What changed in this filing

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Item 1A. Risk Factors

2022-03-11 compared with 2021-03-12 · 148 added, 175 removed, 482 unchanged (40% of the section changed)

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RISKS RELATED TO OUR BUSINESS

Our business could be adversely affected by natural disasters, public health epidemics, and other events beyond our control.

Our business has been adversely impacted by the recent coronavirus (“COVID-19”) outbreak which has affected more than 200 countries and has significantly disrupted the day-to-day activities of both individuals and companies.

For example, we have been following the recommendations of health authorities to minimize exposure risk for our employees since March 2020, including allowing employees to work remotely to the extent possible.

This has included our home office employees and our hospital and field based sales representatives.

Risks Related to the COVID-19 pandemic, natural disasters, public health epidemics, and other events beyond our control.

Our business has been adversely impacted by the COVID-19 pandemic which has affected more than 200 countries and has significantly disrupted the day-to-day activities of both individuals and companies.

We rely on individuals and third-party organizations around the world to supply components, manufacture and distribute our products, and execute our clinical trials.

We are aware of a few instances where these individuals and third-party organizations were adversely impacted by the COVID-19 pandemic.

We may experience revenue loss, supply interruptions, time delays and incur unplanned expenses as a result of the impact of the ongoing COVID-19 pandemic.

We have and may continue to experience revenue loss, supply interruptions, time delays and incur unplanned expenses as a result of the impact of the ongoing COVID-19 pandemic.

The COVID-19 pandemic’s impact on global markets could affect our future access to liquidity and materially adversely affect our results of operations and financial condition.

The coronavirus has spread throughout much of the world after initially surfacing in Wuhan, China in December 2019.

State and local authorities in the United States, like their counterparts in many other countries, have since forced many businesses to temporarily shut down in an attempt to slow the spread of the virus, and Americans are being told by public officials to practice “social distancing.” Global stock markets have reacted very negatively, and economists are projecting a sharp economic slowdown, at least in the near term, even as governments take emergency relief measures.

While the economic impact brought by, and the duration of, COVID-19 is difficult to assess or predict, the COVID-19 pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in the future, which could negatively affect our liquidity in the future.

The situation is constantly evolving, however, so the extent to which the COVID-19 outbreak will impact businesses and the economy is highly uncertain and cannot be predicted.

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, have had a significant adverse impact on economic and market conditions around the world, including the United States.

The impact of the COVID-19 pandemic continues to evolve.

While the economic impact brought by, and the duration of, COVID-19 is difficult to assess or predict, the COVID-19 pandemic could result in additional disruption of global financial markets, reducing our ability to access capital in the future, which could negatively affect our liquidity in the future and in ways that cannot be predicted potentially including a prolonged recessionary environment in the United States.

In the longer term, there could be significant new regulatory actions and other events that could limit our activities and investment opportunities or change the functioning of the capital markets, and there is the possibility of a severe worldwide economic downturn.

Consequently, we may not be capable of, or successful at, generating positive investment returns or effectively managing risks.

Accordingly, we cannot predict the extent to which our results of operations, financial condition and cash flows will be affected.

An adverse development regarding our products could have a material and adverse impact on our future revenues and profitability.

A number of factors may impact the effectiveness of our marketing and sales activities and the demand for our products, including:

Our product portfolio currently includes eight brands:

Acetadote, Caldolor, Kristalose, Vaprisol, Omeclamox-Pak, Vibativ, RediTrex and Sancuso.

A product contamination or other safety or regulatory issues, such as a failure to meet certain FDA reporting requirements involving our products, could negatively impact us and possibly lead to a product recall.

In addition, changes impacting any of our products in areas such as competition, lack of market acceptance or demand, government regulation, intellectual property, reimbursement and manufacturing could have an adverse impact on our future revenues and profitability including:

• Changes in intellectual property protection available for our products or competing treatments;

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• The continued availability of adequate supplies of our products to meet demand:

If demand for our products weaken, our revenues and profitability will likely decline.

Known adverse effects of our marketed products are documented in product labeling, including the product package inserts, medical information disclosed to medical professionals and all marketing-related materials.

At this time, no unforeseen or serious adverse effects outside of those specified in current product labeling have been directly attributed to our approved products.

We currently market and sell seven products:

Acetadote, Caldolor, Kristalose, Vaprisol, Omeclamox-Pak, and Vibativ with RediTrex being marketed since late 2020.

A product contamination or other safety or regulatory issues, such as a failure to meet certain FDA reporting requirements involving our products could negatively impact us and possibly lead to a product recall.

The FDA has requested prescribers and manufacturers of prescription combination products that contain acetaminophen to limit the amount of acetaminophen to no more than 325 milligrams (mg) in each tablet or capsule.

The FDA requested this action to protect consumers from the risk of severe liver damage which can result from excess acetaminophen.

This category of prescription drugs combines acetaminophen with another ingredient intended to treat pain (most often an opioid), and these products are commonly prescribed to consumers for pain, such as pain from acute injuries, post-operative pain, or pain following dental procedures.

The FDA also requires manufacturers to appropriately label all prescription combination acetaminophen products to warn of the potential risk for severe liver injury.

The actions the FDA is taking for prescription acetaminophen combination products do not affect over-the-counter acetaminophen products.

The FDA's regulation of acetaminophen in prescription combination products and over-the-counter products may reduce the number of acetaminophen overdoses which could result in a lower demand for Acetadote.

• Weakened demand for our products;

• Unforeseen or serious adverse effects outside of those specified in current product labeling being attributed to any of our approved products.

