What changed in this filing

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Item 1A. Risk Factors

2021-03-08 compared with 2020-03-13 · 554 added, 405 removed, 1004 unchanged (49% of the section changed)

Factors Summary

are subject to a variety of risks and uncertainties, including risks related to our financial position and need for additional

capital, the commercialization of our product candidates, our operations, regulatory approval and other legal compliance matters,

human capital, product development, intellectual property and our common stock, which could have a material adverse effect on

our business results of operations, financial condition and prospects.

Risks that we deem material are described under “Risk

Factors” below and include, but are not limited to, the following:

ability to achieve profitability for our business;

ability to successfully market, commercialize, and sell current and future products;

potential adverse impact of health epidemics, including the recent coronavirus outbreak;

and maintaining patent or other intellectual property protection for our products and related improvements;

acceptance of compounded drugs and pharmacies;

ability to successfully research, develop and timely manufacture our current and future products;

regulations that burden operations or narrow the market for our products;

exposure to liabilities and reputation harm if our products give rise to defects, recalls, patient injury or death;

current indebtedness and ability to access additional capital;

ability to attract customers and increase sales of current and future products;

ability to obtain marketing approval and ongoing expense associated with it for any of our drug candidates, including those

we own royalty rights of;

reliance on third parties for manufacturing certain components and to conduct clinical trials;

ability to enforce protect our intellectual property rights along with the potential of future legal proceedings filed against

us claiming intellectual property infringement;

recruitment, and training of senior management and key personnel;

of the price of our common stock;

stock price falling as a result of future offerings or sales.

should carefully consider the following risk factors in addition to the other information contained in this Annual Report.

business, financial condition, results of operations and stock price could be materially adversely affected by any of these risks.

Related to Our Business

Related to Our Financial Position and Need for Additional Capital

2018, we incurred losses in every year of our operations, and we may not be profitable in the future.

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have been generating revenue from our pharmaceutical compounding operations, our ability to generate the revenues necessary to

achieve profitability will depend on many factors, including those discussed in this “Risk Factors”

achieve profitability will depend on many factors, including those discussed in this “Risk Factors” section.

plan and strategies involve costly activities that are susceptible to failure, and, therefore, we may not be able to generate

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business plan, which would cause our business to suffer.

sell our proprietary formulations primarily through pharmaceutical compounding facilities we own, but we may not be successful

in our efforts to integrate these businesses into our operations.

currently have two compounding facilities in New Jersey.

We may plan to expand our pharmacy operations and personnel and developing

our facilities into a unified group compounding pharmacy facilities.

We have developed “ImprimisRx”

as a uniform brand

for our compounding facilities and ophthalmology focused pharmaceutical compounding business.

We have limited experience acquiring,

building or operating compounding pharmacies or other prescription dispensing facilities or commercializing our formulations through

ownership of or licensing arrangements with pharmacies.

In addition, as we have in the past, we have purchased and operated certain

pharmaceutical compounding businesses and pharmacies, and subsequently divested or sold those associated assets, we may pursue

similar strategies in the future.

Those things considered, we may experience difficulties implementing and/or executing on our

compounding pharmacy strategy, including difficulties that arise as a result of our lack of experience, and we may be unsuccessful

and our plans may change materially.

For instance:

have experienced delays and increased costs in relation to expansion efforts;

may not be able to satisfy applicable federal and state licensing and other requirements for any of our pharmacy businesses

in a timely manner or at all;

to federal and state pharmacy regulations may restrict compounding operations or make them more costly;

may be unable to achieve or maintain a sufficient physician and patient customer base to sustain our pharmacy operations;

acceptance of compounding pharmacies generally may be curtailed or delayed;

may not be able to enter into licensing or other arrangements with third-party pharmacies or outsourcing facilities when desired,

loan under the Paycheck Protection Program may not be forgiven or may subject us to challenges and investigations regarding qualification

for the loan.

April 2020, we entered into an unsecured promissory note and related Business Loan Agreement with Renasant Bank, as lender, for

a loan (the “PPP Loan”), which was established under the Federal Coronavirus Aid, Relief, and Economic Security Act

(the “CARES Act”) in the principal amount of $1,967,000.

Pursuant to Section 1106 of the CARES Act, during the year

ended December 31 ,2020, we applied for forgiveness for all of the PPP Loan, however as of the date of this Annual Report the

Small Business Administration (the “SBA”) has not made a decision related to our application for forgiveness.

Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for qualifying expenses, which

include payroll costs, rent, and utility costs over the allowable measurement period following receipt of the loan proceeds.

