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Item 4. Controls and Procedures

2020-08-04 compared with 2020-05-05 · 11 added, 138 removed, 4 unchanged (97% of the section changed)

1 unchanged sentence

Management’s Evaluation of our Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the

“Exchange Act”) is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including to our principal executive officer and principal

financial officer, to allow timely decisions regarding required disclosure.

As of March 31, 2020, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules

13a-15(b) and 13a-15(e) under the Exchange Act).

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily

applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of March 31,

2020, our disclosure controls and procedures were effective at the reasonable assurance level.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”) is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including to our

principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of June 30, 2020, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure

controls and procedures (as defined in Rules 13a-15(b) and 13a-15(e) under the Exchange Act).

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving

their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our principal executive officer and principal financial officer have concluded based upon the

evaluation described above that, as of June 30, 2020, our disclosure controls and procedures were effective at the reasonable assurance level.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the evaluation of such internal control that

occurred during our last fiscal quarter, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the

evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Legal Proceeding s

From time to time, we have been and may again become involved in legal proceedings arising in the course of our business.

Patent-Related Litigation

Beginning in August 2013, we were informed of abbreviated new drug application (“ANDA”) filings in the United States by Watson Laboratories, Inc.

(now Actavis Laboratories, Inc., or “Actavis”), Par Pharmaceutical,

Inc.(“Par”), Alvogen Pine Brook, Inc.

(“Alvogen”), Teva Pharmaceuticals USA, Inc.

(“Teva”), Sandoz Inc.

(“Sandoz”), and Mylan Technologies Inc.

(“Mylan”), for the approval by the FDA of generic versions of Suboxone Sublingual Film in the United

We filed patent infringement lawsuits against all six generic companies in the United States District Court for the District of Delaware (the “Delaware District Court”).

After the commencement of the ANDA patent litigation against Teva, Dr.

Reddy’s Laboratories (“DRL”) acquired the ANDA filings for Teva’s buprenorphine and naloxone sublingual film that are at issue in these trials.

Of these, cases against three of the six generic companies have been resolved.

Mylan and Sandoz settled without a trial.

Sandoz withdrew all challenges and became the distributor of the authorized generic products.

All cases against Par were resolved pursuant to a May 2018 settlement agreement between the Company, Indivior, and Par and certain of its affiliates.

Actavis was found to infringe Patent No.

6,603,514, or the ’514 patent, and cannot enter the market until the expiration of the patent in 2024, and the United States Court of Appeals for the Third

Circuit (“Federal Circuit”) affirmed that ruling on July 12, 2019.

DRL and Alvogen were found not to infringe under a different claim construction analysis, and the Federal Circuit affirmed that ruling on July 12, 2019.

Teva has agreed to be bound by all DRL adjudications.

Subsequent to the above, all potential generic competitors without a settlement agreement were also sued for infringement of two additional new patents that contain new claims not adjudicated in the original Delaware

District Court case against DRL and Alvogen.

On July 12, 2019, the Federal Circuit affirmed the decisions from the previously decided cases.

The remaining case against Actavis was dismissed in light of the infringement ruling above, which prevents

Actavis from entering the market until 2024.

The case(s) against the remaining defendants regarding the additional asserted patents have not been finally resolved.

A Markman hearing in the cases against

Reddy’s and Alvogen, which is pending in the United States District Court for the District of New Jersey (the “New Jersey District Court”), was held on October 17, 2019.

On November 5, 2019, District Judge McNulty of the New Jersey District

Court issued a Markman opinion construing the disputed terms of the asserted patents.

On January 9, 2020, the New Jersey District Court entered a stipulated order of non-infringement of one of the patents,

9,931,305, or the ’305 patent, based on the Federal Circuit Court’s claim construction ruling, and we and Indivior preserved our rights to appeal the claim construction ruling.

On November 19, 2019, Magistrate Judge Waldor of the New

Jersey District Court issued an order granting DRL and Alvogen’s requests to file amended answers to add antitrust counterclaims against us and Indivior.

We and Indivior appealed the Magistrate Judge’s decision to District Judge McNulty on December

4, 2019, and DRL and Alvogen opposed the appeal.

The parties are awaiting further action from the New Jersey District Court on the appeal.

On January 17, 2020, we filed a motion to dismiss DRL’s and Alvogen’s antitrust counterclaims for failure to

state a claim and DRL and Alvogen opposed the motion.

The parties are awaiting further action from the New Jersey District Court on the motion to dismiss.

No trial date has been set in those cases.

We are not able to determine or predict the

ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcomes or losses, is any, in this matter.

On February 19, 2019, the Federal Circuit issued its mandate reversing the District of New Jersey’s preliminary injunction against Dr.

Following issuance of the mandate, the District of New Jersey vacated

preliminary injunctions against both Dr.

Reddy’s and Alvogen.

Reddy’s, Alvogen, and Mylan all launched generic versions of Suboxone Sublingual Film, and the launches by Dr.

Reddy’s and Alvogen are “at risk” because the products are the subject

of the ongoing patent infringement litigations.

On March 22, 2019, we and Indivior brought suit against Aveva Drug Delivery Systems, Inc., Apotex Corp., and Apotex Inc.

in the United States District Court for the Southern District of Florida (the “Southern District of

Florida Court”) for infringement of the Company’s U.S.

8,017,150, 9,687,454, the ’514 patent and the ’305 patent, seeking an injunction and potential monetary damages.

Following a negotiated settlement between all parties, on December

3, 2019, the parties submitted a Notice of Settlement and a Joint Motion to Approve Consent Judgment.

The Southern District of Florida Court entered an order dismissing the suit on December 18, 2019.

We are also seeking to enforce our patent rights in multiple cases against BioDelivery Sciences International, Inc.

