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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-29 · 570 added, 229 removed, 460 unchanged (63% of the section changed)

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These risks are discussed more fully in the section titled “Risk Factors.” These risks and uncertainties include, but are not limited to, the following:

• Our approved products, including Cortrophin Gel, ILUVIEN and YUTIQ, may not achieve commercialization at levels of market acceptance that will continue to allow us to achieve profitability;

• Cortrophin Gel is our first rare disease pharmaceutical product.

To the extent we are not able to continue to achieve commercial success with this product, including expanding the market and gaining market share, our business, financial condition, and results of operations will be negatively impacted;

• Our approved products, including Cortrophin Gel, may not achieve commercialization at levels of market acceptance that will continue to allow us to achieve profitability;

• Acquisitions and investments could disrupt our business and harm our financial position and operating results;

• We may fail to realize the benefits expected from our acquisition of Alimera and the combined company may not perform as we or the market expects;

• The limited number of suppliers for our API could result in lengthy delays in production if we need to change suppliers;

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Noncompliance by these contract manufacturers or our inability to find qualified contract manufacturers could result in us being unable to commercialize these products;

Several of our products are manufactured and/or packaged by third parties, which we cannot control and could result in us being unable to market and distribute products;

Several of our products are manufactured and/or packaged by single-sourced third parties, which we cannot control and could result in us being unable to market and distribute products;

• We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business;

• The continuing trend toward consolidation of customer groups that could result in declines in the sales volume and prices of our products, and increased fees charged by customers;

• Pharmaceutical product quality standards are steadily increasing on all products, and if we cannot meet these standards, we may be required to discontinue marketing and/or recall products from the market;

• Federal and state false claims litigation brought against us by private individuals and the government could result in civil and criminal penalties, damages, fines and other related actions;

• The use of legal, regulatory, and legislative strategies by competitors could result in increased costs to develop and market our products, delay new product introductions and reduce profit potential;

• Third-party payer actions may prevent us from effectively marketing our products or cause us to decrease pricing;

• Continuing studies of our products could produce results that could have a negative impact on our business;

• Healthcare reform legislation could have a material adverse effect on our business, financial position, and operating results;

• Barriers in achieving anticipated revenue growth and profitability could have a material adverse effect on our business, financial position, and operating results;

• We may not achieve the anticipated benefits from our acquisition of Novitium Pharma LLC (“Novitium”);

• The obligations and liabilities of Novitium, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Novitium to us;

• Public health outbreaks, epidemics, or pandemics (such as COVID-19) have adversely affected and may in the future adversely affect our business;

• The Food and Drug Administration (“FDA”) does not provide guidance on safety labeling for products that are marketed without approved New Drug Applications (“NDAs”) or Abbreviated New Drug Applications (“ANDAs”), which could increase our potential liability with respect to failure-to-warn claims for these products;

• Four of our products are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.

In either case, our business, financial position, and operating results could be materially adversely affected;

• If the Drug Enforcement Administration (“DEA”) does not approve supply of the API we need to manufacture our controlled substances, we may be unable to manufacture controlled substances, which would eliminate our revenue on these products;

• Failure to comply with data protection laws and regulations could subject us to government enforcement actions, private litigation and/or adverse publicity, which could negatively affect our operating results and business;

• Our Medicaid rebate accruals have increased and continue to increase due to our acquisitions and subsequent sales of branded products and authorized generics of branded products;

• Our accruals for the Medicare Coverage Gap Discount Program have increased due to growth and acquisitions;

• We face vigorous competition from other pharmaceutical manufacturers that threatens the commercial acceptance and pricing of our products;

• We expect to spend a significant amount of resources on research and development efforts, and such efforts may not result in marketable products;

• Production at any or all of our three current manufacturing facilities could be interrupted, which could cause us to fail to deliver product on a timely basis;

• We rely on third parties to assist with our clinical studies.

• We rely on third parties to assist with our clinical trials.

If these parties do not perform or are non-compliant, it could negatively impact the clinical trial and potential of regulatory approval;

further, we may be required to audit or redo previously completed trials or recall already-approved commercial products;

• Clinical trials for our products may not generate the outcomes we expect, may take longer or be more costly to complete than we anticipate;

• We may be adversely affected by the expiration of patents that protect key aspects of our products in the near- to medium-term;

• Inability to protect our intellectual property in the U.S.

and foreign countries could negatively affect sales of our branded products;

• With the exception of patents on a limited number of products we do not own or license any material patents associated with the majority of our products, and our ability to protect and control unpatented trade secrets, know-how, and other technological innovation is limited;

• If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are material to our business;

• Our success is largely dependent upon certain key employees, including members of our senior management, the loss of whom could adversely affect our operations;

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• We are susceptible to product liability claims that may not be covered by insurance, which, if successful, could require us to pay substantial sums;

• The obligations and liabilities of Alimera, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Alimera to us;

• Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results;

• Our operations, including those resulting from our acquisition of Alimera, and its international operations, will subject us to political and economic risks, increase our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations;

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• Future acquisitions and investments could disrupt our business and harm our financial position and operating results;

• Federal and state false claims litigation brought against us by private individuals and the government could result in civil and criminal penalties, damages, fines and other related actions;

• Third-party payer actions may prevent us from effectively marketing our products or cause us to decrease pricing;

• Healthcare reform legislation could have a material adverse effect on our business, financial position, and operating results;

• Public health outbreaks, epidemics, or pandemics (such as COVID-19) have adversely affected and may in the future adversely affect our business;

• The continuing trend toward consolidation of customer groups could result in declines in the sales volume and prices of our products, and increased fees charged by customers;

In either case, our business, financial position, and operating results could be materially adversely affected;

• Our policies regarding returns, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce revenues in future fiscal periods;

• Making interest and principal payments under our Credit Agreement with Truist requires a significant amount of cash;

• We previously identified material weaknesses in our internal control over financial reporting, and the failure to maintain an effective system of internal controls and procedures may cause investors to lose confidence in our financial reporting;

• Our Credit Facility contains restrictive and financial covenants and if are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility;

• Our indebtedness and liabilities could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operation;

• To service our indebtedness, we will be required to generate a significant amount of cash;

• Our New Credit Agreement contain restrictive and financial covenants and if are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility;

• Certain risks relating to our 2.25% Convertible Senior Notes due 2029 and related capped call transactions;

• Raising additional funds by issuing additional equity securities may cause dilution to our current stockholders.

Raising additional funds by entering into additional credit or other borrowing facilities or issuing debt may subject us to covenants and other requirements that may restrict our operations.

• Our operations, including those resulting from our acquisition of Novitium and its international operations, will subject us to political and economic risks, increase our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations.

The following are significant factors known to us that could materially harm our business, financial position, or operating results or could cause our actual results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this report.

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Risks Related to our Business

Our approved products, including Cortrophin Gel, ILUVIEN and YUTIQ, may not achieve commercialization at levels of market acceptance that will continue to allow us to achieve profitability and we may face substantial competition from competitors that discover, develop or commercialize competing products before or more successfully than we do, which could have a material adverse effect on our business, financial position, and operating results.

The development and commercialization of new drugs is highly competitive, and the commercial success of our products or any of our future products or product candidates will depend on several factors, including our ability to differentiate any such products or product candidates from our competitors’ current or future products, including the creation of generic competitive products.

We seek to develop, license, or acquire products that we can commercialize at levels of market acceptance that would allow us to recoup our costs, grow market share, and achieve profitability.

However, w e face competition from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to our current products and to any future products or product candidates that we may develop or commercialize in the future.

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Even if we are able to obtain regulatory approvals for our pharmaceutical products, if we fail to predict accurately demand for such products, or our competitors more effectively develop competitive products, that have few or less severe adverse side effects and have higher rates of acceptance by physicians, our business, financial position, and operating results could be adversely affected.

Levels of market acceptance for our products could be impacted by several factors, including but not limited to:

• our products’ pricing relative to that of our competitors;

• our marketing effectiveness relative to that of our competitors;

• timing of our market entry;

• our ability to market our products effectively to the retail level;

• acceptance of our products by government and private formularies.

Some of these factors are outside of our control and, if any arise, our profitability, business, financial position, and operating results could be materially adversely affected.

Cortrophin Gel is our first rare disease pharmaceutical product.

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On October 29, 2021, we received approval from the FDA for our Cortrophin Gel product for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.

We have devoted significant time and money over the past eight years to the development of this product since we acquired the rights to the product in 2016.

We have devoted significant time and money to the development of this product since we acquired the rights to the product in 2016.

We have invested and continue to invest significantly in the commercialization of this product in the U.S, including building out a sales force and developing a patient support program, with a full-scale launch in January 2022.

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In addition, sales of Cortrophin Gel could be negatively affected by discovery of previously unknown problems with the product, such as adverse events of unanticipated severity or frequency, problems with the facilities where the product is manufactured, or imposition of restrictions on Cortrophin Gel, including requiring withdrawal of the product from the market, by a regulatory agency if it disagrees with the promotion, marketing, or labeling of the product.

We are continuing to develop our marketing and sales organization to support Cortrophin Gel and have limited experience in marketing prescription rare disease drug products.

If we are unable to continue to develop marketing and sales capabilities for Cortrophin Gel, our business will suffer.

We first established our rare disease sales, marketing or distribution capabilities in 2021 and have limited institutional experience in marketing rare disease products.

We intend to continue to develop an in-house marketing organization and sales force, which will require significant expenditures, management resources and time.

We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

Future acquisitions and investments could disrupt our business and harm our financial position and operating results.

Our growth will depend, in part, on our continued ability to develop, commercialize, and expand our products, including in response to changing regulatory and competitive pressures.

In some circumstances, we have and may continue to grow our business through the acquisition of complementary businesses and technologies rather than through internal development.

The identification of suitable acquisition candidates or products can be difficult, time-consuming, and costly, and we may not be able to successfully complete or successfully execute strategies for identified acquisitions.

The risks faced in connection with acquisitions include:

• diversion of management time and focus from operating our business to addressing acquisition and/or product integration challenges;

• coordination of research and development and sales and marketing functions;

• retention of key employees from the acquired company;

• integration of the acquired company’s accounting information, management, human resources, and other administrative systems;

• the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

• difficulties relating to integrating the acquired business;

• liability for activities of the acquired company and/or products before the acquisition, including patent infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

• unanticipated write-offs or charges;

• litigation or other claims in connection with the acquired company or product, including claims from product users, former stockholders, or other third parties.

In any acquisition that we may undertake, our failure to address these risks or other problems encountered in connection with any acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.

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We may enter into new lines of business that offer new products and/or services and we may have limited experience in marketing such new products and/or services, which may subject us to additional risks.

From time to time, we may enter into new lines of business that offer new products and/or services.

For example, in September 2024 we acquired Alimera, a global pharmaceutical company that specializes in the commercialization and development of ophthalmic retinal pharmaceuticals, which for us is a new line of business.

Our lack of experience with or knowledge of such business or other new lines of business we may choose to enter, as well as external factors, such as competitive alternatives, potential conflicts of interest, either real or perceived, and shifting market preferences, may impact our implementation and operation of such new lines of business.

Other risks of implementing new lines of business include:

• potential diversion of management's attention, available cash and other resources from our existing business;

• any determination by governmental agencies that any acquisition we undertake is anticompetitive in any relevant market;

• unanticipated liabilities or contingencies;

• compliance with new or increased regulatory burdens;

• potential damage to existing customer relationships, lack of customer acceptance or inability to attract new customers;

• the cost of developing an in-house sales and marketing organization, which would require significant expenditures, management resources, and time;

• the inability to compete effectively in the new line of business.

Failure to successfully manage these risks in the implementation or acquisition of new lines of business or the offering of new products or services could have a material adverse effect on our reputation, business, results of operations and financial condition.

We depend on a limited number of suppliers for API.

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Our ability to manufacture and distribute products is dependent, in part, upon ingredients and components supplied by others, including entities based outside the U.S.

During the year ended December 31, 2023, no single vendor represented at least 10% of inventory purchases.

During the year ended December 31, 2022, we purchased approximately 19% of our inventory from one supplier.