SBA continues to develop and issue new and updated guidance regarding the PPP Loan application and forgiveness process, including

guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program.

evolving nature of the guidance and depending upon our ability to use the loan proceeds for qualifying expenses, we cannot give

any assurance that our PPP Loan will be forgiven in whole or in part.

Additionally,

the PPP Loan application required us to certify that the current economic uncertainty made the PPP Loan request necessary to support

our ongoing operations.

While we made this certification in good faith after analyzing, among other things, our financial situation

and access to alternative forms of capital, and believe that we satisfied all eligibility criteria for the PPP Loan and that our

receipt of the PPP Loan is consistent with the broad objectives of the Paycheck Protection Program of the CARES Act, the certification

described above does not contain any objective criteria and is subject to interpretation.

In addition, the SBA has stated that

it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required

certification in good faith.

The lack of clarity regarding loan eligibility under the program has resulted in significant media

coverage and controversy with respect to public companies applying for and receiving loans.

If, despite our good faith belief

that we satisfied all eligibility requirements for the PPP Loan, we are found to have been ineligible to receive the PPP Loan

or in violation of any of the laws or regulations that apply to us in connection with the PPP Loan, including the False Claims

Act, we may be subject to penalties, including significant civil, criminal and administrative penalties, and would be required

to repay the PPP Loan.

We were also required to make certain certifications in our application for forgiveness, which will be

subject to audit and review by governmental entities and could subject us to significant penalties and liabilities if found to

be inaccurate, including being required to repay the PPP loan.

In addition, our receipt of the PPP Loan may result in adverse

publicity and damage to our reputation, and a review or audit by the SBA or other government entity or claims under the False

Claims Act could consume significant financial and management resources.

Any of these events could materially harm our business,

results of operations and financial condition.

may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.

estimates of our future operating and capital expenditures are based upon our current business plan, our current operations and

our current expectations regarding the commercialization of our proprietary formulations.

Our projections have varied significantly

in the past as a result of changes to our business model and strategy, our termination of efforts to pursue FDA approval of a

drug candidate in November 2013, our acquisitions of compounding facilities and various product and corporate development opportunities

since 2014, and the expenses in developing our pharmacy facilities into outsourcing facilities and registering them as such with

We may not accurately estimate the potential revenues and expenses of our operations.

If we are unable to correctly estimate

the amount of cash necessary to fund our business, we could spend our available financial resources much faster than we expect.

If we do not have sufficient funds to continue to operate and develop our business, we could be required to seek additional financing

earlier than we expect, which may not be available when needed or at all, or be forced to delay, scale back or eliminate some

or all of our proposed operations.

have incurred significant indebtedness, which will require substantial cash to service and which subjects us to certain financial

requirements and business restrictions.

ability to make scheduled payments on our indebtedness depends on our future performance and ability to raise additional capital,

which is subject to economic, financial, competitive and other factors, some of which are beyond our control.

If we are unable

to generate sufficient cash to service our debt, we may be required to adopt one or more alternatives, such as selling assets,

restructuring our debt or obtaining additional capital through equity sales or incurrence of additional debt on terms that may

be onerous or highly dilutive to our stockholders.

Our ability to engage in any of these activities would depend on the capital

markets and our financial condition at such time, and we may not be able to do so when needed, on desirable terms or at all, which

could result in a default on our debt obligations.

Additionally, our debt instrument with SWK Funding LLC (“SWK”)

contains various restrictive covenants, including, among others, our obligation to deliver to SWK certain financial and other

information, our obligation to comply with certain notice and insurance requirements, and our inability, without SWK’s prior

consent, to dispose of certain of our assets, incur certain additional indebtedness, enter into certain merger, acquisition or

change of control transactions, pay certain dividends or distributions on or repurchase any of our capital stock or incur any

lien or other encumbrance on our assets, subject to certain permitted exceptions.

Any failure by us to comply with any of these

covenants, subject to certain cure periods, or to make all payments under the debt instruments when due, would cause us to be

in default under the applicable debt instrument.

In the event of any such default, SWK may be able to foreclose on our assets

that secure the debt or declare all borrowed funds, together with accrued and unpaid interest, immediately due and payable, thereby

potentially causing all of our available cash to be used to pay our indebtedness or forcing us into bankruptcy or liquidation

if we do not then have sufficient cash available.

Any such event or occurrence could severely and negatively impact our operations

and prospects.

may need additional capital in order to continue operating our business, and such additional funds may not be available when needed,

on acceptable terms, or at all.

all our efforts to expand pharmacy operations will involve significant costs and other resources, which we may not be able to

afford and may disrupt our other operations and distract management and employees from the other aspects of our business.

result, our business could materially suffer if we are unable to further develop a group of unified compounding facilities and,

even if we are successful, we may be unable to generate sufficient revenue to recover our costs.

only recently started generating cash from operations, but we do not currently earn sufficient revenues to support our operations.

