What changed in this filing

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Item 1A. Risk Factors

2024-02-29 compared with 2023-03-01 · 235 added, 176 removed, 1204 unchanged (25% of the section changed)

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

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

if the sales volume or pricing of our Primatene MIST ® , glucagon, epinephrine, 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 BAQSIMI ® , Primatene MIST ® , glucagon, epinephrine, lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues;

if the sales volume or pricing of these 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 actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results with respect to the acquisition of BAQSIMI ® ;

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

● our business may be adversely affected by the ongoing COVID-19 pandemic and the related challenging macroeconomic conditions globally;

● 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 business may be adversely affected by challenging macroeconomic conditions globally;

● 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, 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;

● 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;

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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 Primatene MIST ® , glucagon, epinephrine, lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues.

If the sales volume or pricing of our glucagon, epinephrine, 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 BAQSIMI ® , Primatene MIST ® , glucagon, epinephrine, lidocaine, phytonadione, and enoxaparin products collectively represent a significant portion of our net revenues.

If the sales volume or pricing of these 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 BAQSIMI ® product that we acquired in June 2023 represented 8% of our total net revenues for the year ended December 31, 2023.

Sales from our Primatene MIST ® product represented 14%, 17%, and 17% of our total net revenues for the years ended December 31, 2023, 2022, and 2021, respectively.

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

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

Our BAQSIMI ® , Primatene MIST ® , glucagon, epinephrine, 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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● changes in third-party reimbursement practices;

● changes in applicable environmental law;

● implementation of prescription drug cost containment measures;

● changes in applicable FDA, health care, and environmental law;

● product liability claims;

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Any factor adversely affecting the sale of these products may cause our revenues to decline, and we may not be able to achieve and maintain profitability.

Our actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results with respect to the acquisition of BAQSIMI ® .

Although we currently expect to realize increased revenues as a result of our acquisition of BAQSIMI ® , the expectations and guidance we have provided, with respect to the potential financial impact of the acquisition of BAQSIMI ® , are subject to numerous assumptions including assumptions derived from our diligence efforts concerning the status of and prospects for BAQSIMI ® business, which we did not control at the time such assumptions were made, and assumptions relating to the near-term prospects for glucagon products generally and the markets for BAQSIMI ® in particular.

Additional assumptions we have made relate to numerous matters, including (without limitation) the following:

projections of BAQSIMI ® ’s future revenues;

the amount of intangibles that resulted from the acquisition of BAQSIMI ® ;

acquisition costs, including transaction costs payable to our financial, legal, and accounting advisors;

our ability to maintain, develop, and deepen relationships with BAQSIMI ® customers and suppliers;

other financial and strategic risks of the acquisition of BAQSIMI ® , including the possible impact of our reduced liquidity resulting from deal-related cash outlays, the credit risk associated from the debt facility described below, and continued uncertainty arising from the global economic downturn.

We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues or revenue growth rates, if any, of BAQSIMI ® , and we cannot provide assurances with respect to our ability to realize the cost savings that we currently anticipate.

There are a variety of risks and uncertainties, some of which are outside of our control, which could cause our actual financial and operating results to differ materially from any expectations or guidance provided by us, concerning our future results with respect to the acquisition of BAQSIMI ® .

We may fail to realize the projected revenue and other benefits expected from the acquisition and integration of BAQSIMI ® , which could adversely affect the value of our common stock.

Our ability to realize the projected revenue and other benefits from the acquisition of BAQSIMI ® will depend, in part, on our ability to continue to integrate BAQSIMI ® into our current business.

If we are not able to achieve the projected revenue or other benefits within the anticipated time frame, or at all, or if the projected revenue or other benefits take longer to realize than expected, then the value of our common stock may be adversely affected.

It is possible that the ongoing integration process could result in the disruption of our business or ongoing business associated with BAQSIMI ® .

We may also identify inconsistencies in standards, controls, procedures and policies between the two businesses that could adversely affect our ability to maintain relationships with our customers, suppliers, distributors, creditors, lessors, clinical trial investigators or managers or to achieve the anticipated benefits of BAQSIMI ® .

Specifically, in order to realize the anticipated benefits of the acquisition of BAQSIMI ® , we will continue to:

rely on Lilly for manufacturing services and transition services, including for performance of clinical and commercial activities, relating to BAQSIMI ® and transfer of the corresponding activities to Amphastar;

enter into our own arrangements with certain suppliers/manufacturers in the supply chain;

finalize distribution and sales arrangements for BAQSIMI ® including payor and other agreements.

Integration efforts between us and the business associated with BAQSIMI ® will also continue to divert management attention and resources.

In addition, the actual integration of BAQSIMI ® may result in additional and unforeseen expenses or liabilities (including those that may be assumed in connection with the acquisition of BAQSIMI ® ), and any

anticipated benefits of the integration plan may not be realized.

If we are not able to adequately address these challenges, we may be unable to successfully integrate BAQSIMI ® into our business, or to realize some or any of the anticipated benefits of the acquisition of BAQSIMI ® .

Delays encountered in the integration process could have a material adverse effect on our revenues, expenses, operating results and financial condition.

For example, launching the products in certain international countries has encountered delays, which then goes beyond the current Manufacturing Service Agreement, or MSA.

Although we expect significant benefits, such as increased sales revenues, from the acquisition of BAQSIMI ® , there can be no assurance that we will realize these or any other anticipated benefits.

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.

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

Some of our products are the result of complex manufacturing processes, and some require highly specialized raw materials.

