What changed in this filing

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Item 1A. Risk Factors

2021-05-07 compared with 2020-11-05 · 16 added, 64 removed, 4 unchanged (95% of the section changed)

1 unchanged sentence

Risk Factors”

in our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by the section captioned “Part II, Item 1A.

Risk Factors”

in our Quarterly Report on Form 10-Q for the interim period ended March 31, 2020.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section captioned “Part I, Item 1A.

Risk Factors”

in our Annual Report on Form 10-K for the year ended December 31, 2019 and the section captioned “Part II, Item 1A.

in our Annual Report on Form 10-K for the year ended December 31, 2020.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section captioned “Part I, Item 1A.

Risk Factors”

in our Quarterly Report on Form 10-Q for the interim period ended March 31, 2020, which could materially affect our business, financial condition, or future results.

The risks described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q are not the only risks we face.

in our Annual Report on Form 10-K for the year ended December 31, 2020, which could materially affect our business, financial condition, or future results.

The risks described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q are not the only risks we face.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition, and/or operating results.

Risks Related to the COVID-19 Pandemic

The ongoing COVID‑19 outbreak has affected 215 countries and territories, including the United States and Italy.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide.

On October 23, 2020, the Director-General of the World Health Organization stated that the global population, particularly in the northern hemisphere, is at a critical juncture in the pandemic and that upcoming months will be challenging, with some countries seeing an exponential increase in cases.

Government and private sector actions responding to the pandemic have disrupted, and will continue to disrupt, domestic business activities generally and have adversely affected, and are likely to continue to negatively affect, our business operations for an indefinite period.

Numerous countries, including the United States and Italy, have imposed, and are expected to continue to impose, restrictions on travel, as well as general movement restrictions, business closures and other measures imposed to slow the spread of COVID‑19.

We have previously set forth key risks from the COVID‑19 pandemic as updated by the statements below.

The current circumstances are dynamic, however.

While the quarantine, social distancing, and other regulatory measures instituted or recommended in response to COVID‑19 are not expected to be permanent, in his comments on October 23, 2020 the Director-General of the World Health Organization urged leaders worldwide to take immediate, additional action, such as isolation and quarantining of individuals and temporary closing of businesses, to keep transmission of the coronavirus at a low level.

The full impact of COVID-19 on our business operations and financial condition, including the duration and severity of the impact on overall customer demand and on our clinical studies, cannot be reasonably estimated at this time.

The COVID‑19 pandemic continues to adversely affect the economies and financial markets of many countries, resulting in an economic downturn and changes in global economic policy that could reduce demand for our products and have a material adverse impact on our business, operating results and financial condition.

Our operations are located in areas impacted by the COVID-19 pandemic, and those operations have been, and may continue to be, adversely affected by the COVID-19 pandemic.

The coronavirus has impacted the social and economic framework in the United States and Italy.

Our administrative, research and development, and manufacturing operations are principally performed at our U.S.

facilities in Massachusetts and Florida.

Though our Italian operations represent a relatively small percentage of our consolidated business, we conduct commercial activity, product development, sales and inventory management and other services in our office in Padova, Italy.

Our business operations in the United States and Italy are subject to potential business interruptions arising from protective measures that have been, and may be, taken by Italian, U.S., Massachusetts and Florida regulators and other agencies and governing bodies.

Business disruptions elsewhere in the world could also negatively affect the sources and availability of components and materials that are essential to the operation of our business in both the United States and Italy.

While we have seen improvement in certain areas in which we do business over the course of the second and third quarters of 2020 as it related to the pandemic, the situation in other jurisdictions, including Florida, has deteriorated over the same period.

It is difficult to predict with certainty the timing for a return to pre-COVID-19 pandemic operations.

Stay-at-home orders, business closures, travel restrictions, supply chain disruptions, employee illness or quarantines, and other extended periods of interruption to our business could result in disruptions to our operations, which could adversely impact the growth of our business, could cause us to cease or delay operations, and could prevent our customers from receiving shipments or processing payments.

To mitigate the spread of COVID-19, we transitioned a significant subset of our employee population to a remote work environment, which may exacerbate various cybersecurity risks to our business, including an increased demand for information technology resources, an increased risk of phishing and other cybersecurity attacks, and an increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information.

Extended periods of interruption to our corporate, development or manufacturing facilities due to the COVID-19 pandemic could cause us to lose revenue and market share, which would depress our financial performance and could be difficult to recapture.

Our business may also be harmed if travel within, to or from the United States and Italy continues to be restricted or inadvisable.

In addition, employee disruptions and remote working environments related to the COVID-19 pandemic have impacted, and are continuing to impact, the efficiency and pace with which we work and develop our product candidates and our manufacturing capabilities.

The COVID-19 pandemic has resulted in a significant reduction in the number of elective surgeries being performed, which has decreased the usage of, and revenue from, certain of our products.

A significant portion of the demand for our products results from the usage of our products in elective surgeries.