Acetadote may be used to treat acetaminophen overdosess.

The FDA has previously requested prescribers and manufacturers of prescription combination products that contain acetaminophen to limit the amount of acetaminophen to no more than 325 milligrams (mg) in each tablet or capsule.

The FDA requested this action to protect consumers from the risk of severe liver damage which can result from excess acetaminophen which may reduce the number of acetaminophen overdoses which could result in a lower demand for Acetadote.

If the demand for Acetadote decreases, it could have an adverse impact on our future revenues and profitability.

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As with our other products, if Caldolor is not accepted in the marketplace, it could have an adverse impact on our future revenues and profitability.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to review and approve new products and otherwise affect the FDA’s ability to perform routine functions.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

Separately, in response to the continuing COVID-19 pandemic and the spread of the Omicron variant, on December 29, 2021, the FDA announced its intention to again postpone surveillance inspections of most foreign and domestic manufacturing facilities with no definitive target date for resuming routine inspection activities.

Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and emerging variants.

If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

If any manufacturer or partner we rely upon fails to supply our products in the amounts we require on a timely basis, or fails to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may be unable to meet demand for our products and may lose potential revenues.

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A long-term inability to meet demand for our products could result in impairment of our brands overall future and the carrying value of the assets associated with our brands.

The recent COVID-19 pandemic may create local issues for our third party-manufacturers and introduce delays in our manufacturing process.

We have agreements with two manufacturers, and both manufacturers provided commercial supplies of the product during 2020.

If neither of the manufacturers of Acetadote are able to produce marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for our product.

The recent COVID-19 pandemic has and may continue to create issues for our third party-manufacturers and introduce delays in our manufacturing process.

We have an agreement with one manufacturer to provide commercial supply of Acetadote.

If this manufacturer is unable to produce marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for Acetadote.

We have agreements with multiple manufacturers for the supply of Caldolor and during 2021 we obtained commercial supplies from three of these manufacturers for our international and domestic Caldolor requirements.

If the manufacturers of Caldolor are unable to produce marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for our product.

The active pharmaceutical ingredient for Kristalose is manufactured at a single facility by an international supplier.

We also have manufacturing relationships with two packagers who provided finished supplies of the product for commercial and sampling purposes during 2020.

If these facilities are damaged or destroyed, or if local conditions result in a work stoppage, we could suffer an inability to meet demand for our product.

Kristalose is manufactured through a complex process.

It would be particularly difficult to find a new manufacturer of Kristalose active pharmaceutical ingredient on an expedited basis.

As a result of these factors, our ability to manufacture Kristalose may be substantially impaired if the manufacturer is unable or unwilling to supply sufficient quantities of the product.

If the manufacturers of Caldolor are unable to produce marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for Caldolor.

The active pharmaceutical ingredient for Kristalose is manufactured at a single facility through a complex process.

It would be particularly difficult to find a new manufacturer of the Kristalose active pharmaceutical ingredient on an expedited basis.

We also have manufacturing relationships with two packagers who provided finished supplies of Kristalose for commercial and sampling purposes during 2021.

We will be continuing the packaging of Kristalose with one of those packagers going forward.

If the manufacturing or packaging facilities are unable to produce useable or marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inablty to meet demand for Kristalose.

Omeclamox-Pak:

Prior to our asset purchase agreement with GEL that closed in December 2018, GEL managed the packaging and supply of Omeclamox-Pak commercial and sample units.

Following our acquisition of the remaining rights to the brand in late 2018, we assumed responsibility for the packaging and supply of the product.

During 2019 we entered into a new packaging arrangement for this product.

The Company has been carefully monitoring its supply chain during the pandemic and preparing for its economic impact.

The packager for Cumberland’s Omeclamox-Pak product encountered financial difficulties due to the impact of COVID-19, and their operations are currently suspended.

Our packager for Omeclamox-Pak encountered financial difficulties due to the impact of COVID-19, and their operations are currently suspended.

Cumberland is awaiting resumption of those operations while also exploring other alternatives to restart the product’s packaging.

Meanwhile, we informed the FDA of a shortage of the Omeclamox-Pak effective October 14, 2020, and have not provided a date for the availability of new inventory.

Cumberland noted that there is currently some remaining inventory of the product in the distribution channels.

If we are unable to obtain marketable inventory in the future, we could suffer an inability to meet demand for our product.

As part of the acquisition of Vaprisol, we purchased an existing supply of raw material inventory.

In addition, as part of this transaction, we were assigned a commercial supply agreement with the historical Vaprisol manufacturer.

In 2018, the manufacturer informed us that they would no longer be able to provide the product following the manufacturing of one final batch which is providing us with a multi-year supply.

In October 2020, we informed the FDA of a shortage of the Omeclamox-Pak which continues.

If we are unable to obtain marketable inventory in the future, we could suffer an inability to meet demand for Omeclamox-Pak.

In 2018, the manufacturer of Vaprisol informed us that they would no longer be able to provide the product following the manufacturing of one final batch which is providing us with a multi-year supply.

We are currently working with a new manufacturer to provide us with long term supplies of the product.

If we are unable to produce additional marketable inventory in sufficient quantities of Vaprisol, we could suffer an inability to meet demand for our product.

In February 2022, we notified the FDA of a shortage of Vaprisol If we are unable to produce additional marketable inventory in sufficient quantities, in the required time frame, we could suffer an inability to meet demand for Vaprisol.