Three cases are currently pending but stayed in the U.S.

District Court for the Eastern

District of North Carolina (the “Eastern District of North Carolina Court”):

The first, a declaratory judgment action brought by BDSI against Indivior and Aquestive, seeks declarations of invalidity and non-infringement of U.S.

7,897,080 8,652,378 and 8,475,832.

This case is stayed pending final

resolution of the above-mentioned appeals on related patents.

The second was filed by us and Indivior related to BDSI’s infringing Bunavail product, and alleges infringement of our patent, U.S.

8,765,167, or the ’167 patent, and seeks an injunction and potential monetary damages.

after the case was filed, BDSI filed four (4) IPR’s challenging the asserted ’167 patent.

On March 24, 2016, the United States Patent Trial and Appeal Board (PTAB), issued a final written decision finding that all claims of the ’167 patent

The case was stayed in May 2016 pending the final determination of the appeals on those decisions.

Following the PTAB’s February 7, 2019 decisions on remand denying institution, we and Indivior submitted a notice to the Court on

February 15, 2019 notifying the Court that the stay should be lifted as result of the PTAB’s decisions.

We are awaiting further action from the Court.

On January 13, 2017, we also sued BDSI asserting infringement of the ’167 patent by BDSI’s Belbuca product and seeking an injunction and potential monetary damages.

On August 7, 2019, the Eastern District of North Carolina Court granted

BDSI’s motion to dismiss the Complaint without prejudice and denied BDSI’s motion to stay as moot.

On November 11, 2019, we filed a new Complaint against BDSI in the Eastern District of North Carolina Court.

On November 27, 2019, BDSI filed

a motion to stay the case pending BDSI’s appeal of the PTAB’s remand decisions, and we opposed the motion.

The Eastern District of North Carolina Court denied BDSI’s motion to stay on April 1, 2020.

BDSI’s appeal of the PTAB’s remand

decisions to the United State Court of Appeals for the Fourth Circuit (the “Federal Fourth Circuit Court”) was docketed on March 13, 2019, and on March 20, 2019, we moved to dismiss the appeal for lack of jurisdiction.

On August 29, 2019,

the Federal Fourth Circuit Court granted the motion to dismiss BDSI’s appeal.

On September 30, 2019, BDSI filed a petition for rehearing in the Federal Fourth Circuit Court en banc , which we

The Federal Fourth Circuit Court denied BDSI’s petition for rehearing en banc on January 13, 2020.

After the Federal Fourth Circuit Court denied BDSI’s petition, on January 13, 2020, BDSI

filed with the Eastern District of North Carolina Court a motion to dismiss the Complaint, and we opposed the motion on February 2, 2020.

The Eastern District of North Carolina Court denied BDSI’s motion to dismiss on April 1, 2020.

April 16, 2020, BDSI filed an Answer to the Complaint, including counterclaims for non-infringement, invalidity, and unenforceability of the ’167 patent.

Our response to BDSI’s counterclaims is due May 7, 2020.

Antitrust Litigation

On September 22, 2016, forty-one states and the District of Columbia, or the States, brought suit against Indivior and us in the U.S.

District Court for the Eastern District of Pennsylvania, alleging violations of

federal and state antitrust statutes and state unfair trade and consumer protection laws relating to Indivior’s launch of Suboxone Sublingual Film in 2010 and seeking an injunction, civil penalties, and disgorgement.

After filing the suit, the case

was consolidated for pre-trial purposes with the In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation , MDL No.

2445, or the Suboxone MDL, a multidistrict litigation relating to

putative class actions on behalf of various private plaintiffs against Indivior relating to its launch of Suboxone Sublingual Film.

While we were not named as a defendant in the original Suboxone MDL cases, the action brought by the States alleges

that we participated in an antitrust conspiracy with Indivior in connection with Indivior’s launch of Suboxone Sublingual Film and engaged in related conduct in violation of federal and state antitrust law.

We moved to dismiss the States’ conspiracy

claims, but by order dated October 30, 2017, the Court denied our motion to dismiss.

We filed an answer denying the States’ claims on November 20, 2017.

The fact discovery period closed July 27, 2018, but the parties agreed to conduct certain fact

depositions in August 2018.

The expert discovery phase closed May 30, 2019, but additional reports and depositions were conducted through August 1, 2019.

Daubert briefing is ongoing.

The remainder of the

case schedule, including summary judgment briefing, is stayed pending resolution of Indivior’s appeal of the District Court’s class certification ruling in a co-pending multi-district litigation to which we are not a party.

We are not able to

determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate, or range of estimate, of the possible outcome or loss, if any, in this matter.

California Complaint

On December 5, 2019, Neurelis Inc.

(“Neurelis”) filed a complaint against Aquestive in the Superior

Court of California, County of San Diego alleging Unfair Competition, Defamation, and Malicious Prosecution related to the Company’s pursuit of FDA approval for Libervant™.

Neurelis filed a First Amended Complaint on December 9, 2019, alleging the

same three causes of action.

The Company filed a Motion to Strike Neurelis’s Complaint under California’s anti-SLAPP (“strategic lawsuit against public participation”) statute on January 31, 2020, which Neurelis is expected to oppose.

filed a motion for leave to file a Supplemental Complaint on February 5, 2020, which we will oppose.

A hearing on our anti-SLAPP motion and Neurelis’s motion for leave was scheduled for April 24, 2020 but was postponed as a result of court

closures in San Diego County, California resulting from the COVID-19 pandemic.

The parties are awaiting further action from the court regarding a new hearing date.

We are not able to determine or predict the ultimate outcome of this

proceeding or provide a reasonable estimate, or range of estimate, of the possible outcome or loss, if any, in this matter.

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

What changed 10-Q

Item 4. Controls and Procedures