As COVID-19 reached a global pandemic level in March 2020, the volume of elective surgery procedures worldwide, including in the U.S.

and Western Europe, declined precipitously, as healthcare systems diverted resources to meet the increasing demands of managing COVID-19 and as patients deferred elective surgeries to avoid the risk of exposure to the coronavirus.

The American College of Surgeons, U.S.

surgeon general, and other public health bodies recommended delaying elective surgeries during the COVID-19 pandemic, and surgeons and medical societies continue to evaluate the risks of minimally invasive surgeries in the presence of infectious diseases.

The decreased number of procedures performed has negatively impacted our revenue and operating results, and it is impossible to reasonably predict when the level of elective procedures will begin to return to pre-COVID-19 levels.

There is significant uncertainty in light of ongoing infection rates in many areas of the United States and in various international jurisdictions.

Procedure volumes have not returned to pre-COVID-19 levels and there is no guarantee that the positive trends will continue.

As a result, elective procedures may yet again decline substantially in future periods, especially in geographies with substantial COVID-19 infection rates.

In the United States, COVID-19 policymaking is being handled largely on a state-by-state, and even city-by-city, basis.

The international outlook is similar, as countries are taking varying approaches to combating the pandemic and returning to pre-COVID operations.

The pace of recovery will continue to be phased and regionally determined based on local orders and the overall impact of COVID-19.

A continuation of the decreased level of elective procedures due to COVID-19 will result in a loss of sales and profits and other material adverse effects on our business and operating results.

Risks Related to Our Business and Industry

Our business is dependent upon retaining qualified management and technical personnel, including our recent hiring of a chief executive officer and our chief financial officer.

We are highly dependent on the members of our management and technical staff, the loss of one or more of whom could have a material adverse effect on us.

We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business.

We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel.

We face significant competition for such personnel from competitive companies, research and academic institutions, government entities, and other organizations.

There can be no assurance that we will be successful in hiring or retaining the personnel we require.

The failure to hire and retain such personnel could have a material adverse effect on our business, financial condition, and results of operations.

On January 29, 2020, Joseph Darling, our former President and Chief Executive Officer, passed away unexpectedly.

Cheryl Blanchard, a member of the Board of Directors, was named Interim Chief Executive Officer initially and became our permanent President and Chief Executive Officer on April 26, 2020.

Effective August 21, 2020, Sylvia Cheung resigned from her position of Chief Financial Officer, Treasurer and Assistant Secretary for personal reasons.

On August 5, 2020, we announced that we had appointed Michael Levitz as our Executive Vice President, Chief Financial Officer and Treasurer, effective August 10, 2020 following a search process aided by an executive search firm.

Even though we have appointed Dr.

Blanchard and Mr.

Levitz to succeed Mr.

Darling and Ms.

Cheung, respectively, we may face challenges in building our business in accordance with our strategy as the result of having both a chief executive officer and chief financial officer that are relatively new to our company.

Our operations and products are subject to extensive regulation, compliance with which is costly and time consuming, and our failure to comply may result in substantial penalties, including recalls of our products.

The FDA and foreign regulatory bodies impose extensive regulations applicable to our operations and products, including regulations governing product standards, packing requirements, labeling requirements, quality system and manufacturing requirements, import restrictions, tariff regulations, duties, and tax requirements.

We cannot assure you that we will be able to achieve and maintain compliance required for FDA, CE marking, or other foreign regulatory approvals for any or all of our operations and products or that we will be able to produce our products in a timely and profitable manner while complying with applicable requirements.

Failure to comply with applicable regulatory requirements could result in substantial penalties, including warning letters, fines, injunctions, civil penalties, seizure of products, total or partial suspension of production, refusal to grant pre-market clearance or pre-market approval for devices or drugs, withdrawal of approvals, and criminal prosecution.

Additionally, regulatory authorities have the power to require the recall of our products.

It also might be necessary for us, in applicable circumstances, to initiate a voluntary recall per regulatory requirements of one or several of our products.

The imposition of any of the foregoing penalties, whether voluntarily or involuntary, could have a material negative impact on our business, financial condition, and results of operations.

On March 10, 2021, we learned that certain lots of cannulas that we source from a supplier and that are packaged with specific presentations of our Hyalobarrier and Hyaloglide products sold in various countries outside the United States could not be guaranteed to be sterile due to the provision of inaccurate sterility records related to those lots by that supplier’s third-party sterilizer.

Due to the resulting inability of our supplier to ensure sterility, we are in the process of implementing an appropriate voluntary field action as part of a corrective action plan, managed in conjunction with our distributors, related to the products in the affected jurisdictions.

Based on the information available to us, we do not believe that this will materially impact our business, financial condition, or results of operations.

We will continue to review the overall situation, and further information that might be uncovered or decisions that may be made by regulatory authorities with jurisdiction over these products could lead to business or operating results that are different than what we currently expect.

This matter is illustrative of the risks we face in the highly-regulated life sciences industry and the efforts that are necessary to ensure patient safety and compliance with applicable regulations in the global marketplace.

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

What changed 10-Q

Item 1A. Risk Factors