Through our acquisition of Vibativ, we acquired a multi-year supply of raw material, work in process and finished goods inventory.

As a result of the agreement, we are now responsible for the manufacture of the product and completed the transfer of the product’s manufacturing activities to a new supplier during 2020.

If we are unable to obtain marketable inventory in the future, we could suffer an inability to meet demand for our product.

Under our agreement with Nordic, they are responsible for providing us the packaged and labeled commercial supply of the RediTrex product.

If we are unable to obtain marketable inventory in the future, we could suffer an inability to meet demand for our product.

In 2020, we completed the transfer of Vibativ manufacturing activities to a new supplier.

If we are unable to continue to obtain marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for Vibativ.

Under our licensing and distribution agreement for the product, our licensor is responsible for providing us the packaged and labeled commercial supply of the RediTrex product.

If we are unable to obtain marketable inventory in sufficient quantities, in the agreed upon time period, we could suffer an inability to meet demand for RediTrex.

As part of the acquisition of Sancuso in January 2022, we obtained an initial supply of finished goods inventory and work in progress.

The continued production of Sancuso is in the process of being moved to one of the current manufacturer’s other facilities.

Data is being developed to support the transfer which will require FDA approval.

If the FDA does not approve the new facility and we are unable to obtain marketable inventory n sufficient quantities, we could suffer an inability to meet demand for Sancuso.

In addition, all manufacturers of our products and product candidates must comply with current good manufacturing practices, ("GMPs"), enforced by the FDA through its facilities inspection program.

These requirements include quality control, quality assurance, and the maintenance of records and documentation.

Manufacturers of our products may be unable to comply with GMP requirements and with other FDA, state and foreign regulatory requirements.

Manufacturers of our products must be unable to comply with GMP requirements and with other FDA, state, and foreign regulatory requirements.

We have no control over our manufacturers’ compliance with these regulations and standards.

If our third-party manufacturers do not comply with these requirements, we could be subject to:

• Fines and civil penalties;

If our third-party manufacturers do not comply with these requirements, we could be subject to Fines and civil penalties;

suspension of production or distribution;

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product seizure or recall;

• Withdrawal of product approval.

and withdrawal of product approval.

We are dependent on a variety of other third parties.

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We rely on a variety of third parties, in addition to our manufacturers, to help us operate our business.

Other third parties on which we rely include:

• Cardinal Health Specialty Pharmaceutical Services, a logistics and fulfillment company and business unit of Cardinal, which bills for, collects, warehouses and ships our marketed products;

• Vanderbilt University, WinHealth and the Tennessee Technology Development Corporation, co-owners with us of CET, and the universities that collaborate with us in connection with CET's research and development programs.

If these third parties do not continue to provide services to us, or collaborate with us, we might not be able to obtain others who can serve these functions.

This could disrupt our business operations, increase our operating expenses or otherwise adversely affect our operating results.

The recent COVID-19 pandemic may create additional risk and delays at our independent third-party service providers.

Competitive pressures could reduce our revenues and profits.

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states allows or, in some instances mandates, that a pharmacist dispense an available generic equivalent when filling a prescription for a branded product, in the absence of specific instructions from the prescribing physician.

Governmental and private

healthcare payors also emphasize substitution of branded pharmaceuticals with less expensive generic equivalents.

Governmental and private healthcare payors also emphasize substitution of branded pharmaceuticals with less expensive generic equivalents.

Pursuant to the provisions of the Hatch-Waxman Act, manufacturers of branded products often bring lawsuits to enforce their patent rights against generic products released prior to the expiration of branded products’ patents, but it is possible for generic manufacturers to offer generic products while such litigation is pending.

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We may also experience delays associated with future required Phase IV clinical studies potentially resulting from, among other factors, difficulty enrolling patients.

Such delays could impact our ability to explore opportunities for label expansion and limit our ability to bring our products to new patient populations.

could impact our ability to explore opportunities for label expansion and limit our ability to bring our products to new patient populations.

In addition, we have largely obtained regulatory approval to market our products in the United States.

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If we do not successfully identify and acquire rights to products, our growth opportunities may be limited.

We acquired rights to our products and our product candidates.

We have added six products to our portfolio of brands through acquisitions.

Our business strategy is to continue to acquire rights to FDA-approved products as well as pharmaceutical product candidates in the late stages of development.

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If we do not successfully integrate acquired product brands into our operations, our growth opportunities may be limited.

We added six marketed products to our portfolio of brands, roughly one brand per year, beginning in late 2013 through the launch of RediTrex during late 2020.

If we are unable to continue to optimize our sales of our brands or we are unable to successfully integrate the marketing, sale and distribution of any other potential products into our current infrastructure or if they require significantly greater resources than originally anticipated, we may face

financial and operational risks and uncertainties.

If we are unable to successfully integrate the marketing, sale and distribution of any other potential products into our current infrastructure or if they require significantly greater resources than originally anticipated, we may face financial and operational risks and uncertainties.

If we are unable to successfully integrate any acquired brands, both current and future, these product acquisitions may not be beneficial to us in the long term.

Our Hepatoren, Boxaban, Vasculan, and Portaban product candidates have not been approved for sale and may never be successfully commercialized.

We anticipate that a portion of our future revenue growth will come from sales of our Hepatoren, Boxaban, Vasculan, and Portaban product candidates.

