technologies and products that we acquire may seek employment elsewhere, including with our competitors.

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Some of these competitors may possess greater technical, human and other resources than us, and our financial resources may be relatively limited when contrasted with those of our competitors.

We may lose acquisition opportunities if we do not match our competitors’

pricing, terms and structure criteria for such acquisitions.

We may lose acquisition opportunities if we do not match our competitors’ pricing, terms and structure criteria for such acquisitions.

If we are forced to match these criteria to make acquisitions, we may not be able to achieve acceptable returns on our acquisitions or may bear substantial risk of capital loss.

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Intensive due diligence is often time consuming and expensive due to the operations, finance and legal professionals who may be involved in the due diligence process.

Even if we conduct extensive due diligence on a target business which we acquire, we may not identify all material issues that are present inside a particular target business.

If our due diligence fails to discover or identify material issues relating to a target business, industry or the environment in which the target business operates, we may be forced to later write-down or write-off assets, restructure the target business’

operations or incur impairment or other charges that could result in losses to us.

Even if we conduct extensive due diligence on a target business which we acquire,

we may not identify all material issues that are present inside a particular target business.

Charges to earnings resulting from acquisitions could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

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The failure to realize the expected long-term benefits of any one or more of these transactions could have a material adverse effect on our financial condition or results of operations.

The Affordable Care Act and certain legislation and regulatory proposals may increase our costs of compliance and negatively impact our profitability over time.

In March 2010, former President Barack Obama signed the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, which we refer to collectively as the Affordable Care Act.

The Affordable Care Act made extensive changes to the delivery of health care in the United States.

We expect that the rebates, discounts, taxes and other costs resulting from the Affordable Care Act over time will have a negative effect on our expenses and profitability in the future.

Furthermore, the Independent Payment Advisory Board created by the Affordable Care Act to reduce the per capita rate of growth in Medicare spending could potentially limit access to certain treatments or mandate price controls for our products.

Moreover, expanded government investigative authority and increased disclosure obligations may increase the cost of compliance with new regulations and programs.

The Trump administration and members of the U.S.

Congress have indicated that they may continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the Affordable Care Act.

Most recently, the Tax Act was enacted, which, among other things, removes penalties for not complying with the individual mandate to carry health insurance.

On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case to the District Court to determine whether the remaining provisions of the ACA are invalid.

While the Texas U.S.

District Court Judge, as well as the Trump administration and CMS, have stated that the ruling will have no immediate effect pending appeal of the decision, it is unclear how this decision, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our business.

In addition, the Trump administration has also proposed the establishment of an “international pricing index”, which may

have the effect of decreasing prices for certain prescription drugs.

We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation in the United States may have on our business.

In addition, there have been a number of other legislative and regulatory proposals aimed at changing the pharmaceutical industry.

For example, in November 2013, Congress passed the Drug Quality and Security Act, or the DQSA.

The DQSA establishes federal pedigree tracking standards requiring drugs to be labeled and tracked at the lot level, preempts state drug pedigree requirements, and will eventually require all supply-chain stakeholders to participate in an electronic, interoperable prescription drug track and trace system.

The DQSA also establishes new requirements for drug wholesale distributors and third party logistics providers, including licensing requirements in states that had not previously licensed such entities.

As a result of these and other new proposals, we may determine to change our current manner of operation, provide additional benefits or change our contract arrangements, any of which could have a material adverse effect on our business, financial condition and results of operations.

Former President Barack Obama also signed into law the Food and Drug Administration Safety and Innovation Act.

The law and related agreements make several significant changes to the FFDCA and FDA’s processes for reviewing marketing applications that could have a significant impact on the pharmaceutical industry, including, among other things, the following:

reauthorizes the Prescription Drug User Fee Act, which increases the amount of associated user fees, and, for certain types of applications, increases the expected time frame for FDA review of NDAs;

permanently reauthorizes and makes some revisions to the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act, which provide for pediatric exclusivity and mandated pediatric assessments for certain types of applications, respectively;

revises certain standards and requirements for FDA inspections of manufacturing facilities and the importation of drug products from foreign countries;

creates incentives for the development of certain antibiotic drug products;

modifies the standards for accelerated approval of certain new medical treatments;

expands the reporting requirements for potential and actual drug shortages;

requires the FDA to issue a report on, among other things, ensuring the safety of prescription drugs that have the potential for abuse;

requires the FDA to hold a public meeting regarding the potential rescheduling of drug products containing hydrocodone, which was held in October 2012;

requires electronic submission of certain marketing applications following the issuance of final FDA regulations.

The full impact on our business of the new laws is uncertain;

however, we anticipate that it will have an adverse effect on our results of operations.

There has been heightened governmental scrutiny recently over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

For example, at the federal level, the Trump administration released a “Blueprint”

to lower drug prices and reduce out-of-pocket costs of prescription drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out-of-pocket costs of drug products paid by consumers.

Additionally, on January 31, 2019, HHS Office of Inspector General proposed modifications to federal Anti-Kickback Statute safe harbors which, among other things, may affect rebates paid by manufactures to Medicare Part D plan sponsors, Medicaid managed care organizations, and those entities’

pharmacy benefit managers, the purpose of which is to further reduce the cost of drug

products to consumers.

On October 9, 2019, HHS, OIG and CMS issued two proposed rules that set forth modifications to the Federal Anti-Kickback Statute, Civil Monetary Penalties Law and Physician Self-Referral Law (or the Stark Law) regulations to promote value-based and coordinated care arrangements.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Additionally, we encounter similar regulatory and legislative issues in most other countries.

In the European Union, or EU, and some other international markets, the government provides health care at low cost to consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government-sponsored health care system.

This international system of price regulations may lead to inconsistent prices.

If significant additional reforms are made to the U.S.

health care system, or to the health care systems of other markets in which we operate, those reforms could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles, or U.S.

GAAP, in the United States are subject to interpretation by the Financial Accounting Standards Board, or FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.

For example, in May 2014, the FASB issued ASU No.

2014-09, Revenue From Contracts With Customers (Topic 606), or ASC 606, as subsequently amended, which supersedes nearly all existing revenue recognition guidance under U.S.

ASC 606 became effective for us beginning the first quarter of fiscal 2018, and we have adopted it using the modified retrospective transition method.

In addition, were we to change our critical accounting estimates, our results of operations could be significantly impacted.

These or other changes in accounting principles could adversely affect our financial results.

See Note 2 of the Notes to Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K for information regarding the effect of new accounting pronouncements on our financial statements.

Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’

confidence in us.

Significant balances of intangible assets, including goodwill, are subject to impairment testing and may result in impairment charges, which may materially and adversely affect our results of operations and financial condition.

A significant amount of our total assets is related to goodwill and intangible assets.

As of December 31, 2019, the value of our goodwill and intangible assets net of accumulated amortization was $41.2 million.

As of December 31, 2020, the value

of our goodwill and intangible assets net of accumulated amortization was $40.6 million.

Goodwill and other intangible assets are tested for impairment annually when events occur or circumstances change that could potentially reduce the fair value of the reporting unit or intangible asset.

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We may not be able to generate sufficient cash flow or revenue to meet the financial covenants or pay the principal and interest on our debt, and in the past we have not been in compliance with certain financial covenants.

In addition, upon the occurrence of an event of default, our lenders, among other things, can declare

all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes.

In addition, upon the occurrence of an event of default, our lenders, among other things, can declare all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes.

An event of default includes our failure to pay any amount due and payable under the loan agreements, the occurrence of a material adverse change in our business as defined in the loan agreements, our breach of any covenant in the loan agreements, subject to a grace period in some cases, or an involuntary insolvency proceeding.