We may need significant additional capital to execute our business plan and fund our proposed business operations.

Additionally,

our plans may change or the estimates of our operating expenses and working capital requirements could be inaccurate, we may pursue

acquisitions of pharmacies or other strategic transactions that involve large expenditures, or we may experience growth more quickly

or on a larger scale than we expect, any of which may result in the depletion of capital resources more rapidly than anticipated

and could require us to seek additional financing earlier than we expect to support our operations.

have raised over $59,000,000 in funds through equity and debt financings since January 2015.

We may seek to obtain additional

capital through equity or debt financings, funding from corporate partnerships or licensing arrangements, sales of assets or other

financing transactions.

If we issue additional equity or convertible debt securities to raise funds, our existing stockholders

may experience substantial dilution, and the newly issued equity or debt securities may have more favorable terms or rights, preferences

and privileges senior to those of our existing stockholders.

If we raise additional funds through collaboration and licensing

arrangements or sales of assets, we may have to relinquish potentially valuable rights to our drug candidates or proprietary technologies,

or grant licenses on terms that are not favorable to us.

If we raise funds by incurring additional debt, we may be required to

pay significant interest expenses and our leverage relative to our earnings or to our equity capitalization may increase.

commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments and may

impose restrictions on our activities, such as the financial and operating covenants included in our loan agreement with SWK.

Further, we may incur substantial costs in pursuing future capital and/or financing transactions, including investment banking

fees, legal fees, accounting fees, printing and distribution expenses and other costs.

We may also be required to recognize non-cash

expenses in connection with certain securities we may issue, such as options, convertible notes and warrants, which would adversely

impact our financial results.

Related to the Commercialization of our Product Candidates

are dependent on market acceptance of compounding pharmacies and compounded formulations, and physicians may be unwilling to prescribe,

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were due to mislabeling by the underlying supplier, and not of our own misdoing.

Separately, in December 2017, we were issued

a warning letter from the FDA alleging that, in their interpretation of our public communications, we had made false or misleading

claims and omitted risk and side effect information regarding certain of our ophthalmology focused compounded medications.

immediately performed a full review of our public communications referenced in the warning letter and responded to the FDA in

January 2018.

Notwithstanding our continued belief that our public communications were not in fact false and misleading, we have

been in communication with the FDA and are taking steps to address the items outlined in the FDA letter.

In June 2019, our outsourcing

facility was issued a warning letter related to an April 2017 inspection and our use of certain active pharmaceutical ingredients

in our compounded medications.

We responded to the warning letter in July 2019.

We will continue to work with the FDA to assure

that all allegations in the warning letters have been addressed.

We believe, to date, we have addressed all of the material items

of concern in the FDA’s warning letters and those related to the MedWatch notification (and any other requirements observed

by FDA and noted to us), and we do not believe there will be any further action taken by FDA in these matters.

Nonetheless, these

items increased further scrutiny and negative publicity on us as a company.

At times, we have become aware of negative views of

regulators related to certain formulations, and as a result discontinued compounding certain drug formulations in an attempt help

mitigate potential regulatory risk.

As a result of the MedWatch notice, warning letters and other regulatory notifications, some

physicians may be hesitant to prescribe and some patients may be hesitant to purchase and use non-FDA approved compounded formulations,

particularly when an FDA-approved potential alternative is available.

For other reasons physicians may be unwilling to prescribe

or patients may be unwilling to use our proprietary compounded formulations, including the following:

legal proscriptions on our

ability to discuss the efficacy or safety of our formulations with potential users to the extent applicable data is available;

We no longer compound curcumin emulsion products.

Separately, in December 2017, we were issued a warning letter from the FDA alleging that, in their interpretation of our public

communications, we had made false or misleading claims and omitted risk and side effect information regarding certain of our ophthalmology

focused compounded medications.

We immediately performed a full review of our public communications referenced in the warning

letter and responded to the FDA in January 2018.

Notwithstanding our continued belief that our public communications were not

in fact false and misleading, we have been in communication with the FDA and are taking steps to address the items outlined in

the FDA letter.

In June 2019, our outsourcing facility was issued a warning letter related to an April 2017 inspection and our

use of certain active pharmaceutical ingredients in our compounded medications.

During September 2020 through January 2021, our

New Jersey based outsourcing facility was inspected by the FDA (the “2020 Inspection”) and certain observations

were made by the FDA in a Form 483.

Five observations made during the 2020 Inspection were considered repeat observations

from a 2017 FDA inspection.

