What changed in this filing

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Item 1A. Risk Factors

2021-03-16 compared with 2020-03-05 · 224 added, 416 removed, 1350 unchanged (32% of the section changed)

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our business.

are a specialty pharmaceutical company founded in April 2017 and have only recently commenced revenue-producing operations

and our historical operations have primarily consisted of the preliminary formulation, testing and development

of our various product candidates.

Our limited operating history makes it difficult for potential investors to evaluate

our initial product candidates or our prospective operations.

As an early stage company, we are subject to all the risks inherent

in the initial organization, financing, expenditures, complications and delays in a new business.

Further, biopharmaceutical product

development is a highly speculative undertaking, involves a substantial degree of risk and is a capital-intensive business.

you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies

in the early stages of product development and commercialization, especially clinical-stage biopharmaceutical companies

such as ours.

As a company with a limited operating history, we may be unable to:

are a specialty pharmaceutical company founded in April 2017 and have only recently commenced revenue-producing operations and

our historical operations have primarily consisted of the preliminary formulation, testing and development of our various product

Our limited operating history makes it difficult for potential investors to evaluate our initial product candidates

or our prospective operations.

As an early-stage company, we are subject to all the risks inherent in the initial organization,

financing, expenditures, complications and delays in a new business.

Further, biopharmaceutical product development is a highly

speculative undertaking, involves a substantial degree of risk and is a capital-intensive business.

Accordingly, you should consider

our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages

of product development and commercialization, especially clinical-stage biopharmaceutical companies such as ours.

with a limited operating history, we may be unable to:

implement or execute our current business plan, or develop a business plan that is sound;

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successfully execute any one of the foregoing, our business may not succeed.

have a history of significant operating losses and anticipate continued operating losses for the foreseeable future .

date, we are not profitable and have incurred losses since our inception in April 2017.

For the years ended December 31, 2019

and 2018, we incurred a net loss of $18.3 million and $12.7 million, respectively, and our operations used $18.0 million

and $8.1 million of cash and cash equivalents, respectively.

We have realized limited revenues from two products and expect to

incur significant development expenses for our product candidates in the United States and elsewhere.

We may never be able to

obtain regulatory approval for the marketing of our additional product candidates for any indication in the United States or internationally

and there can be no assurance that we will generate significant revenues or ever achieve profitability.

expect to have significant research, regulatory and development expenses as we advance our product candidates .

a result, we expect to incur substantial losses for the foreseeable future.

We are uncertain when or if we will be able to achieve

or sustain profitability.

If we achieve profitability in the future, we may not be able to sustain profitability in subsequent

Failure to become and remain profitable may impair our ability to sustain operations and adversely affect our business

and our ability to raise capital.

If we are unable to generate positive cash flow within a reasonable period of time, we may be

unable to further pursue our business plan or continue operations.

could need additional financing to execute our business plan and fund operations, which additional financing may not be available

on reasonable terms or at all .

of December 31, 2019, we had total assets of $17.1 million and working capital of $13.0 million.

We received $22.0 million in

net proceeds from our initial public offering (“IPO”) in November 2018.

In November 2019, we entered into a $10.0

million debt facility with SWK Holdings Corporation, and we received $5.0 million at closing with the option to drawdown additional

capital if certain product candidates are approved.

We could require additional funding at a future point in time.

we require additional capital, we will endeavor to seek additional funds through various financing sources, including the sale

of our equity and debt securities, licensing fees for our technology and joint ventures with industry partners.

In addition, we

will consider alternatives to our current business plan that may enable to us to achieve additional revenue producing operations

and meaningful commercial success with a smaller amount of capital.

However, there can be no guarantees that such funds will be

available on commercially reasonable terms, if at all.

If such financing is not available on satisfactory terms, we may be unable

to further pursue our business plan and we may be unable to continue operations.

will need to grow the size of our organization, and we may experience difficulties in managing this growth .

our development and commercialization plans and strategies develop, we will need to expand the size of our employee and consultant/contractor

business is adversely affected by the ongoing coronavirus pandemic and the impact could be material.

health outbreaks, epidemics or pandemics have had, and could in the future have, an adverse impact on our operations and financial

The continuing pandemic caused by the novel strain of coronavirus (COVID-19) has caused many countries, including the

United States, to declare national emergencies and implement preventive measures such as travel bans and shelter-in-place or total

lock-down orders, some of which have eased.