Additionally, a lender could exercise its lien on substantially all of our assets and our future working capital, borrowings or equity financing may not be available to repay or refinance any such debt.

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

Our business is sensitive to general economic conditions, both inside and outside the U.S.

Slower global economic growth, credit market crises, high levels of unemployment, reduced levels of capital expenditures, government deficit reduction, sequestration and other austerity measures and other challenges affecting the global economy adversely affects us and our distributors, customers and suppliers.

It is uncertain how long these effects will last or whether economic and financial trends will worsen or improve.

Such uncertain economic times may have a material adverse effect on our revenues, results of operations, financial condition and, if circumstances worsen, our ability to raise capital at reasonable rates.

If slower growth in the global economy or in any of the markets we serve continues for a significant period, if there is significant deterioration in the global economy or such markets or if improvements in the global economy don’t benefit the markets we serve, our business and financial statements could be adversely affected.

Additionally, as a result of any future global economic downturn, our third-party payers may delay or be unable to satisfy their reimbursement obligations.

Sales of our principal products are dependent, in part, on the availability and extent of reimbursement from third-party payers, including government programs such as Medicare and Medicaid and private payer healthcare and insurance programs.

A reduction in the availability or extent of reimbursement from government and/or private payer healthcare programs could have a material adverse effect on the sales of our products, our business and results of operations.

Current economic conditions may adversely affect the ability of our distributors, customers, suppliers and service providers to obtain the liquidity required to pay for our products or to buy necessary inventory or raw materials and to perform their obligations under agreements with us, which could disrupt our operations, and could negatively impact our business and cash flow.

Although we make efforts to monitor these third parties’

financial condition and their liquidity, our ability to do so is limited, and some of them may become unable to pay their bills in a timely manner, or may even become insolvent, which could negatively impact our business and results of operations.

These risks may be elevated with respect to our interactions with third parties with substantial operations in countries where current economic conditions are the most severe, particularly where such third parties are themselves exposed to sovereign risk from business interactions directly with fiscally-challenged government payers.

At the same time, significant changes and volatility in the financial markets, in the consumer and business environment, in the competitive landscape and in the global political and security landscape make it increasingly difficult for us to predict our revenues and earnings into the future.

As a result, any revenue or earnings guidance or outlook which we have given or might give may be overtaken by events, or may otherwise turn out to be inaccurate.

Though we endeavor to give reasonable estimates of future revenues and earnings at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook will turn out to be, or to have been, incorrect.

Failure to maintain adequate internal controls or to implement new or improved controls could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

We may not be able to complete our evaluation, testing and any required remediation in a timely fashion.

During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective.

We have in the past, identified a material weakness in our internal control over financial reporting , which was remediated;

however, our remediation efforts may not enable us to avoid a material weakness in the future.

Ensuring that we have adequate internal financial and accounting controls and procedures in place to help produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be evaluated frequently.

We are required to disclose changes made in our internal control and procedures on a quarterly basis.

We ceased to be an emerging growth company on December 31, 2019, and no longer take advantage of the exemptions in the Jumpstart Our Business Startups Act, or JOBS Act.

Accordingly, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.

Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

In addition, we may encounter problems or delays in completing the implementation of any requested improvements and receiving a favorable attestation by our independent registered public accounting firm.

In the event that our Chief Executive Officer, Chief Financial Officer, or independent registered public accounting firm determines that our internal control over financial reporting is not effective as defined under Section 404, we could be subject to one or more investigations or enforcement actions by state or federal regulatory agencies, stockholder lawsuits, breaches of the covenants under our credit facilities, or other adverse actions requiring us to incur defense costs, pay fines, make settlements or seek judgments, which may adversely affect investor perceptions and potentially result in a decline in our stock price.

There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.

Any future changes in estimates, judgments and assumptions used or necessary revisions to prior estimates, judgments or assumptions or changes in accounting standards could lead to a restatement or revision to previously consolidated financial statements, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, provision for chargebacks and rebates, accruals for product returns, valuation of inventory, impairment of intangibles and long-lived assets, accounting for income taxes and share-based compensation.

Furthermore, although we have recorded reserves for litigation related contingencies based on estimates of probable future costs, such litigation related contingencies could result in substantial further costs.

Also, any new or revised accounting standards may require adjustments to previously issued financial statements.

Any such changes could result in corresponding changes to the amounts of liabilities, revenues, expenses and income.

Any such changes could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Changes in financial accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective.

New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future.

Changes to existing rules or the questioning of current practices may adversely affect our business and financial results.

Changes in income tax laws, tax rulings and other factors may have a significantly adverse impact on our effective tax rate and tax expense, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

On December 22, 2017, the U.S.

government enacted the Tax Act, which includes significant changes to the taxation of business entities.

These changes include, among others, a federal statutory rate reduction from 35% to 21% effective January 1, 2018, the elimination or reduction of certain domestic deductions and credits, limitations on the deductibility of executive compensation and interest, and a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

Our financial statements for the current year now reflect the effects of the Tax Act based on current guidance, including remeasurement of our deferred tax assets and liabilities, as well as the effects of the reduced rate of the U.S.

corporate income tax and certain other provisions of the Tax Act on our effective tax rate and operating results.

Treasury Department, the IRS, and state tax authorities will continue to interpret or issue guidance on

how provisions of the Tax Act will be applied or otherwise administered.

As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made.

In addition to income taxes in the United States, we are subject to income taxes in many foreign jurisdictions.

Significant judgment is required in determining our worldwide provision for income taxes.

In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain.

The final determination of any tax audits or related litigation could be materially different from our historical income tax provisions and accruals.

In addition, tax laws are dynamic and subject to change as evidenced by the Tax Act.

As new laws are passed and new interpretations of the law are issued or applied, our provision for income taxes may be affected.

Changes to U.S.

tax laws, including taxation of earnings outside of the U.S., the introduction of a base erosion anti-abuse tax and the disallowance of tax deductions for certain book expenses, as well as changes to U.S.

tax laws that may be enacted in the future, could impact the tax treatment of our earnings, as well as cash and cash equivalent balances we currently maintain.

Furthermore, due to shifting economic and political conditions, tax policies or rates in various jurisdictions may be subject to significant change.

Additionally, increases in our effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in our overall profitability, changes in the valuation of deferred tax assets and liabilities, the results of audits and the examination of previously filed tax returns by various taxing authorities and continuing assessments of our tax exposures could impact our tax liabilities and affect our income tax expense, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Counterfeit versions of our products could harm our patients and reputation.

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If a product of ours was the subject of counterfeits, we could incur substantial reputational and financial harm in the longer term.

Our business and operations would suffer in the event of system breach or failure.

We, our collaborators, third-party providers, distributors, customers and other contractors utilize information technology systems and networks to transmit, store and otherwise process electronic data in connection with our business activities.

Our business and operations have been impacted in the past, and may be impacted in the future, in the event of system breach or failure.

We, our collaborators, third-party providers, distributors, customers and other contractors utilize information technology systems and networks, including internet-based system, to transmit, store and otherwise process electronic data in connection with our business activities, including our supply chain processes, operations and communications.

This includes our clinical data and business proprietary information, Electronic Data Interchange, or EDI, on purchase orders, invoices, chargebacks, etc.

We, and others on our behalf, also collect and process certain personal data, including about our personnel, business partners, website visitors and others, which may be subject to applicable data protection laws and regulations.

We, and others on our behalf, rely on complex information technology systems, including Internet-based systems, to transmit, store and otherwise process such data in support of our supply chain processes, operations, and communications.

Potential legal (regulatory or contractual), financial, operational, and reputational harm may arise from the accidental or unlawful destruction, damage, loss, unavailability, alteration, impairment, misuse, unauthorized disclosure of, or unauthorized access to (i) our data, which is transmitted, stored or otherwise processed by us or by collaborators, third-party providers, distributors and other contractors on our behalf (a “data security incident”);

and (ii) the systems upon which we rely for our operations (an “other event”).

