What changed in this filing

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Item 1A. Risk Factors

2024-03-13 compared with 2023-03-13 · 62 added, 45 removed, 551 unchanged (16% 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:

• General economic conditions can have a material adverse effect on our business, financial conditions and result of operations.

• Global and national events, including, but not limited to the COVID-19 pandemic, increased inflation, rising interest rates, supply chain disruptions, labor conditions, and international conflict, may adversely affect our revenues, results of operations and financial condition.

• Global and national conditions and events, including, but not limited to, rising interest rates, increased inflation, supply chain disruptions, labor conditions, pandemics and public health crises and international conflict, may adversely affect our business, revenues, results of operations and financial condition.

• Failure to implement strategies to enhance our performance could have a material adverse effect on our business, results of operations and financial conditions.

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RISKS RELATED TO OUR BUSINESS

Risks related to the COVID-19 pandemic, natural disasters, public health epidemics, and other events beyond our control may adversely affect our business.

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

Global and national economic and other events, including, but not limited to increased inflation, rising interest rates, supply chain disruptions, labor conditions and international conflicts, could affect our future access to liquidity and materially adversely affect our results of operations and financial condition.

Ongoing global and national events including, but not limited to increased inflation, rising interest rates, supply chain disruptions, labor conditions and the war between Russia and Ukraine, have had a significant adverse impact on economic and market conditions around the world, including the United States.

Global and national economic conditions and events, including, but not limited to increased inflation, rising interest rates, supply chain disruptions, labor conditions, pandemics and public health crises and international conflicts, could affect our future access to liquidity and materially adversely affect our results of operations and financial condition.

Our business and results of operations could be adversely affected by changes in global or national economic conditions.

These conditions include, but are not limited to, increased inflation, high and rising interest rates, supply chain disruptions, labor conditions, the negative impacts from pandemics and public health crises (including any lingering or recurring adverse impacts from the COVID-19 pandemic) and the negative impacts resulting from the ongoing conflicts in Eastern Europe and the Middle East.

These conditions have had a significant adverse impact on economic and market conditions around the world, including the United States.

While the economic impact brought by, and the duration of, such global events is difficult to assess or predict, such events 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.

Inflation rates have increased recently to levels not seen in decades.

If our costs, in particular costs related to clinical trial expenses and/or employee-related expenses, were to become subject to significant inflationary pressures, it may adversely impact our business, operating results and financial condition.

In response to inflationary pressures, the Federal Reserve raised interest rates in 2022 and 2023, and these increases may continue in 2024 and beyond.

Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, ongoing effects of the COVID-19 pandemic, the ongoing conflicts in Eastern Europe and the Middle East and employee availability and wage increases.

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

Our product portfolio currently includes eight brands:

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

Our product portfolio currently includes seven brands:

Acetadote, Caldolor, Kristalose, Vaprisol, Omeclamox-Pak, Vibativ 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.

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We have manufacturing relationship with one packager who provided finished supplies of Kristalose for commercial and sampling purposes during 2022.

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 inability to meet demand for Kristalose.

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 inability to meet demand for Kristalose.

Omeclamox-Pak:

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In October 2020, we informed the FDA of a shortage of 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.

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

With uncertain future cash flows, the Board of Directors approved the write-down of the intangible assets related to the product.

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.

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

Specifically, we depend and will continue to depend upon independent investigators and collaborators, such as universities, medical institutions, contract research organizations (CROs) and strategic partners to conduct our preclinical and clinical trials.

We negotiate budgets and contracts with CROs and study sites, which may result in delays to our development timelines and increased costs.

We will rely heavily on these third parties over the course of our clinical trials, and we control only certain aspects of their activities.

Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities.

We and these third parties are required to comply with Good Clinical Practice (GCPs), which are regulations and guidelines enforced by

the FDA and comparable foreign regulatory authorities for therapeutic candidates in clinical development.

Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites.

If we or any of these third parties fail to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

We cannot assure you that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the GCP regulations.

Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Any third parties conducting our clinical trials are not and will not be our employees and, except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical and nonclinical programs.

Further, these third parties may have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other drug development activities, which could affect their performance.

If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our therapeutic candidates.

As a result, our financial results and the commercial prospects for our therapeutic candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.

If any of our relationships with trial sites, or any CRO that we may use in the future, terminates, we may not be able to enter into arrangements with alternative trial sites or CROs or do so on commercially reasonable terms.

Switching or adding third parties to conduct our clinical trials involves substantial cost and requires extensive management time and focus.