In addition, during the 2020 Inspection, the FDA noted that we were compounding drugs for which

there is no change that produces for an individual patient a clinical difference, as determined by a prescribing practitioner

between a compounded drug and the comparable approved drug.

We have responded to the FDA regarding all of their observations

from the 2020 Inspection, including providing documentation from prescribing clinicians that indicate a clinical difference between

our compounded drugs and the comparable approved drugs, while also committing to amend our order process to collect “medical

necessity/clinical difference” information for each order of our compounded drugs on a go-forward basis.

will continue to work and communicate with the FDA to assure that all allegations in the warning letters and 483s have been addressed.

We believe, to date, we have addressed all of the material items of concern in the FDA’s 483, warning letters and those

related to the MedWatch notification (and any other requirements observed by the FDA and noted to us), and we do not believe

there will be any further action taken by the FDA in these matters.

Nonetheless, these items increased further scrutiny

and negative publicity on us as a company.

As part of our commitment to actively work with regulators, at times, we have become

aware of concerns related to certain formulations, and as a result, discontinued compounding certain drug formulations in an attempt

to help mitigate potential regulatory risk.

As a result of the MedWatch notice, warning letters and other regulatory notifications,

some physicians may be hesitant to prescribe and some patients may be hesitant to purchase and use non-FDA-approved compounded

formulations, particularly when an FDA-approved potential alternative is available.

For other reasons, physicians may be unwilling

to prescribe or patients may be unwilling to use our proprietary compounded formulations, including the following:

legal prohibitions

on our ability to discuss the efficacy or safety of our formulations with potential users to the extent applicable data is available;

our pharmacy operations are primarily operating on a cash-pay basis and reimbursement may or may not be available from third-party

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and/or third-party payors to accept and embrace compounded formulations could substantially limit our market and cause our operations

business is significantly impacted by state and federal statutes and regulations.

proprietary formulations are comprised of active pharmaceutical ingredients that are components of drugs that have received marketing

approval from the FDA, although our proprietary compounded formulations have not themselves received FDA approval.

is not required in order to market and sell our compounded formulations.

In the future we may choose to pursue FDA approval to

market and sell certain potential drug candidates.

The marketing and sale of compounded formulations is subject to and must comply

with extensive state and federal statutes and regulations governing compounding pharmacies.

These statutes and regulations include,

among other things, restrictions on compounding for office use or in advance of receiving a patient-specific prescription or,

for outsourcing facilities, requirements regarding preparation, such as regular FDA inspections and cGMP requirements, prohibitions

on compounding drugs that are essentially copies of FDA-approved drugs, limitations on the volume of compounded formulations that

may be sold across state lines, and prohibitions on wholesaling or reselling.

These and other restrictions on the activities of

compounding pharmacies and outsourcing facilities may significantly limit the market available for compounded formulations, compared

to the market available for FDA-approved drugs.

pharmacy business is impacted by federal and state laws and regulations governing the following:

the purchase, distribution, management,

compounding, dispensing, reimbursement, marketing and labeling of prescription drugs and related services;

FDA and/or state regulation

affecting the pharmacy and pharmaceutical industries, including state pharmacy licensure and registration or permit standards;

rules and regulations issued pursuant to HIPAA and other state and federal laws related to the use, disclosure and transmission

of health information;

and state and federal controlled substance laws.

Our failure to comply with any of these laws and regulations

could severely limit or curtail our pharmacy operations, which would materially harm our business and prospects.

business could be adversely affected by changes in these or any newly enacted laws and regulations, and federal and state agency

interpretations of the statutes and regulations.

Statutory or regulatory changes could require us to make changes to our business

model and operations and/or could require us to incur significantly increased costs to comply with such regulations.

one of our pharmacies fails to comply with state statutes and regulations, the pharmacy could be required to cease operations

or become subject to restrictions that could adversely affect our business.

pharmacy laws require pharmacy locations in those states be licensed as an in-state pharmacy to dispense pharmaceuticals.

state controlled substance laws require registration and compliance with state pharmacy licensure, registration or permit standards

promulgated by the state’s pharmacy licensing authority.

Pharmacy and controlled substance laws often address the qualification

of an applicant’s personnel, the adequacy of its prescription fulfillment and inventory control practices and the adequacy

of its facilities.

If one of our pharmacies, or with which we may partner is found not to comply with state pharmacy and controlled

substance laws and regulations, the pharmacy could be required to cease operations or become subject to burdensome restrictions

and limitations on its business.

For example, in March 2018, the California Board of Pharmacy filed an accusation against our

subsidiary Park related to a compounded formulation we believe was legally dispensed and was, without our knowledge, inappropriately

administered to a patient unknown to us, by the prescribing healthcare professionals.