The continuation or re-implementation of these bans and orders remains uncertain.

In some cases, these bans and orders have influenced certain aspects of our business.

For example, we began commercializing our

Biorphen product in December 2019;

however, we have encountered difficulty in creating significant market pull-through demand

for Biorphen in 2020 as our in-person sales calls to key personnel at hospitals and surgical centers and introductory product

presentation seminars were cancelled as a result of the COVID-19 pandemic.

We are working on other promotional efforts to drive

further adoption in the market, but we expect that our Biorphen sales and marketing efforts will continue to be adversely affected

by the pandemic in 2021.

COVID-19 may also affect our ability to complete recruitment and data analysis for our clinical trials

and our ability to conduct research and development of our complement programs in our planned timeframe.

The extent to which COVID-19

impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence,

including the duration and severity of the outbreak, and the actions that may be required to contain COVID-19 or treat its impact.

In particular, as a result of the COVID-19 pandemic, we may experience disruptions that could severely impact our business, preclinical

studies, drug manufacturing and clinical trials including:

or difficulties in enrolling patients in our human factor study for Lamotrigine Oral Suspension (ET-105);

of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical

trial sites and hospital staff supporting the conduct of our clinical trials;

of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended

by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures,

which may impact the integrity of subject data and clinical study endpoints;

or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

of, or delays in promoting our products in-person, at conferences and at hospitals due to limitations on travel and in-person

gatherings imposed or recommended by federal or state governments.

may need to grow the size of our organization, and we could experience difficulties in managing this growth .

our development and commercialization plans and strategies develop, we may need to expand the size of our employee and consultant/contractor

Future growth would impose significant added responsibilities on members of management, including the need to identify,

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and our ability to compete effectively will depend, in part, on our ability to effectively manage our future growth.

we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our

business strategy.

In addition, the loss of the services of our senior management would adversely impact our business prospects .

management team has expertise in many different aspects of drug development and commercialization.

However, our ability to compete

in the highly competitive pharmaceuticals industry depends in large part upon our ability to attract and retain highly qualified

managerial, scientific and medical personnel.

We will need to hire additional personnel as we further develop our product candidates.

Competition for skilled personnel in our market is intense and competition for experienced scientists may limit our ability to

hire and retain highly qualified personnel on acceptable terms.

Despite our efforts to retain valuable employees, members of our

management and scientific teams may terminate their employment with us on short notice.

The loss of the services of any of our

executive officers or other key employees, or our inability to hire targeted executives, could potentially harm our business,

operating results or financial condition.

In particular, we believe that the loss of the services of our chief executive officer

would have a material adverse effect on our business.

pharmaceutical companies with which we compete for qualified personnel have greater financial and other resources, different risk

profiles, and a longer history in the industry than we do.

They also may provide more diverse opportunities and better chances

for career advancement.

Some of these characteristics may be more appealing to high-quality candidates than what we have to offer.

If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can develop and commercialize

product candidates would be limited.

product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization

of our product candidates .

face a potential risk of product liability as a result of the commercialization of our Biorphen product and clinical testing

of our 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 Biorphen or any product we develop, including any of our product candidates,

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,

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eventual outcome, liability claims may result in:

demand for Biorphen or any of our product candidates or any future products that we may develop;

demand for our current products or any of our product candidates or any future products that we may develop;

to our reputation;

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decline in the value of our stock.

carry product liability insurance we consider adequate for our current level of expected Biorphen sales, clinical testing

and product development.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost

to protect against potential product liability claims could prevent or inhibit the commercialization of Biorphen or additional

products we develop.

Although we will endeavor to obtain and maintain such insurance in coverage amounts we deem adequate,

any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole

or in part, by our insurance or that is in excess of the limits of our insurance coverage.

Our insurance policies also have various

exclusions, and we may be subject to a product liability claim for which we have no coverage.

We may have to pay any amounts awarded

by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we

may not have, or be able to obtain, sufficient capital to pay such amounts.

carry product liability insurance we consider adequate for our current level of expected product sales, clinical testing and product

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against

potential product liability claims could prevent or inhibit the commercialization of our approved products or additional products

Although we will endeavor to obtain and maintain such insurance in coverage amounts we deem adequate, any claim that

may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part,

by our insurance or that is in excess of the limits of our insurance coverage.

