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An investment in our company involves a high degree of risk.
−Removed: You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report on Form 10-K, including Item 7“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes included in Item 8 “Financial Statements and Supplementary Data.” If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed.
+Added: You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report on Form 10-K, including Item 7“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the notes thereto included in Item 8 “Financial Statements and Supplementary Data.” If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed.
The risks and uncertainties described below are not the only ones we face.
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Risks Related to Our Business and Strategy
−Removed: We will require additional financing to fund our future operations, and a failure to obtain additional capital when so needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations and as a result, there is substantial doubt about our ability to continue as a going concern.
−Removed: We believe that our current capital resources, after taking into account the repayment of the Oxford loan are not sufficient to meet our obligations and fund operations through at least the next 12 months.
−Removed: We will be required to raise additional capital to meet our operating, debt and settlement obligations coming due.
−Removed: We have utilized substantial amounts of cash since our inception in order to conduct clinical development to support regulatory approval of Jeuveau ® in the United States, EU and Canada and in connection with the launch of Jeuveau ® in the United States and Canada.
−Removed: We expect that we will continue to expend substantial resources for the foreseeable future in order to pay costs associated with our settlement agreements with Medytox and Allergan, payments to the founders of our company under a promissory note issued to them in 2017 and for the continued commercialization of Jeuveau ® in the United States and abroad.
−Removed: As described in our notes to the financial statements in this Annual Report on Form 10-K, we have incurred recurring losses and negative cash flows from operations and have an accumulated deficit at December 31, 2020 of $376.1 million, which raises substantial doubt about our ability to continue as a going concern.
−Removed: As of December 31, 2020, we had cash and cash equivalents of $102.6 million and short-term investments of $5.0 million.
−Removed: On January 4, 2021, we entered into a letter agreement with Oxford Finance, LLC, or Oxford , pursuant to which we paid Oxford $76.4 million to discharge in full all outstanding obligations, included accrued interest, under that certain Loan and Security Agreement, dated as of March 15, 2019.
−Removed: In the near term, we expect expenditures associated with our settlement agreements with Medytox and Allergan, including a $15.0 million payment due in the second quarter of 2021, and a $20.0 million payment in the fourth quarter of 2021 due to the founders of our company under a promissory note issued to them in 2017.
−Removed: This will be partially offset by a $25.5 million payment from Daewoong to us.
−Removed: Additionally, we expect to expend resources furthering the development and continuation of our marketing programs and commercialization infrastructure in connection with commercializing Jeuveau ® within and outside of the United States.
−Removed: In the long term, our expenditures will include costs associated with the continued commercialization of Jeuveau ® and any of our future product candidates, such as research and development, conducting preclinical studies and clinical trials and manufacturing and supplying as well as marketing and selling any products approved for sale.
−Removed: In addition, other unanticipated costs may arise.
−Removed: Because the commercialization expenditures needed to meet our sales objectives are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully commercialize Jeuveau ® .
−Removed: We expect to incur additional costs as we continue to operate as a public company, hire additional personnel and expand our operations.
−Removed: If we raise additional capital through marketing and distribution arrangements, royalty financing arrangements, or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
−Removed: If we raise additional capital through public or private equity offerings or offerings of securities convertible into our equity, the ownership interest of our existing stockholders will be diluted and the terms of any such securities may have a preference over our common stock.
−Removed: Debt financing, receivables financing and royalty financing may also be coupled with an equity component, such as warrants to purchase our capital stock, which could also result in dilution
−Removed: of our existing stockholders’ ownership, and such dilution may be material.
−Removed: Additionally, if we raise additional capital through debt financing, we will have increased fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures to meet specified financial ratios, and other operational restrictions, any of which could restrict our ability to commercialize Jeuveau ® or any future product candidates or operate as a business and may result in liens being placed on our assets.
−Removed: If we were to default on any of our indebtedness, we could lose such assets.
−Removed: In the event we are unable to raise sufficient capital to fund our commercialization efforts to achieve specified minimum sales targets under the Daewoong Agreement, we will lose exclusivity of the license that we have been granted under the Daewoong Agreement.
−Removed: In addition, if we are unable to raise additional capital when required or on acceptable terms, we will be required to take actions to address our liquidity needs which may include the following:
−Removed: significantly reduce operating expenses and delay, reduce the scope of or discontinue some of our development programs, commercialization efforts or other aspects of our business plan, out-license intellectual property rights to our product candidates and sell unsecured assets, or a combination of the above.
−Removed: As a result, our ability to achieve profitability or to respond to competitive pressures would be significantly limited and may have a material adverse effect on our business, results of operations, financial condition and/or our ability to fund our scheduled obligations on a timely basis or at all.
We currently depend entirely on the successful commercialization of our only product, Jeuveau ® .
−Removed: If we are unable to successfully commercialize Jeuveau ® , we may never generate sufficient revenue to continue our business.
+Added: If we are unable to successfully market and sell Jeuveau ® , we may not generate sufficient revenue to continue our business.
We currently have only one product, Jeuveau ® , and our business presently depends entirely on our ability to successfully commercialize it in a timely manner.
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Our near-term prospects, including our ability to generate revenue, as well as our future growth, depend entirely on the successful commercialization of Jeuveau ® .
−Removed: The commercial success of Jeuveau ® will depend on a number of factors, including our ability to successfully commercialize Jeuveau ® , whether alone or in collaboration with others, including our ability to hire, retain and train sales representatives in the United States.
−Removed: Our ability to commercialize Jeuveau ® is also dependent on the willingness of consumers to pay for Jeuveau ® relative to other discretionary items, especially during economically challenging times.
+Added: The commercial success of Jeuveau ® will depend on a number of factors, including our ability to successfully market and sell Jeuveau ® , whether alone or in collaboration with others, including our ability to hire, retain and train sales representatives in the United States.
+Added: Our ability to market and sell Jeuveau ® is also dependent on the willingness of consumers to pay for Jeuveau ® relative to other discretionary items, especially during economically challenging times.
Additional factors necessary for the successful commercialization of Jeuveau ® include the availability, perceived advantages, relative cost, relative safety of Jeuveau ® and relative efficacy of competing products, the timing of new product introductions by our competitors, and the sales and marketing tactics of our competitors, including bundling of multiple products, in response to our launch of Jeuveau ® .
If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant issues commercializing Jeuveau ® .
−Removed: Further, we may never be able to successfully commercialize Jeuveau ® or any future product candidates.
+Added: Further, we may never be able to successfully market and sell Jeuveau ® or any future product candidates.
In addition, our experience as a commercial company is limited.
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We have a limited operating history and have incurred significant losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
−Removed: We have only one product and limited commercial sales, which, together with our limited operating history, make it difficult to assess our future viability.
+Added: We have only one product and limited commercial sales, which, together with our limited operating history, makes it difficult to assess our future viability.
We are a performance beauty company with a limited operating history.
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We began selling Jeuveau ® in the United States in May 2019 and through a distribution partner in Canada in October 2019 and have a limited history of generating revenue.
−Removed: We are not profitable and have incurred losses in each year since our inception in 2012.
+Added: While we recorded a profit for the three months ended March 31, 2021, largely as a result of a payment received from our partner, Daewoong, we were not profitable and have incurred losses in each year since our inception in 2012.
We have a limited operating history upon which you can evaluate our business and prospects.
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We have recorded net losses of $46.8 million and $163.0 million for the years ended December 31, 2021 and 2020, respectively, and had an accumulated deficit as of December 31, 2021 of $422.9 million.
−Removed: We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will continue as we commercialize Jeuveau ® .
−Removed: Our ability to achieve revenue and profitability is dependent on our ability to successfully market and commercialize Jeuveau ® .
−Removed: Even if we achieve profitability in the future, we may not be able to sustain profitability in
−Removed: subsequent periods.
+Added: We expect to continue to incur losses for the foreseeable future.
+Added: Our ability to achieve revenue and profitability is dependent on our ability to successfully market and sell Jeuveau ® .
+Added: Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
Our prior losses, combined with expected future losses, may adversely affect the market price of our common stock and our ability to raise capital and continue operations.
+Added: We may require additional financing to fund our future operations, and a failure to obtain additional capital when so needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations.
+Added: We have utilized substantial amounts of cash since our inception in order to conduct clinical development to support regulatory approval of Jeuveau ® in the United States, EU and Canada and in connection with the launch of Jeuveau ® in the United States and Canada.
+Added: We expect that we will continue to expend substantial resources for the foreseeable future in order to continue to market and sell Jeuveau ® and for the clinical development of any additional product candidates we may choose to pursue.
+Added: In the near term, we expect to make payments for expenditures associated with our settlement agreements with Medytox and Allergan, including a $15.0 million payment due in the first quarter of 2022 and $5.0 million in 2023, a portion of which will be reimbursed to us by Daewoong.
+Added: Additionally, we expect to expend resources furthering the development and continuation of our marketing programs and commercialization infrastructure in connection with commercializing Jeuveau ® within and outside of the United States.
+Added: In the long term, our expenditures will include costs associated with the continued commercialization of Jeuveau ® and any of our future product candidates, including our proposed higher strength dose of Jeuveau ® , such as research and development, conducting preclinical studies and clinical trials and manufacturing and supplying as well as marketing and selling any products approved for sale.
+Added: We expect to incur additional costs as we continue to operate as a public company, hire additional personnel and expand our operations.
+Added: Because the commercialization expenditures needed to meet our sales objectives are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully market and sell Jeuveau ® .