Hepatoren (intravenous ifetroban) is used to treat hepatorenal syndrome ("HRS"), Boxaban (oral ifetroban) is used to treat aspirin exacerbated respiratory disease ("AERD"), Vasculan (oral ifetroban) is for the treatment of systemic sclerosis ("SSc"), and Portaban (injection and oral ifetroban) is for the treatment of portal hypertension associated with liver disease.

Our ifetoban product candidates have not been approved for sale and may never be successfully commercialized.

We anticipate that a portion of our future revenue growth may come from sales of our ifetroban product candidates.

However, none of these products have been approved by the FDA for marketing, and these product candidates are still subject to risks associated with their development.

Drug development is a long, expensive and inherently uncertain process with a high risk of failure at every stage of development, and results of earlier studies and trials may not be predictive of future trial results

The FDA has cleared our IND's for the ifetroban product candidates as we evaluate them as treatments for these conditions.

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Adoption of such legislation could further limit reimbursement for pharmaceuticals.

In March 2010, the U.S.

government passed into law the Patient Protection and Affordable Care Act, ("PPACA") along with the Health Care and Education Reconciliation Act of 2010, ("HCERA"), which modified the revenue provisions of the PPACA.

The legislation calls for an increase in certain Medicare drug rebates paid by pharmaceutical manufacturers and an industry fee imposed on pharmaceutical manufacturers according to the individual manufacturer’s relative percentage of total industry sales to specified government programs.

At this time no assurances can be given that these measures, or any other measures included in the Healthcare Reform Act, will not have an adverse effect on our revenues in the future.

Future cost control initiatives, legislation and regulations could decrease the price that we receive for any products, which would limit our revenue and profitability.

Since its inception, other legislative changes have been proposed and adopted.

These changes included aggregate reductions of Medicare payments to providers of up to two percent per fiscal year.

Additionally, in January 2013, the American Taxpayer Relief Act of 2012, was signed into law which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Further, while the healthcare reform agenda and policies of the current administration are not fully known, it is possible that additional regulatory changes may take place.

This includes a repeal of all or portions of the PPACA, and Congress could be asked to replace the current legislation of the PPACA.

There is uncertainty with respect to the timing and impact of any changes.

These changes could have an impact on coverage and reimbursement for healthcare products and services covered by plans that were authorized by the PPACA.

At this time, we cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.

In addition, as part of the Build Back Better Act (“BBBA”) proposed legislation, provisions intended to lower the price of prescription drugs, including permitting Medicare to negotiate the price of prescription drugs once they have been on the market for a fixed number of years, and imposing a tax penalty on drug manufacturers if the price of their drugs increase faster than the rate of inflation are possible At this time no assurances can be given that these measures, or subsequent legislative proposals, will not have an adverse effect on our revenues in the future.

Future cost control initiatives, legislation, and regulations could decrease the price that we receive for our products, which would limit our revenue and profitability.

Also, reimbursement practices of third-party payors might preclude us from achieving market acceptance for our products or maintaining price levels sufficient to realize an appropriate return on our investment in product acquisition and development.

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“Formulary” practices of third-party payors could adversely affect our competitive position.

Many managed healthcare organizations are now controlling the pharmaceutical products included on their formulary lists.

Many managed healthcare organizations control the pharmaceutical products included on their formulary lists.

Having products listed on these formulary lists creates competition among pharmaceutical companies which, in turn, has created a trend of downward pricing pressure in our industry.

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If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results.

The recent COVID-19 pandemic may introduce additional challenges in the retention and hiring of key personnel.

The recent COVID-19 pandemic has introduced additional challenges in the retention and hiring of key personnel.

The size of our organization and our potential growth may lead to difficulties in managing operations.

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If we cannot successfully defend ourselves against the product liability claim, we may incur substantial liabilities.

Liability claims may result in:

• Decreased demand for our products;

Liability claims may result in decreased demand for our products;

injury to our reputation;

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loss of revenue;

• The inability to commercialize our product candidates.

We are highly dependent upon medical and patient perceptions of us and the safety and quality of our products.

We could be adversely affected if we or our products are subject to negative publicity.

We could also be adversely affected if any of our products or any similar products sold by other companies prove to be, or are asserted to be, harmful to patients.

Also, because of our dependence upon medical and patient perceptions, any adverse publicity associated with illness or other adverse effects resulting from the use or misuse of our products or any similar products sold by other companies could have a material adverse impact on our results of operations.

and the inability to commercialize our product candidates.

We have product liability insurance that covers our clinical trials, the marketing and sale of our products up to a $10 million annual aggregate limit, subject to specified deductibles.

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If we are not able to obtain FDA approval for any desired future indications for our products, our ability to effectively market and sell our products may be reduced and our business may be adversely affected.

While physicians may choose to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical studies and approved by the regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA.

These “off-label” uses are common across medical specialties and may constitute an appropriate treatment for some patients in varied circumstances.

Regulatory authorities in the U.S.

generally do not regulate the behavior of physicians in their choice of treatments.

Regulatory authorities do, however, restrict communications by pharmaceutical companies on the subject of off-label use.

If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities.

In addition, our failure to follow FDA rules and guidelines relating to promotion and advertising may cause the FDA to suspend or withdraw an approved product from the market, require a recall or payment of fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our business.

Our failure to follow FDA rules and guidelines relating to promotion and advertising may cause the FDA to suspend or withdraw an approved product from the market, require a recall or payment of fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our business.

Our business and operations would suffer in the event of system failures, security breaches, including any cybersecurity incidents, adverse events or other disruptions within our information technology infrastructure at our corporate headquarters;

Despite the implementation of security measures, our internal computer systems, including those at our corporate headquarters, are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

or in the event of intellectual property infringement.