Our insurance policies also have various exclusions,

and we may be subject to a product liability claim for which we have no coverage.

We may have to pay any amounts awarded by a

court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may

not have, or be able to obtain, sufficient capital to pay such amounts.

may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions .

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effects on our revenues, business and results of operations and damage our brand and reputation .

Biorphen product on our product candidates may become subject to competition from counterfeit pharmaceutical products,

current approved products or our new product candidates may become subject to competition from counterfeit pharmaceutical products,

which are pharmaceutical products sold under the same or very similar brand names and/or having a similar appearance to genuine

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throughout the world have been increasingly active in policing counterfeit pharmaceuticals, we may not be able to prevent third

parties from manufacturing, selling or purporting to sell counterfeit products competing with our Biorphen product on our

parties from manufacturing, selling or purporting to sell counterfeit products competing with our current products or our new

product candidates.

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of counterfeit products or unauthorized sales could negatively impact our revenues, brand reputation, business and results of

have entered into several arrangements with related parties for the development and marketing of certain product candidates and

these arrangements present potential conflicts of interest .

Chief Executive Officer, Sean Brynjelsen, has a material ownership interest in several companies from which we have licensed or

acquired product development and marketing rights.

See, “Notes to Financial Statements - Related Party Transactions.”

We are required to pay these entities a combination of licensing fees, milestone payments and royalty payments.

The transactional

agreements also subject us to a loss of our rights to the product candidates in the event we breach any of our representations,

warranties or covenants included in the agreements.

While we believe the terms of the transactional agreements, including the

licensing fees, milestone payments and royalty payments, approximate the terms and payments we could have obtained in an arms’

length transaction with an unaffiliated party, these arrangements may present Mr.

Brynjelsen with a conflict of interest in the

event of dispute between the parties.

Although we believe we have mechanisms in place to protect the interests of our stockholders,

including a board of directors, a majority of which are independent and have no interest in these related parties, there can be

no assurance that a conflict of interest will not arise or that any such conflict will not adversely impact the interests of our

stockholders.

Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

depend entirely on the success of Biorphen and our product candidates.

If we are unable to generate revenues from our product

candidates, our ability to create stockholder value will be limited .

have various product candidates are in the early stages of clinical

development, and we do not generate revenues from any FDA approved drug products other than Biorphen.

An abbreviated new

drug application (“ANDA”) was submitted for our EM-100 product candidate and our DS-300 product.

an NDA was submitted for ET-105 in May 2019.

We plan on submitting our clinical trial protocols and receiving

approvals from the FDA and international regulatory authorities before we commence any clinical trials.

We may not be successful

in obtaining acceptance from the FDA or comparable foreign regulatory authorities to start our clinical trials.

If we do not obtain

such acceptance, the time in which we expect to commence clinical programs for any product candidate will be extended and such

extension will increase our expenses and increase our need for additional capital.

Moreover, there is no guarantee that our clinical

trials will be successful or that we will continue clinical development in support of additional product approvals from

the FDA or comparable foreign regulatory authorities for any indication.

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.

depend entirely on the success of current approved products and our new product candidates.

If we are unable to generate revenues

from our approved products and new product candidates, our ability to create stockholder value will be limited .

have various product candidates under review with the FDA and are in the early stages of clinical development with a number of

new product candidates, and have not yet generated significant revenues from our approved drug products.

We plan on submitting

our clinical trial protocols and receiving approvals from the FDA and international regulatory authorities before we commence

any clinical trials.

We may not be successful in obtaining acceptance from the FDA or comparable foreign regulatory authorities

to start our clinical trials.

If we do not obtain such acceptance, the time in which we expect to commence clinical programs for

any product candidate will be extended and such extension will increase our expenses and increase our need for additional capital.

Moreover, there is no guarantee that our clinical trials will be successful or that we will continue clinical development in support

of additional product approvals from the FDA or comparable foreign regulatory authorities for any indication.

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

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

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to such candidates .

The FDCA provides three years of marketing exclusivity for an NDA,

505(b)(2) NDA, or supplement to an existing NDA or 505(b)(2) NDA if new clinical investigations, other than bioavailability studies,

that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, (e.g.,

for new indications, dosages, strengths or dosage forms of an existing drug).