+Added: We may in the future, also, acquire other companies or products which may be costly and which may require additional capital to operate.
+Added: In addition, other unanticipated costs may arise.
+Added: Accordingly, our actual cash needs may exceed our expectations.
+Added: If we were to raise additional capital through marketing and distribution arrangements, royalty financing arrangements, or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
+Added: If we raise additional capital through public or private equity offerings or offerings of securities convertible into our equity, the ownership interest of our existing stockholders will be diluted and the terms of any such securities may have a preference over our common stock.
+Added: Debt financing, receivables financing and royalty financing may also be coupled with an equity component, such as warrants to purchase our capital stock, which could also result in dilution of our existing stockholders’ ownership, and such dilution may be material.
+Added: Additionally, if we raise additional capital through debt financing, we will have increased fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures to meet specified financial ratios, and other operational restrictions, any of which could restrict our ability to market and sell Jeuveau ® or any future product candidates or operate as a business and may result in liens being placed on our assets.
+Added: If we were to default on any of our indebtedness, we could lose such assets.
+Added: In the event we do not achieve specified minimum sales targets under the Daewoong Agreement, we will lose exclusivity of the license that we have been granted under the Daewoong Agreement.
+Added: In addition, if we are unable to raise additional capital when required or on acceptable terms, we will be required to take actions to address our liquidity needs which may include the following:
+Added: significantly reduce operating expenses and delay, reduce the scope of or discontinue some of our development programs, commercialization efforts or other aspects of our business plan, out-license intellectual property rights to our product candidates and sell unsecured assets, or a combination of the above.
+Added: As a result, our ability to achieve profitability or to respond to competitive pressures would be significantly limited and may have a material adverse effect on our business, results of operations, financial condition and/or our ability to fund our scheduled obligations on a timely basis or at all.
If we or our counterparties do not comply with the terms of our settlement agreements with Medytox, Inc., or Medytox, and Allergan Limited, Allergan, Inc.
−Removed: and Allergan Pharmaceuticals Ireland, or, collectively, Allergan, we may face litigation or lose our ability to commercialize Jeuveau ® which would materially and adversely affect our ability to carry out our business, and our financial condition and ability to continue as a going concern.
−Removed: Effective February 18, 2021, we entered into one Settlement and License Agreement with Allergan and Medytox, which we refer to as the U.S.
−Removed: Settlement Agreement and into another Settlement and License Agreement with Medytox which we refer to as the ROW Settlement Agreement.
+Added: and Allergan Pharmaceuticals Ireland, or, collectively, Allergan, we may face litigation or lose our ability to market and sell Jeuveau ® , which would materially and adversely affect our ability to carry out our business and our financial condition and ability to continue as a going concern.
+Added: Effective February 18, 2021, we entered into a Settlement and License Agreement with Allergan and Medytox, which we refer to as the U.S.
+Added: Settlement Agreement, and into another Settlement and License Agreement with Medytox only, which we refer to as the ROW Settlement Agreement.
Collectively, we refer to the U.S.
Settlement Agreement and the ROW Settlement Agreement as the Medytox/Allergan Settlement Agreements.
−Removed: Under the Medytox/Allergan Settlement Agreements we obtained (i) a license to commercialize, manufacture and to have manufactured for us certain products identified in the Medytox/Allergan Settlement Agreements, including Jeuveau ® (the “Licensed Products’), in the United States and other territories where we license Jeuveau ® , (ii) the dismissal of outstanding litigation against us, including the ITC Action, a rescission of the related remedial orders, and the dismissal of a civil case in the Superior Court of California against us, which we refer to together with any claims (including claims brought in Korean courts) with a common nexus of fact as the Medytox/Allergan Actions, and (iii) releases of claims against us for the Medytox/Allergan Actions.
−Removed: In exchange, we agreed to (i) make payments of $35 million in multiple payments over two years to Allergan and Medytox, (ii) from December 16, 2020 to September 16, 2022, pay to Allergan and Medytox certain royalties on the sale of Jeuveau ® , based on a specified dollar amount per vial sold of Licensed Product by or on behalf of the Company in the United States, (iii) from December 16, 2020 to September 16, 2022, pay to Medytox a low-double digit royalty on net sales of Jeuveau ® sold by us or on our behalf in territories we have licensed outside the United States;
−Removed: (iv) from September 16, 2022 to September 16, 2032, pay to Medytox a mid-single digit royalty percentage on net sales of Jeuveau ® in the United States and all territories we have licensed outside the United States, (v) issue to Medytox 6,762,652 shares of our common stock, par value $0.00001 per share, which we issued on February 18 2021, and (vi) enter into a Registration Rights Agreement pursuant to which we granted certain registration rights to Medytox with respect to such shares of common stock beginning as of March 31, 2022.
+Added: Under the Medytox/Allergan Settlement Agreements we obtained (i) a license to commercialize, manufacture and to have manufactured for us certain products identified in the Medytox/Allergan Settlement Agreements, including Jeuveau ® (the
+Added: “Licensed Products”), in the United States and other territories where we license Jeuveau ® , (ii) the dismissal of outstanding litigation against us, including the ITC Action, a rescission of the related remedial orders, and the dismissal of a civil case in the Superior Court of California against us, which we refer to together with any claims (including claims brought in Korean courts) with a common nexus of fact as the Medytox/Allergan Actions, and (iii) releases of claims against us for the Medytox/Allergan Actions.
+Added: In exchange, we agreed to (i) make payments of $35.0 million in multiple payments over two years to Allergan and Medytox, of which we have paid $30.0 million, (ii) from December 16, 2020 to September 16, 2022, pay to Allergan and Medytox certain royalties on the sale of Jeuveau ® , based on a specified dollar amount per vial sold of the Licensed Products by or on behalf of the us in the United States, (iii) from December 16, 2020 to September 16, 2022, pay to Medytox a low-double digit royalty on net sales of Jeuveau ® sold by us or on our behalf in territories we have licensed outside the United States, (iv) from September 16, 2022 to September 16, 2032, pay to Medytox a mid-single digit royalty percentage on net sales of Jeuveau ® in the United States and all territories we have licensed outside the United States, (v) issue to Medytox 6,762,652 shares of our common stock, which we issued on February 18 2021, and (vi) enter into a Registration Rights Agreement pursuant to which we granted certain registration rights to Medytox with respect to such shares of common stock beginning as of March 31, 2022.
In addition, under the Medytox/Allergan Settlement Agreements we made certain representations and warranties and agreed to positive and negative covenants.
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Any litigation may result in remedies against our products, resulting in either an injunction prohibiting our sales, or with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, any of which would materially and adversely affect our ability to generate revenue from Jeuveau ® , to carry out our business, and to continue as a going concern.
−Removed: Additionally, if Medytox or Allergan fail to comply with the terms of the Medytox/Allergan Settlement Agreements and do not dismiss the claims to be dismissed or grant the licenses or comply with the covenants and agreements under the Medytox/Allergan Settlement Agreements, it would materially and adversely affect our ability to generate revenue from Jeuveau ® , to carry out our business, and to continue as a going concern.
+Added: Additionally, if Medytox or Allergan fail to comply with the terms of the Medytox/Allergan Settlement Agreements and comply with the covenants and agreements under the Medytox/Allergan Settlement Agreements, it could materially and adversely affect our ability to generate revenue from Jeuveau ® , to carry out our business, and to continue as a going concern.
We would also be required to engage in costly and time consuming litigation in order to enforce our rights under the Medytox/Allergan Settlement Agreements.
−Removed: The terms of the Medytox/Allergan Settlement Agreements will reduce our profitability and may affect the extent of any discounts we may offer to our customers.
−Removed: As a result of the royalty payments that we are required to pay under the Medytox/Allergan Settlement Agreements, our profitability will be impacted.
+Added: The terms of the Medytox/Allergan Settlement Agreements will reduce our profitability until the royalty obligations expire, and may affect the extent of any discounts we may offer to our customers.
+Added: As a result of the royalty payments that we are required to pay under the Medytox/Allergan Settlement Agreements, our profitability will be impacted for the period that we are required to pay royalties.
We may be able to offset a portion of the loss of profitability by decreasing any discount to customers on Jeuveau ® as compared to discounts we provided to customers prior to the Medytox/Allergan Settlement Agreements.
If we reduce discounts for any customers, their volume of purchases may decrease which would have a material and adverse effect on our business and results of operations.
−Removed: Our business, financial condition and operations may be materially adversely affected by the COVID-19 outbreak or other similar outbreaks.
−Removed: The COVID-19 outbreak and pandemic of the novel coronavirus that was first detected in Wuhan, China, in December 2019, known as COVID-19, or other similar outbreaks of contagious diseases may have material adverse effects on our business, financial condition, results of operations and cash flows.
+Added: Our business, financial condition and operations have been, and may in the future be, adversely affected by the COVID-19 outbreak or other similar outbreaks.
+Added: The outbreak and pandemic of the novel coronavirus that was first detected in 2019, known as COVID-19, has had, and may continue to have, material adverse effects on our business, financial condition, results of operations and cash flows.
+Added: Other similar outbreaks of contagious diseases in the future could have a similar material adverse effect on our business.
The COVID-19 outbreak, and restrictions intended to slow the spread of COVID-19, including quarantines, government-mandated actions, stay-at-home orders and other restrictions, has adversely affected our business in a number of ways.