The accidental or unlawful loss, unavailability or alteration of clinical trial data from completed or ongoing clinical trials for any of our product candidates could result in delays in our development and regulatory approval efforts as well as significantly increase our costs to recover or reproduce the data.

The size and complexity of our systems make them potentially vulnerable to breakdown or interruption, whether due to computer viruses or other causes, which may result in the loss of key information or the impairment of production and other supply chain processes, adversely affecting our business.

Any data security incident or other event, either on its own or as a pattern, may require costly response and remediation efforts, trigger litigation or adverse regulatory action arising from or related to such an incident or event, and result in significant additional expense to implement further data protection measures.

Integrating the systems and data of any acquired entity may in some cases further increase these risks due to unforeseen threats and vulnerabilities.

Similarly, a data security incident or other event experienced by our collaborators, third-party providers, distributors and other contractors may hinder our product development, supply chain, other business operations, or our regulatory and contractual obligations to others and could also give rise to litigation or adverse regulatory action.

We, and others on our behalf, also collect, transmit, store and otherwise process certain data relating to individuals, including about our personnel, business partners, and others, which may be subject to applicable data protection laws and regulations that require adoption of minimum information security standards.

The cost of compliance with applicable data protection laws and regulations have increased and may increase in the future.

Despite our implementation of security measures to protect the confidentiality, integrity, and availability of the systems and data within our control from various threats (e.g., cyber-attack, insider threat, accidental disclosure, intellectual property theft and economic espionage, exploitable defects or bugs in our third-party providers’ systems, natural disaster, war, terrorism, telecommunications and electrical outage), risks remain, and our systems and networks and the systems and networks of third parties that support us and our services may be breached or disrupted due to these threats.

Techniques used to sabotage or obtain unauthorized access to systems and networks are constantly evolving and, in some instances, are not identified until or after they are launched against a target.

We and our third-party providers may be

unable to anticipate these techniques, discover threats and react in a timely manner, or implement adequate preventative or mitigating measures.

Further, system breaches, malware, ransomware, computer hacking, and insider threats have become more prevalent, and experts have warned that the COVID-19 pandemic has resulted in increased threats and malicious activity.

and (ii) the systems upon which we rely for our operations (an “other event”).

● The accidental or unlawful loss, unavailability or alteration of clinical trial data from completed or ongoing clinical trials for any of our product candidates could affect our ability to operate, result in delays in our development and regulatory approval efforts, and significantly increase our costs to recover or reproduce the data.

● The size and complexity of our systems may make them potentially vulnerable to breakdown or interruption, whether due to computer viruses or other causes, which may result in the loss of key information or the impairment of production and other supply chain processes, adversely affecting our business.

● Any data security incident or other event, either on its own or as a pattern, may require costly response and remediation efforts, trigger notification obligations under breach notification laws, result in litigation or adverse regulatory action arising from or related to such an incident or event, damage our reputation, and result in significant additional expense to implement further data protection measures.

Integrating the systems and data of any acquired entity may increase these risks due to unforeseen threats and vulnerabilities.

● Similarly, any data security incident or other event experienced by our collaborators, third-party providers, distributors and other contractors may hinder our product development, supply chain, other business operations, or our regulatory and contractual obligations to others and could also give rise to litigation or adverse regulatory action.

We have experienced and may continue to experience cyberattacks of varying degrees from time to time.

In the second quarter of 2020, we were subject to a cyber-event that resulted in a temporary disruption to some of our internal computer systems.

In response to this incident, we engaged a third-party forensic expert to investigate, and determined that cyber criminals illegally obtained certain personal information of certain current and former employees.

We notified affected individuals and regulators, as we deemed was required or appropriate.

We have incurred costs to respond to this incident and may continue to incur costs to support our efforts to enhance our security measures.

There can be no assurance that we will be successful in preventing data security incidents or other events nor that we will be successful in mitigating their effects, despite the implementation of security measures for systems and data within our control.

Similarly, there can be no assurance that our collaborators, third-party providers, distributors and other contractors will be successful in protecting our data on their systems or in protecting other systems upon which we may rely.

Furthermore, breach notification laws are not consistent among jurisdictions, and compliance and other measures in the event of a widespread data security incident could result in a substantial cost and diversion of resources, distract management and technical personnel.

Any such data security incident or other event could have a material adverse effect on our business and prospects.

We or the third parties upon whom we depend may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

The facilities we use for our headquarters, laboratory and research and development activities are located in earthquake-prone areas of California.

A significant percentage of the facilities we use for our manufacturing, packaging, warehousing, distribution and administration offices are also located in these areas.

Earthquakes or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.

If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our facilities, that damaged critical infrastructure, such as our manufacturing facilities, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event.

We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans.

Although we maintain cyber liability insurance coverage that may cover certain liabilities in connection with a security breach or other security incident, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms (if at all) or that any insurer will not deny coverage as to any future claim.

The successful assertion of one or more large claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, or denials of coverage, could have a material adverse effect on our business, including our financial condition, results of operations and reputation

Risks Relating to Regulatory Matters

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Satisfaction of all regulatory requirements, which typically takes years for drugs that require regulatory approval in ANDAs, NDAs, biological license applications, or BLAs, or biosimilar applications is dependent upon the type, complexity and novelty of the product candidate and requires the expenditure of substantial resources for research (including qualification of suppliers and their supplied materials), development, in vitro and in vivo (including nonclinical and clinical trials) studies, manufacturing process development and commercial scale up.

Some of our products are drug-device combination products that are regulated as drug products by the FDA, with consultation from the FDA’s Center for Device and Radiological Health.

These combination products require the submission of drug applications to the FDA.

All of our products are subject to compliance with the FFDCA and/or the Public Health Service Act, or PHSA, and with the FDA’s implementing regulations.

Failure to adhere to applicable statutory or regulatory requirements by us or our business partners would have a material adverse effect on our operations and financial condition.

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Such foreign regulations and product approval requirements are expected to be time consuming and expensive as well.

We may encounter delays or agency rejections during any stage of the regulatory review and approval process based

upon a variety of factors, including without limitation the failure to provide clinical data demonstrating compliance with the FDA’s requirements for safety, efficacy and quality.

We may encounter delays or agency rejections during any stage of the regulatory review and approval process based upon a variety of factors, including without limitation the failure to provide clinical data demonstrating compliance with the FDA’s requirements for safety, efficacy and quality.

Those requirements may become more stringent prior to submission of our applications for approval or during the review of our applications due to changes in the law or changes in FDA policy or the adoption of new regulations.

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The FDA can convene an Advisory Committee to assist the FDA in examining specific issues related to the application.

For example, we initially filed an NDA, for our Primatene ®

Mist product in July 2013, but FDA approval was not granted until November 2018 due to delays caused by the FDA’s requirement that we provide additional non-clinical information, label revision and follow-up studies (including label comprehension and behavioral/human factor studies), and that we make packaging and label revisions.

For example, we initially filed an NDA, for our Primatene Mist ® product in July 2013, but FDA approval was not granted until November 2018 due to delays caused by the FDA’s requirement that we provide additional non-clinical information, label revision and follow-up studies (including label comprehension and behavioral/human factor studies), and that we make packaging and label revisions.

Additionally, we received Complete Response Letters, or CRLs, from the FDA asking for more information before they could approve the ANDA for our epinephrine vial product.

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Under various user fee enactments, the FDA has committed to timelines for its review of NDAs, ANDAs, BLAs and biosimilar applications.