During the year ended December 31, 2021, no single vendor represented at least 10% of inventory purchases.

During the year ended December 31, 2024, approximately 12%, of our raw material inventory purchases were from one domestic supplier.

During the year ended December 31, 2023, no single vendor represented more than 10% of our raw ma terial inventory purchases.

During the year ended December 31, 2022 approximately 19% , of our raw material inventory purchases were from one domestic supplier.

Any disruption in the supply of these ingredients or components or any problems in their quality could materially affect our ability to manufacture and distribute our products and could result in legal liabilities that could materially affect our ability to realize profits or otherwise harm our business, financial, and operating results.

Virtually all of our generic contracts for the supply of pharmaceutical products to customers contain "failure to supply" clauses.

Under these clauses, if we are unable to supply the requested quantity of product within a certain period after receipt of a customer’s purchase order, the customer is entitled to procure a substitute product elsewhere and we must reimburse the customer for the difference between our contract price and the price the customer was forced to pay to procure the substitute product.

Therefore, our ability to source sufficient quantities of API for manufacturing is critical.

We source the raw materials for our products from both domestic and international suppliers.

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As a result, we carefully select suppliers, based on various factors including quality, reliability of supply, and long-term financial stability.

Certain of the APIs for our drug products, including those that are marketed without approved NDAs or ANDAs, are sourced from international suppliers.

Certain of the API for our drug products, including those that are marketed without approved NDAs or ANDAs, are sourced from international suppliers.

From time to time, we have experienced temporary disruptions in the supply of certain of such imported API due to FDA inspections.

Several of the products we have acquired cannot be manufactured in our facilities and are manufactured and/or packaged by third parties, which we cannot control.

If we are unable to secure or maintain qualified contract manufacturers for those products or if a contract manufacturer fails to comply with federal, state, and local laws and regulations, our business, financial position, and operating results could be materially, adversely affected.

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Several of the products we have acquired cannot be manufactured in our facilities and are manufactured, packaged and/or distributed by third parties, which we cannot control.

If we are unable to secure or maintain qualified contract manufacturers for those products, a contract manufacturer or distributor fails to comply with federal, state, and local laws and regulations, or third-party manufacturers or distributors sustain delays in production and distribution of our products, our business, financial position, and operating results could be materially, adversely affected.

We have acquired, and may continue to acquire, a variety of products that we seek to commercialize.

Some of these products, including injectables, softgel capsules, and Purified Cortrophin Gel, are products that we cannot currently manufacture in our facilities.

As a result, we may seek partners to contract manufacture the products on our behalf, and we rely on third parties to manufacture and/or package many of our products.

Like our company, these firms must comply with cGMPs and other federal, state, and local laws and regulations regarding pharmaceutical manufacturing.

Noncompliance by those firms may result in warning letters, fines, product recalls, and partial or total suspension of production and distribution.

If we are unable to find qualified contract manufacturers or if a contract manufacturer fails to comply with federal, state, and local laws and regulations, we may be unable to commercialize these products, which could have a material adverse effect on our business, financial position, and operating results, including an impairment of the acquired product.

Some of these products, including injectables, softgel capsules, and Cortrophin Gel, as well as ILUVIEN and YUTIQ, are products that we cannot currently manufacture in our facilities.

As a result, we may seek partners to contract manufacture the products on our behalf, and we rely on single-source third parties to manufacture, package and/or distribute many of our products.

Like our Company, these companies must comply with cGMPs and other federal, state, and local laws and regulations regarding pharmaceutical manufacturing.

Noncompliance by those companies may result in warning letters, fines, product recalls, and partial or total suspension of production and distribution.

If we are unable to find qualified contract manufacturers or distributors or if a contract manufacturer or distributor fails to comply with federal, state, and local laws and regulations, we may be unable to commercialize these products, which could have a material adverse effect on our business, financial position, and operating results, including an impairment of the acquired product.

We expect our reliance on third party manufacturers to continue to increase in the future as we receive approvals for new products to be manufactured through our collaborative arrangements, and as we seek additional growth opportunities outside of the capabilities of our current manufacturing facilities.

If we are unable to secure third-party manufacturers for these products on commercially acceptable terms, we may not be able to market and distribute such products at a profit.

Any delays or difficulties with third-party manufacturers could adversely affect the marketing and distribution of these products, or future products, which could have a material adverse effect on our business, financial position, and operating results.

In addition, manufacturers and distributors of our products may sometimes encounter difficulties in production and distribution.

These problems include failure to meet target production costs and yields, failure to meet product release specifications, including stability of the product, quality assurance system failures, operator error and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations.

Adverse weather conditions and natural disasters may also affect our manufacturers’ and distributors’ supply chains, which could negatively impact our ability to source materials and components to make our products and, in more severe cases, such as hurricanes, earthquakes, floods, droughts, tornadoes or blizzards, eliminate the availability, or significantly increase the cost, of the components to make our products, sometimes for prolonged periods of time.

The response of federal, state and local governmental bodies and agencies to climate change through regulations, mandates, reporting and disclosure requirements, taxes or levies could materially increase our or our manufacturers’ cost to operate or obtain product components at a reasonable price, resulting in a material adverse effect on our financial results.

Any of these situations could materially and adversely harm our business and financial condition.

We cannot assure you that any product quality issues relating to the manufacture and/or distribution of our products or any future product candidates will not occur in the future.

Any delays or difficulties with third-party manufacturers and/or distributors could adversely affect the marketing and distribution of these products, or future products, which could have a material adverse effect on our business, financial position, and operating results.

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We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business.

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Any of these types of investigations or enforcement actions could affect our ability to commercially distribute our products and could materially and adversely affect our business, financial condition, results of operations and cash flows.

We are subject to certain privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies, contractual obligations and failure to comply with such requirements, as well as any breach of unsecured identifiable personal information protected by law, could subject us to significant costs, fines, penalties (civil and criminal), and civil litigation which may have a material adverse effect on our business, financial condition or results of operations.

As regulatory focus on privacy issues continues to increase, and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify.

In addition, the interpretation and application of consumer, health-related, and data protection laws are often uncertain, contradictory, and in flux, which complicates compliance efforts.

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If we fail to comply with data protection laws and regulations, we could be subject to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity, which could negatively affect our operating results and business.

We are subject to data protection laws and regulations.

In the U.S., numerous federal and state laws and regulations, including state data breach notification laws, state health information and/or genetic privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health related and other personal information.

In California, the California Consumer Privacy Act (“CCPA”) establishes certain requirements for data use and sharing transparency, and provides California residents certain rights concerning the use, disclosure, and retention of their personal data.

The California Privacy Rights Act currently in effect, significantly amends the CCPA.

Virginia, Colorado, Utah, and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business, and similar laws are under consideration in other states.

These laws and regulations are evolving and subject to interpretation and may impose limitations on our activities or otherwise adversely affect our business.

The obligations to comply with the CCPA and evolving legislation may involve, among other things, updates to our notices and the development of new processes.

We may be subject to fines, penalties, or private actions in the event of non-compliance with such laws.

In addition, we may obtain health information from third parties (e.g., healthcare providers who prescribe our product) that are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, (collectively, “HIPAA”).

HIPAA imposes privacy and security obligations on covered entity health care providers, health plans, and health care clearinghouses, as well as their “business associates”—certain persons or entities that create, receive, maintain, or transmit protected health information in connection with providing a specified service or performing a function on behalf of a covered entity.

Although we are not directly subject to HIPAA, we could be subject to criminal penalties if we knowingly receive individually identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA.

Further at the federal level, the Federal Trade Commission (“FTC”) also sets expectations for failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individual about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”).

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Individually identifiable health information is considered sensitive data that merits stronger safeguards.

With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information;

any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.

While we do not intend to engage in unfair or deceptive acts or practices, the FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may result in FTC enforcement.

Enforcement by the FTC under the FTC Act can result in civil penalties or enforcement actions.

EU Member States and other jurisdictions where we operate have adopted data protection laws and regulations, which impose significant compliance obligations.

For example, the General Data Protection Regulation (GDPR) imposes strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting.

Switzerland has adopted laws that impose restrictions and obligations similar to the GDPR.

The obligations and restrictions under the GDPR and Switzerland’s laws concern, in particular, in some instances the consent of the individuals to whom the personal data relate, the processing details disclosed to the individuals, the sharing of personal data with third parties, the transfer of personal data out of the EEA or Switzerland, contracting requirements (such as with clinical trial sites and vendors), and security breach notifications, as well as substantial potential fines, in some cases up to 4% of annual global turnover, for breaches of the data protection obligations.

Data protection authorities from the different EU Member States and the EEA may interpret the GDPR and applicable related national laws differently which could effectively result in requirements additional to those currently understood to apply under the GDPR.

In addition, guidance on implementation and compliance practices may be updated or otherwise revised, which adds to the complexity of processing personal data in the EU.

When processing personal data of subjects in the EU, we have to comply with applicable data protection and electronic communications laws.

In particular, as we rely on service providers processing personal data of subjects in the EU, we have to enter into suitable contract terms with such providers and receive sufficient guarantees that such providers meet the requirements of the applicable data protection laws, particularly the GDPR which imposes specific and relevant obligations.

Enforcement by EU and U.K.

regulators is active, and failure to comply with the GDPR or applicable Member State law may result in substantial fines.

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Legal mechanisms to allow for the transfer of personal data from the EEA or U.K.

may impact our ability to transfer personal data or otherwise may cause us to incur significant costs to do so legally.

On July 16, 2020, the European Court of Justice ruled that the Privacy Shield is an invalid data transfer mechanism and confirmed that the Standard Contractual Clauses (“SCCs”) remain valid.

If companies are relying on the SCCs as their transfer mechanism to transfer personal information from the EEA to the U.S.

(or to other jurisdictions not recognized as adequate by the EU), they must be incorporated into new and existing agreements within prescribed timeframes.

adopted versions of their own SCCs.

Updating agreements to incorporate these new SCCs for the EEA and U.K.

may require significant time and resources to implement, including through adjusting our operations, conducting requisite data transfer assessments, and revising our contracts.

Companies that have not taken steps to demonstrate that their SCCs and personal data recipients in the U.S.

or other non-adequate jurisdictions are suitable to receive the personal data may be subject to enforcement actions by competent authorities in the EU for failure to comply with related data privacy rules.

Additionally, the European Commission adopted a draft adequacy decision for the EU-U.S.

Data Privacy Framework, which reflects the assessment by the European Commission of the U.S.

legal framework.

The draft decision concludes that the U.S.

ensures an adequate level of protection for personal data transferred from the EU to U.S.

After an approval process, the European Commission is expected to adopt the final adequacy decision, which will allow data to flow freely from the EU to the U.S.

If we or our distributors fail to comply with applicable data privacy laws concerning, or if the legal mechanisms we or our distributors rely upon to allow, the transfer of personal data from the EEA or Switzerland to the U.S.

(or other countries not considered by the European Commission to provide an adequate level of data protection) are not considered adequate, we could be subject to government enforcement actions, including an order to stop transferring the personal data outside of the EEA and significant penalties against us.

Moreover, our business could be adversely impacted if our ability to transfer personal data out of the EEA or Switzerland to the U.S.

is restricted, which could adversely impact our operating results.

Failure to comply with data protection laws and regulations could result in unfavorable outcomes, including increased compliance costs, delays or impediments in the development of new products, increased operating costs, diversion of management time and attention, government enforcement actions and create liability for us (which could include civil, administrative, and/or criminal penalties), private litigation and/or adverse publicity that could negatively affect our operating results and business.

Our anticipated revenue growth and profitability, if achieved, is dependent upon our ability to develop, license or acquire, and commercialize new products on a timely basis in relation to our competitors’ product introductions, and to address all regulatory requirements applicable to the development and commercialization of new products.

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The timing and cost of obtaining regulatory approvals could adversely affect our product introduction plans, business, financial position, and operating results.

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The approval process for generic pharmaceutical products often results in the FDA granting simultaneous final approval to a number of generic pharmaceutical products at the time a patent claim for a corresponding branded product or other market exclusivity expires.