−Removed: For example, the spread of COVID-19 in the United States has resulted and continues to result in travel restrictions impacting our sales professionals and closures of our customers’ businesses, which has adversely affected our sales and operations.
−Removed: In response, we have taken and will continue to take temporary precautionary measures intended to help minimize the risk of COVID-19 to our employees, including requiring our employees and sales professionals, to work remotely when required by local jurisdictions, suspending non-essential travel and restricting in-person work-related meetings.
−Removed: We significantly reduced our operating expenses during this uncertain period, including through meaningful headcount reductions and temporary reductions in executive salaries.
−Removed: As a result of the limitations on our sales force and our headcount reductions, we expect to increasingly depend on our proprietary digital platform to support sales.
−Removed: Other negative impacts of the COVID-19 outbreak or other similar outbreaks could include the availability of our key personnel, temporary closures of our office or the facilities of our business partners, customers, third party service providers or other vendors, and the interruption of our supply chain, distribution channels, liquidity and capital or financial markets.
+Added: For example, the spread of COVID-19 in the United States has resulted in travel restrictions impacting our sales professionals and closures of our customers’ businesses, which adversely affected our sales and operations, particularly in 2020 and periods of 2021.
+Added: If similar or other restrictions are imposed in the future in response COVID-19 outbreaks or outbreaks of other contagious disease, our sales and operations may be adversely affected.
+Added: Additionally, surges of COVID-19 outbreaks or other outbreaks of contagious disease, including closures of our customers’ businesses, may impact our ability to enroll patients in our ongoing and future clinical programs.
+Added: Other negative impacts of the COVID-19 outbreak or other similar outbreaks could include the availability of our key personnel, temporary closures of our office or the facilities of our business partners, customers, third party service providers or other vendors, and the interruption of our supply chain, distribution channels, liquidity and capital or financial markets, including increased inflation.
Any of these events may result in a period of business disruption and in reduced sales and operations.
−Removed: In addition, any disruption and volatility in the global capital markets may increase our cost of capital and adversely affect our ability to access financing when and on terms that we desire.
+Added: In addition, any disruption and volatility in the global capital markets may increase our cost of capital and
+Added: adversely affect our ability to access financing when and on terms that we desire.
Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Moreover, Jeuveau ® is utilized in elective procedures, the costs of which are borne by the consumer and not third-party payors.
−Removed: As a result of the COVID-19 outbreak and restrictions to slow its spread, these elective procedures have declined dramatically due to closures of our customers’ businesses and as many customers are deferring their procedures.
−Removed: Even after the current COVID-19 outbreak has subsided, we may continue to experience negative impacts to our business and financial results if consumers continue to defer or avoid altogether elective procedures to administer Jeuveau ® due to the continued perceived risk of infection or concern of a resurgence of the COVID-19 outbreak as well as COVID-19’s global economic impact, including decreases in consumer discretionary spending and any economic slowdown or recession that has occurred or may occur in the future.
+Added: As a result of the COVID-19 outbreak and restrictions to slow its spread, these elective procedures declined dramatically in 2020 due to closures of our customers’ businesses and as many customers are deferring their procedures.
+Added: Even after the current COVID-19 pandemic subsides, we may continue to experience negative impacts to our business and financial results if consumers continue to defer or avoid altogether elective procedures to administer Jeuveau ® due to the continued perceived risk of infection or concern of a resurgence of the COVID-19 outbreak, including new and more contagious and/or vaccine resistant variants, as well as COVID-19’s global economic impact, including decreases in consumer discretionary spending and any economic slowdown or recession that may occur in the future.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
−Removed: As a result of the COVID-19 outbreak, there has been a global economic contraction that may last a long time.
−Removed: Significant increases in unemployment stemming from the pandemic have also occurred which will impact consumer discretionary spending.
−Removed: Furthermore, the market for aesthetic medical procedures may be particularly vulnerable to unfavorable economic conditions.
−Removed: We do not expect Jeuveau ® for the treatment of glabellar lines to be reimbursed by any government or third-party payor and, as a result, our product will be ultimately paid for by the consumer.
−Removed: Demand for Jeuveau ® is tied to discretionary spending levels of our targeted consumer population.
+Added: Significant increases in unemployment stemming from the pandemic have also occurred which may impact consumer discretionary spending.
+Added: Furthermore, the discretionary nature of aesthetic medical procedures may be particularly vulnerable to unfavorable economic conditions.
+Added: Because we do not expect Jeuveau ® for the treatment of glabellar lines to be reimbursed by any government or third-party payor, our only product is and will continue to be paid for directly by the consumer.
+Added: Demand for Jeuveau ® is accordingly tied to the discretionary spending levels of our targeted consumer population.
A severe or prolonged economic downturn could result in a variety of risks to our business, including a decline in the discretionary spending of our target consumer population, which could lead to a weakened demand for Jeuveau ® or any future product candidates.
−Removed: A severe or prolonged economic downturn may also affect our ability to raise additional capital when needed on acceptable terms, if at all.
−Removed: A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our products.
+Added: A severe or prolonged economic downturn may also affect our ability to raise additional capital when needed on acceptable terms, if at all, and could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our products.
+Added: Inflation in the markets we serve could similarly impact our revenues, as consumer spending power could decline.
Any of the foregoing could harm our business.
−Removed: In addition, our business strategy was developed based on a number of important assumptions about the self-pay healthcare market.
+Added: Additionally, our business strategy was developed based on a number of important assumptions about the self-pay healthcare market.
For example, we believe that the number of self-pay healthcare procedures will increase in the future.
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Jeuveau ® faces, and any of our future product candidates will face, significant competition and our failure to effectively compete may prevent us from achieving significant market penetration and expansion.
−Removed: In May 2019, we commercially launched Jeuveau ® into the highly competitive U.S.
−Removed: aesthetic neurotoxin market.
−Removed: In the long term, we expect to expand our focus to the broader self-pay healthcare market.
+Added: Jeuveau ® is approved for use in facial aesthetic medicine.
+Added: The facial aesthetic market is highly competitive and dynamic and is characterized by rapid and substantial technological development and product innovations.
+Added: We have received regulatory approval of Jeuveau ® for the treatment of glabellar lines and launched commercially in the United States and through a distribution partner in Canada.
+Added: We anticipate that Jeuveau ® will face significant competition from other facial aesthetic products, such as other injectable and topical botulinum toxins and dermal fillers.
+Added: Jeuveau ® may also compete with unapproved and off-label treatments.
Many of our potential competitors, including Allergan, and now AbbVie Inc., which acquired Allergan, who first launched BOTOX for cosmetic uses in 2002 and has since maintained the highest market share position in the aesthetic neurotoxin market with its BOTOX product, are large, experienced companies that enjoy significant competitive advantages, such as substantially greater financial resources enabling them to, among other things, market and discount aggressively.
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A number of our larger competitors also have access to a significant amount of studies and publications that they could use to compete with us.
−Removed: Competitors and other parties may also seek to impact regulatory approval of our future product applications through the filing of citizen petitions or other similar documents, which could require costly and time-consuming responses to the regulatory agencies.
+Added: In the long term, we expect to expand our focus to the broader self-pay healthcare market.
+Added: Competitors and other parties may seek to impact regulatory approval of our future product applications through the filing of citizen petitions or other similar documents, which could require costly and time-consuming responses to the regulatory agencies.
Larger competitors could seek to prevent or delay our commercialization efforts via costly litigation which can be lengthy and expensive and serve to distract our management team’s attention.
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For example, Revance Therapeutics, Inc.
−Removed: has submitted a BLA to the FDA for an injectable botulinum toxin type A neurotoxin and received a target action date of November 25, 2020 under the Prescription Drug User Fee Act;
−Removed: however, the FDA has deferred its decision on the BLA and the BLA has not yet been approved.
−Removed: If the BLA is approved, we expect the competition in the U.S.
+Added: has submitted a biologics license application, or BLA, to the FDA for an injectable botulinum toxin type A neurotoxin and in October 2021 received a Complete Response Letter from the FDA.
+Added: Additionally, Hugel Inc., has submitted a BLA to the FDA for an injectable botulinum toxin type A neurotoxin.
+Added: If either BLA is approved, we expect the competition in the U.S.
injectable botulinum toxin market to further increase.
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In the event that regulations applicable to reimbursed products are changed to apply to self-pay healthcare products, we would no longer have this flexibility and we may not be able to compete as effectively with our competitors which may have a material effect on our business, financial condition and results of operations.
−Removed: Additionally, as a result of the royalty payments that we are required to pay under the Medytox/Allergan Settlement Agreements, we may not be able to discount Jeuveau ® to the extent that we previously provided discounts to customers without impacting our gross margins.
+Added: Additionally, as a result of the royalty payments that we are required to pay under the Medytox/Allergan Settlement Agreements, we may not be able to discount Jeuveau ® to the extent that we previously provided discounts to customers without impacting our gross profit margins.
If we increase prices for any customers, their volume of purchases may decrease which would have a material and adverse effect on our business and results of operations.
−Removed: The first use of Jeuveau ® is in aesthetic medicine.
−Removed: The aesthetic product market, and the facial aesthetic market in particular, is highly competitive and dynamic and is characterized by rapid and substantial technological development and product innovations.
−Removed: We have received regulatory approval of Jeuveau ® for the treatment of glabellar lines and launched commercially in the United States and through a distribution partner in Canada.
−Removed: We anticipate that Jeuveau ® will face significant competition from other facial aesthetic products, such as other injectable and topical botulinum toxins and dermal fillers.