However, the FDA’s timelines described in its guidance on these statutes are flexible and subject to changes based on workload and other potential review issues that may delay the FDA’s review of an application.

Further, the terms of approval of any applications may be more restrictive than our expectations and could affect the marketability of our products.

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In addition, data obtained from trials and studies are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent regulatory approval.

Success in preclinical studies and early clinical trials does not ensure that subsequent clinical trials will generate the same or similar results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.

Success in preclinical studies and

early clinical trials does not ensure that subsequent clinical trials will generate the same or similar results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.

A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in Phase 3 clinical trials, even after seeing promising results in earlier clinical trials.

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If clinical studies for our product candidates are unsuccessful or significantly delayed, we will be unable to meet our anticipated development and commercialization timelines, which would have an adverse impact on our business.

Some of our new drug candidates must be approved in NDAs based on clinical studies demonstrating safety and/or

effectiveness.

Some of our new drug candidates must be approved in NDAs based on clinical studies demonstrating safety and/or effectiveness.

For these types of studies, we rely on our investigational teams, who mainly are medical experts working in multicenter hospitals, to execute our study protocols with our product candidates.

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Once a clinical trial has begun, it may be delayed, suspended or terminated by us or by regulatory authorities for a variety of reasons, including without limitation ongoing discussions with regulatory authorities regarding the scope or design of our clinical trials, a determination by us or regulatory authorities that continuing a trial presents an unreasonable health risk to participants, failure to conduct clinical trials in accordance with regulatory requirements, lower than anticipated recruitment or retention rate of patients in clinical trials, inspection of the clinical trial operations or trial sites by regulatory authorities, the imposition of a clinical hold by the FDA, lack of adequate funding to continue clinical trials and/or negative or unanticipated results of clinical trials.

and patients’

perceptions as to the potential advantages of the drug being studied in relation to available alternatives, including without limitation therapies being investigated by other companies.

Patient enrollment, a significant factor in the time required to complete a clinical study, is affected by many factors, including the size and nature of the study subject population, the proximity of patients to clinical sites, the eligibility criteria for the study, the design of the clinical study, competing clinical studies and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to available alternatives, including without limitation therapies being investigated by other companies.

Further, completion of a clinical study and/or the results of a clinical study may be adversely affected by failure to retain subjects who enroll in a study but withdraw due to, among other things, adverse side effects, lack of efficacy, improvement in condition before treatment has been completed or for personal issues or who fail to return for or complete post-treatment follow-up.

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Protocol amendments may require us to resubmit protocols to institutional review boards for reexamination or renegotiate terms with contract research organizations and study sites and investigators, all of which may adversely impact the costs or timing of or our ability to successfully complete a trial.

Clinical trials required by the FDA for approval of our products may not produce the results we need to move forward in product development or to submit or obtain approval of an NDA.

Clinical trials required by the FDA for approval of our products may not produce the results we need to move forward in

product development or to submit or obtain approval of an NDA.

Success in pre-clinical testing and early phase clinical trials does not assure that late phase clinical trials will be successful.

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In addition, if we license rights to third parties to develop our product candidates in other geographic areas or for other indications, we may have limited control over nonclinical testing or clinical studies that may be conducted by such third-party licensees in those territories or for those indications.

If data from third-party testing identifies a safety or efficacy concern, such data could adversely affect our or another licensee’s development of such product.

There is significant risk that our products could fail to show anticipated results in nonclinical testing and/or clinical studies and, as a result, we may elect to discontinue the development of a product for a particular indication or altogether.

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until we receive approval of an NDA from the FDA.

NDA approvals may require extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired indication.

NDAs must include significant information regarding the chemistry, manufacturing and controls for the product.

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In addition, delays in approvals or rejections of marketing applications in the U.S.

or other countries may be based upon many factors, including regulatory requests for additional analyses, reports, data, preclinical studies and clinical trials, regulatory questions regarding different interpretations of data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding our product candidates or other products.

or other countries may be based upon many factors, including regulatory requests for additional analyses, reports, data, preclinical studies and clinical trials,

regulatory questions regarding different interpretations of data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding our product candidates or other products.

Also, regulatory approval for any of our product candidates may be withdrawn.

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Even if we do receive fast track designation, we may not experience a faster development process, review or approval compared to conventional procedures adopted by the FDA.

In addition, the FDA may withdraw fast track designation if they believe that the designation is no longer supported by data from our clinical development program or if a competitor’s product candidate is approved.

For example, we were granted a fast

track designation for our intranasal naloxone product, but this designation was withdrawn after a competitor’s intranasal naloxone was approved.

For example, we were granted a fast track designation for our intranasal naloxone product, but this designation was withdrawn after a competitor’s intranasal naloxone was approved.

Many drugs that have received fast track designation have failed to obtain FDA approval.

The commercial success of our NDA product candidates will depend in significant measure on the label claims that the FDA approves for such products.

The scientific foundation of our NDA product candidates will be based on our various proprietary technologies and the commercial success of these product candidates will depend in significant measure upon our ability to obtain FDA approval of labeling describing such products’

expected features or benefits.

The commercial success of our NDA product candidates will depend in significant measure on the scope of the indication(s) and claims that the FDA approves for such products.

Failure to achieve FDA approval of product labeling containing adequate information on features or benefits will prevent or substantially limit our advertising and promotion of such features in order to differentiate our proprietary technologies from those products that already exist in the market.

This failure would have a material adverse impact on our business.

Our ANDA products are also subject to FDA approval of their labeling.

Our ANDA products are also subject to FDA approval of their labeling and the labeling of the referenced drug products.

Even if we are able to obtain regulatory approval for our generic products, state pharmacy boards or state agencies may conclude that our products are not substitutable at the pharmacy level for the reference listed drug.

If our generic products are not substitutable at the pharmacy level for their reference listed drugs, this could materially reduce sales of our products and our business would suffer.

Although the FDA may determine that a generic product is therapeutically equivalent to a brand product and indicate this therapeutic equivalence by providing it with an “A”

rating in the FDA’s Orange Book, this designation is not binding on state pharmacy boards or state agencies.

If our generic products are not substitutable at the pharmacy level for their reference listed drugs, or if our drug products do not gain the acceptance of healthcare providers, payors, and patients, this could materially reduce sales of our products and our business would suffer.

Although the FDA may determine that a generic product is therapeutically equivalent to a brand product and indicate this therapeutic equivalence by providing it with an “A” rating in the FDA’s Orange Book, this designation is not binding on state pharmacy boards or state agencies.

As a result, in states that do not deem our product candidates substitutable at the pharmacy level, physicians may be required to specifically prescribe our product or a generic product alternative in order for our product to be dispensed.

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In 2010, Congress amended the PHSA to create an abbreviated approval pathway for follow-on biologics.

This approval pathway is available for “biosimilar”

products, which are products that are highly similar to previously approved biologics notwithstanding minor differences in inactive components.

This approval pathway is available for “biosimilar” products, which are products that are highly similar to previously approved biologics notwithstanding minor differences in inactive components.

The process for bringing a biosimilar product to market is uncertain and may be drawn out for an extended period of time.

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Biosimilar products are not presumed to be substitutable for the reference drug under the Biologics Price Competition and Innovation Act, or BPCIA.

Biosimilar applicants must seek a separate FDA determination that they are “interchangeable”

with the reference drug, meaning that they can be expected to produce the same clinical result in any given patient without an increase in risk due to switching from the brand product.

None of the 16 biosimilar products that have been approved by the FDA have been approved as “interchangeable”

and therefore, are not substitutable for the referenced drug.

Biosimilar applicants must seek a separate FDA determination that they are “interchangeable” with the reference drug, meaning that they can be expected to produce the same clinical result in any given patient without an increase in risk due to switching from the brand product.