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Promotion of a prescription drug for uses not approved by the FDA can have serious consequences and result in lawsuits by private parties, state governments and the federal government, significant civil and criminal penalties, and compliance agreements that require a company to change current practices and prevent unlawful activity in the future.

Our branded products may become subject to increased generic competition.

Many of our branded products have not been patent-protected for several years and no longer have market exclusivity.

As a result, they face competition from lower priced generic products which may reduce and limit the sales of our mature brand products.

Additionally, increased focus by the FDA on approval of generic products may accelerate this trend.

If generic products are substituted for these branded products, our revenue from these products will decrease, which could have an adverse effect on our business, financial position, and operating results.

Our Medicaid rebate accruals have increased and continue to increase due to our acquisitions and subsequent sales of branded products and authorized generics of branded products, and the estimates on which our accruals are based are subject to change.

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Increases in Medicare Coverage Gap Discount rebates, and legislative changes to the Medicare Coverage Gap Discount Program, could decrease our revenues from product sales, which in turn could adversely affect our business, financial position, and operating results.

We have entered into distribution agreements under which we market products under ANDAs and NDAs owned by third parties.

Any changes to these agreements could have a material adverse effect on our business, financial position, and operating results.

We have entered into several distribution agreements to market and distribute products under our own label that are sold under ANDAs and NDAs owned by third parties, over which we have no control.

Generally, the responsibility for maintaining the ANDAs and NDAs lies with these third parties.

If any regulatory issues were to arise with the underlying ANDA or NDA for one of these products, we could be required to discontinue sales of the product, which could have an adverse effect on our business, financial position, and operating results.

We face vigorous competition from other pharmaceutical manufacturers that may adversely impact commercial acceptance and pricing of our products.

If we are unable to successfully compete, such competition could have a material adverse effect on our business, financial position, and operating results.

The generic pharmaceutical industry is highly competitive.

We face intense competition from U.S.

and foreign manufacturers, many of whom are significantly larger than us and operate in lower cost geographies.

Our competitors may be able to develop products and processes competitive with or superior to ours for many reasons, including but not limited to the possibility that they may have:

• greater financial resources;

• proprietary processes or delivery systems;

• larger research and development and marketing staffs;

• larger production capabilities;

• more products;

• access to lower cost wages;

• more experience in developing new drugs.

Any of our significant competitors, due to one or more of these and other factors, could have a material adverse effect on our business, financial position, and operating results.

Our approved products may not achieve commercialization at levels of market acceptance that allow us to achieve profitability, which could have a material adverse effect on our business, financial position, and operating results.

We seek to develop, license, or acquire products that we can commercialize at levels of market acceptance that would allow us to recoup our costs, grow market share, and achieve profitability.

Even if we are able to obtain regulatory approvals for our pharmaceutical products, if we fail to predict accurately demand for such products, our business, financial position, and operating results could be adversely affected.

Levels of market acceptance for our products could be impacted by several factors, including but not limited to:

• availability of alternative products from our competitors;

• our products’ pricing relative to that of our competitors;

• our marketing effectiveness relative to that of our competitors;

• timing of our market entry;

• our ability to market our products effectively to the retail level;

• acceptance of our products by government and private formularies.

Some of these factors are outside of our control and, if any arise, our profitability, business, financial position, and operating results could be materially adversely affected.

We have entered into several collaborative arrangements that may not result in marketable products.

We have entered into several collaborative arrangements to develop generic products for us to market in the U.S.

We can offer no assurances that these arrangements will result in additional approved products, or that we will be able to market the products at a profit.

In addition, any expenses related to clinical trials, or additional studies required by the FDA, that we may incur in connection with these collaborative arrangements may negatively affect our business, financial position, and operating results.

Specifically:

• clinical trials could be more costly than we anticipate;

• formulation development could take longer and be more costly than we expect;

• we may be required to obtain specialized equipment in order to manufacture products on a commercial scale;

• we may be subject to milestone payments to collaborative partners, the timing of which we may be unable to predict.

Any of these events could have a material adverse effect on our business, financial position, and operating results.

We expect to spend a significant amount of resources on research and development efforts, and such efforts may not result in marketable products.

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If we spend significant resources on research and development efforts and are not able to introduce new products, our business, financial position, and operating results may be materially adversely affected.

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We produce the majority of our products in three manufacturing facilities.

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Our internal manufacturing operations are currently based in three fa cilities.

We have transitioned the products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites, and we are seeking to find potential buyers for the Oakville site.

While these three remaining facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.

We have transitioned products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites.

While these three facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.

A significant disruption at any of the facilities, even on a short-term basis, whether due to a labor strike, adverse quality or compliance observation, vandalism, natural disaster, fire, storm or other environmental damage, or other events could impair our ability to produce and ship products on a timely basis and, among other consequences, could subject us to “failure to supply” claims from our customers, as discussed below.

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Any of these events could have a material adverse effect on our business, financial position, and operating results.

Virtually all our contracts for the supply o f generic products to our customers contain "failure to supply" clauses which require us to reimburse the customer for the difference between our contract price and the price the customer was forced to pay to procure the substitute product in the event we failed to deliver the requested quantity within a specified period of time.

Virtually all of our contracts for the supply o f generic products to our customers contain “failure to supply” clauses which require us to reimburse the customer for the difference between our contract price and the price the customer was forced to pay to procure the substitute product in the event we failed to deliver the requested quantity within a specified period of time.

This difference can be substantial because of the much higher spot price at which the customer must cover its requirements and can be far in excess of the revenue that we would otherwise have received on the sale of our own product.

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Failure to deliver products could have a material adverse effect on our business, financial position, and operating results.

We rely on third parties to assist with our clinical studies.

If these third parties do not perform as required or expected, or if they are not in compliance with FDA rules and regulations, our clinical studies may be extended, delayed or terminated, or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such studies.

The NEW DAY clinical trial may fail to demonstrate the efficacy of ILUVIEN as baseline therapy in patients with early DME, fail to generate data demonstrating the benefits of ILUVIEN when compared to the current leading therapy for DME, take longer or be more costly to complete than we currently anticipate or fail to change physician prescribing practices.

We are conducting our NEW DAY clinical trial, which is a multicenter, single-masked, randomized, controlled trial designed to generate prospective data evaluating ILUVIEN as a baseline therapy in the treatment of DME and demonstrate its potential advantages over the current standard of care of repeat anti-VEGF (aflibercept) injections.

The NEW DAY clinical trial is fully enrolled as of May 2023 with 300 treatment-naïve, or almost naïve, DME patients in approximately 42 sites around the U.S.

The NEW DAY clinical trial may fail to demonstrate the efficacy of ILUVIEN as baseline therapy in patients with early DME, fail to generate data demonstrating the benefits of ILUVIEN when compared to the current leading therapy for DME, or take longer or be more costly to complete than we currently anticipate, and/or fail to change physician prescribing practices despite a successful result.

The occurrence of any of these events could materially and adversely affect our business, financial condition and cash flows, and results of operations.

We rely on third parties to assist with our clinical trials.

If these third parties do not perform as required or expected, or if they are not in compliance with FDA rules and regulations, our clinical trials may be extended, delayed or terminated, or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such trials.

Further, we may be required to audit or redo previously completed trials or recall already-approved commercial products.

We rely on third parties, such as medical institutions, clinical investigators, and contract laboratories, to assist with our clinical studies.

We are responsible for confirming that our studies are conducted in accordance with applicable regulations and that each of our clinical studies is conducted in accordance with our general investigational plan and protocol.

The FDA requires us to comply with regulations and standards, commonly referred to as good clinical practices for conducting, monitoring, recording, and reporting the results of clinical studies, to assure that data and reported results are accurate and that the clinical study participants are adequately protected.

We rely on third parties, such as medical institutions, clinical investigators, and contract laboratories, to assist with our clinical trials.

We are responsible for confirming that our trials are conducted in accordance with applicable regulations and that each of our clinical trials is conducted in accordance with our general investigational plan and protocol.

The FDA requires us to comply with regulations and standards, commonly referred to as good clinical practices for conducting, monitoring, recording, and reporting the results of clinical trials, to assure that data and reported results are accurate and that the clinical trial participants are adequately protected.

Our reliance on these third parties does not relieve us of these responsibilities.

If the third parties assisting us with our clinical studies do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with the FDA’s good clinical practice regulations, do not adhere to our protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical studies may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such studies.

If the third parties assisting us with our clinical trials do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with the FDA’s good clinical practice regulations, do not adhere to our protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical trials may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such trials.

For our already-approved commercial products, we may be required to audit or redo previously completed trials or recall our products from the market, which could have a material adverse effect on our business, financial position, and operating results.

With the exception of patents or patent applications related to Veregen, baclofen, and hydrochlorothiazide products, we do not own or license any material patents associated with our products, and our ability to protect and control unpatented trade secrets, know-how, and other technological innovation is limited.

Generally, the branded pharmaceutical business relies upon patent protection to ensure market exclusivity for the life of the patent.

Except for licenses for patent technology for Veregen, and ownership of patents and patent applications relating to our baclofen and hydrochlorothiazide products, we do not own or license any material patents associated with our products and therefore do not enjoy the same level of intellectual property protection with respect to such products as would a pharmaceutical manufacturer that markets a patented product.

We have limited ability to protect and control trade secrets, know-how, and other technological innovation, all of which are unpatented.

Others independently may develop similar or better proprietary information and techniques and disclose them publicly.

In addition, others may gain access to our trade secrets, and we may not be able to protect our rights to our unpatented trade secrets.

In addition, confidentiality agreements and other measures may not provide protection for our trade secrets in the event of unauthorized use or disclosure of such information.

Failure to protect and control such trade secrets, know-how and innovation could harm the value of our trade secrets, know-how and other technological innovation, which could have a material adverse effect on our business, financial position, and operating results.

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Clinical trials for our products may not generate the outcomes we expect, may take longer or be more costly to complete than we anticipate.

From time to time, we initiate or participate in clinical trials for our products and may in the future participate in clinical trials or studies for other products.

The timing of patient enrollment in these trials, and related costs, can be unpredictable, and any such trials or studies may be more expensive or take longer than we expect, data may be inconclusive, or such studies and trials may fail to change physician prescribing practices.

Further, the outcome of continuing post-marketing clinical trials, such as NEW DAY and SYNCHRONICITY, may fail, take longer than anticipated to complete or, could produce negative results requiring us to submit reports to the FDA of adverse events involving the use of our products and we may be required to implement risk management programs, or discontinue product marketing as a result.

In addition, ongoing post-approval drug safety surveillance of our products could result in the submission of adverse event reports to the FDA.

In some cases, studies and safety surveillance programs have resulted, and in the future may result, in one or more of the following:

• product label changes including FDA-mandated Black Box warnings;

• risk management programs such as patient registries;

• reduced product sales due to concerns among patients and physicians;

• discontinuance of product marketing.

These situations, should they occur with respect to any of our products, could have a material adverse effect on our business, financial position, and operating results.

Climate change concerns could disrupt our businesses, adversely affect client activity levels, adversely affect the creditworthiness of our counterparties, and damage our reputation.

Climate change may cause extreme weather events that, among other things, could damage our facilities and equipment, injure our employees, disrupt operations at one or more of our primary locations, negatively affect our ability to service and interact with our clients, and adversely affect the value of our assets.

Any of these events may increase our costs including our costs to insure against these events.

Climate change may also have a negative impact on the financial condition of our clients, which may decrease revenues from those clients and increase the credit exposures to those clients.

Additionally, our reputation and client relationships may be damaged as a result of our involvement, or our clients’ involvement, in certain industries associated with causing or exacerbating, or alleged to cause or exacerbate, climate change.

We also may be negatively impacted by any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

New regulations or guidance relating to climate change, as well as the perspectives of shareholders, employees, and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products.

Risks Related to Our Intellectual Property

We may be adversely affected by the expiration of patents that protect key aspects of ILUVIEN and YUTIQ in the near- to medium-term.

The patent rights relating to ILUVIEN and YUTIQ licensed to us from EyePoint include one U.S.

patent that will expire in August 2027, and has expired in the EU in October 2024, although extensions have been obtained or applied for through May 2027 in various EU countries .

