What changed in this filing

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Item 1A. Risk Factors

2025-03-18 compared with 2024-03-14 · 43 added, 24 removed, 750 unchanged (8% of the section changed)

27 unchanged sentences

We face a potential risk of product liability as a result of the commercialization of our approved products and clinical testing of our new product candidates and will face an even greater risk if we commercialize our current product candidates or any other future product.

For example, we may be sued if our approved products or any product we develop, including any of our product candidates, or any materials that we use in our products allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

For example, we may be sued if our approved products or any product we develop, including any of our product candidates, or any materials that we use in our products allegedly cause injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties.

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If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates.

Even successful defense would require significant financial and management resources.

Even a successful defense would require significant financial and management resources.

Regardless of the merits or eventual outcome, liability claims may result in:

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however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems.

Use of artificial intelligence-based software by us or third parties with which we contract, may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property.

Artificial intelligence-based software is increasingly being used in the biopharmaceutical and healthcare industries.

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If the analyses that artificial intelligence-based applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability and brand or reputational harm.

Furthermore, use of artificial intelligence-based software may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property.

Furthermore, use of artificial intelligence-based software by us or third parties with which we contract, may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property and could negatively impact our competitive position, financial condition, results of operations and prospects.

Sales of counterfeits of any of our product candidates, as well as unauthorized sales of any of our product candidates, may have adverse effects on our revenues, business and results of operations and damage our brand and reputation .

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We note that most product candidates never reach the clinical development stage and even those that do commence clinical development have only a small chance of successfully completing clinical development and gaining regulatory approval.

Therefore, our business substantially depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.

Therefore, our business depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.

We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively .

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Our business model is to focus on product candidates that we consider to have a shorter timeline to, and lower cost of, regulatory approval.

These attributes can also be taken advantage of by our competitors to develop and obtain marketing approval of a competing product.

These attributes can also be taken advantage of by our competitors to develop and obtain marketing approval for a competing product.

In addition, following FDA approval of our product candidates for which we have no patent protection, our competitors may seek to develop a competing product pursuant to the 505(j) pathway, which is an abbreviated pathway used for the regulatory approval of generic product candidates.

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For example, we had under development a patented injectable pentoxifylline therapeutic candidate, which we believed would satisfy the requirements of the 505(b)(2) regulatory pathway.

However, based on a pre-IND meeting with the FDA in March 2018 to discuss the clinical and regulatory pathway for the product, we have decided to suspend all further development activities for this candidate indefinitely due to extraordinarily high costs of the clinical trials that would be required by the FDA.

However, based on a pre-IND meeting with the FDA in March 2018 to discuss the clinical and regulatory pathway for the product, we decided to suspend all further development activities for this candidate indefinitely due to extraordinarily high costs of the clinical trials that would be required by the FDA.

Notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years some pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2) to allow reliance on the FDA’s prior findings of safety and effectiveness.

If the FDA changes its interpretation of Section 505(b)(2), or if the FDA’s interpretation is successfully challenged in court, this could delay or even prevent the FDA from approving any Section 505(b)(2) application that we submit.

In addition, we expect that our competitors will file citizens’ petitions with the FDA in an attempt to persuade the FDA that our product candidate, or the clinical studies that support their approval, contain deficiencies.

In addition, we expect that our competitors will file citizens’ petitions with the FDA in an attempt to persuade the FDA that our product candidates, or the clinical studies that support their approval, contain deficiencies.

Such actions by our competitors could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).

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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, our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Changes in U.S.

trade policy, threats of international tariffs, and changes to the U.S.

political landscape may adversely affect our business, results of operations, financial condition, and prospects.

Rising threats of international tariffs, including tariffs applied to goods traded between the U.S.

and Canada, Mexico, Europe and other international markets, could materially and adversely affect our business, results of operations, financial condition, and prospects.

Over the past several years, legislative and executive action from U.S.

and foreign leaders has led to both threats of and the imposition of tariffs on certain materials and products, including pharmaceutical products.

Changes in U.S.

relations with these international trading partners, including the current trade tensions, are difficult to predict and could adversely affect our operations or financial condition.

We cannot predict the extent to which the U.S.

or other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.

The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S.

economy, which in turn could have a material adverse effect on our business, results of operations, financial condition, and prospects.

If we market our existing approved products or any of our new product candidates in a manner that violates health care fraud and abuse laws, or if we violate government price reporting laws, we may be subject to civil or criminal penalties .

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It is also possible that additional studies we conduct may not be considered sufficient by the FDA or applicable foreign regulatory agencies to provide regulatory approval.

If any of these outcomes occur, we may not receive approval for our product candidate.

If any of these outcomes occur, we may not receive approval for our product candidates, which could negatively impact our business, financial condition, or results of operations.

We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.

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In particular, the Virginia Consumer Data Protection Act (“VCDPA”) became effective on January 1, 2023;

the Colorado Privacy Act (“CPA”) and the Connecticut Data Privacy Act (“CTDPA”) will become effective on July 1, 2023;

and the Utah Consumer Privacy Act (“UCPA”) will become effective on December 31, 2023.

the Colorado Privacy Act (“CPA”) and the Connecticut Data Privacy Act (“CTDPA”) became effective on July 1, 2023;

and the Utah Consumer Privacy Act (“UCPA”) became effective on December 31, 2023.