−Removed: Jeuveau ® may also compete with unapproved and off-label treatments.
−Removed: In addition, competitors may develop new technologies within the aesthetic market that may be superior in safety and efficacy to Jeuveau ® or offer alternatives to the
−Removed: use of toxins, including surgical and radio frequency techniques.
+Added: In addition, competitors may develop new technologies within the aesthetic market that may be superior in safety and efficacy to Jeuveau ® or offer alternatives to the use of toxins, including surgical and radio frequency techniques.
To compete successfully in the aesthetic market, we will have to demonstrate that Jeuveau ® is at least as safe and effective as current products sold by our competitors.
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Our competitors also may obtain FDA or other regulatory approval for these products more rapidly than we may obtain approval for our products, which could result in our competitors establishing a strong market position before we are able to enter the market, which may create additional barriers to successfully commercializing Jeuveau ® and any future product candidates and attracting physician and consumer demand.
−Removed: Jeuveau ® may fail to achieve the broad degree of physician adoption and use or consumer demand necessary for commercial success.
−Removed: Jeuveau ® may fail to gain sufficient market acceptance by physicians, consumers and others in the medical aesthetics community.
−Removed: The commercial success of Jeuveau ® and any future product candidates will depend significantly on the broad adoption and use of the resulting product by physicians for approved indications, including, in the case of Jeuveau ® , the treatment of glabellar lines and other aesthetic indications that we may seek to pursue.
+Added: Jeuveau ® may fail to achieve the broad degree of physician adoption and use or consumer demand necessary for continued commercial success.
+Added: Jeuveau ® may fail to gain sufficient market acceptance by physicians, consumers and others in the medical aesthetics community to continue to grow our net revenues.
+Added: The continued commercial success of Jeuveau ® and any future product candidates, including a proposed higher strength dose of Jeuveau ® , will depend significantly on the broad adoption and use of the resulting product by physicians for approved indications, including, in the case of Jeuveau ® , the treatment of glabellar lines and other aesthetic indications that we may seek to pursue.
We are aware that other companies are seeking to develop alternative products and treatments, any of which could impact the demand for Jeuveau ® .
The degree and rate of physician adoption of Jeuveau ® and any future product candidates depend on a number of factors, including the cost, profitability to our customers, consumer demand, characteristics and effectiveness of the product.
−Removed: Our success will also depend our ability to create compelling marketing programs, training of our customers and ability to overcome any biases physicians or consumers may have toward the use, safety and efficacy of existing products over Jeuveau ® .
+Added: success will also depend our ability to create compelling marketing programs, training of our customers and ability to overcome any biases physicians or consumers may have toward the use, safety and efficacy of existing products over Jeuveau ® .
Moreover, our competitors may utilize negative selling efforts or offer more compelling marketing or discounting programs than we are able to offer, including by bundling multiple aesthetic products to provide a more comprehensive offering than we can as Jeuveau ® is currently our sole product.
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The decision by a consumer to undergo treatment with Jeuveau ® for the treatment of glabellar lines or other aesthetic indications that we may pursue may be influenced by a number of factors, including the cost, efficacy, safety, perception, marketing programs for, and physician recommendations of Jeuveau ® versus competitive products or procedures.
−Removed: Moreover, consumer demand may flucuate over time as a result of consumer sentiment about the benefits and risks of aesthetic procedures generally and Jeuveau ® in particular, changes in demographics and social trends, and general consumer confidence and consumer discretionary spending, which may be impacted by the COVID-19 outbreak, economic and political conditions.
+Added: Moreover, consumer demand may fluctuate over time as a result of consumer sentiment about the benefits and risks of aesthetic procedures generally and Jeuveau ® in particular, changes in demographics and social trends, and general consumer confidence and consumer discretionary spending, which may be impacted by the COVID-19 outbreak, economic and political conditions.
If Jeuveau ® or any future product candidates fail to achieve the broad degree of physician adoption necessary for commercial success or the requisite consumer demand, our operating results and financial condition will be adversely affected, which may delay, prevent or limit our ability to generate revenue and continue our business.
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We rely on our digital technology and applications and our business and operations would suffer in the event of computer system failures or breach by hackers.
−Removed: As part of the measures we took in April 2020, including reductions in the size of our sales force, we are more reliant on our digital technology, including our Evolus Practice App, which allows customers to open a new account, order Jeuveau ® , pay invoices and engage with our customer experience team and medical affairs representatives.
−Removed: In the event that our digital technology is unable to function in the manner they were designed or at all, we would experience difficulty processing customer orders and requests in a timely manner or at all which would have a material adverse effect on our business, results of operations and financial condition.
+Added: We are reliant on our digital technology, including our Evolus Practice App, which allows customers to open a new account, order Jeuveau ® , pay invoices and engage with our customer experience team and medical affairs representatives.
+Added: In the event that our digital technology is unable to function in the manner it was designed or at all, we would experience difficulty processing customer orders and requests in a timely manner or at all which would have a material adverse effect on our business, results of operations and financial condition.
The systems underlying our digital technology may not be adequately designed or may not operate with the reliability and redundancy necessary to avoid performance delays or outages that could be harmful to our business.
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As the number of users of our digital technology continues to grow we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our needs.
−Removed: It is possible that we may fail to continue to effectively scale and grow our technical infrastructure to accommodate these increased demands, which may adversely affect our customers’ experience with our digital technology which may decrease our revenue and harm our results of operations.
−Removed: Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyberattacks or cyber intrusions over the internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization.
−Removed: The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusions, including by computer hackers, foreign governments and cyberterrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
−Removed: If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our current or future product development programs.
+Added: It is possible that we may fail to continue to effectively scale and grow our technical infrastructure to accommodate
+Added: these increased demands, which may adversely affect our customers’ experience with our digital technology which may decrease our revenue and harm our results of operations.
+Added: Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to disruption or damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyberattacks or cyber intrusions, insider threats, persons who access our systems in an authorized manner, or inadvertent misconfiguration of our systems.
+Added: The risk of a security incident or system disruption, particularly through cyberattacks or cyber intrusions, including by computer hackers, foreign governments and cybercriminals, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
+Added: Interruptions in our operations caused by such an event could result in a material disruption of our current or future product development programs.
The costs to us to mitigate network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, government files or penalties and other harm to our business and our competitive position.
−Removed: If such an event were to occur and cause interruptions in our operations, it could result in a material disruption in our relationship with our customers.
+Added: Interruptions in our operations caused by such an event could also result in a material disruption in our relationship with our customers.
For example, if our Evolus Practice App were rendered inoperable, we would have to process orders by telephone or otherwise which may result in slower processing times and harm to our reputation.
−Removed: Moreover, if a computer security breach affects our systems or results in the unauthorized release of financial information, personally identifiable information, or PII, or other sensitive information our reputation could be materially damaged.
−Removed: In addition, such a breach may require notification to governmental agencies, the media or individuals pursuant to various international, federal and state privacy and security laws, if applicable, including the GDPR, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Clinical Health Act of 2009, and its implementing rules and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach
−Removed: notification laws.
+Added: Moreover, a computer security incident that affects our systems or results in the unauthorized access to financial information, personally identifiable information (PII), customer information or data, including credit card transaction data, or other sensitive information, could materially damage our reputation.
+Added: In addition, such a security incident may require notification to governmental agencies, the media or individuals pursuant to various international, federal and state privacy and security laws, including the General Data Protection Regulation (GDPR);
+Added: the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Clinical Health Act of 2009, and its implementing rules and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach notification laws.
Additionally, the regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve, and a number of states have adopted laws and regulations that may affect our privacy and data security practices regarding the use, disclosure and protection of PII.
For example, the California Consumer Privacy Act, among other things, has created new individual privacy rights and imposes increased obligations on companies handling PII.
−Removed: We would also be exposed to a risk of loss or litigation and potential liability, which could materially adversely affect our business, results of operations and financial condition.
−Removed: Our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.
+Added: In the event of a security incident, we would also be exposed to the risk of litigation and potential liability, which could materially adversely affect our business, results of operations and financial condition.
+Added: Our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related security incidents.
Jeuveau ® or any other product candidate for which we seek approval as a biologic may face competition sooner than anticipated.
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Physicians could use Jeuveau ® on their patients in a manner that is inconsistent with the approved label of the treatment of moderate to severe glabellar lines, potentially including for the treatment of other aesthetic or therapeutic indications.
−Removed: If we are found to have promoted such off-label uses, we may receive warning letters from and be subject to other enforcement actions by the FDA, the EMA and other regulatory agencies, and become subject to significant liability, which would materially harm our business.
+Added: If we are found to have promoted such off-label uses, we may receive warning letters from and be subject to other enforcement actions by the FDA, the European Medicines Agency, or EMA, and other regulatory agencies, and become subject to significant liability, which would materially harm our business.
The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion.
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Product liability claims could divert management’s attention from our core business, be expensive to defend, result in sizable damage awards against us that may not be covered by insurance and subject us to negative publicity resulting in reduced sales of our products.
−Removed: Furthermore, the use of Jeuveau ® or any future product candidates for indications other than those cleared by the FDA may not effectively treat such conditions,
−Removed: which could harm our reputation in the marketplace among physicians and consumers.
+Added: Furthermore, the use of Jeuveau ® or any future product candidates for indications other than those cleared by the FDA may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and consumers.
Any of these events could harm our business and results of operations and cause our stock price to decline.