Otherwise, no patent term extension will be available for any of these U.S.

patents, European patents or any of our licensed U.S.

or European pending patent applications.

After these patents expire in August 2027 in the U.S., we will not be able to block others from marketing FAc in an implant similar to ILUVIEN or YUTIQ.

We rely on patent, trademark and other intellectual property protection in the discovery, development, manufacturing and sale of our products.

In particular, patent protection is, in the aggregate, important in our marketing of pharmaceutical products in the U.S.

and most major markets outside of the U.S.

Patents covering our products normally provide market exclusivity, which is important for the profitability of many of our products.

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As patents for certain of our products expire, we will or could face competition from lower priced generic or biosimilar products.

In general, the expiration or loss of patent protection for a product may allow market entry by substitute products that could significantly reduce sales for the original product in a short amount of time.

If our competitive position is compromised because of generics, biosimilars or otherwise, it could have a material adverse effect on our business and results of operations.

In addition, proposals emerge from time to time for legislation to further encourage the early and rapid approval of generic drugs or biosimilars.

Any such proposals that are enacted into law could increase the negative effect of generic competition.

Inability to protect our intellectual property in the U.S.

and foreign countries could negatively affect sales of our branded products.

We own the trademark names for most of our branded pro ducts, including, Apexicon, Cortenema, Purified Cortrophin Gel, Cortrophin-Zinc, Inderal LA, Inderal XL, InnoPran XL, Lithobid, Reglan, Vancocin, and Veregen.

We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, Oxistat, and Pandel.

W hile we will seek to protect those trademarks through timely renewal in applicable jurisdictions, we may not be able to renew our trademarks in a timely manner or to prevent third parties from using our trademarks, which could have a material adverse effect on our business, financial position, and operating results.

We own the trademark names for most of our branded pro ducts, including, Cortenema, Purified Cortrophin Gel, Cortrophin-Zinc, ILUVIEN, Inderal LA, Inderal XL, InnoPran XL, Lithobid, Reglan, Vancocin, Veregen, and YUTIQ.

We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, and Oxistat.

While we will seek to protect those trademarks through timely renewal in applicable jurisdictions, we may not be able to renew our trademarks in a timely manner or to prevent third parties from using our trademarks, which could have a material adverse effect on our business, financial position, and operating results.

If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are material to our business.

Our licenses are material to our business, and we may enter into additional licenses in the future.

We hold a license from EyePoint to intellectual property relating to ILUVIEN pursuant to the New Collaboration Agreement.

Pursuant to the Product Rights Agreement with EyePoint, we also have the commercialization rights to YUTIQ in the entire world, except Europe, the Middle East and Africa as we had previously licensed from EyePoint rights to certain products, which included YUTIQ (known as ILUVIEN in Europe, the Middle East and Africa) for the prevention of relapse in recurrent NIU-PS in those territories.

The Product Rights Agreement also excludes any rights to YUTIQ for the treatment and prevention of chronic NIU-PS in China and certain other countries and regions in Asia, which rights are subject to a pre-existing exclusive license between EyePoint Parent and Ocumension.

Our ability to pursue the development and commercialization of our products depends upon the continuation of our agreements with EyePoint.

The New Collaboration Agreement imposes various commercialization, milestone payment, royalty payments, insurance and other obligations on us, including the right by EyePoint to audit.

If we fail to comply with these obligations, EyePoint may have the right to terminate the license.

Our license rights to EyePoint’s proprietary insert technology utilized in ILUVIEN could revert to EyePoint in certain circumstances, including failure to cure contractual breaches and filing for bankruptcy protection.

We have from time to time amended the New Collaboration Agreement, and we may again seek to do so in the future if the need arises.

If our license with EyePoint, or any other current or future material license agreement, were terminated, or if we were unable to amend the New Collaboration Agreement or resolve any dispute related to such agreement, we may be unable to market the applicable products, such as ILUVIEN, that may be covered by such license, which would materially and adversely affect our business, results of operations and future prospects.

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We do not control the commercialization of ILUVIEN in China, East Asia and the Western Pacific, and receipt of the value we currently anticipate will depend on, among other factors, Ocumension’s ability to further commercialize ILUVIEN in that region.

We have granted an e xclusive license to Ocumension for the development and commercialization of our 0.19mg FAc intravitreal injection in China, East Asia and the Western Pacific.

Our ability to receive aggregated potential sales milestone payments of up to $89.0 million depend upon achievement by Ocumension of specified amounts of net sales of ILUVIEN in that region in the future.

However, we cannot assure you as to the amount, if any, we might receive.

If there are any adverse developments or perceived adverse developments with respect to Ocumens ion’s ability to commercialize ILUVIEN in China, East Asia and the Western Pacific, we may not realize the value we currently anticipate from this license, which would harm our business and may cause the price of our securities to fall.

Examples of such adverse developments include, but are not limited to:

• regulatory hurdles in China, including related to the ongoing COVID-19 pandemic or the geopolitical tensions between the U.S.

• competition, whether from current competitors or new products developed by others in the future;

• claims relating to intellectual property;

• global economic conditions;

• disruptions in Ocumension’s business;

• disappointing or lower than expected sales of ILUVIEN;

• disputes between Ocumension and us;

• Ocumension deciding to modify, delay or halt its development and commercialization of ILUVIEN.

If our license with Ocumension were terminated, or if Ocumension is unable to sell our licensed product, we will not receive any milestone payments under our license agreement, and our future revenues may be materially lower than expected.

If we or our licensors are unable to obtain and maintain protection for the intellectual property incorporated into our products, the value of our technology and products will be adversely affected.

Our success depends largely on our ability or the ability of our licensors to obtain and maintain protection in the U.S.

and other countries for the intellectual property incorporated into our products.

The patent situation in the field of biotechnology and pharmaceuticals generally is highly uncertain and involves complex legal and scientific questions.

We or our licensors may be unable to obtain additional issued patents relating to our technology.

Our success will depend in part on the ability of our licensors to obtain, maintain (including making periodic filings and payments) and enforce patent protection for their intellectual property, in particular, those patents to which we have secured exclusive rights.

Under our license with EyePoint, EyePoint controls the filing, prosecution and maintenance of all patents.

Our licensors may not successfully prosecute or continue to prosecute the patent applications to which we are licensed.

Even if patents are issued in respect of these patent applications, we or our licensors may fail to maintain these patents, may determine not to pursue litigation against entities that are infringing upon these patents, or may pursue such litigation less aggressively than we ordinarily would.

Without protection for the intellectual property that we own or license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects.

Moreover, FAc is an off-patent active ingredient that is commercially available in several forms, including the extended release ocular implant Retisert.

Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of term of patent protection that we may have for our products.

In addition, our patents and our licensors’ patents may not afford us protection against competitors with similar technology.

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Litigation or third-party claims of intellectual property infringement would require us to divert resources and may prevent or delay our commercialization of our current products or the development or regulatory approval of other product candidates.

Our current products or any future products or product candidates may infringe upon other parties’ intellectual property rights that are protected by patents or patent applications.

Third parties may now or in the future own or control these patents and patent applications in the U.S.

These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses or divert substantial employee resources from our business.

If those claims are successful, we could be required to pay substantial damages or could be prevented from developing any future product candidates.

Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay manufacturing, sales, research or development of the product or product candidate that is the subject of the suit.

Several issued and pending U.S.

patents claiming methods and devices for the treatment of eye diseases, including through the use of steroids, implants and injections into the eye, purport to cover aspects of our products.

For example, one of our potential competitors holds issued and pending U.S.

patents and a pending European patent application with claims covering injecting an ocular implant into a patient’s eye similar to our current products’ applicator.

There is also an issued U.S.

patent with claims covering implanting a steroidal anti-inflammatory agent to treat an inflammation-mediated condition of the eye.

If these or any other patents were held by a court of competent jurisdiction to be valid and to cover aspects of our current products, then the owners of such patents would be able to block our ability to commercialize our current products unless and until we obtain a license under such patents (which license might require us to pay royalties or grant a cross-license to one or more patents that we own), until those patents expire or unless we are able to redesign our products to avoid any such valid patents.

As a result of patent infringement claims, or in order to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from a third-party and would most likely be required to pay license fees or royalties or both.

These licenses may not be available on acceptable terms, or at all.

Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property.

Ultimately, we could be forced to cease some aspect of our business operations, or be prevented from commercializing a product if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms.

This could harm our business significantly.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries.

In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the U.S.

Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products and technology.

The cost to us of any litigation or other proceeding, regardless of its merit, even if resolved in our favor, could be substantial.

Some of our competitors may be able to sustain the costs of such litigation or proceedings better than we can because of their substantially greater financial resources.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

Intellectual property litigation and other proceedings may, regardless of their merit, also absorb significant management time and employee resources.

If our efforts to protect the proprietary nature of the intellectual property related to our products are inadequate, we may not be able to compete effectively in our markets.

The strength of our patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain.

In addition to the rights we have licensed from EyePoint relating to ILUVIEN and YUTIQ, we rely upon intellectual property we own, including patents, patent applications and trade secrets.

Our patent applications may be challenged or fail to result in issued patents and our existing or future patents may be too narrow to prevent third parties from developing or designing around these patents.

Moreover, it is possible that a third-party could successfully challenge the scope (i.e., whether a patent is infringed), validity and enforceability of our licensed patents before patent expiration and obtain approval to market a competitive product.

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Further, the patent applications that we license or have filed may fail to result in issued patents.

Patent examiners have rejected some claims in pending patent applications that we have filed or licensed.

We may need to amend these claims.

Even after amendment, a patent may not be permitted to issue.

Further, the existing or future patents to which we have rights based on our New Collaboration Agreement with EyePoint may be too narrow to prevent third parties from developing or designing around these patents.

Additionally, we may lose our rights to the patents and patent applications we license in the event of a breach or termination of our license agreement with EyePoint.

Manufacturers may also seek to obtain approval to sell generic versions of our products before the expiration of the relevant licensed patents.

If the sufficiency of the breadth or strength of protection provided by the patents we license with respect to our products or the patents we pursue related to our products or any future product candidate is threatened, it could dissuade companies from collaborating with us to commercialize our products and develop any future product candidates.

Further, if we encounter delays in our clinical trials for any future product candidate, the period during which we could market those product candidates under patent protection would be reduced.

We may become involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors.

To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.

In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not being issued.

Interference proceedings brought by the U.S.

Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patents and patent applications or those of our collaborators or licensors.

An unfavorable outcome could require us to cease using the technology or to attempt to license rights to it from the prevailing party.

Our business could be harmed if a prevailing party does not offer us a license on terms that are acceptable to us.

Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction of our management and other employees.

We may not be able to prevent, alone or with our licensors, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments.

If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.

We rely on trade secret protection and confidentiality agreements to protect certain proprietary know-how that is not patentable, for processes for which patents are difficult to enforce and for any other elements of our development processes with respect to our current products that involve proprietary know-how, information and technology that is not covered by patent applications.

Any involuntary disclosure or misappropriation by third parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market.

We seek to protect confidential or proprietary information in part by confidentiality agreements with our employees, consultants and third parties.

While we require all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information and technology to enter into confidentiality agreements, we cannot be certain that this know-how, information and technology will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the U.S.

As a result, we may encounter significant problems in protecting and defending our intellectual property both in the U.S.

If we are unable to protect or defend the intellectual property related to our technologies, we will not be able to establish or maintain a competitive advantage in our market.

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Our success is largely dependent upon certain key employees, including members of our senior management team, the loss of whom could adversely affect our operations.

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A breach in security, unauthorized access resulting in misappropriation, theft, or sabotage with respect to proprietary and confidential information, including research or clinical data, could require significant capital investments to remediate any such failure, problem or breach, all of which could adversely affect our business, financial position, and operating results.

See “ Cybersecurity – Risk management and strategy ,” Item 1C of this Annual Report on Form 10-K for additional information.

We are currently involved in and may from time to time become involved in legal proceedings, some of which may result in substantial losses, government enforcement actions, damage to our business and reputation, and place a strain on our internal resources.

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Any dispute resolved unfavorably, could have a material adverse effect on our business, financial position, and operating results.