Many of our competitors have significantly greater

financial, manufacturing, marketing, drug development, technical and human resources than we do.

As a result, many of our competitors

have the ability to bring a product candidate to market more rapidly than we can and depending on the nature of their product

candidate they could substantially delay the introduction of our product candidate into the market if their product qualifies

for the market and data exclusivity provisions under the FDCA.

In order to preserve any competitive advantage, we will, at times,

make the decision to pursue a product candidate for which we will not disclose the API, dosage or reference drug until such time

as we believe that any competitive advantage would not be materially compromised by public disclosure of such information, which

in some cases may be as late as our receipt of marketing approval from the FDA.

Our business currently depends on our ability

to bring our product candidates to market in a manner that preserves our perceived competitive advantage and any loss of that

competitive advantage could negatively impact our business, results of operations and stock price.

FDCA provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA, or supplement to an existing NDA or 505(b)(2) NDA

if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed

by the FDA to be essential to the approval of the application, (e.g., for new indications, dosages, strengths or dosage forms

of an existing drug).

Many of our competitors have significantly greater financial, manufacturing, marketing, drug development,

technical and human resources than we do.

As a result, many of our competitors have the ability to bring a product candidate to

market more rapidly than we can and depending on the nature of their product candidate they could substantially delay the introduction

of our product candidate into the market if their product qualifies for the market and data exclusivity provisions under the FDCA.

In order to preserve any competitive advantage, we will, at times, make the decision to pursue a product candidate for which we

will not disclose the API, dosage or reference drug until such time as we believe that any competitive advantage would not be

materially compromised by public disclosure of such information, which in some cases may be as late as our receipt of marketing

approval from the FDA.

Our business currently depends on our ability to bring our product candidates to market in a manner that

preserves our perceived competitive advantage and any loss of that competitive advantage could negatively impact our business,

results of operations and stock price.

we are not able to obtain any required regulatory approvals for our product candidates, we will not be able to commercialize our

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our product candidates, and our ability to generate sufficient revenue will be materially impaired.

We cannot guarantee

that regulators will agree with our assessment of the results of the clinical trials we intend to conduct in the future or that

such trials will be successful.

The FDA and other regulators have substantial discretion in the approval process and may refuse

to accept any application or may decide that our data is insufficient for approval and require additional clinical trials, or

pre-clinical or other studies.

In addition, varying interpretations of the data obtained from pre-clinical and clinical testing

could delay, limit or prevent regulatory approval of our product candidates.

We cannot guarantee that regulators

will agree with our assessment of the results of the clinical trials we intend to conduct in the future or that such trials will

be successful.

The FDA and other regulators have substantial discretion in the approval process and may refuse to accept any application

or may decide that our data is insufficient for approval and require additional clinical trials, or pre-clinical or other studies.

In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent

regulatory approval of our product candidates.

process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially

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Any failure to obtain regulatory

approval of our product candidates would significantly limit our ability to generate sufficient revenues, and any failure

to obtain such approval for all of the indications and labeling claims we deem desirable could reduce our potential revenues.

approval of our product candidates would significantly limit our ability to generate sufficient revenues, and any failure to obtain

such approval for all of the indications and labeling claims we deem desirable could reduce our potential revenues.

NDA submitted under Section 505(b)(2) subjects us to the risk that we may be subject to a patent infringement lawsuit that would

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and could cause the market value of our common stock to decline.

if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product,

and the revenue that we generate from its sales, if any, may be limited .

if we receive regulatory approval for our additional product candidates, we may not be able to successfully commercialize these

products, and the revenue that we generate from those sales, if any, may be limited .

approved for marketing, the commercial success of our product candidates will depend upon each product’s acceptance by the

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of our product candidates.

We are subject

to ongoing obligations and continued regulatory review, which may result in significant additional expense.

Additionally, our

product candidates could be subject to labeling and other restrictions and withdrawal from the market and we may be subject to

penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates .

or foreign equivalent may still impose significant restrictions on our products indicated uses or the conditions

of approval, or impose ongoing requirements for potentially costly and time-consuming post-approval studies, including Phase 4

clinical trials, and post-market surveillance to monitor safety and efficacy.