None of the 16 biosimilar products that have been approved by the FDA have been approved as “interchangeable” and therefore, are not substitutable for the referenced drug.

The statutory standards for determining biosimilarity and interchangeability are broad and uncertain, and the FDA has broad discretion to determine the nature and extent of product characterization, nonclinical testing and clinical testing on a product-by-product basis.

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Some states have passed laws limiting pharmacy substitution to biosimilar products that the FDA has determined to be interchangeable, as well as restrictions on the substitution of interchangeable biosimilar products.

These restrictions include, among other things, requirements for informing the patient and the prescribing

physician of the substitution or proposed substitution, authority for the prescribing physician and the patient to preclude substitution and recordkeeping requirements.

These restrictions include, among other things, requirements for informing the patient and the prescribing physician of the substitution or proposed substitution, authority for the prescribing physician and the patient to preclude substitution and recordkeeping requirements.

There is no certainty that other states will not impose similar restrictions or that states will not impose further restrictions or preclude substitution of interchangeable biosimilar products entirely.

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Although the drug delivery devices we currently use in our products and product candidates are provided by third parties, we have entered into collaboration agreements with various medical device manufacturers to develop drug delivery systems to be used for our pipeline products.

These drug- device combination products are particularly complex, expensive and time-consuming to develop due to the number of variables involved in the final product design, including ease of patient and doctor use, establishing clinical efficacy, reliability and cost of manufacturing, regulatory approval requirements and standards and other important factors.

These drug-device combination products are particularly complex, expensive and time-consuming to develop due to the number of variables involved in

the final product design, including ease of patient and doctor use, establishing clinical efficacy, reliability and cost of manufacturing, regulatory approval requirements and standards and other important factors.

We will be responsible for any regulatory filings arising from this collaboration and, although we have significant in-house and external regulatory expertise, we have never prepared or submitted an NDA to the FDA for a drug-device combination product.

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Some of the drug delivery devices utilized in our products and product candidates are provided by single source unaffiliated third-party companies.

We are dependent on the sustained cooperation and effort of those third-party companies both to supply the devices and, in some cases, to conduct the studies required for approval or other regulatory clearance of the devices.

We are dependent on the sustained cooperation and effort of those third-party companies both to supply the devices and to maintain regulatory compliance with the FDA quality system regulations applicable to medical device, and, in some cases, to conduct the studies required for approval or other regulatory clearance of the devices.

We are also dependent on those third-party companies continuing to maintain such approvals or clearances once they have been received.

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A reduction in the availability of, or the coverage and/or reimbursement for, drug delivery devices used with our products could have a material adverse effect on our product sales, business and results of operations.

If pharmaceutical companies are successful in limiting the use of generics through their legislative, regulatory and/or other efforts, our sales of generic products may suffer.

If branded pharmaceutical companies are successful in limiting the use of generics through their legislative, regulatory and/or other efforts, our sales of generic products may suffer.

Many pharmaceutical companies producing proprietary drugs have increasingly used state and federal legislative and regulatory means to delay, impede and/or prevent generic competition.

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● selling the brand product as an authorized generic, either by the brand company directly, through an affiliate or by a marketing partner;

using the FDA’s Citizen Petition process to request amendments to FDA standards or otherwise delay generic drug approvals;

● using the FDA’s Citizen Petition process to request amendments to FDA standards or otherwise delay generic drug approvals;

● challenging FDA denials of Citizen Petitions in court and seeking injunctive relief to reverse approval of generic drug applications;

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● seeking patents on methods of manufacturing certain API;

settling patent lawsuits with generic companies in a manner that leaves the patent as an obstacle for approval of other companies’

generic drugs;

● settling patent lawsuits with generic companies in a manner that leaves the patent as an obstacle for approval of other companies’ generic drugs;

● settling patent litigation with generic companies in a manner that avoids forfeiture of or otherwise protects or extends the exclusivity period;

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● seeking federal or state regulatory restrictions on the use of the same non-proprietary name as the reference brand product for a biosimilar or interchangeable biologic.

If pharmaceutical companies or other third parties are successful in limiting the use of generic products through these or

other means, our sales of generic products may decline.

If pharmaceutical companies or other third parties are successful in limiting the use of generic products through these or other means, our sales of generic products may decline.

If we experience a material decline in generic product sales, our results of operations, financial condition and cash flows will suffer.

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In addition to formulary tier co-pay differentials, private health insurance companies and self-insured employers have been raising co-payments required from beneficiaries, particularly for proprietary pharmaceuticals and biotechnology products.

Private health insurance companies also are increasingly imposing utilization management tools, such as requiring prior authorization for a proprietary product if a generic product is available or requiring the patient to first fail on one or more generic products before permitting access to a proprietary medicine.

before permitting access to a proprietary medicine.

We do not currently have any managed care organization agreements and do not intend to have managed care organization agreements in the future.

We must manufacture our product at our facilities in conformity with cGMP regulations;

We must manufacture our drug products at our facilities in conformity with cGMP regulations;

failure to maintain compliance with cGMP regulations may prevent or delay the manufacture or marketing of our products or product candidates and may prevent us from gaining approval of our products.

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Compliance with such standards requires substantial expenditures of time, money and effort in such areas as production and quality control to ensure full technical compliance.

Failure to comply with cGMP or with other state or federal requirements may result in unanticipated compliance expenditures, total or partial suspension of production or distribution, suspension of review of applications submitted for approval of our product candidates, termination of ongoing research, disqualification of data derived from studies on our products and/or enforcement actions such as recall or seizure of products, injunctions, civil penalties and criminal prosecutions of the company and company officials.

Failure to comply with cGMP or with other state, federal, or foreign requirements may result in unanticipated compliance expenditures, total or partial suspension of production or distribution, suspension of review of applications submitted for approval of our product candidates, termination of ongoing research, disqualification of data derived from studies on our products and/or enforcement actions such as recall or seizure of products, injunctions, civil penalties and criminal prosecutions of the company and company officials.

Any suspension of production or distribution would require us to engage contract manufacturing organizations to manufacture our products or to accept a hiatus in marketing our products.

Any contract manufacturing organization we engage will require time to learn our methods of production and to scale up to full production of our products.

Any contract manufacturing organization we engage will require time to learn our methods of production and to scale up to full production of our products in accordance with cGMP requirements.

Any delays caused by the transfer of manufacturing to a contract manufacturing organization may have a material adverse effect on our results of operations.

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The costs of complying with these various environmental requirements, as they now exist or as may be altered in the future, could adversely affect our financial condition and results of operations.

For example, as a result of environmental concerns about the use of CFCs, the FDA issued a final rule on January 16, 2009 that required the phase-out of the CFC version of our Primatene ®

Mist product by December 31, 2011.

This phase out caused us to discontinue sales of the CFC version of our Primatene ®

Mist product subsequent to December 31, 2011 and write off our inventory for the product, which had an adverse effect on our financial results.

Data collection under European and state laws in the U.S.

is governed by restrictive regulations addressing the collection, use, processing and, in the case of Europe, cross-border transfer, of personal information.

We also must comply with data protection and data privacy requirements.

Compliance with these laws, rules and regulations regarding privacy, security and protection of employee data could result in higher compliance and technology costs for us, as well as significant fines, penalties and damage to our global reputation and our brand as a result of non-compliance.

For example, as a result of environmental concerns about the use of CFCs, the FDA issued a final rule on January 16, 2009 that required the phase-out of the CFC version of our Primatene Mist ® product by December 31, 2011.

This phase out caused us to discontinue sales of the CFC version of our Primatene Mist ® product subsequent to December 31, 2011 and write off our inventory for the product, which had an adverse effect on our financial results.