For a description of legal proceedings which are currently pending, see Note 15.

Commitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K.

For a description of legal proceedings which are currently pending, see Note 17 “Commitments and Contingencies” in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K.

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We are susceptible to product liability claims that may not be covered by insurance, which, if successful, could require us to pay substantial sums.

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Additionally, insurance coverage for product liability may become prohibitively expensive in the future or may not be available at all, and as a result, we may not be able to maintain adequate product liability insurance coverage to mitigate the risk of large claims, or we may be required to maintain a larger self-insured retention that we would otherwise choose.

Currency fluctuations and changes in exchange rates could have a material adverse effect on our business, fina ncial position, and operating results.

A portion of our transactions are denominated in a foreign currency, the Indian rupee.

Because we engage in certain transactions in a foreign currency, we are subject to the effects of exchange rate fluctuations.

dollar depreciates against the Indian rupee, the expenses we recognize from Indian-denominated transactions made by our Indian subsidiary could be translated at an unfavorable rate, leading to foreign exchange losses.

Foreign exchange gains or losses as a result of exchange rate fluctuations in any given period could harm our operating results and negatively impact our financial position and results of operati ons.

We may not achieve the anticipated benefits from our acquisition of Novitium, which could have a material adverse effect on our business, financial position, and operating results.

On November 19, 2021, the Company completed its previously announced acquisition (the “Acquisition”) of Novitium pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021 (the “Merger Agreement”), by and among the Company, Novitium, Nile Merger Sub LLC, a Delaware limited liability company , and certain other parties, with Novitium becoming a wholly owned subsidiary of ANI.

We may not realize the potential benefits from the Acquisition that we or the market expects.

Risks associated with the Acquisition include:

• failure to effectively manage our expanded operations, which were materially increased by the Acquisition;

• diversion of management’s attention, the disruption or interruption of, or the loss of momentum in, the businesses of ANI and Novitium or inconsistencies in standards, controls, procedures, and policies, any of which could adversely affect our ability to maintain relationships with customers, partners, and employees or our ability to achieve the anticipated benefits of the acquisition;

• loss of key employees;

• failure to maintain relationships with third parties, including Novitium’s and our pre-existing customers, which relationships may be affected by customer preferences or public attitudes about the Acquisition.

Any adverse changes in these relationships could adversely affect our business, financial condition, and results of operations.

The obligations and liabilities of Novitium, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Novitium to us.

Novitium’s obligations and liabilities, some of which may not have been disclosed to us or may not be reflected or reserved for in Novitium’s historical financial statements, may be greater than we have anticipated.

The obligations and liabilities of Novitium could have a material adverse effect on Novitium’s business or Novitium’s value to us or on our business, financial condition, or results of operations.

Under the Merger Agreement relating to the Novitium acquisition, we have only limited indemnification with respect to obligations or liabilities of Novitium, whether known or unknown.

We may fail to realize the benefits expected from our acquisition of Alimera and the combined company may not perform as we or the market expects, which could have an adverse effect on the price of our common stock.

On September 16, 2024, we completed our previously announced acquisition (the “Merger”) of Alimera pursuant to the terms of the Agreement and Plan of Merger, dated as of June 21, 2024 (the “Merger Agreement”), by and among the Company, Alimera and ANIP Merger Sub INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”).

The anticipated benefits we expect from this acquisition include, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company and operating efficiencies and these benefits are, necessarily, based on projections and assumptions about the combined businesses of our Company and Alimera, which may not materialize as expected or which may prove to be inaccurate.

The value of our common stock could be adversely affected if we are unable to realize the anticipated benefits from the Merger on a timely basis or at all.

Achieving the benefits of the Merger will depend, in part, on our ability to continue to integrate the business, operations and products of Alimera successfully and efficiently with our business.

The combined company may not perform as we or the market expects.

Risks associated with the combined company following the Merger include:

• integrating businesses is a difficult, expensive, and time-consuming process, and the failure to successfully integrate our businesses with the business of Alimera timely would adversely affect our financial condition and results of operation;

• there may be inconsistencies in standards, controls, procedures and policies that will need to be reconciled;

• the Merger has materially increased the size of our operations, and if we are not able to effectively manage our expanded operations, our common stock price may be adversely affected;

• it is possible that our key employees or key employees of Alimera might decide not to remain with us, and the loss of such personnel could have a material adverse effect on the financial condition, results of operations, and growth prospects of the combined company;

• the success of the combined company will also depend upon relationships with third parties and Alimera’s or our pre-existing customers, which relationships may be affected by customer preferences or public attitudes about the Merger.

Any adverse changes in these relationships could adversely affect the combined company’s business, financial condition, and results of operations;

• unanticipated write-offs or charges.

In connection with the Merger we recorded goodwill and intangible assets in the fair value amount of the acquisition.

If we conclude that some portion of such goodwill or intangible assets are impaired, a non-cash charge for the amount of such impairment would be recorded against earnings;

• our expansion into international operations as a result of the Merger (as discussed below);

• incurrence of significant costs in connection with consummating the Merger and integrating the operations of Alimera into our business;

• the potential for securities class action lawsuits and derivative lawsuits that may be brought as a result of the Merger, including costs associated with defending such lawsuits;

• our failure to identify or accurately assess the magnitude of certain liabilities we assumed in the Merger could result in unexpected litigation or regulatory exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax benefits or other known and unknown liabilities which could result in adverse effects on our business, operating results or financial condition.

The occurrence of any of these Merger-related events individually or in combination could materially and adversely affect our business, results of operations, financial condition and the market price of our common stock.

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The obligations and liabilities of Alimera, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Alimera us.

Alimera’s obligations and liabilities, some of which may not have been disclosed to us or may not be reflected or reserved for in Alimera’s historical financial statements, may be greater than we have anticipated.

The obligations and liabilities of Alimera could have a material adverse effect on Alimera’s business or Alimera’s value to us or on our business, financial condition, or results of operations.

Under the Merger Agreement, we have only limited indemnification with respect to obligations or liabilities of Alimera, whether known or unknown.

In addition, even in cases where we are able to obtain indemnification, we may discover liabilities greater than the contractual limits or the financial resources of the indemnifying party.

In the event that we are responsible for liabilities substantially in excess of any amounts recovered through rights to indemnification or alternative remedies that might be available to us, or any applicable insurance, we could suffer severe consequences that would substantially reduce our earnings and cash flows or otherwise materially and adversely affect our business, financial condition, or results of operations.

We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the Merger, including costs that we may not currently expect.

There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.

We must pay substantially all of the costs and expenses whether or not the transaction is completed.

Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately.

To the extent these acquisition and integration expenses are higher than anticipated, we may experience liquidity or cash flow issues.

In connection with the Merger, we recorded goodwill and intangible assets and if either goodwill or intangible assets become impaired, our earnings could be significantly impacted.

Under current accounting methods, goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis and more frequently if an event occurs or circumstances change that reduce the fair value of a reporting unit below its carrying amount.

In connection with the Merger, we recorded goodwill and intangible assets in the fair value amount of such acquisition.

Although we do not anticipate impairment charges, if we conclude that some portion of such goodwill or intangible assets are impaired, a non-cash charge for the amount of such impairment would be recorded against earnings.

A goodwill impairment charge could be caused by a decline in our stock price or the occurrence of a triggering event that compounds negative financial results.

Therefore, if goodwill recorded in connection with the Merger becomes impaired, our earnings could be significantly and adversely affected.

The Merger may become the target of derivative lawsuits that could result in substantial costs in connection with the Merger.

We may incur significant, non-recurring costs in connection with consummating the Merger and integrating the operations of Alimera into our business operations.

Securities class action and derivative lawsuits are often brought against public companies that have entered into merger agreements and have consummated acquisitions.

The outcome of any litigation is uncertain, but regardless of the outcome of any such lawsuits, we may incur significant fees and expenses relating to legal services (including any costs that would be incurred in defending against any potential derivative lawsuits in connection with the Merger if any such proceedings are brought), accounting and other fees and costs, associated with consummating the Merger.

Our business is subject to political, economic, legal, and social risks, and if we fail to successfully manage our domestic and international operations, our business, operating results and financial condition could suffer.

There are significant regulatory, economic and legal barriers in markets in the U.S.

and outside the U.S.

that we must overcome.

Changes in U.S.

social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development, and investment, and any negative sentiments towards the U.S.

as a result of such changes, could adversely affect our business and decrease our anticipated revenue growth and profitability.

Further, in connection with the merger we have acquired direct international operations outside of the U.S., and are marketing products outside the United States, that cover the United Kingdom and much of Europe and the Middle East.

We have not historically conducted any operations or marketed any of our products outside the United States.

As a result of the closing of the Merger, the percentage of our revenues generated outside of the United States increased materially, and our new international operations require significant management attention and financial resources.

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There is a high level of regulation in all markets where the products we acquired from Alimera have been sold and great diversity in how those markets operate.

Consequently, experience and expertise will be required in understanding the market dynamics of each country, the rules and regulations in place governing the sale of medicines, the codes of practice governing promotion of medicines, different currencies, the financial frameworks applying to taxation (both corporate and value-added tax) and the need to communicate in different languages.

We also import inputs for certain products, including API, from international suppliers.

As a result, our operations may be affected by challenges to the global supply chain, including increased costs of API and other inputs for our products.

government recently announced tariffs on products manufactured in several jurisdictions, including China, Mexico and Canada.

and has made announcements regarding the potential imposition of tariffs on other jurisdictions.

Some countries have, and other countries may in the future, implement trade restrictions and/or retaliatory measures as well.

Any such trade restrictions or measures could affect our operations, our imports into the U.S.

and other countries and our supply chains.

Moreover, Alimera’s international operations rely on distributors in many countries to provide adequate levels of experience and expertise on its behalf, and we will now rely on those distributors.

We need to monitor and manage these relationships appropriately to address risks in these markets.

Conducting extensive international operations subjects us to risks that are inherent in international operations, including:

• extended collection timelines for accounts receivable and greater working capital requirements;

• multiple, conflicting legal systems and unexpected changes in legal requirements such as privacy and data protection laws and regulations, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

• tariffs, export restrictions, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, including China and certain other parts of Asia, Mexico and Canada;

• changes in currency exchange rates;

• currency transfer and other restrictions and regulations that may limit our ability to sell our products internationally or repatriate profits to the United States;

• difficulties adapting to new cultures, business customs, and legal systems;

• trade laws and business practices favoring local competition;

• potential tax issues, including restrictions on repatriating earnings, resulting from multiple, conflicting and complex tax laws and regulations;

• weaker intellectual property protection in some countries;

• natural disasters, political, economic, and social instability, including the effects of ongoing U.S.-China diplomatic and trade friction, social unrest in China, the recent conflicts between Russia and Ukraine, Israel and Hamas, within the Middle East, and global sanctions imposed in response thereto, the possibility of a wider European or global conflict, or other war or terrorist activities or the threat of war and terrorism;

• adverse economic conditions, including increasing inflation and the stability and solvency of business financial markets, financial institutions and sovereign nations.

In particular, regulatory oversight of pharmaceutical products, including production, marketing and sales, can vary significantly among countries and will require additional oversight by our compliance and marketing teams.

We need to spend significantly more time and invest in additional resources to ensure compliance with regulatory regimes outside the United States.

Similarly, there are often supply chain risks that are specific to a given region, and our expansion outside the United States exposes us to additional risks and expenses related thereto.

In addition, compliance with foreign and U.S.

laws and regulations that are applicable to our international operations is complex and may increase our cost of doing business in international jurisdictions, and our international operations could expose us to fines and penalties if we fail to comply with these regulations.

These laws and regulations include import and export requirements, U.S.

laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to governmental officials.

There can be no assurance that our employees, partners and other persons with whom we do business will not take actions in violation of our policies or these laws.

Any violations of these laws could subject us to civil or criminal penalties, including substantial fines or prohibitions on our ability to offer our products in one or more countries, and could also materially and adversely harm our business and financial condition.

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As a result of the consummation of the Merger, we need to meet certain additional requirements for our international operations, including adequate levels of reimbursement and various regulatory approvals, and our inability to meet these requirements could adversely affect our results of operations.