Our business depends on effective, secure and operational information systems which include systems provided by external contractors and other service providers.

Despite the implementation of security measures, our computer systems and information technology infrastructure, including those resources at our corporate headquarters, are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

Our business is at risk from and may be impacted by information security incidents, including ransomware, malware, phishing, social engineering, and other security events.

Such incidents can range from individual attempts to gain unauthorized access to information technology systems to more sophisticated security threats.

These events can also result from internal compromises, such as human error or malicious acts.

These events can occur on our systems or on the systems of our partners and subcontractors.

In the ordinary course of our business, we store sensitive data, including intellectual property, our proprietary business information and that of our customers.

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The secure processing and maintenance of this information is critical to our operations.

In the event that our corporate headquarters and/or our computer systems are disabled or materially damaged, it would have a substantial and material negative effect on our operations.

Problems with, or the failure of, our technology and systems or any system upgrades or programming changes associated with such technology and systems would have a substantial and material negative effect on our operations.

Furthermore, any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our drug development programs.

While we continue to invest in data protection and information technology, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.

Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.

Any such breach could compromise our networks and the information stored there could be accessed,

publicly disclosed, lost or stolen.

If we are subject to cyber-attacks or security breaches, this could result in business interruptions and delays;

the loss, misappropriation, corruption or unauthorized access of data;

litigation and potential liability under privacy, security and consumer protection laws or other applicable laws;

reputational damage and federal and state governmental inquiries.

Any such problems or failures and the costs incurred in correcting any such problems or failures, could have a material adverse effect on our business and financial condition, results of operations and cash flows.

To the extent that any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liability and the further development of our products or product candidates may be delayed.

We may develop internationally and license our products globally;

therefore, we may have an increased exposure to foreign regulatory requirements and fluctuations in foreign currency exchange rates.

While we currently have only obtained regulatory approval to market our products in the United States, in the future we may seek global opportunities for our products and to develop product candidates internationally in the future.

Such opportunities and development will inherently subject us to a number of risks and uncertainties, including:

A failure to restore our information systems after the occurrence of any of these events could have a material adverse effect on our business and financial condition, results of operations and cash flows.

Our information systems and applications also require maintenance, upgrading and enhancement to meet our operational needs.

We regularly upgrade and expand our information systems’ capabilities.

If we experience difficulties with the transition and integration of information systems or are unable to implement, maintain, or expand our systems properly, we could suffer from, among other things, operational disruptions, regulatory problems and increases in administrative expenses.

As cyber threats continue to evolve, we may be required to expend significant capital and other resources to protect against the threat of security breaches or to mitigate and alleviate problems caused by breaches, including unauthorized access to proprietary information and personally identifiable information stored in our information systems, and the introduction of computer viruses or other malicious software programs to our systems.

Our security measures may be inadequate to prevent security breaches and our business operations could be materially adversely affected by federal and state fines and penalties, legal claims or proceedings, cancellation of contracts and loss of customers if security breaches are not prevented.

We believe that our subcontractors and vendors take precautionary measures to prevent problems that could affect our business operations as a result of failure or disruption to their information systems.

However, there is no guarantee such efforts will be successful in preventing a disruption, and it is possible that we may be impacted by information system failures.

The occurrence of any information system failures could result in interruptions, delays, loss or corruption of data and cessations or interruptions in the availability of these systems.

All of these events or circumstances, among others, could have an adverse effect on our business, results of operations, financial position and cash flows, and they could harm our business reputation.

We believe we have all the necessary licenses from third parties to use technology and software that we do not own.

A third party could, however, allege that we are infringing its rights, which may deter our ability to obtain licenses on commercially reasonable terms from the third party, if at all, or cause the third party to commence litigation against us.

In addition, we may find it necessary to initiate litigation to protect our trade secrets, to enforce our intellectual property rights and to determine the scope and validity of any proprietary rights of others.

Any such litigation, or the failure to obtain any necessary licenses or other rights, could materially and adversely affect our business.

We license our products globally;

therefore, we may have exposure to foreign regulatory requirements and fluctuations in foreign currency exchange rates.

Continued foreign licensure inherently subjects us to a number of risks and uncertainties, including:

• longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

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These or other similar risks could adversely affect our revenue and profitability.

As we develop internationally, our exposure to these factors will increase.

Even if a drug candidate that we develop receives regulatory approval, we may decide not to commercialize it if we determine that commercialization of that product would require more capital and time than we are willing to invest.

Even if any of our drug candidates receives regulatory approval, it could be subject to post-regulatory surveillance, and may have to be withdrawn from the market or subject to restrictions if previously unknown problems occur.

Regulatory agencies may also require additional clinical trials or testing, and the drug product may be recalled or may be subject to reformulation, additional studies, changes in labeling, warnings to the public and negative publicity.

As a result, we may not continue to commercialize a product even though it has obtained regulatory approval.

Further, we may decide not to continue to commercialize a product if the market does not accept the product because it is too expensive or because third parties, such as insurance companies or Medicare, have not approved it for substantial reimbursement.

In addition, we may decide not to continue to commercialize a product if competitors develop and commercialize similar or superior products or have proprietary rights that preclude us from ultimately marketing our products.

As we continue to develop internationally, our exposure to these factors will increase.

We may decide not to commercialize one of our drug candidates once it obtains regulatory approval if we determine that commercialization of that product would require more capital and time than we are willing to invest.