Some of our products are the result of complex manufacturing processes, and some require highly specialized raw materials, and BAQSIMI ® relies on contract manufacturing organizations, or CMO.

Because our business requires outsourcing in some instances, we are subject to inherent uncertainties related to product safety, availability and security.

For some of our key raw materials, components and API used in certain of our products, we have only a single, external source of supply, and alternate sources of supply may not be readily available.

For some of our key raw materials, components and APIs used in certain of our products, we have only a single, external source of supply, and alternate sources of supply may not be readily available.

For example, in 2009, we purchased heparin USP as the starting material for producing our enoxaparin product exclusively from a single source supplier and, in 2009, this supplier received a warning letter from the FDA and was the subject of an FDA Import Alert.

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

If we fail to maintain relationships with our current suppliers, we may not be able to complete development, commercialization or marketing of our products, which would have a material and adverse effect on our business.

If we fail to maintain relationships with our current suppliers, including our CMO, we may not be able to complete development, commercialization or marketing of our products, which would have a material and adverse effect on our business.

Third-party suppliers may not perform as agreed, may discontinue production, or may terminate their agreements with us.

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Therefore, if our primary suppliers become unable or unwilling to manufacture or deliver materials, we could experience protracted delays or interruptions in the supply of materials.

This would ultimately delay our manufacture of products for commercial sale, which could materially and adversely affect our development programs, commercial activities, operating results and financial condition.

This would ultimately delay

our manufacture of products for commercial sale, which could materially and adversely affect our development programs, commercial activities, operating results and financial condition.

Additionally, any failure by us to forecast demand for, or to maintain an adequate supply of, the raw material and finished product could result in an interruption in the supply of certain products and a decline in sales of that product.

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We have invested significantly in our manufacturing capacity in order to vertically integrate our business, contain the costs of raw materials and reduce the risks imposed by relying on third-party single source suppliers.

We currently own and operate facilities that manufacture raw materials and APIs for our products and product candidates and those of our

customers and partners, including insulin API for MannKind.

We currently own and operate facilities that manufacture raw materials and APIs for our products and product candidates and those of our customers and partners, including insulin API for MannKind.

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 May 2021, we amended the Supply Agreement with MannKind to modify and extend the annual minimum purchase commitments under the Supply Agreement for an additional year through 2027.

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.

We have amended our supply agreement with MannKind, or the Supply Agreement and our option purchase agreement with MannKind, or the Option Agreement, multiple times to modify and extend the annual minimum purchase commitments under the Supply Agreement and the Option Agreement.

This lowers the annual minimum quantities and lowers the production levels at AFP.

If an increase in supply outpaces the increase in market demand, or if demand decreases, such as a further reduction in sales of insulin API for MannKind, the resulting oversupply could adversely impact our sales and result in the underutilization of our manufacturing capacity, high inventory levels, changes in revenue mix and rapid price erosion, which would lower our margins and adversely impact our financial results.

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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.

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., 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., Eli Lilly and Co., and Teva Pharmaceutical Industries Ltd.

We face and will face significant competition for our products and product candidates from pharmaceutical companies that focus on proprietary and 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., Xeris Pharmaceuticals, Novo Nordisk, Medefil Inc., Accord Healthcare, Eugia Pharma, and Teva Pharmaceutical Industries Ltd.

Competition in the generic pharmaceutical industry has increased as producers of branded products have entered the business by creating generic drug subsidiaries, purchasing generic drug companies, or licensing their products to generic manufacturers prior to patent expiration and/or as their patents expire.

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Consequently, many of our competitors may be able to develop products and/or processes competitive with, or superior to, our own.

For example, a competitor has received FDA approval for their intranasal naloxone product in the markets for which we are currently seeking approval.

We are concentrating the majority of our efforts and resources on developing product candidates utilizing our proprietary technologies.

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If alternative technologies or other therapeutic approaches are adopted prior to our new product approvals, then the market for our new products may be substantially decreased, thus reducing our ability to generate future profits.

products to healthcare professionals in private practice, group practices and managed care organizations.

This intensely competitive environment requires an ongoing, extensive search for technological innovations and the ability to market products effectively, including the ability to communicate the effectiveness, safety and value of our products to healthcare professionals in private practice, group practices and managed care organizations.

Our competitors vary depending upon product categories and, within each product category, upon dosage strengths and upon drug-delivery systems.

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It is possible that developments by our competitors will make our products or technologies noncompetitive or obsolete.

Our current and future indebtedness has and may continue to adversely affect our operating results and cash flows.

The acquisition of BAQSIMI ® was financed with proceeds of the senior secured term loan, or the Wells Fargo Term Loan, provided by the syndicated credit agreement, or the Credit Agreement, by and among the Company, certain subsidiaries of the Company, as guarantors, certain lenders, and Wells Fargo Bank, National Association, or Wells Fargo, as Administrative Agent (in such capacity, Agent), Swing line Lender and L/C Issuer.

The material increase in our indebtedness as a result of the Credit Agreement and the 2.00% Convertible Senior Notes due 2029, or the 2029 Convertible Notes, has and may continue to adversely affect our operating results, cash-flows and our ability to use cash generated from operations as we satisfy our materially increased underlying interest and principal payment obligations under the Credit Agreement and the 2029 Convertible Notes, as applicable.

Specifically, our materially increased indebtedness could have important consequences to investors in our common stock, including any or all of the following:

we could be subject to substantial variable interest rate risk because interest rates applicable to certain of our indebtedness are based on a fixed margin over an indexed rate or an adjusted base rate.