Following the consummation of the Merger, we now have certain additional requirements that we need to meet in order to engage in international operations.

For example, in the European Economic Area (“EEA”) and the United Kingdom, each country has a different reviewing body that evaluates reimbursement dossiers submitted by marketing authorization holders of new drugs and then makes recommendations as to whether or not the drug should be reimbursed.

Limitations on reimbursement could be imposed at the national, regional or local level or by fiscal intermediaries in each country, either through the initial authorization process or at some point in the future.

In addition, due to price referencing within the EEA, the United Kingdom and certain other countries, existing pricing in our current markets could be negatively affected by a change in pricing in a country where Alimera historically has reimbursement or by a new price in a country where we obtain reimbursement approval in the future.

Our business could also be adversely affected if governments, private insurers or other reimbursing bodies or payers limit the indications for reimbursement approval to a smaller subset than we believe our products are effective in treating or establish a limit on the frequency with which our products may be administered that is less often than we believe would be effective.

Those actions could limit our revenues and harm our business.

We also need to maintain current or obtain marketing authorization and commercialization rights in countries outside the United States.

Certain countries, such as those in the EEA, require minimum sales within three years or licenses may be revoked if extensions are not negotiated.

Alimera did not and we do not currently have rights in China and certain other parts of Asia.

As a result of the Merger, in order to market our products in foreign jurisdictions, we are required to obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.

We may not receive the necessary approvals to commercialize our products in any additional market.

The process of obtaining regulatory approvals and clearances in jurisdictions where our products are not approved will require us to expend substantial time and capital.

Despite the time and expense incurred, regulatory approval is never guaranteed.

The number of preclinical and clinical tests that will be required for regulatory approval varies depending on the drug candidate, the disease or condition for which the drug candidate is in development, the jurisdiction in which we are seeking approval and the regulations applicable to that particular drug candidate.

The applicable regulatory authorities may make requests or suggestions regarding our clinical trials, resulting in an increased risk of difficulties or delays in obtaining regulatory approval.

For example, the regulatory authorities may not approve of certain of our methods for analyzing our trial data, including how we evaluate the relationship between risk and benefit.

Additionally, the foreign regulatory approval process may include all of the risks associated with obtaining FDA approval.

For all of these reasons, we may not obtain additional foreign regulatory approvals on a timely basis, if at all.

Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA.

As a result of the consummation of the Merger, our reliance on third parties to manufacture and test certain of our products will increase, and if any of these third parties is unable to satisfy our demand, our business, operating results and financial condition could suffer.

Alimera did not have in-house manufacturing capability and depended entirely on single source third-party manufacturers for the manufacture of its products;

following the consummation of the Merger, we rely on these third-party manufacturers for the manufacture of the products we acquired from Alimera, including for supply of active pharmaceutical ingredients, the product applicator, the product implants, and the final assembly of the injectors with the implants.

In addition, Alimera relied, and we now rely, on third parties for the quality release testing.

If any of these third-party manufacturers breaches its agreement, is unable to meet its contractual or quality requirements or becomes unwilling to perform for any reason, we may be unable, in a timely manner or at all, to locate alternative acceptable manufacturers or testing facilities, as applicable, enter into favorable agreements with them and ensure that they are approved by the applicable regulatory authorities, such as the FDA.

For example, Alimera relied, and we now rely, on (subject to certain exceptions) the YUTIQ Supply Agreement with EyePoint for the manufacturing and supply of YUTIQ, which has an initial term of two years through May 2025.

On February 27, 2025, the Company received written notice of non-renewal from EyePoint of the YUTIQ Supply Agreement, effective May 31, 2025.

The Company has submitted a PAS to the FDA seeking to add YUTIQ’s indication of chronic NIU-PS to the ILUVIEN label.

The Company expects FDA approval of the PAS in the second quarter of 2025 and plans to market ILUVIEN for chronic NIU-PS in addition to its current indication of DME in the U.S.

In order to support the transition to of NIU-PS to ILUVIEN, in July 2024, the Company extended its partnership with Siegfried, its long-term supplier for ILUVIEN, through 2029, and contracted with Siegfried to upgrade equipment on the existing manufacturing line and significantly expand capacity through the addition of a second manufacturing line.

If the PAS approval is delayed, or not approved at all, or we are unable to timely transfer manufacturing to Siegfried or another replacement supplier or make other arrangements to supply product, we may not be able to fulfill demand for

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YUTIQ and / or the NIU-PS indication in the U.S.

In addition, on July 12, 2024, EyePoint received a warning letter from the FDA alleging violations of current good manufacturing practice (CGMP) requirements in connection with a February 2024 FDA inspection and associated February 2024 Form FDA-483 specifically related to the manufacturing of YUTIQ at the supplier’s facility (the “Warning Letter”).

The Warning Letter requires the supplier to implement certain corrective and preventive actions.

Any failure by the supplier to remediate to the FDA’s satisfaction these findings or any future findings the FDA may have, could result in the supply of YUTIQ being adversely effected or terminated, and our ability to fulfill demand for YUTIQ prior to the addition of NIU-PS to the ILUVIEN label could be materially impaired.

Additionally, we may experience lengthy delays if we need to change a third-party supplier or manufacturer, including for YUTIQ, which could have a material impact on business and results of operations.

Further, suppliers and manufacturers for the products we acquired from Alimera rely on additional third parties for the manufacture of component parts.

Any inability of these contract manufacturers to acquire sufficient quantities of the active pharmaceutical ingredients and other component parts in a timely manner from these third parties could delay commercial production of YUTIQ or ILUVIEN.

Any of these events could adversely affect our ability to fulfill demand for the acquired products and / or indications.

In addition, any of these events could in turn have a material adverse effect on our business, financial position, and operating results, including an impairment of the acquired assets, or cause a decline in the price of our common stock.

Future acquisitions and investments could disrupt our business and harm our financial position and operating results.

Our growth will depend, in part, on our continued ability to develop, commercialize, and expand our products, including in response to changing regulatory and competitive pressures.

In some circumstances, we have and may continue to grow our business through the acquisition of complementary businesses and technologies rather than through internal development.

The risks faced in connection with acquisitions include:

• diversion of management time and focus from operating our business to addressing acquisition and/or product integration challenges;

• coordination of research and development and sales and marketing functions;

• retention of key employees from the acquired company;

• integration of the acquired company’s accounting information, management, human resources, and other administrative systems;

• the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

• difficulties relating to integrating the acquired business;

• unanticipated write-offs or charges;

• litigation or other claims in connection with the acquired company or product, including claims from product users, former stockholders, or other third parties.

Risks Related to our Industry

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and the demand for our products.

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Such disruptions in our operations could materially adversely impact our business, prospects, operating results, and financial condition.

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The continuing trend toward consolidation of customer groups could result in declines in the sales volume and prices of our products, and increased fees charged by customers, each of which could have a material adverse effect on our business, financial position, and operating results.

Consolidation and the formation of strategic partnerships among and between wholesale distributors, chain drug stores, and group purchasing organizations has resulted in a smaller number of companies, each controlling a larger share of pharmaceutical distribution channels.

Consolidation and the formation of strategic partnerships among and between wholesale distributors, chain drug stores, and group purchasing organizations has re sulted in a smaller number of companies, each controlling a larger share of pharmaceutical distribution channels.

For example, our net revenues are concentrated among four customers representing 25%, 16%, 12%, and 11% of net revenues, respectively, during the year ended December 31, 2024.

As of December 31, 2024, accounts receivable from these four customers was approximately 70% of our accounts receivable, net.

Drug wholesalers and retail pharmacy chains, which represent an essential part of the distribution chain for generic pharmaceutical products, have undergone, and are continuing to undergo, significant consolidation.

Drug wholesalers and retail pharmacy chains, which represent an essential par t of the distribution chain for generic pharmaceutical products, have undergone, and are continuing to undergo, significant consolidation.

This consolidation may result in declines in our sales volumes if a customer is consolidated into another company that purchases products from a competitor.

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Any determination by governmental agencies that we have failed to comply with our reporting and payment obligations could subject us to penalties and sanctions, which could have a material adverse effect on our business, financial position, and operating results.

Three products, which tog ether comprised less than 10% of ou r total revenue in 2023, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S.

Four products, which tog ether comprised less than 10% of our total revenue in 2024, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S.

Food and Drug Administration (“FDA”) will not require us to either seek approval for these products or withdraw them from the market.

In either case, our business, financial position, and operating results could be materially adversely affected.

Three products, Esterified Estrogen with Methyltestosterone (“EEMT”), Opium Tincture, and Thyroid Tablets are marketed without approved NDAs or ANDAs.

The Company obtained the rights to Hyoscyamine, a product without approved NDAs or ANDAs, on of December 27, 2023.

During 2023 the Company recorded only contract manufacturing revenues for Hyoscyamine (see further discussion in Note 15.

Commitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K).

We plan to launch Hyoscyamine commercially in early 2024.

Four products, Esterified Estrogen with Methyltestosterone (“EEMT”), Opium Tincture, Thyroid Tablets, and Hyoscyamine are marketed without approved NDAs or ANDAs.

The FDA's policy with respect to the continued marketing of unapproved products appears in the FDA's September 2011 Compliance Policy Guide Sec.

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The hearing relates to the FDA's intent to reclassify certain estrogen-androgen combination drugs as lacking substantial evidence of their effectiveness for the treatment of moderate to severe vasomotor symptoms associated with the menopause in those patients not improved by estrogen alone.

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If the FDA were to move away from the risk-based approach to enforcement against marketing of unapproved products, we may be required to seek FDA approval for these products or withdraw such products from the market.

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We are dependent on imported API to make certain of our products.

If the FDA detained or refused to allow the importation of such API, our revenues from certain of our products would be reduced or eliminated and our business, financial position, and operating results could be materially adversely affected.

If the FDA detained or refused to allow the importation of such API of if tariffs or other governmental action make the import of such API costly, our revenues from certain of our products would be reduced or eliminated and our business, financial position, and operating results could be materially adversely affected.

We source some of the API for our products, including those that are marketed without approved NDAs or ANDAs, from international suppliers.

From time to time, due to FDA inspections, we have experienced temporary disruptions in the supply of imported API.

Any prolonged disruption in the supply of imported API could materially affect our ability to manufacture and distribute our products, reduce or eliminate our revenues, and have a material adverse effect on our business, financial position, and operating results.

Any prolonged disruption in the supply of imported API or increased costs due to tariffs could materially affect our ability to manufacture and distribute our products, reduce or eliminate our revenues, and have a material adverse effect on our business, financial position, and operating results.

In addition, as regulatory fees and compliance oversight of API manufacturers increase, this could result in certain companies discontinuing their supply of API to us, which would materially affect our ability to manufacture our products.

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Failure to comply with current and future regulations of the DEA could lead to a variety of sanctions, including revocation or denial of renewal of DEA registrations, injunctions, or civil or criminal penalties.

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In addition, each year, we must submit a request to the DEA for a procurement quota in order to purchase the amount of API needed to manufacture our Schedule II controlled substances.

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Appco Pharma, LLC, with whom we had partnered to develop and market the product, initiated a voluntary recall, and we elected to exit the market for Ranitidine in 2019.

For a description of legal proceedings which are currently pending relating to ranitidine, see Note 15.

Commitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

For a description of legal proceedings which are currently pending relating to ranitidine, see Note 15 “Commitments and Contingencies” in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

In December of 2021, the FDA issued an information request to all manufacturers of propranolol products, including Inderal LA (Propranolol ER) currently being marketed by ANI in the United States to evaluate their product for the presence and level of a nitrosamine impurity known as N-nitroso-propranolol (“NNP”), which is distinct from NDMA.

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Actions brought against ANI for violations of these laws, even if successfully defended, could also have a material adverse effect on our business, financial position, and operating results.

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The use of legal, regulatory, and legislative strategies by competitors, both branded and generic, including “authorized generics,” citizen’s petitions, and legislative proposals, may increase the costs to develop and market our generic products, could delay or prevent new product introductions, and could significantly reduce our profit potential.

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We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs.

The pharmaceutical industry is subject to regulation by various federal authorities, including the FDA, the DEA, and state governmental authorities.