Our product candidates will also be subject to ongoing

regulatory requirements governing the manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising,

promotion, recordkeeping and reporting of adverse events and other post-market information.

These requirements include registration

with the FDA, as well as continued compliance with current Good Clinical Practices regulations (“cGCPs”) for any clinical

are subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.

Additionally,

our product candidates could be subject to labeling and other restrictions and withdrawal from the market and we may be subject

to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates .

FDA or foreign equivalent may still impose significant restrictions on our products indicated uses or the conditions of approval,

or impose ongoing requirements for potentially costly and time-consuming post-approval studies, including Phase 4 clinical trials,

and post-market surveillance to monitor safety and efficacy.

Our product candidates will also be subject to ongoing regulatory

requirements governing the manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising, promotion,

recordkeeping and reporting of adverse events and other post-market information.

These requirements include registration with

the FDA, as well as continued compliance with current Good Clinical Practices regulations (“cGCPs”) for any clinical

trials that we conduct post-approval.

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and our ability to realize the full market potential of our product candidates will be harmed.

currently have a limited sales and marketing organization and one partner for co-promotion of our Biorphen product.

we are unable to secure a sales and marketing partner for potential future products or establish satisfactory sales and

marketing capabilities, we may not successfully commercialize our product candidates .

have limited sales and marketing personnel.

In order to commercialize products that are approved for commercial sales, we must

either collaborate with third parties that have such commercial infrastructure or develop our own sales and marketing infrastructure.

If we are not successful entering into appropriate collaboration arrangements or recruiting sufficient sales and marketing personnel

or in building a sales and marketing infrastructure, we will have difficulty successfully commercializing our product candidates,

which would adversely affect our business, operating results and financial condition.

may not be able to enter into additional collaboration agreements on terms acceptable to us or at all.

In addition, even

if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution activities of

these third parties.

Our future revenues may depend heavily on the success of the efforts of these third parties.

to establish a sales and marketing infrastructure, we may not realize a positive return on this investment.

In addition, we will

have to compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire, train and retain

sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our product candidates without strategic

partners or licensees include:

inability to recruit and retain adequate numbers of effective sales and marketing personnel;

inability of sales personnel to obtain access to or educate an adequate number of physicians as to the benefits of any our

product candidates;

lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to

companies with more extensive product lines;

costs and expenses associated with creating an independent sales and marketing organization.

additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products.

jurisdictions may seek to adopt significant additional product labeling or warning requirements or limitations on the availability

of our products relating to the content or perceived adverse health consequences of our products.

Federal laws may preempt some

or all of these attempts by state or localities to impose additional labeling or warning requirements.

If these types of requirements

become applicable to our products under current or future environmental or health laws or regulations, they may inhibit sales

of our products.

Moreover, if we fail to meet compliance deadlines for any such new requirements, our products may be deemed misbranded

or mislabeled and could be subject to enforcement action, or we could be exposed to private lawsuits alleging misleading labels

or product promotion.

and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product

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aspects of the Health Care Reform Law.

Since January 2017, President Trump has signed two executive orders and other directives

Since January 2017, former President Trump had signed two executive orders and other directives

designed to delay, circumvent or loosen certain requirements mandated by the Health Care Reform Law.

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for all or part of a year that is commonly referred to as the “individual mandate.”

On January 22, 2018, President

On January 22, 2018, former President

Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain Health

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Medicare Part D plans, Medicaid managed care organizations and pharmacy benefit managers working with these organizations.

some of these and other proposed measures may require additional authorization to become effective, Congress and the Trump administration

have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

some of these and other proposed measures may require additional authorization to become effective, Congress and government administration

officials have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs.

policies of the FDA or similar regulatory authorities may change, and additional government regulations may be enacted that could

prevent, limit or delay regulatory approval of our product candidates.

For example, in December 2016, the 21st Century Cures Act

was signed into law.

The 21st Century Cures Act, among other things, is intended to modernize the regulation of drugs and biologics

and spur innovation, but it has not yet been fully implemented and its ultimate implementation is unclear.

Furthermore, the Trump

administration has taken several executive actions, including the issuance of a number of executive orders, that could impose

significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities

such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing applications.

executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal

course, our business may be negatively impacted.