The Affordable Care Act and certain legislation and regulatory proposals may increase our costs of compliance and negatively impact our profitability over time.

The Affordable Care Act made extensive changes to the delivery of health care in the United States.

We expect that the rebates, discounts, taxes and other costs resulting from the Affordable Care Act over time will have a negative effect on our expenses and profitability in the future.

Moreover, expanded government investigative authority and increased disclosure obligations may increase the cost of compliance with new regulations and programs.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and we expect that there will be additional challenges and amendments to the Affordable Care Act in the future, which may result in the modification, repeal, or invalidation of all or certain provisions of the Affordable Care Act.

Most recently, the Tax Act was enacted, which, among other things, removes penalties for not complying with the individual mandate to carry health insurance.

On December 18, 2019, the U.S.

On March 2, 2020, the U.S.

Supreme Court granted the petitions for writs of certiorari to review this case and held oral arguments in November 2020.

It is unclear how this decision, subsequent appeals, other efforts to repeal and replace the ACA, and healthcare measures of the incoming Administration will impact the ACA and our business.

In addition, the Trump administration announced several executive orders related to prescription drug pricing in 2020.

The FDA also released a final rule in September 2020 providing guidance for states to build and submit importation plans for drugs from Canada.

In addition, there have been a number of other legislative and regulatory proposals aimed at changing the pharmaceutical industry.

For example, in November 2013, Congress passed the Drug Quality and Security Act, or the DQSA.

Former President Barack Obama also signed into law the Food and Drug Administration Safety and Innovation Act.

● reauthorizes the Prescription Drug User Fee Act, which increases the amount of associated user fees, and, for certain types of applications, increases the expected time frame for FDA review of NDAs;

● permanently reauthorizes and makes some revisions to the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act, which provide for pediatric exclusivity and mandated pediatric assessments for certain types of applications, respectively;

● revises certain standards and requirements for FDA inspections of manufacturing facilities and the importation of drug products from foreign countries;

● creates incentives for the development of certain antibiotic drug products;

● modifies the standards for accelerated approval of certain new medical treatments;

● expands the reporting requirements for potential and actual drug shortages;

● requires the FDA to issue a report on, among other things, ensuring the safety of prescription drugs that have the potential for abuse;

● requires the FDA to hold a public meeting regarding the potential rescheduling of drug products containing hydrocodone, which was held in October 2012;

● requires electronic submission of certain marketing applications following the issuance of final FDA regulations.

The full impact on our business of the new laws is uncertain;

however, we anticipate that it will have an adverse effect on our results of operations.

For example, at the federal level, the Trump administration released a “Blueprint” to lower drug prices and reduce out-of-pocket costs of prescription drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out-of-pocket costs of drug products paid by consumers.

In particular, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturer.

In December 2020, CMS issued a final rule that sets forth various changes to manufacturer price reporting under the Medicaid Drug Rebate Program and provisions relating to pharmacy benefit manager accumulator programs, Best Price reporting related to certain value-based purchasing arrangements, line extensions, and Average Manufacturer Price reporting for authorized generics.

Additionally, we encounter similar regulatory and legislative issues in most other countries.

This international system of price regulations may lead to inconsistent prices.

If significant additional reforms are made to the U.S.

Laws in the U.S., Europe, and other jurisdictions impose restrictive regulations addressing the collection, use, and other processing of personal information.

We also must comply with data protection and privacy requirements.

Compliance with these laws, rules and regulations regarding privacy, security and protection of personal data and personal information, including about our personnel, business partners, and others, could result in higher compliance and technology costs for us.

Significant fines, penalties, damages and harm to our global reputation and our brand could result from actual or perceived non-compliance.

We may collect, process, use or transfer personal information from individuals located in the European Union in connection with our business.

The collection and use of personal health data in the European Union are governed by the provisions of the General Data Protection Regulation ((EU) 2016/679), or the GDPR.

requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments and record-keeping.

The GDPR imposes additional responsibilities and liabilities in relation to personal data that we process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules.

Failure to comply with the requirements of the GDPR and related national data protection laws of the member states of the European Union may result in substantial fines, other administrative penalties and civil claims being brought against us, which could have a material adverse effect on our business, financial condition and results of operations.

The collection and use of personal data in the European Union are governed by the provisions of the General Data Protection Regulation ((EU) 2016/679), or the GDPR.

This legislation imposes requirements relating to having legal bases for processing personal information relating to identifiable individuals and transferring such information outside of the European Economic Area, including to the United States, providing details to those individuals regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information, responding to individuals’ requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments and record-keeping.

The GDPR imposes significant responsibilities and liabilities in relation to personal data that we process, and we may be required to put in place additional mechanisms designed to comply with the GDPR.

Failure to comply with the requirements of the GDPR and related national data protection laws of the member states of the European Union may result in investigations, substantial fines, civil claims, and damages

being brought against us, which could have a material adverse effect on our business, financial condition and results of operations.

Further, the United Kingdom exited the EU effective January 31, 2020, subject to a transition period that ended December 31, 2020.

Brexit has created uncertainty with regard to the regulation of data protection in the United Kingdom.

The United Kingdom has implemented legislation that substantially implements the GDPR, and the European Commission and the United Kingdom government announced a EU-UK Trade and Cooperation Agreement on December 24, 2020, providing for a temporary free flow of personal data between the EU and the United Kingdom, but it remains to be seen how the United Kingdom’s withdrawal from the EU will impact the manner in which United Kingdom data protection laws or regulations will develop and how data transfers to and from the United Kingdom will be regulated and enforced by the UK Information Commissioner’s Office, EU data protection authorities, or other regulatory bodies in the longer term.

In addition, U.S.

states are adopting new laws or amending existing laws, requiring attention to frequently changing regulatory requirements related to personal information.

For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which took effect on January 1, 2020 and has been dubbed the first “GDPR-like”

law in the United States.

Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States.

Other states are beginning to pass similar laws.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules.

If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations.

Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly.

For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which took effect on January 1, 2020 and has been dubbed the first “GDPR-like” law in the United States.

The CCPA gives California residents, among other things, expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation.

The CCPA will be expanded substantially on January 1, 2023 when the California Privacy Rights Act of 2020, or the CPRA, which was approved by California voters in November 2020, becomes fully operative.

The CPRA will, among other things, give consumers the ability to limit use of information deemed to be sensitive, establish the California Privacy Protection Agency to implement and enforce the CPRA and impose administrative fines.

Aspects of the CCPA and CPRA, and their interpretation and enforcement remain uncertain.

The potential effects of the CCPA and CPRA are far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Additionally, other jurisdictions are considering new or expanded laws or regulations relating to privacy and data protection.

With the GDPR, CCPA, CPRA, and other laws, regulations and other obligations relating to privacy and data protection imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other obligations, we may face challenges in addressing their requirements, putting in place additional compliance mechanisms and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.

Additionally, if third parties we work with, such as vendors or service providers, violate applicable laws or regulations or our policies, such violations may also put our data at risk and could in turn have an adverse effect on our business.

Any failure or perceived failure by us or our service providers to comply with our applicable policies or notices relating to privacy or data protection, our contractual or other obligations to third parties, or any of our other legal obligations relating to privacy or data protection, may result in governmental investigations or enforcement actions, litigation, claims and other proceedings, and could result in significant fines, penalties, and other liability.

Additionally, defending against any claims, litigation, regulatory proceedings, or other proceedings can be costly, time-consuming and may require significant financial and personnel resources.

Therefore, even if we are successful in defending against any such actions or proceedings that may be brought against us, our business may be impaired, and we may suffer reputational and other harm.

Our products may be subject to federal and state laws and certain initiatives relating to cost control, which may decrease our profitability.