The pharmaceutical industry is subject to regulation by various federal authorities, including the FDA, the DEA, and state governmental authorities and their respective foreign equivalents.

Federal and state statutes and regulations govern or influence the testing, manufacturing, packing, labeling, storing, record keeping, safety, approval, advertising, promotion, sale, and distribution of our products.

Noncompliance with applicable legal and regulatory requirements can have a broad range of consequences, including warning letters, fines, seizure of products, product recalls, total or partial suspension of production and distribution, refusal to approve NDAs or other applications or revocation of approvals previously granted, withdrawal of product from marketing, injunctions, withdrawal of licenses or registrations necessary to conduct business, disqualification from supply contracts with the government, civil penalties, debarment, and criminal prosecution.

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facilities where prescription drugs are manufactured, tested, packaged, stored, or distributed must comply with FDA current good manufacturing practices (“cGMPs”).

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In August 2023, however, the FDA established a one-year stabilization period to allow trading partners to implement, troubleshoot and mature their electronic interoperable systems.

The FDA expects trading partners to use this stabilization period, which expires on November 27, 2024, to build and validate interoperable systems and processes, manage products and data, and ensure continuity of the supply chain and product availability to patients.

Additionally, certain of our largest customer are requiring earlier compliance with the DSCSA, despite the stabilization period enacted by the FDA.

The FDA expects trading partners to use this stabilization period, which expired on November 27, 2024, to build and validate interoperable systems and processes, manage products and data, and ensure continuity of the supply chain and product availability to patients.

The Company continues to provide serialized commercial products as required to comply with the DSCSA.

Compliance with DSCSA and future U.S.

federal or state electronic pedigree requirements may increase the Company’s operational expenses and impose significant administrative burdens.

In addition, if we are unable to comply with DSCSA as of the required dates, we could face penalties or be unable to sell our products.

Our research, product development, and manufacturing activities involve the controlled use of hazardous materials, and we may incur significant costs in complying with numerous laws and regulations.

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Any actual or alleged failure to comply with any regulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwise harm our business, financial position, and operating results.

Any of our products that are distributed, tested or marketed outside the U.S.

are also subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses.

Such foreign regulation may be equally or more demanding than corresponding U.S.

Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results.

We are subject to certain risks associated with having assets and operations located in a foreign jurisdiction, including our operations in India.

Our operations in India may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results.

We are subject to certain risks associated with having assets and operations located in foreign jurisdictions.

Our operations in foreign jurisdictions may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results.

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Additionally, involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.

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For example, in response to the continued conflict between Russia and Ukraine, the United States has imposed and may further impose, and other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia.

Additionally, further escalation of geopolitical tensions, such as the conflict in Israel and Gaza and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.

Additionally, further escalation of geopolitical tensions, such as the conflict in the middle east and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.

We are unable to predict whether acts of international terrorism or the involvement in a war or other military actions by the United States and/or the countries in which we sell or distribute our products will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.

Continuing studies of our products could produce negative results, which could require us to implement risk management programs, or discontinue product marketing.

In addition, ongoing post-approval drug safety surveillance of our products could result in the submission of adverse event reports to the FDA.

Studies of the proper utilization, safety, and efficacy of pharmaceutical products are being conducted by the industry, government agencies, and others on a continuous basis.

Such studies, which increasingly employ sophisticated methods and techniques, can call into question the utilization, safety, and efficacy of current and previously marketed products, including those that we produce.

In addition, we are required by the FDA to submit reports of adverse events involving the use of our products.

In some cases, studies and safety surveillance programs have resulted, and in the future may result, in the one or more of the following:

• product label changes including FDA-mandated Black Box warnings;

• risk management programs such as patient registries;

• reduced product sales due to concerns among patients and physicians;

• discontinuance of product marketing.

These situations, should they occur with respect to any of our products, could have a material adverse effect on our business, financial position, and operating results.

Healthcare reform and changes in pharmaceutical pricing, reimbursement and coverage, by governmental authorities and third-party payors may materially affect our business, financial position and operating results.

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Most notably, CMS is able to directly negotiate the reimbursement for certain prescription drugs reimbursed under Medicare Part D or B to be effective for the 2026 plan year.

If a manufacturer’s drug is selected for negotiation, the manufacturer must negotiate a Maximum Fair Price with CMS or be liable for an excise tax of 65 to 95 percent of Medicare utilization based on the prior year.

If a manufacturer’s drug is selected for negotiation, the manufacturer must negotiate a Maximum Fair Price with CMS or be liable for an excise tax of 65% to 95% of Medicare utilization based on the prior year.

While no ANI drugs have currently been selected for negotiation, ANI continues to evaluate the implications of direct negotiation on its products in the future and potential repercussions of competitive products being selected for direct negotiation.

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Such laws could negatively impact our financial performance and could result in us terminating distribution of certain products in certain states or regions.

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Inflation could have a material adverse effect on our business, financial position, and operating results.

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and key worldwide mark ets.

The rate of inflation may significantly increase input costs for our products and, given the competitive nature of the generic and rare disease markets in which we compete, we may not be able to pass those costs on to our customers.

The rate of inflation may significantly increase input costs for our products and, given the competitive nature of the markets in which we compete, including branded, generic, and rare disease pharmaceutical, and may not be able to pass those costs on to our customers.

Risks Related to Accounting, Tax, and SEC Rules and Regulations

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We are subject to, or potentially subject to, income taxes as well as non-income based taxes in various U.S.

jurisdictions, Canada, and India.

jurisdictions, Canada, India, the United Kingdom, Ireland, Portugal, and Germany.

Significant judgment is required in determining our international provision for income taxes and other tax liabilities.

Changes in tax laws or tax rulings may have a significantly adverse impact on our effective tax rate.

Changes in tax laws or tax ruling s may have a significantly adverse impact on our effective tax rate.

In addition, we have potential tax exposures resulting from the varying application of statutes, regulations, and interpretations, which include exposures on intercompany terms of cross-border arrangements between our U.S.

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We are subject to certain risks associated with having assets and operations located in a foreign jurisdiction, including our operations in India.

We are subject to certain risks associated with having assets and operations located in foreign jurisdictions.

Our international operations may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results.

Additionally, involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.

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Our expanded international operations from the Novitium acquisition increased our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations.

Our expanded international operations from the Alimera Merger increased our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations.

The Foreign Corrupt Practices Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents.

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and our compliance with Anti-Corruption Laws.

While we devote substantial resources to our compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies and with the acquisition of Novitium, our expanded international operations would significantly increase our exposure to potential liability.

While we devote substantial resources to our compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies and with the acquisition of Alimera, our expanded international operations would significantly increase our exposure to potential liability.

Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

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may be affected by changes in trade production laws, policies, and measures, and other regulatory requirements affecting trade and investment.

We are also subject to Indian foreign tax regulations.

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We are also subject to tax regulations in certain foreign locations.

Such regulations may not be clear, not consistently applied and subject to sudden change, particularly with regard to international transfer pricing.

Our earnings could be reduced by changes to such tax regulations or changing interpretation of such tax regulations.

The international nature of Novitium’s operations (including those of its Indian subsidiary Novitium Labs Private Limited) will subject us to political and economic risks that could adversely affect our business, results of operations, or financial condition.

The international nature of our operations (including the acquisition of Alimera) will subject us to political and economic risks that could adversely affect our business, results of operations, or financial condition.

The risks presented by international operations include:

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• limitations on our ability to enforce legal rights and remedies.

If we are unable to successfully manage these and other risks associated with managing the expansion of our business to the jurisdictions in which Novitium operates, including India, the risks could have a material adverse effect on our business, results of operations, or financial condition.

If we are unable to successfully manage these and other risks associated with managing the expansion of our business to the jurisdictions in which Novitium and Alimera operate, the risks could have a material adverse effect on our business, results of operations, or financial condition.

Failure to comply with applicable transfer pricing and similar regulations could have a material adverse effect on our financial position and operating results.

We are subject to complex transfer pricing and other tax regulations in the United States and India designed to ensure that appropriate levels of income are reported as earned and are taxed in the appropriate taxing jurisdictions.

We are subject to complex transfer pricing and other tax regulations in the United States and other foreign locations designed to ensure that appropriate levels of income are reported as earned and are taxed in the appropriate taxing jurisdictions.

Although we believe that we are in substantial compliance with all applicable regulations and restrictions, we are subject to the risk that governmental authorities could audit our transfer pricing and related practices and assert that additional taxes are owed.

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Our material definite-lived intangible assets consist of ANDAs for previously marketed generic products, NDAs and product rights for our branded products, product rights related to certain generic products, and a non-compete agreement.

These assets are being amortized over their useful lives of seven to 10 years.

These assets are being amortized over their useful lives of seven to twelve years.

For these definite-lived intangible assets, we perform an impairment analysis when events or circumstances indicate that the carrying value of the assets may not be recoverable.

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An impairment charge could have a material negative impact on our business, financial position, and operating results.

No impairment losses were recognized in the year ended December 31, 2023.

We recorded impairment losses of $7.6 million in the year ended December 31, 2024 .

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Our management is required to devote substantial time to comply with public company regulations.

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Any of these events could have a material adverse effect on our business, financial position, and operating results.

We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As of December 31, 2022, we identified material weaknesses related to ineffective control environment at our Novitium subsidiary, subsequent to the acquisition of Novitium in November 2021, and information technology general controls (“ITGCs”) in the areas of user access over certain information technology systems that support our financial reporting processes.

These material weaknesses continued into 2023 and were fully remediated as of December 31, 2023.

For a detailed summary of these material weaknesses, including our remediation steps, please refer to Item 9A.

- Controls and Procedures.

As of December 31, 2023 management has concluded that the Company’s internal control over financial reporting was effective.

If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process, and report financial information accurately and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation, investigations, or penalties;

negatively affect our liquidity, our access to capital markets, perceptions of our creditworthiness, our ability to complete acquisitions, our ability to maintain compliance with covenants under our debt instruments or derivative arrangements regarding the timely filing of periodic reports, or investor confidence in our financial reporting, any of which may divert management resources or cause our stock price to decline.

Further, remediation of a material weakness does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate.

Our policies regarding returns, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce revenues in future fiscal periods.

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Although we establish reserves based on prior experience and our best estimates of the impact that these policies may have in subsequent periods, we cannot ensure that our reserves are adequate or that actual product returns, allowances, and chargebacks will not exceed our estimates.

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Risks Related to our Debt

Making interest and principal payments under our Credit Facility consisting of $300.0 million term loan and a $40.0 million revolving credit facility, requires a significant amount of cash.

In connection with the completion of the Novitium acquisition, we entered into a $300.0 million term loan and a $40.0 million revolving credit facility.

The Credit Facility, which is secured by all our assets and the assets of our subsidiaries, was used to finance the cash consideration of the acquisition of Novitium and terminate and repay our previous senior credit facilities.

In order to service the debt we incur under this facility, we will require a significant amount of cash.

Our indebtedness and liabilities could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operation.

We have a substantial amount of indebtedness.

As of December 31, 2024 , we had approximately $639.2 million of indebtedness and other liabilities on a consolidated basis.

Subject to the limitations in the New Credit Agreement, we may also incur additional debt to meet future financing needs.

Our level of indebtedness could have negative consequences for our security holders and our business, results of operation and financial condition by, among other things:

• increasing our vulnerability to adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;

• limiting our flexibility to plan for, or react to, changes in our business;

• diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of our 2.25% Convertible Senior Notes due 2029 (“Senior Notes”);

• placing us at a competitive disadvantage with competitors that are less leveraged than us or have better access to capital;

• making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under the New Credit Agreement, the indenture governing our Senior Notes and the agreements governing our other indebtedness.

In connection with the completion of the Merger, we entered into the New Credit Agreement consisting of a $325.0 million term loan and a $75.0 million revolving credit facility.

The New Credit Agreement, which is secured by all our assets and the assets of our subsidiaries, was used to finance the cash consideration of the Merger.

In addition, in August 2024 the Company completed an offering of $316.25 million aggregate principal amount of Senior Notes at an interest rate of 2.25% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2025.