While we dispute all claims against Park,

we did enter into a settlement agreement with the California Board of Pharmacy and surrendered Park’s pharmacy license and

ceased its sterile compounding operations.

We have transferred approximately half of Park’s business to our New Jersey based

Although we distribute our proprietary formulations through other compounding pharmacies, and not solely through Park,

the loss of Park’s ability to compound sterile formulations could have an adverse impact on our ability to implement our

business plan in a timely manner.

we or our partner facilities fail to comply with the Controlled Substances Act, FDCA, or similar state statutes and regulations,

the pharmacy facilities could be required to cease operations or become subject to restrictions that could adversely affect our

pharmacy laws require pharmacy locations in those states to be licensed as an in-state pharmacy to dispense pharmaceuticals.

addition, state controlled substance laws require registration and compliance with state pharmacy licensure, registration or permit

standards promulgated by the state’s pharmacy licensing authority.

Pharmacy and controlled substance laws often address

the qualification of an applicant’s personnel, the adequacy of its prescription fulfillment and inventory control practices

and the adequacy of its facilities.

These laws also subject pharmacies to oversight by state boards of pharmacy and other regulators

that could impose burdensome requirements or restrictions on operations if a pharmacy is found not in compliance with these laws.

We believe that our compounding pharmacies are in material compliance with applicable regulatory requirements.

Further, if any

of our compounding pharmacies (including Park) fail to comply with regulatory requirements, they could be forced to permanently

or temporarily cease or limit their compounding operations, which would severely limit our ability to market and sell our proprietary

formulations and would materially harm our operations and prospects.

Any noncompliance could also result in complaints or adverse

actions by other state boards of pharmacy.

FDA inspection of a facility to determine compliance with the FDCA, if not successful,

may result in the loss of FDCA exemptions provided under Sections 503A and 503B, warning letters, injunctions, prosecution, fines

and loss of required government licenses, certifications and approvals, any of which could involve significant costs and could

cause us to be unable to realize the expected benefits of these pharmacies’

under federal law, Section 503A of the FDCA seeks to limit the amount of compounded products that a pharmacy can dispense interstate.

The interpretation and enforcement of this provision is dependent on the FDA entering into a standard MOU with each state setting

forth limits on shipments of interstate compounding.

Previously, the draft MOU presented by the FDA in February 2015 intended

to limit interstate shipments of compounded drug units to 30% of all compounded and non-compounded units dispensed or distributed

by the pharmacy per month, the excess of which the FDA considered an “inordinate amount.”

The FDA stated in the guidance

issued in February 2015 that it would not enforce interstate restrictions until after it published a final MOU and made it available

to states for signature for some designated period of time.

If the final MOU was drafted and released by the FDA and was not signed

by a particular state, then interstate shipments of compounded preparations from a pharmacy located in that state would be limited

to quantities not greater than 5% of total prescription orders dispensed or distributed by the pharmacy;

however, we are not aware

that the FDA currently enforces or has in the past enforced the 5% rule and, under current draft guidance, the FDA had historically

stated that it would not enforce the 5% rule until a final MOU was made available to states for signature.

The FDA originally

proposed a 180-day period for states to agree to the final MOU after the final version was presented, which to date has not occurred,

before it would begin to enforce the 5% rule.

In January of 2018, the FDA released the 2018 Compounding Plan which provided an

overview of the key priorities the FDA plans to focus on in 2018 in connection with compounding regulations.

One of the priorities

outlined in the 2018 Compounding Plan addressed the current status of the MOU and the FDA’s plan to release the Revised

Pursuant to the statements in the 2018 Compounding Plan, the Revised MOU would consider amounts shipped interstate by a compounder

to be inordinate amounts if the “number of prescriptions of compounded drugs distributed interstate during any calendar

month is greater than 50 percent.”

Importantly, instead of that number serving as a “hard limit, for state action,”

the 50% target would trigger certain additional reporting requirements.

The Revised MOU will also provide states more time to

report to the FDA, and flexibility on identifying when amounts are inordinate, considering the size and scope of compounding operations.

Until the Revised MOU is issued and presented to states to consider, the extent of interstate dispensing restrictions imposed

by Section 503A is unknown.

However, if the final Revised MOU contains a 50% limit on interstate distribution, dependent on the

additional reporting requirements to be outlined in the Revised MOU, our pharmacy operations could be materially limited.

Additionally,

the permanent injunction entered on July 22, 2019, by the United States District Court of the Central District of California in

the Allergan litigation (also referenced in Item.