If interest rates were to further increase substantially it could have a material adverse effect on our operating results and could affect our ability to service the indebtedness;

our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited or financing may be unavailable;

a substantial portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other obligations and will not be available for use in our business;

our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate or place us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital;

our high degree of indebtedness will make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations;

any conversion of the 2029 Convertible Notes could dilute the interests of existing investors in our common stock.

Our ability to make scheduled payments of the principal and interest when due, or to refinance our borrowings under the Credit Agreement and/or the 2029 Convertible Notes, will depend on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.

Our business may not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under our indebtedness, and any future indebtedness we may incur and to make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying

investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our existing or future indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default under the Credit Agreement, the 2029 Convertible Notes or future indebtedness.

If we fail to make required payments under our existing or future indebtedness, we would be in default under the terms of these agreements.

Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.

Our outstanding loan agreements contain restrictive covenants that may limit our operating flexibility.

Our loan agreements are collateralized by substantially all of our presently existing and subsequently acquired assets and subject us to certain affirmative and negative covenants, including limitations on our ability to transfer or dispose of assets, merge with or acquire other companies, make investments, pay dividends, incur additional indebtedness and liens and conduct transactions with affiliates.

For example, the Credit Agreement contains financial and operational covenants that may adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

We are also subject to certain covenants that require us to maintain certain financial ratios and are required under certain conditions to make mandatory prepayments of outstanding principal.

As a result of these covenants and ratios, we have certain limitations on the manner in which we can conduct our business, and we may be restricted from engaging in favorable business activities or financing future operations or capital needs until our current debt obligations are paid in full or we obtain the consent of our lenders, which we may not be able to obtain.

For example, the Credit Agreement contains financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming including without limitation, covenants requiring compliance with a maximum consolidated net leverage ratio test and a minimum consolidated interest coverage ratio test.

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.

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, 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.

We may not have sufficient cash to settle conversions of the 2029 Convertible Notes in cash, to repurchase the 2029 Convertible Notes upon a fundamental change, or to repay the principal amount of the 2029 Convertible Notes in cash at their maturity, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2029 Convertible Notes.

Holders of the 2029 Convertible Notes will have the right to require us to repurchase all or a portion of the 2029 Convertible Notes upon the occurrence of a fundamental change, as defined in the Indenture, before the applicable maturity date at a repurchase price equal to 100% of the principal amount of such 2029 Convertible Notes to be repurchased, plus accrued and unpaid interest or special interest, if any, as described in the Indenture governing the 2029 Convertible Notes.

In addition, upon conversion of the 2029 Convertible Notes, we will be required to settle a portion or all of its conversion obligation in respect of the 2029 Convertible Notes being converted in cash, as described in the Indenture.

Moreover, we will be required to repay the 2029 Convertible Notes in cash at their maturity unless earlier converted, redeemed or repurchased.

However, we may not have enough available cash on hand or be able to obtain financing at the time we are required to make repurchases of the 2029 Convertible Notes surrendered therefor or pay cash with respect to the 2029 Convertible Notes being converted or at their respective maturity.

In addition, our ability to repurchase the 2029 Convertible Notes or to pay cash upon conversions of the 2029 Convertible Notes or at their maturity may be limited by law, regulatory authority or agreements governing our future indebtedness.

Our failure to repurchase the 2029 Convertible Notes at a time when the repurchase is required by the indenture governing the 2029 Convertible Notes or to pay cash upon the conversion of the 2029 Convertible Notes or at their maturity as required by the indenture would constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our existing and future indebtedness.

Moreover, the occurrence of a fundamental change under the indenture could constitute an event of default under any such agreement.

If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness, which would have a material adverse effect on our business, results of operations and financial condition.

The conditional conversion feature of the 2029 Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2029 Convertible Notes is triggered, holders of the 2029 Convertible Notes will be entitled under the indenture to convert the 2029 Convertible Notes at any time during the specified periods at their option.

Upon such event, if one or more holders elect to convert their 2029 Convertible Notes, we would be required to settle a portion or all of the conversion obligation in cash, which could adversely affect our liquidity.

In addition, even if holders of the 2029 Convertible Notes do not elect to convert their 2029 Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of such 2029 Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Our business relationships, including customer relationships, and those of the business related to BAQSIMI ® may be subject to disruption due to uncertainty associated with the acquisition of BAQSIMI ® .

Suppliers, vendors, and other third parties with whom we or the business related to BAQSIMI ® do business or otherwise have relationships may experience uncertainty associated with the acquisition of BAQSIMI ® , and this uncertainty could materially affect their decisions with respect to existing or future business relationships with us.

As a result, we are currently unable to predict the effect of the acquisition of BAQSIMI ® on certain assumed contractual rights and obligations, including intellectual property rights.

Contracts, agreements, licenses, permits, authorizations and other arrangements related to the BAQSIMI ® business that contain provisions giving counterparties certain rights (including, in some cases, termination rights) in the event of an “assignment” of such agreement or a “change in control” of Lilly or its subsidiaries.

The definitions of “assignment” and “change in control” vary from contract to contract and, in some cases, the “assignment” or “change in control” provisions may be implicated by the acquisition of BAQSIMI ® .

If an “assignment” or “change in control” occurs, a counterparty may be permitted to terminate its contract with respect to BAQSIMI ® .