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will continue to put pressure on the pricing of pharmaceutical products.

In addition, we are required to pay rebates to states, which are generally calculated based on the prices for our products that are paid by state

Medicaid programs.

In addition, we are required to pay rebates to states, which are generally calculated based on the prices for our products that are paid by state Medicaid programs.

Cost control initiatives could decrease the price that we charge, and increase the rebate amounts that we must provide, for any of our products in the future.

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Such pressures have increased as a result of the Medicare Prescription Drug Improvement and Modernization Act of 2003, or the MMA, due to the enhanced purchasing power of the private sector plans that negotiate on behalf of Medicare beneficiaries.

To date, we do not believe that federal and state cost control initiatives have had a direct impact on the pricing of our products, but they could have such an impact in the future.

Similarly, rebate obligations have been relatively stable, but if such obligations increase, our revenue could be adversely affected.

In 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration's proposals.

The FDA also released a final rule on September 24, 2020 providing guidance for states to build and submit importation plans for drugs from Canada.

Recently, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The likelihood of implementation of any of the other Trump administration reform initiatives is uncertain, particularly in light of the transition to the incoming Administration.

We cannot predict how these and future federal and state cost control initiatives will impact our business or the pricing of our products.

In addition, if the MMA or the Affordable Care Act were amended to impose direct governmental price controls and access restrictions, it would have a significant adverse impact on our business.

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In addition to well-documented safety concerns, such as the increased risk of counterfeit products entering the supply chain, such importation could impact pharmaceutical prices in the U.S.

Some of our products are marketed without FDA approval and may be subject to enforcement actions by the FDA.

Some of our prescription products are marketed without FDA approval.

These products, like many other prescription drugs on the market that the FDA have not been formally evaluated as being effective, contain active ingredients that were first marketed prior to the enactment of the Federal Food, Drug, and Cosmetic Act, or FFDCA.

The FDA has assessed these products in a program known as the “Prescription Drug Wrap-Up”

and has stated that these drugs cannot be lawfully marketed unless they comply with certain “grandfather”

exceptions to the definition of “new drug”

in the FFDCA.

These products, like many other prescription drugs on the market that have not been formally evaluated as being effective by the FDA, contain active ingredients that were first marketed prior to the enactment of the Federal Food, Drug, and Cosmetic Act, or FFDCA.

The FDA has assessed these products in a program known as the “Prescription Drug Wrap-Up” and has stated that these drugs cannot be lawfully marketed unless they comply with certain “grandfather” exceptions to the definition of “new drug” in the FFDCA.

These exceptions have been strictly construed by FDA and by the courts, and the FDA has stated that it is unlikely that any of the unapproved prescription drugs on the market, including certain of our drugs, qualify for the exceptions.

At any time, the FDA may require that some or all of our unapproved prescription drugs be submitted for approval and may direct us to recall these products and/or cease marketing the products until they are approved.

The FDA may also take enforcement actions based on our marketing of these unapproved products, including but not limited to the issuance of an untitled letter or a warning letter, and a judicial action seeking an injunction, product seizure and/or civil or criminal penalties.

The FDA may also take enforcement actions based on our marketing of these unapproved products, including but not limited to the issuance of an untitled letter or a warning letter, judicial action seeking an injunction, product seizure and/or civil or criminal penalties.

The enforcement posture could change at any time and our ability to market such drugs could terminate with little or no notice.

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During the third quarter of 2010, the FDA requested that we reintroduce several of the withdrawn products to help address a national drug shortage, while we prepared and filed applications for approval of the products.

Between August and October, 2010, we reintroduced atropine, morphine, dextrose, and epinephrine prefilled syringes.

I n February 2017, the FDA requested that we discontinue the manufacturing and distribution of our epinephrine injection, USP vial product, which had been marketed under the “grandfather”

exception to the FDA’s Prescription Drug

Wrap-Up program.

Between August and October 2010, we reintroduced morphine, dextrose, and epinephrine prefilled syringes.

In February 2017, the FDA requested that we discontinue the manufacturing and distribution of our epinephrine injection, USP vial product, which had been marketed under the “grandfather” exception to the “FDA’s Prescription Drug Wrap-Up program”.

We discontinued selling this product in the second quarter of 2017.

In April 2020, the FDA granted approval of our Epinephrine Injection USP 30mg/mL Multiple Dose Vial, and we launched the product in May 2020.

The FDA granted approval of our Atropine Sulfate Injection 0.1mg/mL in the 10mL Luer-Jet ® Prefilled Syringe in October 2020.

For the years ended December 31, 2020, 2019, and 2018, we recorded net revenues of $23.1 million, $27.1 million, and $19.1 million, respectively, from our unapproved products.

Our unapproved products currently on the market include:

atropine, morphine, dextrose and epinephrine prefilled syringes.

We have filed three ANDAs and one NDA with respect to our remaining unapproved products in order to mitigate all risk associated with the marketing of unapproved drug products.

morphine, dextrose and epinephrine prefilled syringes.

We have filed two ANDAs and one NDA with respect to our remaining unapproved products in order to mitigate all risk associated with the marketing of unapproved drug products.

Prior to the approval of our ANDA and NDA submissions, we continue to operate in compliance with the FDA Compliance Policy Guide, CPG Sec.

440.100 Marketed New Drugs Without Approved NDAs and ANDAs.

Recently, the HHS announced that termination of the FDA Unapproved Drugs Initiative (UDI), citing that the Compliance Policy Guide (CPG) issued with the UDI was “linked to prescription drug price increases and shortages” and announced its withdrawal.

The long-term impact of this policy and other measures of the incoming Administration on our business remains unclear.

Our reporting and payment obligations under the Medicare and/or Medicaid drug rebate programs and other governmental purchasing and rebate programs are complex and may involve subjective decisions that could change as a result of new business circumstances, new regulatory guidance or advice of legal counsel.

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The final rule attempts to provide drug manufacturers with the regulatory guidance necessary to ensure proper calculation and reporting of drug product and pricing information.

Specifically, the final rule attempts to clarify the definition of what constitutes a manufacturer’s “best price”

and aligns it, where appropriate, to the definition of “Average Manufacturer Price”, which is used to calculate drug rebates.

Notwithstanding the final rule’s guidance, a number of state and federal government agencies will continue to conduct investigations of manufacturers’

reporting practices with respect to Average Wholesale Prices, or AWP, in which reports of inflated AWP may lead to excessive payments for prescription drugs.

Specifically, the final rule attempts to clarify the definition of what constitutes a manufacturer’s “best price” and aligns it, where appropriate, to the definition of “Average Manufacturer Price”, which is used to calculate drug rebates.

Notwithstanding the final rule’s guidance, a number of state and federal government agencies will continue to conduct investigations of manufacturers’ reporting practices with respect to Average Wholesale Prices, or AWP, in which reports of inflated AWP may lead to excessive payments for prescription drugs.

These investigations could have a material adverse effect on our business, financial position and results of operations.

Any governmental agencies that have commenced, or may commence, an investigation of our business relating to the sales, marketing, pricing, quality or manufacturing of pharmaceutical products could seek to impose, based on a claim of violation of fraud and false claims laws or otherwise, civil and/or criminal sanctions, including fines, penalties and possible exclusion from federal health care programs including Medicare and/or Medicaid.

Some of the applicable laws may impose liability even in the absence of specific intent to defraud.

Furthermore, should there be ambiguity with regard to how to properly calculate and report payments —

and even in the absence of any such ambiguity —

a governmental authority may take a position contrary to a position we have taken, and may impose civil and/or criminal sanctions.

Furthermore, should there be ambiguity with regard to how to properly calculate and report payments — and even in the absence of any such ambiguity — a governmental authority may take a position contrary to a position we have taken, and may impose civil and/or criminal sanctions.