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.

future growth may depend, in part, on our ability to penetrate international markets, where we would be subject to additional

regulatory burdens and other risks and uncertainties .

future profitability may depend, in part, on our ability to commercialize our product candidates in international markets for

which we intend to rely on collaborations with third parties.

If we commercialize any of our product candidates in international

markets, we would be subject to additional risks and uncertainties, including:

customers’

ability to obtain reimbursement for our product candidates in international markets;

inability to directly control commercial activities because we are relying on third parties;

burden of complying with complex and changing international regulatory, tax, accounting and legal requirements;

medical practices and customs in foreign countries affecting acceptance in the marketplace;

payor reimbursement regimes, governmental payors or patient self-pay systems and price controls

or export licensing requirements;

accounts receivable collection times;

lead times for shipping;

barriers for technical training;

protection of intellectual property rights in some foreign countries;

currency exchange rate fluctuations;

interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.

International

sales of our product candidates could also be adversely affected by the imposition of governmental controls, political and economic

instability, trade restrictions and changes in tariffs, any of which may adversely affect our results of operations.

we market Biorphen or any of our 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 .

For example, in December 2016, the 21 st Century

Cures Act was signed into law.

The 21 st Century Cures Act, among other things, is intended to modernize the regulation

of drugs and biologics and spur innovation, but it has not yet been fully implemented and its ultimate implementation is unclear.

Furthermore, the Trump administration has taken several executive actions, including the issuance of a number of executive orders,

that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory

and oversight activities such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing

applications.

If these executive actions impose constraints on the FDA’s ability to engage in oversight and implementation

activities in the normal course, our business may be negatively impacted.

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.

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 .

FDA enforces laws and regulations, which require that the promotion of pharmaceutical products be consistent with the approved

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and imprisonment.

will be completely dependent on third parties to manufacture our product candidates, and our commercialization of our product

candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval from

the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our product candidates

or fail to do so at acceptable quality levels or prices .

are completely dependent on third parties to manufacture our approved products and new product candidates, and our commercialization

of our product candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing

approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our product

candidates or fail to do so at acceptable quality levels or prices .

do not currently have, nor do we plan to acquire, the capability or infrastructure to manufacture the active pharmaceutical ingredient

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us financially and could harm our business reputation.

expect to rely on third parties to conduct clinical trials for our product candidates.

If these third parties do not successfully

carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize

any of our product candidates and our business would be substantially harmed .

may need to rely on third parties to conduct clinical trials for our future product candidates.

If these third parties do not

successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for

or commercialize any of our product candidates and our business would be substantially harmed .

have entered into agreements with third-party CROs to conduct and manage our clinical programs including contracting with clinical

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not have other assets available to indemnify us, our business, financial condition and results of operations could be adversely

Chief Executive Officer holds ownership interest in some of the third parties we have entered into agreements with.

and fee arrangements of these agreements, we believe, approximate the terms and fee arrangements of an agreement that would have

been obtained in an arm’s length and unaffiliated transaction.

Nonetheless, this may expose us to claims of interested transactions

and other fiduciary suits .

Chief Executive Officer, Sean Brynjelsen, has a material ownership interest in several companies from which we have licensed or

acquired product development and marketing rights.

These include a 27% stake in Andersen Pharma, LLC (license for DS-100), 33%

stake in Eyemax, LLC (license for EM-100) and 50% stake in Selenix, LLC (license for DS-200).

We are required to pay these parties

licensing fees, milestone payments and royalty payments.

We believe the terms of the transactional agreements, including the licensing

fees, milestone payments and royalty payments, approximate the terms and payments we could have obtained in an arms’

transaction with an unaffiliated party.

Nonetheless, a stockholder may seek to challenge these agreements on grounds that they

are not in the best interest of our company and our board breached its fiduciary duty by approving such agreements.

termination or suspension of, or delays in the commencement or completion of, any necessary studies of any of our product candidates

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reviewing entities, or any of our clinical study sites suspend or terminate any of our clinical studies of any of our product

candidates, its commercial prospects may be materially harmed and our ability to generate sufficient product revenues will

candidates, its commercial prospects may be materially harmed and our ability to generate sufficient product revenues will be

Any delays in completing our clinical trials will increase our costs, slow down our development and approval process

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factors and health status.

have not conducted clinical trials for any of our product candidates, other than a bioequivalence trial for one product candidate,

and we may be delayed in commercializing or fail to find success in these trials.