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As a result of any of these actions our sales of the product may decrease significantly, we may be required to expend material amounts to comply with any requirements of the regulatory authorities, we could be sued in a product liability lawsuit and held liable for harm caused to patients, and our brand and reputation may suffer.
−Removed: We face an inherent risk of product liability as a result of the commercialization of Jeuveau ® and any of our future product candidates.
+Added: We face an inherent risk of product liability as a result of the commercialization of Jeuveau ® and any of our future product
For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
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Although most of our effort is focused on the commercialization of Jeuveau ® , a key element of our long-term strategy is to in-license, acquire, develop, market and commercialize a portfolio of products to serve the self-pay aesthetic market.
−Removed: our internal research and development capabilities are limited, we may be dependent upon pharmaceutical and other companies, academic scientists and other researchers to sell or license products or technology to us.
−Removed: The success of this strategy depends partly upon our ability to identify and select promising pharmaceutical product candidates and products, negotiate licensing or acquisition agreements with their current owners and finance these arrangements.
+Added: Jeuveau ® is currently our sole product.
+Added: Our competitors are currently able to bundle multiple aesthetic products to provide a more comprehensive offering than we can as a single product company.
+Added: Because our internal research and development capabilities are limited, we may be dependent upon pharmaceutical and other companies, academic scientists and other researchers to sell or license products or technology to us.
+Added: The success of this strategy depends partly upon our ability to identify and select promising aesthetic product candidates and products, negotiate licensing or acquisition agreements with their current owners and finance these arrangements.
The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex.
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Further, any product candidates that we acquire may require additional development efforts prior to commercial sale, including preclinical or clinical testing and approval by the FDA, the EMA and other similar regulatory authorities.
−Removed: All product candidates are prone to risks of failure during pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.
+Added: All product candidates are prone to risks of failure during product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.
In addition, any approved products that we acquire may not be manufactured or sold profitably or achieve market acceptance.
−Removed: We may need to increase the size of our organization, including our sales and marketing capabilities in order to further commercialize Jeuveau ® and we may experience difficulties in managing this growth.
+Added: We may need to increase the size of our organization, including our sales and marketing capabilities in order to further market and sell Jeuveau ® and we may experience difficulties in managing this growth.
As of December 31, 2021, we had 167 employees, all of whom constituted full-time employees.
Our management and personnel, systems and facilities currently in place may not be adequate to support future growth.
−Removed: Our need to effectively execute our growth strategy requires that we identify, recruit, retain, incentivize and integrate any additional employees to effectively manage any future clinical trials, manage our internal development efforts effectively while carrying out our contractual obligations to third parties, and continue to improve our operational, financial and management controls, reporting systems and procedures.
+Added: Our need to effectively execute our growth strategy requires that we identify, recruit, retain, incentivize and integrate any additional employees to effectively manage any future clinical trials, manage our internal development efforts effectively while carrying out our
+Added: contractual obligations to third parties, and continue to improve our operational, financial and management controls, reporting systems and procedures.
We face risks in building and managing a sales organization whether internally or by utilizing third parties, including our ability to retain and incentivize qualified individuals, provide adequate training to sales and marketing personnel, generate sufficient sales leads, effectively manage a geographically dispersed sales and marketing team, adequately provide complementary products to be offered by sales personnel, which may otherwise put us at a competitive disadvantage relative to companies with more extensive product lines, and handle any unforeseen costs and expenses.
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Our international operations will expose us to risks, and failure to manage these risks may adversely affect our operating results and financial condition.
−Removed: We currently have operations in the United States and may have international operations in the future.
+Added: We currently have operations in the United States and are planning to have international operations, including launching in Europe in 2022.
International operations are subject to a number of inherent risks, and our future results could be adversely affected by a number of factors, including differences in demand for our products due to local requirements or preferences, the difficulty of hiring and managing employees with cultural and geographic differences and the costs of complying with differing regulatory requirements.
Additionally, we may experience difficulties and increased costs due to differences in laws related to enforcing contracts, protecting intellectual property, taxes, tariffs and export regulations.
−Removed: Our international operations will also subject us to risks related to multiple, conflicting and changing laws and regulations such as privacy regulations, including General Data Protection Regulation, or GDPR, tax laws, export and import restrictions, employment laws, immigration laws, labor laws, regulatory requirements and other governmental approvals, permits and licenses.
−Removed: Additionally, we will face heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in,
−Removed: financial statements.
+Added: Our international operations will also subject us to risks related to multiple, conflicting and changing laws and regulations such as privacy regulations, including the GDPR, tax laws, export and import restrictions, employment laws, immigration laws, labor laws, regulatory requirements and other governmental approvals, permits and licenses.
+Added: Additionally, we will face heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements.
These and other factors could harm our ability to gain future revenue and, consequently, materially impact our business, operating results and financial condition.
−Removed: If we fail to attract and keep senior management and key scientific personnel, we may be unable to commercialize Jeuveau ® successfully, or any future products we develop.
+Added: If we fail to attract and keep senior management and key scientific personnel, we may be unable to market and sell Jeuveau ® successfully, or any future products we develop.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management.
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This eliminates our ability to offer a substantial number of products and indications for Jeuveau ® .
−Removed: For example, on December 18, 2017, we entered into the therapeutic agreement with Alphaeon, or the therapeutic agreement, relating to certain rights to the therapeutic indications of botulinum toxin products under the Daewoong Agreement.
−Removed: Pursuant to the therapeutic agreement, we agreed not to sell, sub-license or otherwise dispose in whole or in part the therapeutic option or the rights underlying the therapeutic option and hold the therapeutic option and the underlying rights in trust for Alphaeon.
−Removed: Our entry into the therapeutic agreement and the entry by Alphaeon into an agreement directly with Daewoong eliminate our ability to expand the permitted uses of botulinum toxin products for therapeutic indications.
+Added: For example, under the Daewoong Agreement our rights to market and sell Jeuveau ® are limited to cosmetic indications.
+Added: Daewoong has subsequently licensed the rights to the therapeutic indications to a third party.
+Added: As a result, we do not have the ability to expand the permitted uses of botulinum toxin products for therapeutic indications.
Jeuveau ® is the only U.S.
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Although we believe that the safety procedures utilized by Daewoong for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, this may not eliminate the risk of accidental contamination or injury from these materials.
−Removed: In such an event, we may be held liable
−Removed: for any resulting damages and such liability could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and interrupt our business operations.
+Added: In such an event, we may be held liable for any resulting damages and such liability could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and interrupt our business operations.
Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent.
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Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.
−Removed: Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to consumers, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.
+Added: Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to consumers, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such
+Added: ownership without regard to the merits of the challenge and industry and market conditions generally.
The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate.
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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
−Removed: We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability.
+Added: We have incurred substantial losses during our history and we may never achieve profitability.
To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire.
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In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
+Added: Planned discontinuation of LIBOR could have an adverse impact on operations.
+Added: As of December 31, 2021, we had $71.2 million of outstanding indebtedness that bears interest at a floating rate using London Interbank Offered Rate ("LIBOR") as the applicable reference rate.
+Added: LIBOR has been the subject of regulatory guidance and proposals for reform.
+Added: In March 2021, the United Kingdom's Financial Conduct Authority, the authority that regulates LIBOR, and ICE Benchmark Administration (“IBA”), the authority that administers LIBOR, announced that the publication of one-week and two-month USD LIBOR maturities and the non-USD LIBOR maturities will cease immediately after December 31, 2021, with the publication of overnight, one-, three-, six-, and 12-month USD LIBOR ceasing immediately after June 30, 2023.
+Added: The United States Federal Reserve also issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021.
+Added: Changes in, or the planned discontinuation of, LIBOR would cause changes in how interest is calculated on our floating rate debt including our term loans.
+Added: Recent proposals for LIBOR reforms may result in the establishment of new methods of calculating LIBOR or the establishment of one or more alternative benchmark rates.
+Added: Our floating rate debt instruments, including our term loans, provide for alternate interest rate calculations if LIBOR is no longer widely available or should the alternative interest rate prove more favorable.
+Added: At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although the U.S.
+Added: Federal Reserve, in connection with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.
+Added: financial institutions, is considering replacing U.S.
+Added: dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”).
+Added: In addition, recent New York state legislation effectively codified the use of SOFR as the alternative to LIBOR in the absence of another chosen replacement rate, which may affect contracts governed by New York state law, including our Credit Agreement.
+Added: SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities.
+Added: SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.
+Added: Given the inherent differences between LIBOR and SOFR or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including, but not limited to, the need to amend our debt instruments with LIBOR as the referenced rate and how this will impact our cost of variable rate debt.
+Added: We will also need to consider any new contracts and if whether they should reference an alternative benchmark rate or include suggested fallback language, as published by the Alternative Reference Rates Committee.
+Added: The consequences of these
+Added: developments with respect to LIBOR cannot be entirely predicted and span multiple future periods but could result in an increase in the cost of our variable rate debt which may be detrimental to our financial position or operating results.
Risks Related to Our Relationship with Daewoong
1 unchanged sentence
Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect our development or commercialization of Jeuveau ® .
−Removed: Pursuant to the Daewoong Agreement, we have secured an exclusive license from Daewoong, a South Korean pharmaceutical manufacturer, to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit Jeuveau ® for aesthetic indications in the United States, EU, Canada, Australia, Russia, C.I.S.
−Removed: and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan.