Even if any of our drug candidates receives regulatory approval, it could be subject to matters such as post-regulatory surveillance, additional clinical trials or testing, reformulation, changes in labeling, warnings to the public, recall, competition from similar or superior products, and lack of sufficient payor reimbursement by insurance companies or Medicare.

As a result, we may not commercialize or continue to commercialize a product that has obtained regulatory approval.

Any approved drug product that we bring to the market may not gain market acceptance by physicians, patients, healthcare payors and others in the medical community.

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RISKS RELATING TO GOVERNMENT REGULATION

We are subject to stringent government regulation.

All of our products face regulatory challenges.

Virtually all aspects of our business activities are regulated by government agencies.

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• greater scrutiny in advertising and promotion.

In the past, clinical trials and post-marketing surveillance of certain marketed drugs of competitors within the industry have raised concerns that have led to recalls, withdrawals or adverse labeling of marketed products.

If previously unknown side effects are discovered or if there is an increase in negative publicity regarding known side effects of any of our products, it could significantly reduce demand for the product or require us to take actions that could negatively affect sales, including removing the product from the market, restricting its distribution or applying for labeling changes.

In addition, certain health authorities, regulators and agencies have increased their focus on safety when assessing the balance of benefits and risks of drugs.

Some health authorities appear to have become more cautious when making decisions about approvability of new products and are re-reviewing select products that are already marketed, adding further to the uncertainties in the regulatory processes.

There is also greater regulatory scrutiny, especially in the U.S., on advertising, and promotion (in particular, direct-to-consumer advertising) and pricing of pharmaceutical products.

Certain regulatory changes or decisions could make it more difficult for us to sell our products and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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If we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with a facility where the product is manufactured, a regulatory agency may impose restrictions on that product or the manufacturer, including withdrawal of the product from the market or suspension of manufacturing.

If we, our partners or the manufacturing facilities for our products fail to comply with applicable regulatory requirements, a regulatory agency may take the following actions, among others:

If we, our partners or the manufacturing facilities for our products fail to comply with applicable regulatory requirements or violate healthcare laws, a regulatory agency may take the following actions, among others:

• issue warning letters or untitled letters;

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Such changes, or new legislation, could have a material adverse effect on our business, financial condition and results of operations.

The recent COVID-19 pandemic has introduced additional strain on the FDA.

We are unable to fully understand the impact this may cause on regulations or the related timeframes pertaining to communication with the FDA.

Proposed legislation may permit re-importation of drugs from other countries into the U.S., including foreign countries where the drugs are sold at lower prices than in the U.S., which could materially and adversely affect our operating results and our overall financial condition.

In previous years, legislation has been introduced in Congress that, if enacted, would permit more widespread re-importation of drugs from foreign countries into the U.S., which may include re-importation from foreign countries where the drugs are sold at lower prices than in the U.S.

Based on recent election results, there could be a renewed effort for legislation permitting the re-importation of prescription drugs as a means of lowering drug costs.

Such legislation, or similar regulatory changes, if enacted, could decrease the price we receive for any approved products which, in turn, could materially and adversely affect our operating results and our overall financial condition.

We must comply with the CREATES Act.

There have been a number of recent regulatory and legislative initiatives designed to encourage generic competition for pharmaceutical products, including expedited review procedures for generic manufacturers and incentives designed to spur generic competition of branded drugs.

In particular, FDA and FTC have been focused on brand companies’ denial of drug supply to potential generic competitors for testing.

In December 2019, the Creating and Restoring Equal Access to Equivalent Samples Act, or the CREATES Act, was enacted, which provides a legislatively defined private right of action under which eligible product developers can bring suit against companies who refuse to sell sufficient quantities of their branded products on commercially reasonable, market-based terms to support such eligible product developers’ marketing applications.

We cannot currently predict the specific outcome or impact on our business of such regulatory and legislative initiatives.

We must comply with the Foreign Corrupt Practices Act.

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Manufacturers are required to report this information annually to The Centers for Medicare & Medicaid Services ("CMS").

In addition, some states require reporting information concerning payments to health care providers or other transfers of value by drug manufacturers beyond the requirements of the Federal Sunshine Act.

Cumberland has implemented a series of policies and procedures for every employee involved in the data collection process, and has systems in place to capture the data, which is verified by an outside firm that specializes in reporting the payments.

Cumberland has also established a system to ensure that data was reported completely, in the correct format, and on time.

Despite these policies, procedures and systems, we cannot assure you that we will collect and report all data accurately.

Despite these

policies, procedures and systems, we cannot assure you that we will collect and report all data accurately.

If we fail to accurately report this information, we could suffer severe penalties.

If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

We participate in and have certain price reporting obligations to the Medicaid Drug Rebate program and other governmental pricing programs, and we have obligations to report average sales price under the Medicare program.

Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available to the states for our drugs under Medicaid and Medicare Part B.

Those rebates are based on pricing data reported by us on a monthly and quarterly basis to CMS, the federal agency that administers the Medicaid Drug Rebate program.

These data include the average manufacturer price and, in the case of innovator products, the best price for each drug which, in general, represents the lowest price available from the manufacturer to any entity in the US in any pricing structure, calculated to include all sales and associated rebates, discounts and other price concessions.

The Healthcare Reform Act made significant changes to the Medicaid Drug Rebate program, such as expanding rebate liability from fee-for-service Medicaid utilization to include the utilization of Medicaid managed care organizations as well and changing the definition of average manufacturer price.

