Anika Therapeutics, Inc. 10-Q

ITEM 1A. RISK FACTORS   Except as set forth below, there have been no material changes to the risk factors described in the section captioned “Part I, Item 1A. Risk Factors” 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 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.   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.   28