We cannot predict the effects, if any, if the acquisition of BAQSIMI ® is deemed to constitute an assignment or change in control under certain of the contracts and other arrangements related to BAQSIMI ® , including the extent to which cancellation rights or other rights would be exercised, if at all, or the effect on our financial condition, results of operations or cash flows.

If we fail to obtain exclusive marketing rights for our generic pharmaceutical products or fail to introduce these generic products on a timely basis, our revenues, gross margin and operating results may decline significantly.

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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.

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.

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.

In addition, brand companies often authorize a generic version of the corresponding brand drug to be sold during any period of marketing exclusivity that is awarded, which reduces gross margins during the marketing exclusivity period.

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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.

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

Fresenius Kabi USA, Apotex Corp., Zydus Pharmaceuticals USA Inc., Sandoz, Meithael Pharmaceuticals, Inc., and others also either market or plan to market a generic version of enoxaparin.

Other companies may have received FDA approval of enoxaparin but have not launched the product, while other companies have filed ANDAs for enoxaparin with the FDA.

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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.

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.

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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.

Pharmacy chains may not be willing to stock certain of our new products, and pharmacists may not recommend such products to consumers.

chains may not be willing to stock certain of our new products, and pharmacists may not recommend such products to consumers.

Further, consumers may not be willing to purchase some of our products.

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revenues is derived from relatively few customers, any financial difficulties experienced by a single customer, or any delay in receiving payments from a single customer, could have a material adverse effect on our business, financial condition and results of operations.

At the same time, the traditional model for distribution of pharmaceutical products is also undergoing disruption as a result of the entry or potential entry of new competitors and significant mergers among key industry participants.

For example, in 2020 Amazon.com launched its pharmaceutical distribution business.

At the same time, the traditional model for distribution of pharmaceutical products is also undergoing disruption as a

result of the entry or potential entry of new competitors and significant mergers among key industry participants.

For example, in 2020 Amazon launched its pharmaceutical distribution business.

In addition, several major hospital systems in the United States formed a nonprofit company that will provide U.S.

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Competition among pharmaceutical companies for qualified employees is intense, and the ability to attract and retain qualified individuals is critical to our success.

We have experienced attrition among our executive officers in the past, and any future loss of key members of our

organization or any inability to continue to attract high-quality employees may delay or prevent the achievement of major business objectives.

We have experienced attrition among our executive officers in the past, and any future loss of key members of our organization or any inability to continue to attract high-quality employees may delay or prevent the achievement of major business objectives.

Our productivity may be adversely affected if we do not integrate or train our new employees quickly and effectively.

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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.

Our business may be adversely affected by the ongoing COVID-19 pandemic and the related challenging macroeconomic conditions globally.

The ongoing COVID-19 pandemic, including the emergence of variants, has continued to impact worldwide economic activity and financial markets, and remains a potential challenge to our business until it is abated.

Our business may be adversely affected by challenging macroeconomic conditions globally, as a result of the COVID-19 pandemic or other public health outbreaks in the future.

While the U.S.

government ended the COVID-19 public health emergency on May 11, 2023, the effects of the COVID-19 pandemic continue to impact worldwide economic activity and financial markets and present challenges to our business.

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 vials and needles.

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 ongoing COVID-19 pandemic could continue to adversely affect economies and financial markets globally and nationally, including inflationary pressures and changes in interest rates, which could decrease spending and adversely affect demand for our products and harm our business and results of operations.

To the extent macroeconomic uncertainty persists or the COVID-19 pandemic or macroeconomic conditions worsen, we may experience a continuing adverse effect on the demand for some of our products.

The degree of impact of the COVID-19 pandemic and the related challenging macroeconomic conditions globally 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 and the challenging macroeconomic conditions globally, all of which continue to evolve and remain uncertain at this time.

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.

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

Additionally, protocols at certain clinical sites have changed which could slow down the pace of clinical trials while also increasing their cost.

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

Additionally, certain suppliers delayed shipments to us in 2021 and 2022.

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

For example, in the first quarter of 2022, increases in COVID-19 cases in Shanghai, China, led to shutdowns and delays at the ports in Shanghai, which led to temporary delays in shipping certain APIs and starting materials.

While availability of components has increased since COVID-19, lead times remain longer than pre-pandemic.

More generally, any extended public health outbreaks or emergencies could adversely affect economies and financial markets globally and nationally, including inflationary pressures and changes in interest rates, which have and could continue to decrease spending and adversely affect demand for our products and harm our business and results of operations.

To the extent macroeconomic uncertainty persists or macroeconomic conditions worsen, we may experience a continuing adverse effect on the demand for some of our products.

The degree of impact of any pandemic and the related challenging macroeconomic conditions globally 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 and the challenging macroeconomic conditions globally, all of which continue to evolve and remain uncertain at this time.

During the COVID-19 pandemic, FDA issued various COVID-19 related guidance documents applicable to biopharmaceutical manufacturers and clinical trial sponsors many of which have expired or were withdrawn with the expiration of the COVID-19 public health emergency declaration in May 2023, although some COVID-19 related guidance documents continue in effect.

These and future guidance documents and regulatory requirements, including future legislation, have and may continue to 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.

While we are not currently experiencing any delayed shipments as a result of COVID-19, certain suppliers delayed shipments to us in 2022, and may delay shipments to us in the future.

Future shutdowns could have an adverse impact on our operations.

However, the extent of the impact of any future shutdown or delay is highly uncertain and difficult to predict.

Shanghai’s delays did not ultimately cause delays in our manufacturing, but future delays could cause manufacturing disruptions at our factories.