While these regulations incorporate many similar concepts to the CCPA, there are also several key differences in their scope, application, and enforcement that will, among other things, impact how regulated businesses collect and process personal sensitive data, conduct data protection assessments, transfer personal data to affiliates, and respond to consumer rights requests.

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The existence of comprehensive privacy laws in different states in the country makes our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.

Further, regulations promulgated pursuant to HIPAA imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.

Further, regulations promulgated pursuant to HIPAA impose privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.

HIPAA establishes privacy and security standards that limit the use and disclosure of individually identifiable health information and protected health information, or PHI, and requires the implementation of administrative, physical, and technological safeguards to protect the privacy of PHI and ensure the confidentiality, integrity, and availability of electronic PHI.

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Risks Related to Owning Our Common Stock

We are currently unable to comply with the requirement to provide separate audited financial statements and unaudited pro forma financial information for the INCRELEX® product acquisition, specified by Item 9.01 of Form 8-K.

As previously reported in our Form 8-K/A filed on March 7, 2025, we are currently unable to file an amendment to our Form 8-K reporting the completion of our acquisition of the INCRELEX® product containing the separate audited financial statements and unaudited pro forma financial information required by Item 9.01 of Form 8-K by the required due date.

As such, we are no longer in compliance with our reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Our inability to obtain such information by the deadline has resulted in noncompliance with our reporting obligations under the Exchange Act.

Such noncompliance, in turn:

has, in the absence of receiving the requested waiver from the SEC, rendered us ineligible to use the SEC's short-form registration statement on Form S-3 to register the issuance of our securities for any capital raising activities;

could, depending on if and/or when the financial statements are created and become available and we file them, have other material and adverse consequences that are summarized below.

Until the earlier of the date on which we receive the requested waiver or the audited financial statements and unaudited pro forma financial information specified by Item 9.01 of Form 8-K are filed with the SEC, no new registration statement that we file with the SEC seeking to register our securities for issuance, sale or resale, including for capital raising transactions, additional acquisitions or for our employee benefit programs, will be declared effective by the SEC and thus our capital raising activities and ability to provide new equity incentives to our employees will be substantially curtailed during that period.

An active, liquid and orderly trading market for our shares may not continue to be developed or sustained .

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Future capital raises may dilute our existing stockholders ’ ownership, could depress the market price for our common stock and have other adverse effects on our operations .

We have an effective Form S-3 registration statement (“Shelf Registration”) on file with the SEC which allows us to sell any combination of common stock, preferred stock, debt securities, warrants to purchase any of these securities, subscription rights to purchase any of these securities, and/or units consisting of one or more of the foregoing in one or more offerings up to a total dollar amount of $100 million (including the $22.5 million raised in our October 2020 offering of common stock).

The issuance of additional shares of our common stock pursuant to the Shelf Registration, or issuances of securities convertible into or exercisable for our common stock or other equity-linked securities, including preferred stock, warrants, debt securities or units, would dilute the ownership interest of our common shareholders and could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

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Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.

In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other areas for further attention or improvement.

In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our financial statements or identify other areas for further attention or improvement.

Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common shares.

There is also a risk that neither we nor our independent registered public accounting firm (when applicable in the future) will be able to conclude within the prescribed timeframe that internal controls over financial reporting is effective as required by Section 404.

This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under the Tax Act, federal NOLs incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning before December 31, 2017, is limited.

We filed in GA, IL, MN, TN, and FL for 2022.

Only GA and FL conform to the Tax Act.

IL and TN do not conform (their NOL will expire if not used and there is no limit deduction on their NOL).

MN does conform with the 80% of taxable income limitation section of the Tax Act for the years 2018 through 2022 and has a 70% limitation for 2023, but not the indefinite carryforward section.

MN NOL will expire if not used.

Under the Tax Act, federal Net Operating Losses (“NOLs”) incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely, but can only be applied to 80% of taxable income for the year.

As of December 31, 2024, our remaining federal NOLs were generated after the 2017 tax year.

Our significant state NOLs as of December 31, 2024 were generated in IL and TN, which begin to expire in 2037 and 2034, respectively.

Neither IL nor TN conform to the federal 80% utilization limitation, but IL has suspended annual NOL utilization above $0.5 million of IL taxable income until the 2027 tax year.

IL NOLs that would have been utilized if not for this suspension are granted an additional carryforward year.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards, or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited.

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However, a court may determine that this provision is unenforceable.

Ownership portions held by our executives and directors, as well as by our former parent company, Harrow Health, Inc., may limit our stockholders ’ ability to influence corporate matters .

Ownership portions held by our executives and directors may limit our stockholders ’ ability to influence corporate matters .

Our directors and executive officers beneficially own approximately 16.9% of our common stock.

Additionally, Harrow Health, Inc.

(“Harrow”), our former parent company, holds approximately 7.7% of our outstanding common stock as of March 5, 2024.

Accordingly, these parties, together, can significantly influence, though not independently determine, the outcome of matters required to be submitted to our stockholders for approval, including decisions relating to the election of our board of directors and the outcome of any proposed merger or consolidation of our company.

These interests may not be consistent with those of our other stockholders.

In addition, the significant interest held by these parties, and particularly by Harrow, may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our shares.

In addition, the significant interest held by these parties may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our shares.

As stockholders in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

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

What changed 10-K

Item 1A. Risk Factors