+Added: Pursuant to the Daewoong Agreement, as it has been amended from time to time, we have secured an exclusive license from Daewoong, a South Korean pharmaceutical manufacturer, to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit Jeuveau ® for aesthetic indications in the United States, EU, United Kingdom, members of the European Economic Area, Switzerland, Canada, Australia, Russia, certain members of the Commonwealth of Independent States, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan.
The Daewoong Agreement imposes on us obligations relating to exclusivity, territorial rights, development, commercialization, funding, payment, diligence, sublicensing, intellectual property protection and other matters.
−Removed: We are obligated to conduct development activities, obtain regulatory approval of Jeuveau ® , obtain from Daewoong all of our product supply requirements for Jeuveau ® and pay to Daewoong regulatory milestone payments and other cash payments in connection with the net sales of Jeuveau ® .
+Added: We are obligated to conduct development activities, obtain regulatory approval of Jeuveau ® and obtain from Daewoong all of our product supply requirements for Jeuveau ® .
In addition, under the Daewoong Agreement, we are required to submit our commercialization plan to a joint steering committee, or JSC, comprised of an equal number of development and commercial representatives from Daewoong and us, for review and input.
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In addition, if any of the regulatory milestones or other cash payments become due under the terms of the Daewoong Agreement, we may not have sufficient funds available to meet our obligations, which would allow Daewoong to terminate the Daewoong Agreement.
−Removed: Any termination or loss of rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect our ability to commercialize Jeuveau ® , which in turn would have a material adverse effect on our business, operating results and prospects.
+Added: Any termination or loss of rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect our ability to market and sell Jeuveau ® , which in turn would have a material adverse effect on our business, operating results and prospects.
If we were to lose our rights under the Daewoong Agreement, we believe it would be difficult for us to find an alternative supplier of a botulinum toxin type A complex.
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Although alternative sources of supply may exist, the number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and it could be expensive and take a significant amount of time to arrange for and qualify alternative suppliers, which could have a material adverse effect on our business.
−Removed: Suppliers of any new product candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate.
+Added: Suppliers of any new product candidate would be required to qualify under
+Added: applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate.
Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us.
In addition, our reliance on Daewoong entails additional risks, including reliance on Daewoong for regulatory compliance and quality assurance, the possible breach of the Daewoong Agreement by Daewoong, and the possible termination or nonrenewal of the Daewoong Agreement at a time that is costly or inconvenient for us.
−Removed: Our failure, or the failure of Daewoong, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions,
−Removed: civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of Jeuveau ® .
+Added: Our failure, or the failure of Daewoong, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of Jeuveau ® .
Our dependence on Daewoong also subjects us to all of the risks related to Daewoong’s business, which are all generally beyond our control.
Daewoong’s ability to perform its obligations under the Daewoong Agreement is dependent on Daewoong’s operational and financial health, which could be negatively impacted by several factors, including changes in the economic, political and legislative conditions in South Korea and the broader region in general and the ability of Daewoong to continue to successfully attract customers and compete in its market.
−Removed: Furthermore, Daewoong’s recently constructed manufacturing facility is Daewoong’s only facility meeting FDA and European Medicines Agency, or EMA, cGMP requirements.
+Added: Furthermore, Daewoong’s recently constructed manufacturing facility is Daewoong’s only facility meeting FDA and EMA, current Good Manufacturing Requirements, or cGMPs.
Daewoong’s lack of familiarity with, or inability to effectively operate, the facility and produce products of consistent quality, may harm our ability to compete in our market.
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This may give rise to difficulties in importing our product into the United States or other countries as a result of, among other things, regulatory agency approval requirements, taxes, tariffs, local import requirements such as import duties or inspections, incomplete or inaccurate import documentation or defective packaging.
−Removed: Any of these factors could adversely impact our ability to effectively commercialize Jeuveau ® .
+Added: Any of these factors could adversely impact our ability to effectively market and sell Jeuveau ® .
Any failure or refusal by Daewoong or any other third party to supply Jeuveau ® or any other product candidates or products that we may develop could delay, prevent or impair our clinical development or commercialization efforts.
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In addition, our product will have fixed future expiration dates.
−Removed: If we overestimate requirements for Jeuveau ® , we will have excess inventory, which may have to be disposed of if such inventory exceeds approved expiration dates, which would result in lost revenues and increase our expenses.
+Added: If we overestimate requirements for Jeuveau ® , we will have excess inventory, which may have to be disposed of if such inventory exceeds approved expiration dates, which would result in lost revenues
+Added: and increase our expenses.
If we underestimate requirements for Jeuveau ® , we may have inadequate inventory, which could interrupt, delay or prevent delivery of our products to our customers.
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Our commercial success depends in part on our avoiding infringement of the proprietary rights of third parties.
−Removed: Competitors in the field of dermatology, aesthetic medicine and neurotoxins have developed large portfolios of patents and patent
−Removed: applications in fields relating to our business.
−Removed: In particular, there are patents held by third parties that relate to the treatment with neurotoxin-based products for the indication we are currently developing.
+Added: Competitors in the field of dermatology, aesthetic medicine and neurotoxins have developed large portfolios of patents and patent applications in fields relating to our business.
+Added: In particular, there are patents held by third parties that relate to the treatment with neurotoxin-based products for the indication we are currently marketing.
There may also be patent applications that have been filed but not published that, when issued as patents, could be asserted against us.
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Defense of such a claim would require dedicated time and resources, which time and resources could otherwise be used by us toward the maintenance of our own intellectual property and the development and commercialization of Jeuveau ® and any of our future product candidates or by any of our current or future licensors for operational upkeep and manufacturing of our products.
−Removed: For example, prior to entering into the Medytox/Allergan Settlement Agreements, we were a defendant in a lawsuit brought by in the Superior Court of the State of California, or the Medytox Litigation, and a respondent in an action filed by Allergan and Medytox in the U.S.
+Added: For example, prior to entering into the Medytox/Allergan Settlement Agreements, we were a defendant in a lawsuit brought by Medytox in the Superior Court of the State of California, or the Medytox Litigation, and a respondent in an action filed by Allergan and Medytox in the U.S.
International Trade Commission, each alleging, among other things, that Daewoong stole Medytox’s botulinum toxin bacterial strain, or the BTX strain, that Daewoong misappropriated certain trade secrets of Medytox, including the process used to manufacture Jeuveau ® (which Medytox claims is similar to its biopharmaceutical drug, Meditoxin) using the BTX strain, and that Daewoong thereby interfered with Medytox’s plan to license Meditoxin to us, or the Medytox Litigation.
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In the event of a successful claim of infringement, we or any of our current or future licensors may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties which may not be commercially or more available, pay royalties or redesign our infringing products or manufacturing processes, which may be impossible or require substantial time and monetary expenditure.
−Removed: Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research, manufacture clinical trial supplies or allow commercialization of Jeuveau ® or any future product candidates.
+Added: Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research, manufacture clinical trial supplies or allow commercialization of Jeuveau ® or any future product
We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all.
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Interference, derivation or other proceedings brought at the USPTO may be necessary to determine the priority or patentability of inventions with respect to any of our future patent applications or those of our licensors or collaborators.
−Removed: Litigation or USPTO proceedings brought by us or any of our current or future licensors may fail or may be invoked against us or our licensors by third parties.
+Added: Litigation or USPTO proceedings brought by us or any of our current or future licensors may fail
+Added: or may be invoked against us or our licensors by third parties.
Even if we are successful, domestic or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management or the management of any of our current or future licensors, including Daewoong.
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Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
−Removed: Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.
+Added: Enforcing a claim that a party illegally disclosed or
+Added: misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.
In addition, some courts within and outside the United States are less willing or unwilling to protect trade secrets.
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Daewoong is also subject to extensive regulation by the FDA and the South Korean regulatory authorities as well as other regulatory authorities.
−Removed: Our failure to comply with all applicable regulatory requirements, or Daewoong’s failure to comply with applicable regulatory requirements, including those promulgated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and the Controlled Substances Act, may subject us to operating restrictions and criminal prosecution, monetary penalties and other enforcement or administrative actions, including, sanctions, warnings, product seizures, recalls, fines, injunctions, suspension, revocation of approvals, or exclusion from future participation in the Medicare and Medicaid programs.
+Added: failure to comply with all applicable regulatory requirements, or Daewoong’s failure to comply with applicable regulatory requirements, including those promulgated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and the Controlled Substances Act, may subject us to operating restrictions and criminal prosecution, monetary penalties and other enforcement or administrative actions, including, sanctions, warnings, product seizures, recalls, fines, injunctions, suspension, revocation of approvals, or exclusion from future participation in the Medicare and Medicaid programs.
Following regulatory approval, we, and our direct and indirect suppliers, including Daewoong, remain subject to the periodic inspection of our plants and facilities, review of production processes, and testing of our products to confirm that we are in compliance with all applicable regulations.
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Administering product candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials and result in the FDA, the EMA or other similar regulatory authorities delaying or denying approval of a product candidate for any or all targeted indications.
−Removed: Regulatory approval of a BLA or BLA supplement, MAA, or other product approval is not guaranteed, and the approval process is expensive and may take several years.
+Added: Regulatory approval of a BLA or BLA supplement, marketing authorization application, or MAA, or other product approval is not guaranteed, and the approval process is expensive and may take several years.
The FDA, the EMA and other regulatory authorities have substantial discretion in the approval process.
Despite the time and expense expended, failure can occur at any stage, and we could encounter problems that cause us to abandon, modify or repeat clinical trials, or perform additional preclinical studies and clinical trials.