In addition, there is a natural transition period when a new third party commences work.

As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines.

Competitive pressures could reduce our revenues and profits.

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The introduction of new products could substantially reduce our market share or render our products obsolete.

The selling prices of pharmaceutical products tend to

decline as competition increases, through new product introduction or otherwise, which could reduce our revenues and profitability.

The selling prices of pharmaceutical products tend to decline as competition increases, through new product introduction or otherwise, which could reduce our revenues and profitability.

If generic products that compete with any of our branded pharmaceutical products are approved and sold, sales of our products will be adversely affected.

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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.

We may not be able to initiate or continue clinical trials for our product candidates if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA.

Subject enrollment, a significant factor in the timeline of clinical trials, is affected by many factors including the size and characteristics of the patient population, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the risk that enrolled patients will not complete a clinical trial, our ability to recruit clinical trial investigators with the appropriate competencies and experience, our ability to obtain and maintain patient consents, patient referral practices of physicians, ability to monitor patients adequately during and after treatment, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating as well as any product candidates under development.

We will be required to identify and enroll a sufficient number of subjects for each of our clinical trials.

Delays that may result from difficulty enrolling patients 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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Many acquisition opportunities involve competition among several potential purchasers including large multi-national pharmaceutical companies and other competitors that have access to greater financial resources than we do.

future acquisitions, we may face financial and operational risks and uncertainties.

With future acquisitions, we may face financial and operational risks and uncertainties.

We may not be able to engage in future product acquisitions, and those we do complete may not be beneficial to us in the long term.

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

Our ifetroban 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.

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In addition, as part of the Inflation Reduction Act 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.

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.

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.

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We are a relatively small company, and we depend to a great extent on principal members of our management, scientific staff, and sales representatives and managers.

If we lose the services of any key personnel, in particular,

If we lose the services of any key personnel, in particular, A.J.

Kazimi, our Chief Executive Officer, or other members of senior management it could have a material adverse effect on our business prospects.

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We have a life insurance policy covering the life of Mr.

We have entered into agreements with each of our employees that contain restrictive covenants relating to non-competition and non-solicitation of our customers and suppliers for one year after termination of employment.

We have entered into agreements with each of our employees that

contain restrictive covenants relating to non-competition and non-solicitation of our customers and suppliers for one year after termination of employment.

Nevertheless, each of our officers and key employees may terminate his or her employment at any time without notice and without cause or good reason, and so as a practical matter these agreements do not guarantee the continued service of these employees.

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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.

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;

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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.

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.

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.

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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.

insurance companies or Medicare.

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

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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.

Manufacturers of

drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with GMP and other applicable regulations.

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.

Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with GMP and other applicable regulations.

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 or violate healthcare laws, a regulatory agency may take the following actions, among others:

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If our competitors engage in these practices, they may receive preferential treatment from officials or agencies in some countries, giving our competitors an advantage in securing business from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage.

We have established formal policies or

procedures for prohibiting or monitoring this conduct, but we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible.

We have established formal policies or procedures for prohibiting or monitoring this conduct, but we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible.

If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.

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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.

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.

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Therefore, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in our issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in these patent applications.

Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.

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

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

and other countries may increase the uncertainties and costs, 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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Our total assets include intangible assets related to our acquisitions.

As of December 31, 2022, intangible assets relating to products, which are being amortized, represented approximately 33% of our total assets.

As of December 31, 2023, intangible assets relating to products, which are being amortized, represented approximately 28 percent of our total assets.

We may never realize the value of these assets.

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We cannot be certain whether or when we will achieve profitability because of the significant uncertainties relating to our ability to generate commercially successful drug products.

Even if we are successful in obtaining regulatory approvals for manufacturing and commercializing additional drug products, we may incur losses if our

drug products do not generate significant revenues.

Even if we are successful in obtaining regulatory approvals for manufacturing and commercializing additional drug products, we may incur losses if our drug products do not generate significant revenues.

If we achieve profitability, we may not be able to sustain or increase profitability.

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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.

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;

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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.

Our inability to comply with the covenants in our debt instruments could lead to a default or an event of default under the terms thereof, for which we may need to seek relief from our lender in order to waive the associated default or event of default and avoid a potential acceleration of the related indebtedness or cross-default or cross-acceleration to other debt.

acceleration to other debt.

There can be no assurance that we would be able to obtain such relief on commercially reasonable terms or otherwise and we may be required to incur significant additional costs.

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As of December 31, 2023, we did not have any outstanding interest rate swap contracts.

Unresolved Staff Comments.

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