The Healthcare Reform Act also increased the minimum Medicaid rebate;

changed the calculation of the rebate for certain innovator products that qualify as line extensions of existing drugs;

and capped the total rebate amount at 100% of the average manufacturer price.

Finally, the Healthcare Reform Act requires pharmaceutical manufacturers of branded prescription drugs to pay a branded prescription drug fee to the federal government.

CMS issued final regulations to implement the changes to the Medicaid Drug Rebate program under the Healthcare Reform Act.

These regulations became effective on April 1, 2016.

The issuance of the final regulations and coverage expansion by various governmental agencies relating to the Medicaid Drug Rebate program has and will continue to increase our costs and the complexity of compliance, has been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS challenges the approach we take in our implementation of the final regulations.

Federal law requires that any company that participates in the Medicaid Drug Rebate program also participate in the Public Health Service's 340B drug pricing program in order for federal funds to be available for the manufacturer's drugs under Medicaid and Medicare Part B.

The 340B program requires participating manufacturers to agree to charge no more than the 340B "ceiling price" for the manufacturer's covered outpatient drugs to a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients.

The Healthcare Reform Act expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals.

The 340B ceiling price is calculated using a statutory formula based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate program.

Changes to the definition of average manufacturer price and the Medicaid rebate amount under the Healthcare Reform Act and CMS's final regulations implementing those changes also could affect our 340B ceiling price calculations and negatively impact our results of operations.

The Healthcare Reform Act obligates the Secretary of the Department of Health and Human Services ("HHS") to update the agreement that manufacturers must sign to participate in the 340B program to obligate a manufacturer to offer the 340B price to covered entities if the manufacturer makes the drug available to any other purchaser at any price and to report to the government the ceiling prices for its drugs.

The Health Resources and Services Administration ("HRSA"), the federal agency that administers the 340B program, recently updated the agreement with participating manufacturers.

The Healthcare Reform Act also obligates the Secretary of the HHS to create regulations and processes to improve the integrity of the 340B program.

On January 5, 2017, HRSA issued a final regulation regarding the calculation of 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities.

The regulation became effective as of January 1, 2019.

Implementation of this final rule and the issuance of any other final regulations and guidance could affect our obligations under the 340B program in ways we cannot anticipate.

In addition, legislation may be introduced that, if passed, would further expand the 340B program to additional covered entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in the inpatient setting.

Federal law also requires that a company that participates in the Medicaid Drug Rebate program report average sales price information each quarter to CMS for certain categories of drugs that are paid under the Medicare Part B program.

Manufacturers calculate the average sales price based on a statutorily defined formula as well as regulations and interpretations of the statute by CMS.

CMS uses these submissions to determine payment rates for drugs under Medicare Part B.

Statutory or regulatory changes or CMS guidance could affect the average sales price calculations for our products and the resulting Medicare payment rate, and could negatively impact our results of operations.

Also, the Medicare Part B drug payment methodology is subject to change based on potential demonstration projects undertaken by CMS or potential legislation enacted by Congress.

Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies and the courts.

We participate in the Medicaid Drug Rebate program, the 340B program, and other governmental pricing programs and have obligations to report the average sales price for certain of our drugs to CMS.

These programs and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies and the courts, which can change over time.

In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for up to three years after those data originally were due.

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Price recalculations also may affect the ceiling price at which we are required to offer our products under the 340B program.

We are liable for errors associated with our submission of pricing data.

In addition to retroactive rebates and the potential for 340B program refunds, if we are found to have knowingly submitted any false price information to the government, we may be liable for civil monetary penalties.

If we are found to have made a misrepresentation in the reporting of our average sales price, the Medicare statute provides for civil monetary penalties for each misrepresentation for each day in which the misrepresentation was applied.

Our failure to submit the required price data on a timely basis could result in a civil monetary penalty per day for each day the information is late beyond the due date.

Such failure also could be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid program.

In the event that CMS terminates our rebate agreement, federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

CMS and the Office of Inspector General ("OIG") have pursued manufacturers that were alleged to have failed to report these data to the government in a timely manner.

Governmental agencies may also make changes in program interpretations, requirements or conditions of participation, some of which may have implications for amounts previously estimated or paid.

Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price.

CMS, could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

We cannot assure you that our submissions will not be found by CMS to be incomplete or incorrect.

In order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part B programs we are required to participate in the VA Federal Supply Schedule ("FSS") pricing program, established under Section 603 of the Veterans Health Care Act of 1992.

Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations.

Unexpected refunds to the government, and any response to government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

The recent COVID-19 pandemic may introduce temporary or permanent healthcare reform measures for which we cannot predict the financial implication of on our business.

Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate program and other governmental programs could negatively impact our financial results.

We may be subject to foreign, federal, and state data privacy and security laws, and failure to protect our information systems against security breaches, service interruptions, or misappropriation of data could disrupt operations, compromise sensitive data, and expose us to liability, possibly causing our business and reputation to suffer.

In the United States, numerous federal and state laws and regulations govern the collection, use, disclosure and protection of health-related and other personal information and could apply to our operations or the operations of our collaborators and third-party providers.

Certain of these laws grant individual rights with respect to their information, and we may be required to expend significant resources to comply with these laws.

For example, the California Consumer Privacy Act, or CCPA, was enacted in 2020.

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

Similarly, there are a number of legislative proposals in the European Union, the United States, at both the federal and state level, as well as other jurisdictions that could impose new obligations or limitations in areas affecting our business.

These changes may lead to additional costs and increase our overall risk exposure.