In order to service the indebtedness we have incurred, and may in the future incur, under the New Credit Agreement, as well as the Senior Notes, we will require a significant amount of cash.

Our ability to make scheduled payments of principal and interest depends 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 service our debt.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt or equity financing on terms that may not be favorable to us or available to us at all.

Our ability to refinance any such debt will depend on the capital markets and our financial condition at that time.

Our business may not continue to generate cash flow from operations in the future, and we may otherwise be unable to maintain cash reserves sufficient to service our indebtedness, including the Senior Notes and indebtedness incurred under the New Credit Agreement, and our cash needs may increase in the future.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring indebtedness, or obtaining additional indebtedness or equity financing on terms that may not be favorable to us or available to us at all.

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

Any event of default or inability to otherwise satisfy our obligations could have a material adverse effect on our future operating results and financial condition.

Our Credit Agreement contains restrictive and financial covenants and if we are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility.

The Credit Agreement contains customary covenants that require maintenance of a leverage ratio at or below specified thresholds and restricts our ability to make certain distributions with respect to our capital stock, prepay other debt, make certain investments, encumber our assets, incur additional indebtedness, make capital expenditures, engage in certain business combinations, transfer, lease or dispose of our assets, alter the character of our business in any material respect or undertake various other corporate activities.

Therefore, as a practical matter, these covenants restrict our ability to engage in or benefit from such activities.

In addition, we pledged our assets in order to secure our repayment obligations under the Credit Agreement.

Our indebtedness could have significant negative consequences for our stockholders and our business and any event of default or inability to otherwise satisfy our obligations could have a material adverse effect on our future operating results and financial condition.

Our New Credit Agreement contains restrictive and financial covenants and if we are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility.

The New Credit Agreement contains customary covenants that require maintenance of a leverage ratio at or below specified thresholds and restricts our ability to make certain distributions with respect to our capital stock, prepay other debt, make certain investments, encumber our assets, incur additional indebtedness, make capital expenditures, engage in certain business combinations, transfer, lease or dispose of our assets, alter the character of our business in any material respect or undertake various other corporate activities.

Therefore, as a practical matter, these covenants, and any other additional restrictive covenants that may be included in the terms of any future indebtedness, restrict our ability to engage in or benefit from such activities.

In addition, we pledged our assets in order to secure our repayment obligations under the New Credit Agreement.

This pledge may reduce our operating flexibility because it restricts our ability to dispose of our assets or engage in other transactions that may be beneficial to us.

If we are unable to comply with the covenants in the Credit Agreement, we will be in default, which could result in the acceleration of our outstanding indebtedness and termination of funding commitments by the lenders.

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If we are unable to comply with the covenants in the New Credit Agreement or any future indebtedness, we will be in default, which could result in the acceleration of our outstanding indebtedness and termination of funding commitments by the lenders.

If such an acceleration occurs, we may not be able to repay our debt and we may not be able to borrow sufficient additional funds to refinance our debt, which would have a material adverse effect on our business, financial position, and operating results.

Changes in the method of determining London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, such as SOFR, may adversely affect interest expense related to outstanding debt.

In July 2023, we amended our Credit Agreement to transition from LIBOR to SOFR due to the cessation of LIBOR pursuant to the terms of Amendment No.1 to the Credit Agreement.

SOFR will be applied to the Credit Facility for the interest period (as defined in the Credit Agreement) beginning on August 1, 2023 and will replace all LIBOR terms.

We have no other material financing agreements that use LIBOR as an interest index.

There is no guarantee that the transition from LIBOR to SOFR will not result in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers.

While we will continue to use SOFR, certain factors may impact SOFR, including factors causing SOFR to cease to exist, new methods of calculating SOFR to be established, or the use of alternative reference rates.

These consequences are not entirely predictable and could have an adverse impact on our financing costs and our results of operations.

As such, the future of SOFR at this time remains uncertain.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase and our net income and cash flows to correspondingly decrease.

Borrowings under our New Credit Agreement are at variable rates of interest and expose us to interest rate risk.

If interest rates were to increase, our debt service obligations on the variable rate indebtedness referred to above would increase even if the principal amount borrowed remained the same, and our net income and cash flows will correspondingly decrease.

Our New Credit Agreement references the Secured Overnight Financing Rate (“SOFR”) as the primary benchmark rate for our variable rate indebtedness.

We are also currently party to, and in the future, we may enter into additional, interest rate swaps that involve the exchange of floating for fixed rate interest payments, in order to reduce interest rate volatility.

However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

Additionally, SOFR is a relatively new reference rate and with a limited history, and changes in SOFR have, on occasion, been more volatile than changes in other benchmark or market rates.

As a result, the amount of interest we may pay on our variable rate indebtedness is difficult to predict.

Shares of our common stock issuable upon conversion of the Senior Notes may dilute the ownership interest of our common stockholders or may adversely affect the market price of our common stock.

The conversion of the Senior Notes may dilute the ownership interests of our stockholders.

Upon conversion of the Senior Notes, we will generally have the right to elect to settle our conversion obligation in excess of the principal amount of any converted Senior Notes by paying or delivering, as applicable, cash, shares of our common stock, or a combination of cash and shares of our common stock.

If we elect to settle our conversion obligation in excess of the principal amount of any converted Senior Notes in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of shares of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Also, the existence of the Senior Notes may encourage short-selling by market participants because the conversion of the Senior Notes could be used to satisfy short positions, or anticipated conversion of the Senior Notes into, in part, shares of common stock could depress the price of our common stock.

We may be unable to raise the funds necessary to repurchase the Senior Notes for cash following a fundamental change or to pay the cash amounts due upon maturity or conversion of the Senior Notes, and our other indebtedness limits our ability to repurchase the Senior Notes or to pay the cash amounts due upon their maturity or conversion.

Holders of the Senior Notes may, subject to limited exceptions, require us to repurchase their Senior Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any.

Upon maturity of the Senior Notes, we must pay their principal amount and accrued and unpaid interest in cash, unless they have been previously repurchased, redeemed or converted.

In addition, all conversions of Senior Notes will be settled partially or entirely in cash.

We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Senior Notes or pay the cash amounts due upon their maturity or conversion.

In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the Senior Notes or to pay the cash amounts due upon their maturity or conversion.

The New Credit Agreement contains restrictive covenants that limit our ability to repay other indebtedness.

Our failure to repurchase Senior Notes or to pay the cash amounts due upon their maturity or conversion when required will constitute a default under the indenture governing the Senior Notes.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full.

We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Senior Notes.

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Provisions in the indenture governing the Senior Notes could delay or prevent an otherwise beneficial takeover of us.

Certain provisions in the Senior Notes and the indenture governing the Senior Notes could make a third-party attempt to acquire us more difficult or expensive.

For example, if a takeover constitutes a fundamental change, then, subject to limited exceptions, holders of the Senior Notes will have the right to require us to repurchase their Senior Notes for cash.

In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate.

In either case, and in other cases, our obligations under the Senior Notes and the indenture governing the Senior Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of the Senior Notes or holders of our common stock may view as favorable.

The conversion of the Senior Notes could impair our financial position and liquidity.

Because we must settle at least a portion of our conversion obligation in cash, the conversion of the Senior Notes could materially and adversely affect our financial position and liquidity.

Before June 1, 2029, holders of the Senior Notes will have the right to convert their Senior Notes only upon the occurrence of certain events.

From and after June 1, 2029, holders of the Senior Notes may convert their Senior Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

However, many of the conditions that permit the conversion of Senior Notes before June 1, 2029 are beyond our control.

We could be required to expend a significant amount of cash to settle conversions, which could significantly harm our financial position and liquidity.

The accounting method for the Senior Notes could adversely affect our reported financial condition and results.

In accordance with applicable accounting standards, the Senior Notes are reflected as a liability on our balance sheets, with the carrying amount equal to the principal amount of the Senior Notes, net of issuance costs.

The issuance costs are treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the Senior Notes.

As a result of this amortization, the interest expense that we recognize for the Senior Notes for accounting purposes is greater than the cash interest payments we pay on the Senior Notes, which results in lower reported income.

In addition, the shares underlying the Senior Notes are reflected in our diluted earnings per share using the “if converted” method.

Under that method, if the conversion value of the Senior Notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share assuming that all of the Senior Notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess.

The after-tax interest expense associated with the Senior Notes will not be added back to the numerator of the diluted earnings per share calculation for these purposes.

However, if reflecting the Senior Notes in diluted earnings per share in this manner is anti-dilutive, or if the conversion value of the Senior Notes does not exceed their principal amount for a reporting period, then the shares underlying the Senior Notes will not be reflected in our diluted earnings per share.

The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the Senior Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Senior Notes as a current, rather than a long-term, liability.

This reclassification could be required even if no holders of our Senior Notes convert their Senior Notes and could materially reduce our reported working capital.

The capped call transactions may affect the value of the Senior Notes and our common stock.

In connection with the pricing of the Senior Notes, we entered into privately negotiated capped call transactions with certain option counterparties.

The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the Senior Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted Senior Notes, as the case may be, with such reduction and/or offset subject to a cap.

The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Senior Notes (and are likely to do so during any observation period related to a conversion of Senior Notes).

This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Senior Notes.

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We are subject to counterparty risk with respect to the capped call transactions, and the capped call may not operate as planned.

The option counterparties are, or are affiliates of, financial institutions, and we are subject to the risk that they might default under the capped call transactions.

Our exposure to the credit risk of the option counterparties is not secured by any collateral.

Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions, including the bankruptcy filing by Lehman Brothers Holdings Inc.

and its various affiliates.

If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that option counterparty.

Our exposure depends on many factors, but, generally, the increase in our exposure will be correlated with increases in the market price or the volatility of our common stock.

In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock.

We can provide no assurances as to the financial stability or viability of any option counterparty.

In addition, the capped call transactions are complex, and they may not operate as planned.

For example, the terms of the capped call transactions may be subject to adjustment, modification or, in some cases, renegotiation if certain corporate or other transactions occur.

Accordingly, these transactions may not operate as we intend if we are required to adjust their terms as a result of transactions in the future or upon unanticipated developments that may adversely affect the functioning of the capped call transactions.

Risks Related to our Common Stock

Our principal stockholders, directors, and executive officers own a significant percentage of our stock and will be able to exercise meaningful influence over our business.

Our current principal stockholders, directors, and executive officers beneficially own approximately 13% of our outstanding capital stock entitled to vote as of December 31, 2023.

As a result, these stockholders, if acting together, would 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.

Our current principal stockholders, directors, and executive officers beneficially own approximate ly 10% of our outstanding capital stock entitled to vote as of December 31, 2024.

As a result, these stockholders, if acting to gether, would 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.

They may also have interests that differ from stockholders generally and may vote in a way with which other stockholders disagree and which may be adverse to their interests.

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We can offer no assurance that any equity or debt financing transaction will be available on terms acceptable to us, or at all.

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Provisions in our charter documents and Delaware law could discourage or prevent a takeover, even if such a transaction would be beneficial to our stockholders.

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There are inherent uncertainties involved in estimates, judgments and assumptions, and any changes in estimates, judgments and assumptions used could have a material adverse effect on our business, financial position, and operating results.

In the consolidated financial statements included in the periodic reports filed with the SEC, estimates, judgments, and assumptions are used for, but not limited to, revenue recognition, allowance for credit losses, accruals for chargebacks, rebates, returns and other allowances, allowance for inventory obsolescence, stock-based compensation, valuation of financial instruments and intangible assets, allowances for contingencies and litigation, deferred tax assets and liabilities, deferred tax valuation allowance, contingent consideration, and the depreciable lives of fixed and intangible assets.

In the consolidated financial statements included in the periodic reports filed with the SEC, estimates, judgments, and assumptions are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration and contingent value rights in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses, and the depreciable lives of long-lived assets.

Actual results could differ from those estimates.

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Any such changes could have a material adverse effect on our business, financial position, and operating results.

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The market price of our common stock has been volatile, and an investment in our common stock could decline in value.

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Securities litigation, whether with or without merit, could result in substantial costs and divert management’s attention and resources, which could harm our business, financial position, and operating results, as well as the market price of our common stock.

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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