3 Legal Proceedings), enjoins the Company from engaging in activities that are

inconsistent with current FDA guidelines for 503A and 503B operations.

While the Company believes its operations fully comply

with the injunction, if the Court were to find the Company to be in violation of the injunction, further sanctions including fines

and limitations on the pharmacies’

operations could occur.

are many competitive risks related to marketing and selling our proprietary formulations and operating our compounding pharmacy

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Although we prepare our compounded formulations in accordance with the standards

provided by the United States Pharmacopeia (“USP”) <795> and USP <797> and applicable state and federal

law, our proprietary compounded formulations are not required to be, and have not been, approved for marketing and sale by the

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we may never gain market share or achieve sustained profitability.

a compounded drug formulation provided through our compounding services leads to patient injury or death or results in a product

recall, we may be exposed to significant liabilities and reputational harm.

success of our business, including our proprietary formulations and pharmacy operations, is highly dependent upon medical and

patient perceptions of us and the actual safety and quality of our products.

We could be adversely affected if we, any other compounding

pharmacies or our formulations and technologies are subject to negative publicity.

We could also be adversely affected if any

of our formulations or other products we sell, any similar products sold by other companies, or any products sold by other compounding

pharmacies prove to be, or are asserted to be, harmful to patients.

For instance, if any of the components of approved drugs or

other ingredients used to produce our compounded formulations have quality or other problems that adversely affect the finished

compounded preparations, our sales could be adversely affected.

Because of our dependence upon medical and patient perceptions,

adverse publicity associated with illness or other adverse effects resulting from the use or misuse of our products, any similar

products sold by other companies, or any other compounded formulations could have a material adverse impact on our business.

assure compliance with USP guidelines, we have a policy whereby 100% of all sterile compound batches produced by our ImprimisRx

compounding pharmacies are tested prior to their delivery to patients and physicians both in-house and externally by an independent,

FDA-registered laboratory that has represented to us that it operates in compliance with current good laboratory practices.

we could still become subject to product recalls and termination or suspension of our state pharmacy licenses if we fail to fully

implement this policy, if the laboratory testing does not identify all contaminated products, or if our products otherwise cause

or appear to have caused injury or harm to patients.

In addition, laboratory testing may produce false positives, which could

harm our business and impact our pharmacy operations and licensure even if the impacted formulations are ultimately found to be

sterile and no patients are harmed by them.

If adverse events or deaths or a product recall, either voluntarily or as required

by the FDA or a state board of pharmacy, were associated with one of our proprietary formulations or any compounds prepared by

our ImprimisRx compounding pharmacies or any pharmacy partner, our reputation could suffer, physicians may be unwilling to prescribe

our proprietary formulations or order any prescriptions from such pharmacies, we could become subject to product and professional

liability lawsuits, and our state pharmacy licenses could be terminated or restricted.

If any of these events were to occur, we

may be subject to significant litigation or other costs and loss of revenue, and we may be unable to continue our pharmacy operations

and further develop and commercialize our proprietary formulations.

carry product and professional liability insurance which may be inadequate.

we have secured product and professional liability insurance for our pharmacy operations and the marketing and sale of our formulations,

our current or future insurance coverage may prove insufficient to cover any liability claims brought against us.

Because of the

increasing costs of insurance coverage, we may not be able to maintain insurance coverage at a reasonable cost or at a level adequate

to satisfy liabilities that may arise.

ability to generate revenues will be diminished if we fail to obtain acceptable prices or an adequate level of reimbursement from

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products less attractive or unavailable to some patients or could reduce our margins.

may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.

estimates of our future operating and capital expenditures are based upon our current business plan, our current operations and

our current expectations regarding the commercialization of our proprietary formulations.

Our projections have varied significantly

in the past as a result of changes to our business model and strategy, our termination of efforts to pursue FDA approval of a

drug candidate in November 2013, our acquisitions of compounding facilities and various product and corporate development opportunities

since 2014, and the expenses in developing our pharmacy facilities into outsourcing facilities and registering them as such with

We may not accurately estimate the potential revenues and expenses of our operations.

If we are unable to correctly estimate

the amount of cash necessary to fund our business, we could spend our available financial resources much faster than we expect.

If we do not have sufficient funds to continue to operate and develop our business, we could be required to seek additional financing

earlier than we expect, which may not be available when needed or at all, or be forced to delay, scale back or eliminate some

or all of our proposed operations.

may be unable to successfully develop and commercialize our proprietary formulations or any other assets we may acquire.

have acquired assets related to compoundable formulations, and we have entered into one license agreement for rights to commercialize

a compounding formulation.

We are currently pursuing development and commercialization opportunities with respect to certain of

these formulations, and we are in the process of assessing certain of our other assets in order to determine whether to pursue

their development or commercialization.