RISKS RELATING TO INTELLECTUAL PROPERTY

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As discussed in Part I, Item 1, Business - Patents, Trademarks, and Other Intellectual Proprietary Rights, of this report on Form 10-K, we have several patents for formulations of Acetadote, and have previously engaged in litigation to enforce our patent rights.

We also have additional patent applications relating to Acetadote which are pending with the USPTO and may or may not be issued.

We intend to continue to vigorously defend and protect our Acetadote product and related intellectual property rights.

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In addition, changes in either patent laws or in interpretations of patent laws in the U.S.

other countries may diminish the value of our intellectual property or narrow the scope of our patent protection.

and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection.

Furthermore, our competitors may independently develop similar technologies or duplicate technology developed by us in a manner that does not infringe our patents or other intellectual property.

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

We may be involved in lawsuits to protect or enforce our trademarks or for allegedly infringing the trademark rights of others, which could be costly and time consuming.

We own certain trademark registrations for each of our branded pharmaceutical products as well as for our corporate name and logo.

We have applied for trademark registration for other various names and logos.

We also may have common law trademark rights in unregistered names, phrases, and logos under which we market or offer certain products and services.

Over time, we intend to obtain and maintain registrations on trademarks that remain valuable to our business.

Third parties may oppose registration of our federal trademark applications.

Further, we could be involved in lawsuits for allegedly infringing the rights of others with respect to their prior-existing trademarks.

These lawsuits or opposition proceedings can be costly and time-consuming.

A significant adverse ruling in any such lawsuit could put our trademarks at risk of being invalidated and could compromise the issuance of our existing trademark applications.

Competitors may infringe on our trademarks or the trademarks of our collaborators or licensors.

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

In addition, in a trademark infringement proceeding, a court may decide that a trademark registration of ours is not valid or is unenforceable, or may refuse to stop the other party from using the mark or a mark that is similar to our registered mark at issue on the grounds that the competitor’s use of the mark is not confusingly similar to our registered trademark.

An adverse result in any litigation or defense proceeding could put one or more of our trademark registrations at risk of being invalidated or interpreted narrowly and could put our trademark applications at risk of not registering.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, some of our confidential information could be disclosed 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 we breach any of the agreements under which we license rights to our products and product candidates from others, we could lose the ability to continue commercialization of our products and development and commercialization of our product candidates.

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Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

We are subject to stringent government regulation.

All of our products face regulatory challenges.

RISKS RELATED TO OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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See also “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources.” Fluctuation in operating results, particularly if not anticipated by investors and other members of the financial community, could add to volatility in our stock price.

The recent COVID-19 coronavirus has

negatively impacted the financial markets and may create additional risk for our customers and their ability to pay for our products.

The COVID-19 coronavirus has negatively impacted the financial markets and may create additional risk for our customers and their ability to pay for our products.

Our focus on acquisitions as a growth strategy has created intangible assets whose amortization could negatively affect our results of operations.

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The interests of this group may not always coincide with our interests or the interests of other shareholders and may prevent or delay a change in control.

This significant concentration of share ownership may adversely affect the trading price of our

common stock because many investors perceive disadvantages to owning stock in companies with controlling shareholders.

This significant concentration of share ownership may adversely affect the

trading price of our common stock because many investors perceive disadvantages to owning stock in companies with controlling shareholders.

Research analysts may not continue to provide or initiate coverage of our common stock or may issue negative reports.

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This price may not have reflected the market price of our common stock following our initial public offering.

Through March 5, 2021, the closing price of our common stock since our initial public offering has ranged from a low of $2.77 to a high of $17.05 per share.

Moreover, the market price of our common stock might decline below current levels.

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Despite the internal controls and procedures put in place to maintain compliance with securities laws and regulations, our employees may still fail to comply with all SEC disclosure and reporting requirements.

Such failure could lead to administrative and civil

penalties, criminal penalties, and private litigation with shareholders.

Such failure could lead to administrative and civil penalties, criminal penalties, and private litigation with shareholders.

The consequences could have a material effect on our ability to effectively market our products and operate our business.

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Moreover, if we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

We may not be able to maintain our listing on the NASDAQ Global Select Market (“NASDAQ”), which could have a material adverse effect on us and our stockholders.

The standards for continued listing on NASDAQ include, among other things, that the minimum bid price for the listed securities not fall below $1.00 for a period in excess of thirty consecutive business days.

If the closing bid price of our common stock were to fail to meet NASDAQ’s minimum closing bid price requirement, or if we otherwise fail to meet any other applicable requirements of NASDAQ and we are unable to regain compliance, NASDAQ may make a determination to delist our common stock.

The delisting of our common stock from NASDAQ could negatively impact us by (i) reducing the liquidity and market price of our common stock;

(ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing;

(iii) impacting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing or limiting us from accessing the public capital markets;

and (iv) impairing our ability to provide equity incentives to our employees.

Some provisions of our third amended and restated charter, bylaws and Tennessee law may inhibit potential acquisition bids that you may consider favorable.

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Our Revolving Credit Agreement contains specified quarterly financial maintenance covenants.

As of December 31, 2020, we were in compliance with the Tangible Capital Ratio financial covenant of the Revolving Credit Agreement and we expect to maintain compliance with the Tangible Capital Ratio financial covenant in future periods.

As of December 31, 2021, we were in compliance with the Tangible Capital Ratio financial covenant of the Revolving Credit Agreement.

However, we can make no assurance that we will be able to comply with the restrictive and financial covenants contained in the Revolving Credit Agreement in the future.

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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