Any such penalties or sanctions could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

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Our promotional materials and training methods must comply with the FFDCA and other applicable laws and regulations, including restraints and prohibitions on the promotion of off-label, or unapproved, use.

Physicians may prescribe our products for off-label use without regard to these prohibitions, as the FFDCA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.

However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including but not limited to the issuance of an untitled letter or warning letter, and a judicial action seeking injunction, product seizure and civil or criminal penalties.

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In addition, the off-label use of our products may increase the risk of product liability claims.

Product liability claims are expensive to defend and could divert our

management’s attention, result in substantial damage awards against us and harm our reputation.

Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us and harm our reputation.

The pharmaceutical industry is highly regulated and pharmaceutical companies are subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act.

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● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent;

the federal Health Insurance Portability and Accountability Act of 1996, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security, and transmission of individually identifiable health information;

● the FFDCA and similar laws regulating advertisement and labeling;

the federal Physician Payment Sunshine Act, created under the ACA, and its implementing regulations, require applicable manufacturers of drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S.

Department of Health and Human Services under the Open Payments Program, information related to certain payments or other transfers of value made to physicians, as defined by such law, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

● the federal Physician Payment Sunshine Act, created under the ACA, and its implementing regulations, require applicable manufacturers of drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S.

Department of Health and Human Services under the Open Payments Program, information related to certain payments or other transfers of value made to physicians, as defined by such law, and teaching

hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

effective January 1, 2022, reporting obligations of applicable manufacturers will be extended to include additional covered recipients, including payments and transfers of value made during the previous year to certain non-physician providers, such as physician assistants and nurse practitioners, among others;

Foreign Corrupt Practices Act, which prohibits corrupt payments, gifts or transfers of value to non-U.S.

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources;

state and local laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration,

and items of value provided to healthcare professionals and entities;

● state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources;

● state and local laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration, and items of value provided to healthcare professionals and entities;

● state and local laws that require the registration of pharmaceutical sales representatives;

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Department of Justice, or DOJ, has increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Dealing with investigations can be time- and resource-consuming and can divert management’s attention from the business.

Additionally, if a healthcare provider settles an investigation with the DOJ or other law enforcement agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.

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providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers;

reporting inflated average wholesale prices that were then used by federal programs to set reimbursement rates;

reporting inflated average wholesale prices that were then used by

federal programs to set reimbursement rates;

engaging in off-label promotion;

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While we have developed and instituted a corporate compliance program, we cannot guarantee that we, our employees, our consultants or our contractors are or will be in compliance with all potentially applicable U.S.

federal and state

regulations and/or laws, all potentially applicable foreign regulations and/or laws and/or all requirements of the corporate integrity agreement.

federal and state regulations and/or laws, all potentially applicable foreign regulations and/or laws and/or all requirements of the corporate integrity agreement.

Because of the far-reaching nature of these laws, we may be required to alter or discontinue one or more of our business practices to be in compliance with these laws.

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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Risks Relating to our International Business

Because a portion of our manufacturing takes place in China, a significant disruption in the construction or operation of our manufacturing facility in China, political unrest in China, tariffs, impact of outbreaks of health epidemics, such as the COVID-19 pandemic, or changes in social, political, trade, health, economic, environmental, or climate-related conditions or in laws, regulations and policies governing foreign trade could materially and adversely affect our business, financial condition and results of operations.

We currently manufacture the starting material for Amphadase ® and enoxaparin as well as the APIs for isoproterenol and nitroprusside at our manufacturing facility in China, and we plan to use this facility to manufacture several of the APIs for products in our pipeline.

Additionally, we intend to continue to invest in the expansion of this manufacturing facility.

Our manufacturing facility and operations in China involve significant risks, including:

● disruptions in the construction of the manufacturing facility;

● interruptions to our operations in China or the inability of our manufacturing facility to produce adequate quantities of raw materials or APIs to meet our needs as a result of natural catastrophic events or other causes beyond our control such as power disruptions or widespread disease outbreaks, including the recent outbreaks that impact animal-derived products, such as the importation of pig-derived crude heparin from countries impacted by the African swine flu, and outbreak of the COVID-19 pandemic, which has resulted in and may in the future result in , business closures, transportation restrictions, import and export complications, and otherwise cause shortages in the supply of raw materials or cause disruptions in our manufacturing capability ;

● product supply disruptions and increased costs as a result of heightened exposure to changes in the policies of the Chinese government, political unrest or unstable economic conditions in China;

● the imposition of tariffs or other trade barriers as a result of changes in social, political, and economic conditions or in laws, regulations, and policies governing foreign trade, including the tariffs previously implemented and additional tariffs that have been proposed by the U.S.

government on various imports from China and by the Chinese government on certain U.S.

goods, the scope and duration of which, if implemented, remain uncertain;

● the nationalization or other expropriation of private enterprises or intellectual property by the Chinese government, which could result in the total loss of our investment in China;

● interruptions to our manufacturing or business operations resulting from geo-political actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics such as coronavirus, or outbreaks in livestock or animals that impact or restrict importation, use, or distribution of animal-derived products.

Any of these matters could materially and adversely affect our business and results of operations.

We are actively monitoring and assessing the potential impact of the COVID-19 pandemic.

This includes evaluating the impact on our employees, suppliers, and logistics providers as well as evaluating governmental actions being taken to curtail the spread of the virus.

While the Chinese government has been relaxing work restrictions, at this time, it is unclear if the Chinese government will reinstate restrictions or if further restrictions will be put into place by the government.

In addition, many countries have placed significant bans on travel to and from China, with many countries

and airlines suspending flights to and from mainland China.

We are exposed to risks related to our international operations and failure to manage these risks may adversely affect our operating results and financial condition.

We have operations both inside and outside the U.S.

For example, we have suppliers in Asia and Europe, and we own manufacturing facilities in Nanjing, China, and Éragny-sur-Epte, France.

As a result, a significant portion of our operations is conducted by and/or rely on entities outside the markets in which our products are sold, and, accordingly, we import a substantial number of products into such markets.

International operations are subject to a number of other inherent risks, and our future results could be adversely affected by a number of factors, including:

● requirements or preferences for domestic products or solutions, which could reduce demand for our products;

● differing existing or future regulatory and certification requirements, including additional or new U.K.

– specific regulatory requirements for commercialization of our products in the U.K.

following the end of Brexit transition period on December 31, 2020;

● management communication and integration problems resulting from cultural and geographic dispersion;

● greater difficulty in collecting accounts receivable and longer collection periods;

● difficulties in enforcing contracts;

● difficulties and costs of staffing and managing non-U.S.

● difficulty hiring and retaining appropriate personnel due to intense competition for such resources and resulting wage inflation in the cities where our operations are located;

● different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;

● the uncertainty of protection for intellectual property rights in some countries and resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties;

● tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products;

● changes in social, political, and economic conditions or in laws, regulations and policies governing foreign trade, manufacturing, development and investment both domestically as well as in other countries and jurisdictions into which we manufacture or sell our products;

● exposure to liabilities under both U.S.

and foreign laws, including export and antitrust regulations, anti-corruption and anti-money laundering laws, including the U.S.

Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions, and any trade regulations ensuring fair trade practices;

● uneven electricity supply that can negatively impact manufacturing;

● heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent

sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

● fluctuations in currency exchange rates and regulatory compliance;

● delays, inefficiencies, and other challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs;

● potentially adverse tax consequences, including multiple and possibly overlapping tax structures;

● interruptions to our manufacturing or business operations resulting from trade restrictions, political and economic instability, political unrest, war, terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics such as the coronavirus and African swine flu outbreaks.