−Removed: The number of preclinical studies and clinical trials that will be required for the FDA, the EMA or other regulatory approval varies depending on the product candidate, the disease or condition that the product candidate is designed
−Removed: to address and the regulations applicable to any particular product candidate.
+Added: The number of preclinical studies and clinical trials that will be required for the FDA, the EMA or other regulatory approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address and the regulations applicable to any particular product candidate.
The FDA, the EMA and other regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including the following:
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In addition, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for Jeuveau ® and any other future product candidates will be subject to extensive and ongoing regulatory requirements.
−Removed: These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP requirements and compliance with GCP requirements, for any clinical trials that we conduct post-approval.
+Added: These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP requirements and compliance with good clinical practice, or GCP, requirements, for any clinical trials that we conduct post-approval.
Later discovery of previously unknown problems with Jeuveau ® or any future product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:
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If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.
−Removed: If we fail to obtain regulatory approvals in foreign jurisdictions for Jeuveau ® or any future product candidates, we will be unable to market our products outside of the United States.
+Added: If we fail to obtain regulatory approvals in foreign jurisdictions for Jeuveau ® or any future product candidates, we will be
+Added: unable to market our products outside of the United States.
In addition to regulations in the United States, we are and will be subject to a variety of foreign regulations governing manufacturing, clinical trials, commercial sales and distribution of our future products.
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Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
−Removed: Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more
−Removed: foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA.
+Added: Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA.
The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval.
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If our marketing or other arrangements were determined to violate anti-kickback or related laws, including the FCA or an all-payor law, then we could be subject to penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from participation in federal and state healthcare programs, individual imprisonment or the curtailment or restructuring of our operations, any of which could materially and adversely affect our ability to operate our business and our financial results.
−Removed: State and federal authorities have aggressively targeted pharmaceutical companies for alleged violations of these anti-fraud statutes, based on improper research or consulting contracts with doctors, certain marketing arrangements with pharmacies and other healthcare providers that rely on volume-based pricing, off-label marketing schemes, and other improper promotional practices.
+Added: State and federal authorities have aggressively targeted pharmaceutical companies for alleged violations of these anti-fraud statutes, based on improper research or consulting contracts with doctors, certain marketing arrangements with pharmacies and other healthcare providers that rely on volume-based pricing, off-label marketing schemes, and other improper
+Added: promotional practices.
Companies targeted in such prosecutions have paid substantial fines, have been ordered to implement extensive corrective action plans, and have in many cases become subject to consent decrees severely restricting the manner in which they conduct their business, among other consequences.
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officials for the purpose of obtaining or retaining business.
−Removed: Our internal control policies and
−Removed: procedures may not protect us from reckless or negligent acts committed by our employees, future distributors, partners, collaborators or agents.
+Added: Our internal control policies and procedures may not protect us from reckless or negligent acts committed by our employees, future distributors, partners, collaborators or agents.
Violations of these laws, or allegations of such violations, could result in fines, penalties or prosecution and have a negative impact on our business, results of operations and reputation.
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Risks Related to Our Relationship with Alphaeon and Alphaeon 1, LLC
−Removed: Alphaeon 1, LLC may exert significant influence over our business, and the concentrated ownership of our common stock and certain contractual rights of Alphaeon 1, LLC may prevent you and other stockholders from influencing significant decisions .
−Removed: As of December 31, 2020 and March 25, 2021, Alphaeon 1, LLC owned 25.7% and 19.8% of our outstanding shares of common stock, respectively.
−Removed: This concentrated ownership position may provide Alphaeon 1, LLC with significant influence in determining the outcome of corporate actions requiring stockholder approval, including the election and removal of directors.
−Removed: This significant stock ownership may also discourage transactions involving a change-of-control of our company, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares.
−Removed: Certain of our directors may have actual or potential conflicts of interest because of their ownership of debt and equity securities in Alphaeon and Alphaeon 1, LLC and their positions with Alphaeon and Alphaeon 1, LLC.
+Added: Certain of our directors may have actual or potential conflicts of interest because of their ownership of debt and equity securities in AEON Biopharma, Inc., or AEON, and Alphaeon 1, LLC and their positions with AEON and Alphaeon 1, LLC.
+Added: Prior to our initial public offering in 2018, we were wholly owned by AEON (previously known as ALPHAEON Corp.).
+Added: In January 2020, AEON transferred all of their stock ownership in us to Alphaeon 1, LLC.
+Added: As of December 31, 2021, Alphaeon 1, LLC owned 10.9% of our outstanding shares of common stock.
Vikram Malik, Simone Blank, and Robert Hayman serve on our board of directors.
−Removed: Such directors or entities they are affiliated with currently own and may in the future own equity, debt or convertible debt of Alphaeon and Alphaeon 1, LLC, which we refer to collectively as the Alphaeon entities.
+Added: Such directors or entities they are affiliated with currently own and may in the future own equity, debt or convertible debt of AEON and Alphaeon 1, LLC, which we refer to collectively as the Alphaeon entities.
These individuals’ or entities’ holdings of debt or equity securities, options to purchase shares of Alphaeon entities or other equity awards in the Alphaeon entities may be significant for some of these persons or entities compared to these persons’ or entities’ total assets.
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our dividend policy;
−Removed: management stock ownership;
−Removed: and the related party services and agreements between Alphaeon and us.
−Removed: Potential conflicts of interest could also arise if we decide to enter into any new commercial arrangements with the Alphaeon entities or SCH in the future or in connection with the Alphaeon entities’ desire to enter into new commercial arrangements with third parties.
+Added: and management stock ownership.
Furthermore, disputes may arise between Alphaeon entities and us relating to our past and ongoing relationship, and these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to:
• indemnification and other matters arising from our initial public offering;
−Removed: • the nature, quality and pricing of services Alphaeon agrees to provide to us;
• sales or other disposal by Alphaeon 1, LLC of all or a portion of its ownership interest in us;
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While we are not controlled by the Alphaeon entities, we may not have the leverage to negotiate amendments to these agreements, if required, on terms as favorable to us as those we would negotiate with an unaffiliated third party.
−Removed: Alphaeon and its directors and officers will have limited liability to us or you for breach of fiduciary duty.
−Removed: Our certificate of incorporation provides that, subject to any contractual provision to the contrary, Alphaeon has no obligation to refrain from:
+Added: AEON and its directors and officers will have limited liability to us or you for breach of fiduciary duty.
+Added: Our certificate of incorporation provides that, subject to any contractual provision to the contrary, AEON has no obligation to refrain from:
engaging in the same or similar business activities or lines of business as we do;
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or employing or otherwise engaging any of our officers or employees.
−Removed: Our certificate of incorporation provides for the allocation of certain corporate opportunities between us and Alphaeon.
−Removed: Under these provisions, neither Alphaeon nor its other affiliates, nor any of their officers, directors, agents, stockholders, members, partners and subsidiaries, will have any obligation to present to us certain corporate opportunities.
−Removed: For example, a director or officer of our company who also serves as a director, officer or employee of Alphaeon or any of its other affiliates may present to Alphaeon certain acquisitions, in-licenses, potential development programs or other opportunities that may be complementary to our business, if he or she was not offered such corporate opportunity in his or her capacity as our director or officer, and, as a result, such opportunities may not be available to us.
−Removed: To the extent attractive corporate opportunities are allocated to Alphaeon or its other affiliates instead of to us, we may not be able to benefit from these opportunities.
−Removed: In addition, under our certificate of incorporation, neither Alphaeon nor any officer or director of Alphaeon, except as provided in our certificate of incorporation, will be liable to us or to our stockholders for breach of any fiduciary or other duty by reason of any of these activities.
+Added: Our certificate of incorporation provides for the allocation of certain corporate opportunities between us and AEON.
+Added: Under these provisions, neither AEON nor its other affiliates, nor any of their officers, directors, agents, stockholders, members, partners and subsidiaries, will have any obligation to present to us certain corporate opportunities.
+Added: For example, a director or officer of our company who also serves as a director, officer or employee of AEON or any of its other affiliates may present to AEON certain acquisitions, in-licenses, potential development programs or other opportunities that may be complementary to our business, if he or she was not offered such corporate opportunity in his or her capacity as our director or officer, and, as a result, such opportunities may not be available to us.
+Added: To the extent attractive corporate opportunities are allocated to AEON or its other affiliates instead of to us, we may not be able to benefit from these opportunities.
+Added: In addition, under our certificate of incorporation, neither AEON nor any officer or director of AEON, except as provided in our certificate of incorporation, will be liable to us or to our stockholders for breach of any fiduciary or other duty by reason of any of these activities.
+Added: As of December 31, 2021, AEON no longer held any shares of our stock.
Risks Related to Our Common Stock
+Added: Medytox, Alphaeon 1, LLC and Daewoong each own a significant portion of our common stock and may exert significant control over our business .
+Added: We had 55,576,988 shares of common stock issued and outstanding as of December 31, 2021.
+Added: As of December 31, 2021, Medytox owned 13.4% of our outstanding shares of common stock, Alphaeon 1, LLC owned 10.9% of our outstanding shares of common stock, and Daewoong owned 5.6% of our outstanding shares of common stock.
+Added: This concentrated ownership position may provide any one of Medytox, Alphaeon 1, LLC or Daewoong with influence in determining the outcome of corporate actions requiring stockholder approval, including the election and removal of directors.
+Added: The significant stock ownership by Medytox, Alphaeon 1, LLC and Daewoong may also discourage transactions involving a change-of-control of our company, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares.