Any of the negative impacts of the ongoing COVID-19 pandemic and the related challenging macroeconomic conditions, including, among others, those described above, alone or in combination with others, may have a material adverse effect on our business and operations, results of operations, financial condition, and cash flows.

It is not possible at this time to estimate the complete impact that the COVID-19 pandemic and the related challenging economic conditions could have

on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.

Macroeconomic conditions may continue to worsen leading to changes in monetary policy and other responses from governmental bodies, 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 enacted or extended for longer periods of time, each of which alone or in combination with others, 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 and the related challenging macroeconomic conditions on all aspects of our business.

Any of the negative impacts of any pandemic and any related challenging macroeconomic conditions, including, among others, those described above, alone or in combination with others, may have a material adverse effect on our business and operations, results of operations, financial condition, and cash flows.

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

Macroeconomic conditions may continue to worsen leading to changes in monetary policy and other responses from governmental bodies, infections may resurge and cause closures or supply disruptions, each of which alone or in combination with others, 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 and related challenging macroeconomic conditions 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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Any of these events could harm or prevent sales of the affected products and could have a material adverse effect upon our business and financial condition.

Any acquisitions of technologies, products and businesses may be difficult to integrate, could adversely affect our relationships with key customers and/or could result in significant charges to earnings.

In addition to our acquisition of BAQSIMI ® , any acquisitions of technologies, products and businesses may be difficult to integrate, could adversely affect our relationships with key customers and/or could result in significant charges to earnings.

We plan to regularly review potential acquisitions of technologies, products and businesses complementary to our business.

For example, in 2023 we acquired BAQSIMI ® from Lilly.

Acquisitions typically entail many risks and could result in difficulties in integrating operations, personnel, technologies and products.

If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

If we are not able to successfully integrate our acquisitions, including BAQSIMI ® , we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

In addition, some acquisitions may require regulatory approvals before products may be sold by us, which may not be obtained on a timely basis, or at all.

For example, in August 2016, our UK subsidiary acquired IMS UK.

We are in the process of transferring the manufacturing of the purchased products to our facility in California.

The transfer will require approval of the UK Medicines and Healthcare products Regulatory Agency and other related agencies before the products can be sold by us.

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.

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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.

our cash flows to fund working capital needs, capital expenditures and other general corporate purposes.

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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 to transmit, store and otherwise process electronic data in connection with our business activities, including our supply chain processes, operations and communications including, in some cases, our clinical data and business proprietary information, and Electronic Data Interchange, or EDI, on purchase orders, invoices, chargebacks, among other things.

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, including our supply chain processes, operations and communications including, in some cases, our clinical data and business proprietary information, and electronic data interchange, on purchase orders, invoices, chargebacks, among other things.

We, and our collaborators, third-party providers, distributors and other contractors, 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, security and privacy laws and regulations that require adoption of minimum information security standards.

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We worked with ANP to improve and implement additional security measures to their systems and networks.

We have incurred costs to respond to the ANP incident.

We incurred minimal costs to respond to the ANP incident.

In addition, in the second quarter of 2020, we were subject to a security incident that resulted in a temporary disruption to some of our internal computer systems.

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

We have incurred cost to respond to this incident, and we expect to continue to incur cost to support our efforts to enhance our security measures.

We incurred minimal cost to respond to this incident, and we expect to continue to incur cost to support our efforts to enhance our security measures.

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.

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Further, system breaches, malware, ransomware, computer hacking, and insider threats have become more prevalent.

For example, companies have experienced an increase in phishing and social engineering attacks from third parties in connection with working remotely as a result of the ongoing COVID-19 pandemic.

We and our third-party providers who may be operating in remote work environments may have increased security risks, due to increased use of home Wi-Fi networks and virtual private networks, as well as increased disbursement of physical machines.

For example, companies have experienced an increase in phishing and social engineering attacks from third parties in connection with the increase in employees working remotely in recent years.

We and our third-party providers who may be operating in remote work environments may have increased security risks, due to

increased use of home Wi-Fi networks and virtual private networks, as well as increased disbursement of physical machines.

Also, due to political uncertainty and military actions associated with Russia’s invasion of Ukraine, we and our third-party providers are vulnerable to heightened risks of cyber threats and cyber-attacks from or affiliated with nation-state actors, including attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services.

While we implement security measures designed to reduce these risks, there is no guarantee that these measures will be adequate to safeguard all systems and networks.

Any failure to maintain performance, reliability, security and availability of our systems and networks may result in accidental or

unlawful destruction, damage, loss, unavailability, alteration, impairment, misuse, unauthorized disclosure of, or unauthorized access to our data, including personal information.

Any failure to maintain performance, reliability, security and availability of our systems and networks may result in accidental or unlawful destruction, damage, loss, unavailability, alteration, impairment, misuse, unauthorized disclosure of, or unauthorized access to our data, including personal information.

In addition, potential legal, regulatory, 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 our systems, networks, or data, including data which is transmitted, stored or otherwise processed by us or by collaborators, third-party providers, distributors and other contractors on our behalf.

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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.

We have incurred losses in the past and we may operate at a loss in future years while continuing to invest in developing new products.

We have incurred losses in the past and we may operate at a loss in future years while continuing to invest in developing and acquiring new products.

Although we achieved net income in the years ended December 31, 2023, 2022 and 2021, we may incur operating and net losses and negative cash flow from operations in the future.

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.