Further, the results of any clinical trial may

not be predictive of future trial results.

Positive results in preclinical testing and early clinical trials do not ensure that

later clinical trials will be successful.

A number of pharmaceutical companies have suffered significant setbacks in clinical

trials, including in Phase 3, after promising results in preclinical testing and early clinical trials.

These setbacks have included

negative safety and efficacy observations in later clinical trials, including previously unreported adverse events.

date, we have not conducted any clinical trials other than a Phase 3 bioequivalence trial for our EM-100 product candidate.

clinical trials may not be successful, and even if they are, the FDA may not approve our NDA for products that are successful

in the trial, may not agree that the benefits outweigh its risks, or may raise new concerns regarding our clinical trial designs.

The Phase 3 trial process is often long, complex, costly and uncertain, and delays or failure are common.

may need to conduct clinical trials for our new product candidates and we may be delayed in commercializing or fail to find success

in these trials.

Further, the results of any clinical trial may not be predictive of future trial results.

Positive results in

preclinical testing and early clinical trials do not ensure that later clinical trials will be successful.

A number of pharmaceutical

companies have suffered significant setbacks in clinical trials, including in Phase 3, after promising results in preclinical

testing and early clinical trials.

These setbacks have included negative safety and efficacy observations in later clinical trials,

including previously unreported adverse events.

3 clinical trials often produce unsatisfactory results even though prior clinical trials were successful.

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to provide coverage when an approved product is used in a way that has not received regulatory marketing approval.

may not be able to sell Biorphen or our product candidates profitably if adequate prices are not approved or coverage and

reimbursement is unavailable or limited in scope.

may not be able to sell Biorphen or our product candidates profitably if adequate prices are not approved or coverage and reimbursement

is unavailable or limited in scope.

are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations

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and we cannot determine the impact such future laws, regulations and standards may have on our business.

global economic conditions could adversely affect our business, financial condition or results of operations.

results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

A severe or prolonged global economic downturn could result in a variety of risks to our business, including our ability to raise

additional capital when needed on acceptable terms, if at all.

This is particularly true in Europe, which is undergoing a continued

severe economic crisis.

A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and

financial market conditions could adversely impact our business.

United Kingdom’s referendum to leave the European Union or “Brexit,”

has and may continue to cause disruptions

to capital and currency markets worldwide.

The full impact of the Brexit decision, however, remains uncertain.

A process of negotiation

will determine the future terms of the United Kingdom’s relationship with the European Union.

During this period of negotiation,

our results of operations and access to capital may be negatively affected by interest rate, exchange rate and other market and

economic volatility, as well as regulatory and political uncertainty.

Brexit may also have a detrimental effect on our suppliers

and manufacturers, which would, in turn, adversely affect our financial condition.

Relating to Our Intellectual Property Rights

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we might be barred from producing and selling some or all of our products.

is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights .

may be difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights .

commercial success will depend, in part, on obtaining and maintaining patent protection for our technologies, products and processes,

successfully defending these patents against third-party challenges and successfully enforcing these patents against third-party

Our development partner has filed a patent application for ET-104.

In addition, our development partner

for ET-105 was granted a patent by the United States Patent and Trademark office.

The patent positions of pharmaceutical companies

can be highly uncertain and involve complex legal, scientific and factual questions for which important legal principles remain

Changes in either the patent laws or in interpretations of patent laws may diminish the value of our intellectual

Accordingly, we cannot predict the breadth of claims that may be allowable or enforceable in our patents.

patent applications relating to our product candidates and related technologies may be challenged, invalidated or circumvented

by third parties and might not protect us against competitors with similar products or technologies.

The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal, scientific and

factual questions for which important legal principles remain unresolved.

Changes in either the patent laws or in interpretations

of patent laws may diminish the value of our intellectual property.

Accordingly, we cannot predict the breadth of claims that

may be allowable or enforceable in our patents.

Patent and patent applications relating to our product candidates and related

technologies may be challenged, invalidated or circumvented by third parties and might not protect us against competitors with

What changed 10-K

Item 1A. Risk Factors