Securities class action and derivative lawsuits have been filed against us and certain of our officers and directors, which could result in substantial costs and could divert management attention.
−Removed: As disclosed in Part II, Item 3 “Legal Proceedings,” we and certain of our officers have been named as defendants in a recently initiated securities class action lawsuit and we are a nominal defendant in derivative lawsuits filed against certain of our officers and directors.
−Removed: We intend to engage in a vigorous defense of such litigation.
−Removed: If we are not successful in our defense of such litigation, we could be forced to make significant payments to or other settlements with our stockholders and their lawyers, and such payments or settlement arrangements could have a material adverse effect on our business, operating results or financial condition.
−Removed: We may be also be the target of this type of litigation in the future, as companies that have experienced volatility in the market price of their stock have been subject to securities act litigation.
+Added: As disclosed in Part I, Item 3 “Legal Proceedings,” we and certain of our officers have been named as defendants in a securities class action lawsuit and we are a nominal defendant in derivative lawsuits filed against certain of our officers and directors.
+Added: We maintain director and officer’s insurance coverage and continue to engage in vigorous defense of such litigation.
+Added: If we are not successful in our defense of such litigation, we could be forced to make significant payments to or other settlements with our stockholders and their lawyers outside of our insurance coverage, and such payments or settlement arrangements could have a material adverse effect on our business, operating results or financial condition.
+Added: We may also be the target of this type of litigation in the future, as companies that have experienced volatility in the market price of their stock have been subject to securities act litigation.
Even if the claims asserted in these lawsuits are not successful, the litigation could result in substantial costs and significant adverse impact on our reputation and divert management’s attention and resources, which could have a material adverse effect on our business, operating results or financial condition.
−Removed: The trading price of our common stock may be volatile, and purchasers of our common stock could incur substantial losses.
+Added: The trading price of our common stock has been volatile, and purchasers of our common stock could incur substantial losses.
Our stock price is volatile.
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The stock market in general and the market for earlier-stage pharmaceutical and medical aesthetic companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
−Removed: The market price for our common stock may be influenced by many factors,
−Removed: some of which are beyond our control, including:
+Added: The market price for our common stock may be influenced by many factors, some of which are beyond our control, including:
+Added: • introductions and announcements of new technologies and products by us, any commercialization partners or our competitors, and the timing of these introductions and announcements;
+Added: • variations in our financial results or those of companies that are perceived to be similar to us;
+Added: • success or failure of competitive products or medical aesthetic products generally;
• announcements of results of clinical trials or regulatory approval or disapproval of product candidates;
+Added: • changes in the structure of healthcare payment systems;
+Added: • announcements by us or our competitors of significant acquisitions, licenses, strategic partnerships, new product approvals and introductions, joint ventures or capital commitments;
+Added: • overall financial market conditions for the pharmaceutical and biopharmaceutical sectors and issuance of securities analysts’ reports or recommendations;
• unanticipated safety concerns related to the use of Jeuveau ® or any of our future products;
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• adverse developments concerning our manufacturer or any future strategic partnerships;
+Added: • adverse developments affecting our compliance with the Medytox/Allergan Settlement Agreements or Daewoong’s ability to satisfy its reimbursement obligations to us with respect to the royalties payable to Medytox and Allergan;
• adverse developments concerning litigation pending against us;
−Removed: • introductions and announcements of new technologies and products by us, any commercialization partners or our competitors, and the timing of these introductions and announcements;
−Removed: • variations in our financial results or those of companies that are perceived to be similar to us;
−Removed: • success or failure of competitive products or medical aesthetic products generally;
−Removed: • changes in the structure of healthcare payment systems;
−Removed: • announcements by us or our competitors of significant acquisitions, licenses, strategic partnerships, new product approvals and introductions, joint ventures or capital commitments;
−Removed: • overall financial market conditions for the pharmaceutical and biopharmaceutical sectors and issuance of securities analysts’ reports or recommendations;
• changes in financial estimates or guidance, including our ability to meet our future revenue and operating profit or loss estimates or guidance;
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• short selling of our common stock or the publication of opinions regarding our business prospects in a manner that is designed to create negative market momentum;
−Removed: • sales of substantial amounts of our stock by Alphaeon or other significant stockholders or our insiders, or the expectation that such sales might occur;
+Added: • sales of substantial amounts of our stock by Medytox, Alphaeon 1 LLC, Daewoong or other significant stockholders or our insiders, or the expectation that such sales might occur;
• news reports relating to trends, concerns and other issues in medical aesthetics market or the pharmaceutical or biopharmaceutical industry;
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• intellectual property, product liability or other litigation against us, our manufacturer or other parties on which we rely or litigation against our general industry;
−Removed: • announcements or actions taken by Alphaeon as our controlling stockholder, including sales of substantial amounts of our common stock by Alphaeon;
• changes in our capital structure, such as future issuances of securities and the incurrence of additional debt;
• changes in accounting standards, policies, guidelines, interpretations or principles;
+Added: • economic conditions in the markets in which we operate, including those related to COVID-19;
• other factors described in this “Risk Factors” section.
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Securities litigation, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business.
−Removed: Future sales of our common stock by us, Alphaeon 1, LLC, Medytox, Daewoong or others, or the perception that such sales may occur, could depress the market price of our common stock.
−Removed: We have 43,733,316 shares of common stock issued and outstanding as of March 25, 2021.
+Added: Future sales of our common stock by us, Medytox, Alphaeon 1, LLC, Daewoong or others, or the perception that such sales may occur, could depress the market price of our common stock.
Sales by us of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could significantly reduce the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
−Removed: As of December 31, 2020 and March 25, 2021, Alphaeon 1, LLC owned 25.7% and 19.8% of our outstanding shares of common stock, respectively.
−Removed: As of March 25, 2021, Medytox owned 15.5% of our outstanding shares of common stock, respectively.
−Removed: Medytox’s shares of common stock are subject to a lock up that expires as to 25% of the shares on each of February, 16, 2022, September 16, 2023, September 16, 2024 and September 16, 2025.
−Removed: Subject to the restrictions described in the paragraph below, future sales of these shares in the public market will be subject to the volume and other restrictions of Rule 144 under the Securities Act for so long as Alphaeon 1, LLC and Medytox are deemed to be our affiliate, unless the shares to be sold are registered with the SEC.
−Removed: The sale by Alphaeon 1, LLC or Medytox of a substantial number of shares of our common stock, or a perception that such sales could occur, could significantly reduce the market price of our common stock.
+Added: Additionally, as discussed above, each of Medytox, Alphaeon 1, LLC and Daewoong owns a significant portion of our outstanding shares of common stock.
+Added: Subject to the restrictions described in the paragraph below, future sales of these shares in the public market will be subject to certain contractual limitations in the case of shares of our common stock owned by Medytox and the volume and other restrictions of Rule 144 under the Securities Act for so long as Medytox or Alphaeon 1, LLC are deemed to be our affiliate, unless the shares to be sold are registered with the SEC.
+Added: Additionally, the shares of common stock held by Medytox are subject to contractual restrictions on transfer that, subject to certain limited exceptions such as transfers to affiliates prohibit Medytox from transferring more than 25% of the shares it holds prior to September 16, 2023, more than 50% of the shares it holds prior to September 16, 2024 and more than 75% of the shares it holds prior to September 16, 2025, with such contractual restrictions terminating on September 16, 2025.
+Added: The sale by Medytox, Alphaeon 1, LLC or Daewoong of a substantial number of shares of our common stock, or a perception that such sales could occur, could significantly reduce the market price of our common stock.
+Added: For example, in September 2021, Alphaeon 1, LLC sold 2,597,475 shares of our common stock.
We have filed a registration statement with the SEC covering shares of our common stock available for future issuance under our 2017 Omnibus Incentive Plan and may file future registration statements covering shares of our common stock for future issuance under any future plans.
−Removed: Upon effectiveness of such registration statements, any shares subsequently issued under such plans will be eligible for sale in the public market, except to the extent that they are restricted by the lock-up agreements referred to above and subject to compliance with Rule 144 in the case of our affiliates.
+Added: Upon effectiveness of such registration statements, any shares subsequently issued under such plans will be eligible for sale in the public market, except to the extent that they are restricted by the contractual arrangements discussed above and subject to compliance with Rule 144 in the case of our affiliates.
Sales of a large number of the shares issued under these plans in the public market, or a perception that such sales could occur, could significantly reduce the market price of our common stock.
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The choice of forum provision in our certificate of incorporation will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
−Removed: This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders.
+Added: This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our
+Added: directors, officers, employees and agents even though an action, if successful, might benefit our stockholders.
Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware.
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Alternatively, if a court were to find this provision of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.
−Removed: Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party
−Removed: claims against us and may reduce the amount of money available to us.
+Added: Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Our certificate of incorporation and bylaws provide that we can indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.
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To the extent we take advantage of any of these exemptions, the information that we provide stockholders may be different than what is available with respect to other public companies.
−Removed: Investors may find our common stock less attractive because we will rely on these exemptions.
+Added: Investors may find our common stock less attractive because
+Added: we will rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
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If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our trading price may be more volatile.
−Removed: General Risk Factors
Our business could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities.
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The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.
−Removed: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: The Sarbanes-
+Added: Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required.
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We may need to hire more employees in the future or engage outside consultants to assist us in complying with these requirements, which will increase our costs and expenses.
−Removed: In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time
+Added: In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
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Unresolved Staff Comments.
−Removed: Not applicable.
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.