Risks Relating to Regulatory Matters

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 FDA approval process for changes to existing products (such as change of components or API supplier) is time-consuming and complicated, and we may not obtain the FDA approval required for such changes within the timeline we desire, or at all.

The development, testing, manufacturing, marketing and sale of generic and proprietary pharmaceutical products and biological products are subject to extensive federal, state and local regulation in the U.S.

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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.

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.

These CRLs have delayed the approval of this product.

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

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The FDA also has the authority to revoke or suspend approvals of previously approved products for cause, to debar companies and individuals from participating in the approval process for ANDAs, to request recalls of allegedly violative products, to seize allegedly violative products, to obtain injunctions that may, among other things, close manufacturing plants that are not operating in conformity with cGMP and stop shipments of potentially violative products and to prosecute companies and individuals for violations of the FFDCA.

In the event that the FDA takes any such action relating to our products or product candidates, such actions would have a material adverse effect on our operations and financial condition.

One of our API suppliers discontinued manufacturing an API included in one of our commercial products.

We qualified one of our subsidiaries to supply the necessary API, and obtained FDA approval of our new API supply.

However, the approval process for the API supply was delayed, causing us to temporarily stop manufacturing and selling the product

for several months.

Similar situations could happen with other suppliers in the future.

If we are forced to stop manufacturing any of our commercial products in the future, for any length of time, it could have a material effect on our operating results and financial condition.

Clinical failure can occur at any stage of clinical development.

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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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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.

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.

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

Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and we may not be successful in obtaining approval.

Obtaining approval of an NDA is a lengthy,

expensive and uncertain process, and we may not be successful in obtaining approval.

If we submit an NDA to the FDA, the FDA must decide whether to accept or reject the submission for filing.

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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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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.

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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As brand and biosimilar companies gain greater understanding of and experience with the new regulatory pathway, we expect to see new and unexpected company strategies, FDA decisions and court decisions that will pose unexpected challenges that will prevent, delay or make more difficult biosimilar approvals.

In addition, the BPCIA was passed as part of the Affordable Care Act.

In addition, the BPCIA was passed as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or the Affordable Care Act.

If the Affordable Care Act is amended or is repealed with respect to the biosimilar approval pathway, our opportunity to develop biosimilars (including interchangeable biologics) could be materially impaired and our business could be materially and adversely affected.

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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.

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.

Our product candidates intended for use with such drug delivery, or expanded indications that we may seek for our products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals or clearances.

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Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries.

Further, in Europe, the implementation of the Clinical Trials Regulation depends on confirmation of full functionality of the Clinical Trials Information System (CTIS) through an independent audit, which commenced in September 2020.

Further, in Europe, the implementation of the Clinical Trials Regulation depends on confirmation of full functionality of the Clinical Trials Information System through an independent audit, which commenced in September 2020.

This new clinical trial portal and database will be maintained by the EMA in collaboration with the European Commission and the European Union Member States.

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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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Our ability to successfully commercialize our products may depend in part on the availability of reimbursement for and insurance coverage of our prescription products from government health administration authorities, private health insurers and other third-party payers and administrators, including Medicaid and Medicare.

Third-party payers and administrators, including state Medicaid programs and Medicare, have been challenging the prices charged for

pharmaceutical products.

Third-party payers and administrators, including state Medicaid programs and Medicare, have been challenging the prices charged for pharmaceutical products.

Government and other third-party payers increasingly are limiting both coverage and the level of reimbursement for new drugs.

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

Additionally, any contract manufacturing organization that we engage will be subject to the same cGMP regulations as us, and any failure on their part to comply with FDA or other governmental regulations will result in similar consequences.

Additionally,

any contract manufacturing organization that we engage will be subject to the same cGMP regulations as us, and any failure on their part to comply with FDA or other governmental regulations will result in similar consequences.

Our operations are subject to environmental, health and safety and other laws and regulations, with which compliance is costly and which exposes us to penalties for non-compliance.

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Because we own and operate real property, various environmental laws also may impose liability on us for the costs of cleaning up and responding to hazardous substances that may have been released on our property, including releases unknown to us.

These environmental laws

and regulations also could require us to pay for environmental remediation and response costs at third-party locations where we dispose of or recycle hazardous substances.

These environmental laws and regulations also could require us to pay for environmental remediation and response costs at third-party locations where we dispose of or recycle hazardous substances.

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.

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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.

Recently, FDA promulgated enhanced drug distribution security requirements under the Drug Supply Chain Security Act, including requiring trading partners to provide, receive and maintain documentation about products and ownership only electronically using interoperable systems and processes.

If we or our partners fail to comply with these and other regulatory requirements that apply to our operations, our business may be materially impacted.

result of these and other new requirements implemented by the government, 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.

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In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our approved products.

Various industry stakeholders, including pharmaceutical companies, the U.S.

Chamber of Commerce, the National Infusion Center Association, the Global Colon Cancer Association, and the Pharmaceutical Research and Manufactures of America, have initiated lawsuits against the federal government asserting that the price negotiation provision of the Inflation Reduction Act are unconstitutional.

The impact of these judicial challenges, legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the government on us and the pharmaceutical industry as a whole is unclear.

The implementation

of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our approved products.

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.

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During that period, the European Commission will monitor the legal situation in the United Kingdom and may intervene at any time with respect to its adequacy decision.

The United Kingdom’s adequacy determination therefore is subject to future uncertainty and may be subject to modification or revocation in the future, with the United Kingdom potentially being considered an inadequate third country under the GDPR and transfers of personal information from the European Economic Area to the United Kingdom will require a transfer mechanism.