In addition, we expect to consider the acquisition of additional intellectual property

rights or other assets in the future.

Once we determine to pursue a potential drug candidate, we develop a commercialization strategy

for it, which may include marketing and selling the formulation in compounded form through compounding pharmacies or outsourcing

facilities, or pursuing FDA approval of the drug candidate.

We may incorrectly assess the risks and benefits of the commercialization

options or we may not pursue a commercialization strategy that proves to be successful.

If we are unable to successfully commercialize

one or more of our proprietary formulations, our operating results would be adversely affected.

Even if we are able to successfully

sell one or more proprietary formulations, we may never recoup our investment in acquiring or developing the formulations.

failure to identify and expend our resources on formulations and technologies with commercial potential and execute an effective

commercialization strategy for each of our formulations would negatively impact the long-term profitability of our business.

Related to Our Operations

COVID-19 pandemic has had an adverse effect on our business and results of operations and is expected to continue to have further

adverse effects, which could be material, on our business, results of operations, financial condition, liquidity, and capital

March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic.

The COVID-19 pandemic has negatively

impacted the global economy, disrupted supply chains and created significant volatility in financial markets.

We have implemented

business policies intended to protect our employees from the spread of COVID-19.

Those policies include employees working from

home when possible and employees in our facilities increasing physical distancing.

March 18, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released guidance for U.S.

healthcare providers

to limit all elective medical procedures in order to conserve personal protective equipment and limit exposure to COVID-19 during

the pendency of the pandemic.

Many of our customers use our products in procedures impacted by the guidance.

In addition to limiting

medical procedures, many hospitals and other healthcare providers have strictly limited access to their facilities during the

We cannot predict the duration or scope of the pandemic, actions that may be taken by governments and businesses in

response to the pandemic, or the impacts of the pandemic on healthcare systems.

The impacts of the pandemic may include, but are

not limited to:

revenues from our customers, including our major customers, whose products are impacted by CMS guidance to limit elective

medical procedures;

ability or willingness of third parties to market, distribute and sell our products, due to reduced demand from, or lack of

access to, healthcare facilities and providers;

ability, or inability, to complete clinical trials and other activities required to achieve regulatory clearance of our products

under development due to lack of access to healthcare facilities, healthcare providers and patients;

or lost access to third party service providers that we use in our research and development or marketing efforts;

cash flow from our operations due to reductions in revenues or collections from our customers and increases in operating costs

related to actions we have taken in response to the pandemic;

business productivity due to inefficiencies in employees working from home or increasing physical distancing and other pandemic

response protocols in our production facilities;

susceptibility to the risk of information technology security breaches and other disruptions due to increased volumes of remote

access to our information systems from our employees working at home;

to source sufficient components used in our products due to disruptions in supply chains;

ability to identify, evaluate and acquire, or effectively integrate, complementary businesses, products, materials or technologies

due to travel restrictions, physical distancing protocols, and lack of access to third party service providers related to

our development activities;

of manufacturing capacity, which could lead to failures to meet product delivery commitments, or increased operating costs

if one of our facilities were to experience a COVID-19 outbreak;

in assessing and securing intellectual property rights due to lack of access to, or delayed responsiveness of, third party

service providers or governmental agencies;

ability to retain personnel over concerns about workplace exposure to COVID-19, or to hire and effectively train new personnel,

due to physical distancing protocols;

of goodwill or other assets due to reductions in the fair value of our reporting units.

and other factors relating to, or arising from, the pandemic could have material adverse effects on our business, results of operations,

cash flows, financial condition, and capital investments.

Actual or anticipated adverse effects on our cash flows or financial

condition may lead us to seek additional funding.

Any future debt financing into which we enter may impose upon us covenants that

restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our

common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

We cannot be certain

that additional funding will be available on acceptable terms, if at all.

If we do not have, or are not able to obtain, sufficient

funds, we may have to delay development or commercialization of our products or otherwise curtail our operations.

events could materially harm our business and operating results.

disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

operations, and those of contract research organizations (or CROs), contractors and consultants, could be subject to power shortages,

telecommunications failures, wildfires, water shortages, floods, earthquakes, hurricanes, typhoons, fires, extreme weather conditions,

medical epidemics, such as the COVID-19 pandemic, and other natural or man-made disasters or business interruptions for which

we are predominantly self-insured.

The occurrence of any of these business disruptions could seriously harm our operations and

financial condition and increase our costs and expenses.