The United Kingdom’s adequacy determination therefore is subject to future uncertainty and may be subject to modification or revocation in the future, with the United Kingdom potentially

being considered an inadequate third country under the GDPR and transfers of personal information from the European Economic Area to the United Kingdom will require a transfer mechanism.

Furthermore, there will be increasing scope for divergence in application, interpretation and enforcement of the data protection law as between the United Kingdom and European Economic Area.

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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.

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.

The CCPA and CPRA could mark the beginning of a trend toward more stringent data protection, security and privacy legislation in the U.S.

The CCPA has prompted a number of proposals for federal and state privacy legislation.

For example, in March 2021, Virginia enacted the Virginia Consumer Data Protection Act, or CDPA, a comprehensive privacy statute that became effective on January 1, 2023 and shares similarities with the CCPA and the CPRA, but also imposes security and assessment requirements for businesses.

In addition, on July 7, 2021, Colorado enacted the Colorado Privacy Act, or CPA, which closely resembles the CDPA.

Also, in March 2022, Utah enacted the Utah Consumer Privacy Act, which becomes effective on December 31, 2023, and in May 2022, Connecticut enacted the Act Concerning Personal Data and Online Monitoring, which becomes effective on July 1, 2023, both of which differ from the CPRA, CDPA, and CPA.

These new state privacy laws will be enforced by the respective states’ Attorney General and/or district attorneys.

For example, Virginia, Colorado, Utah and Connecticut have each passed laws similar to but different from the CCPA and CPRA that have taken effect in 2023;

Florida, Montana, Oregon and Texas have enacted similar laws that go into effect in 2024;

Tennessee, Delaware and Iowa have enacted similar laws that go into effect in 2025;

and Indiana has enacted a similar law that will go into effect in 2026.

Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent data protection, security and privacy legislation in the U.S.

The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.

Further, several states have enacted laws that provide additional protection to consumer health data, including Washington, which enacted the My Health, My Data Act, which, among other things, provides for a private right of action, and Nevada and Connecticut, which have enacted similar laws.

We may also publicly post privacy policies and other documentation regarding our collection, use, storage, transmission, transfer and other processing of personal information.

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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.

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.

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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.

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.

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● the federal Anti-kickback statue, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

● 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;

payers that are false or fraudulent;

● 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;

● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, 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;

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Administrative, civil and criminal sanctions may be imposed under these federal and state laws.

In addition, we are also subject to federal and state consumer protection and unfair competition laws that broadly regulate marketplace activities and activities that potentially harm consumers.

In addition, we are also

subject to federal and state consumer protection and unfair competition laws that broadly regulate marketplace activities and activities that potentially harm consumers.

Further, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes.

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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.

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.

Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

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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.

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, 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.

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● 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 the ongoing 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, including China’s policies with respect to COVID-19;

● the imposition of additional tariffs, export controls 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 U.S.

● 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 the COVID-19 pandemic, which resulted in 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 additional tariffs, export controls 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 U.S.

and foreign export controls such as U.S.

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● 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 such as the war in Ukraine, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics, or outbreaks in livestock or animals that impact or restrict importation, use,

or distribution of animal-derived products.

● interruptions to our manufacturing or business operations resulting from geo-political actions, including war and terrorism, such as the war in Ukraine and the Middle East conflict, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics 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 ongoing impact of the COVID-19 pandemic on our business.

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.

For example, in the first quarter of 2022, increases in COVID-19 cases in Shanghai, China, led to shutdowns and delays at the ports in Shanghai.

However, the extent of any future shutdown or delay is highly uncertain and difficult to predict.

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.

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● 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;

● differing existing or future regulatory and certification requirements;

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

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● 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;

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.

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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.

In 2020, USDA increased its African swine flu surveillance efforts, including additional testing and enhanced restrictions on importation of certain porcine products from affected countries, like China.

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.

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● comprehensive financial sanctions against major Russian banks (including SWIFT cut off);

● additional designations of Russian individuals with significant business interests and government connections;

● designations of individuals and entities involved in Russian military activities;

● designation of individuals and entities involved in Russian military activities;

● additional designations of Russian individuals including but not limited to those with significant business interests and government connections;

● enhanced export controls and trade sanctions targeting Russia’s imports of a wide range of goods as a whole, including potentially tighter controls on exports and reexports of items previously subject to only a low level of control, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports.

We currently sell APIs indirectly to Russian customers.

The imposition of enhanced export controls and economic sanctions on transactions with Russia and Russian entities by the U.S., the U.K., and/or the EU could prevent us from selling our products to Russian customers.

In addition, even if a Russian entity is not formally subject to sanctions, customers of such Russian entity may decide to reevaluate, or cancel projects with such entity, and such actions could have a similar impact on us as if sanctions were applied directly as described above.

Depending on the extent and breadth of new sanctions or export controls that may be imposed against Russia, it is possible that our business, results of operations and financial condition could be adversely affected.

Although we do not export any items to Russia, depending on the extent and breadth of any new sanctions or export controls, it is possible that our business, results of operations and financial condition could be adversely affected.

Risks Relating to our Intellectual Property

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In addition, we may be subject to a third-party pre-issuance submission of prior art to the U.S.

Patent and Trademark

Office, or USPTO, or become involved in opposition, derivation, reexamination, inter parties review or interference proceedings challenging our patent rights or the patent rights of others.

Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, reexamination, inter parties review or interference proceedings challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

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The protracted litigations involved, and may continue to involve, large legal expenses and the diversion of management’s time and effort away from the business.

Any future adverse determinations in a judicial

or administrative proceeding or failure to obtain necessary licenses, whether in these litigations or in other litigations, could result in substantial monetary damage awards and could prevent us from manufacturing and selling our products, which could have a material and adverse effect on our financial condition.

There may also be situations where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts, which situation is commonly referred to as an at-risk launch.

Any future adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses, whether in these litigations or in other litigations, could result in substantial monetary damage awards and could prevent us from manufacturing and selling our products, which could have a material and adverse effect on our financial condition.

situation is commonly referred to as an at-risk launch.

The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, among other things, damages measured by the profits lost by the patent owner and not necessarily by the profits earned by the infringer as well as injunctive relief, which would halt our ability to market and sell such products altogether.

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Despite our efforts to protect our trade secrets, know-how, and our other confidential and proprietary information and technologies, we or our collaboration partners, board members, employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors.

In addition, we may not be able to detect any unauthorized

disclosure of our trade secrets, know-how and our other confidential and proprietary information and technologies if such disclosure was conducted confidentially without public disclosure.

In addition, we may not be able to detect any unauthorized disclosure of our trade secrets, know-how and our other confidential and proprietary information and technologies if such disclosure was conducted confidentially without public disclosure.

There is a risk that our trade secrets, know-how, and other confidential and proprietary information and technologies could have been, or could, in the future, be shared by any of our former employees with, and be used to the benefit of, any company that competes with us.

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Zhang and Luo, each of whom serves as one of our directors and executive officers, and their affiliates beneficially own approximately 26.1% of our outstanding common stock, including shares of common stock subject to options exercisable within 60 days of December 31, 2023.

Our directors, executive officers and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, own approximately 27.8% of the outstanding, including shares of our common stock, based on the number of shares outstanding and shares of our common stock subject to options exercisable within 60 days of December 31, 2022.

Our directors, executive officers and each of our stockholders who own greater than 5% of our outstanding common stock

and their affiliates, in the aggregate, own approximately 28.1% of the outstanding, including shares of our common stock, based on the number of shares outstanding and shares of our common stock subject to options exercisable within 60 days of December 31, 2023.

As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.

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As a result of this policy, Drs.

Zhang and Luo reduced their total number of pledged shares to 2,350,000 in May 2022 from 3,182,898 in February 2022, and 8,582,898 in February 2021.

Zhang and Luo reduced their total number of pledged shares to 1,500,000 in January 2024 from 2,350,000 in May 2022, 3,182,898 in February 2022, and 8,582,898 in February 2021.

If the price of our common stock declines, Drs.

Zhang and Luo may be forced by these financial institutions to provide additional collateral for the loans or to sell shares of our common stock held by them in order to remain within the

margin limitations imposed under the terms of their loans.

Zhang and Luo may be forced by these financial institutions to provide additional collateral for the loans or to sell shares of our common stock held by them in order to remain within the margin limitations imposed under the terms of their loans.

Furthermore, the pledged shares of our common stock may be acquired and sold by the lenders.

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

We also expect that certain exchange rates may be more volatile than normal as a result of the Russian invasion of Ukraine and related events, the COVID-19 pandemic, and uncertain macroeconomic conditions.

We also expect that certain exchange rates may be more volatile than normal as a result of the Russian invasion of Ukraine and related events, the Middle East conflict, and uncertain macroeconomic conditions.

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.

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.

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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, changes in inflation and interest rate environments, sequestration and other austerity measures and other challenges affecting the global economy adversely affects us and our distributors, customers and suppliers.

Slower global economic

growth, credit market crises, high levels of unemployment, reduced levels of capital expenditures, government deficit reduction, changes in inflation and interest rate environments, 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.

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Labor is a primary component of operating our business.

A number of factors may adversely affect the labor force available to us or increase labor costs, including high unemployment levels, federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic, and other government regulations.

A number of factors may adversely affect the labor force available to us or increase labor costs, including high unemployment levels and other government regulations.

We are also experiencing and may continue to experience additional pressure in our supply chain due to labor.

A sustained labor shortage or increased turnover rates within our employee base, caused by COVID-19 or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our manufacturing and distribution facilities and overall business.

A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our manufacturing and distribution facilities and overall business.

If we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, have negative effects, our business could be adversely affected.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our business, financial condition or operating results.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our business, financial condition or operating results.

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.

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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.

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.

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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.

For example, in May 2014, the FASB issued Accounting Standards Update, or 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 GAAP.

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

Accounting Standards Codification, or 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 Consolidated 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.

For information regarding the effect of new accounting pronouncements on our financial statements see “Part II – Item 8.

Financial Statements and Supplementary Data – Notes 2 – Summary of Significant Accounting Policies.” 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.

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

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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.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in greater detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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.

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.

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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.

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.

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This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We intend to invest resources to comply

with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

Failure to comply with these requirements could also subject us to enforcement actions by the SEC, further increase costs and divert management’s attention, damage our reputation and adversely affect our business, operating results or financial condition.

Failure to comply with these requirements could also subject us to enforcement actions by the SEC, further increase

costs and divert management’s attention, damage our reputation and adversely affect our business, operating results or financial condition.

We also believe that being a public company and these rules and regulations make it more expensive for us to obtain director and officer liability insurance.

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Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations and prospects.

Unresolved Staff Comments.

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

What changed 10-K

Item 1A. Risk Factors