Our ability to obtain clinical supplies of our product candidates could

be disrupted if the operations of our contract manufacturers, or the contract manufacturers of our development partners, are affected

by a man-made or natural disaster or other business interruption.

sell our proprietary formulations primarily through pharmaceutical compounding facilities we own, but we may not be successful

in our efforts to integrate these businesses into our operations.

currently have two compounding facilities in New Jersey.

We may plan to expand our pharmacy operations and personnel and develop

our facilities into a unified group compounding pharmacy facilities.

We have developed “ImprimisRx” as a uniform brand

for our compounding facilities and ophthalmology focused pharmaceutical compounding business.

We have limited experience acquiring,

building or operating compounding pharmacies or other prescription dispensing facilities or commercializing our formulations through

ownership of or licensing arrangements with pharmacies.

In addition, as we have in the past purchased and operated certain pharmaceutical

compounding businesses and pharmacies and subsequently divested or sold those associated assets, we may pursue similar strategies

in the future.

Those things considered, we may experience difficulties implementing and/or executing on our compounding pharmacy

strategy, including difficulties that arise as a result of our lack of experience, and we may be unsuccessful and our plans may

change materially.

For instance:

have experienced delays and increased costs in relation to expansion efforts;

may not be able to satisfy applicable federal and state licensing and other requirements for any of our pharmacy businesses

in a timely manner or at all;

to federal and state pharmacy regulations may restrict compounding operations or make them more costly;

may be unable to achieve or maintain a sufficient physician and patient customer base to sustain our pharmacy operations;

acceptance of compounding pharmacies generally may be curtailed or delayed;

may not be able to enter into licensing or other arrangements with third-party pharmacies or outsourcing facilities when desired,

on acceptable terms or at all.

all our efforts to expand pharmacy operations will involve significant costs and other resources, which we may not be able to

afford and may disrupt our other operations and distract management and employees from the other aspects of our business.

result, our business could materially suffer if we are unable to further develop a group of unified compounding facilities and,

even if we are successful, we may be unable to generate sufficient revenue to recover our costs.

we do not successfully identify and acquire rights to potential formulations and successfully integrate them into our operations,

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However, our expectations and assumptions about market potential and patient needs

may prove to be wrong and we may invest capital and other resources on formulations that do not generate sufficient revenues for

us to recoup our investment.

may be unable to successfully develop and commercialize our proprietary formulations or any other assets we may acquire.

have acquired assets related to compoundable formulations and we have entered into one license agreement for rights to commercialize

a compounding formulation.

We are currently pursuing development and commercialization opportunities with respect to certain of

these formulations, and we are in the process of assessing certain of our other assets in order to determine whether to pursue

their development or commercialization.

In addition, we expect to consider the acquisition of additional intellectual property

rights or other assets in the future.

Once we determine to pursue a potential drug candidate, we develop a commercialization strategy

for it, which may include marketing and selling the formulation in compounded form through compounding pharmacies or outsourcing

facilities, or pursuing FDA approval of the drug candidate.

We may incorrectly assess the risks and benefits of the commercialization

options or we may not pursue a commercialization strategy that proves to be successful.

If we are unable to successfully commercialize

one or more of our proprietary formulations, our operating results would be adversely affected.

Even if we are able to successfully

sell one or more proprietary formulations, we may never recoup our investment in acquiring or developing the formulations.

failure to identify and expend our resources on formulations and technologies with commercial potential and execute an effective

commercialization strategy for each of our formulations would negatively impact the long-term profitability of our business.

have incurred significant indebtedness, which will require substantial cash to service and which subjects us to certain financial

requirements and business restrictions.

ability to make scheduled payments on our indebtedness depends on our future performance and ability to raise additional capital,

which is subject to economic, financial, competitive and other factors, some of which are beyond our control.

If we are unable

to generate sufficient cash to service our debt, we may be required to adopt one or more alternatives, such as selling assets,

restructuring our debt or obtaining additional capital through equity sales or incurrence of additional debt on terms that may

be onerous or highly dilutive to our stockholders.

Our ability to engage in any of these activities would depend on the capital

markets and our financial condition at such time, and we may not be able to do so when needed, on desirable terms or at all, which

could result in a default on our debt obligations.

Additionally, our debt instrument with SWK Funding LLC (“SWK”)

contain various restrictive covenants, including, among others, our obligation to deliver to SWK certain financial and other information,

our obligation to comply with certain notice and insurance requirements, and our inability, without SWK’s prior consent,

to dispose of certain of our assets, incur certain additional indebtedness, enter into certain merger, acquisition or change of

control transactions, pay certain dividends or distributions on or repurchase any of our capital stock or incur any lien or other

encumbrance on our assets, subject to certain permitted exceptions.

Any failure by us to comply with any of these covenants, subject

to certain cure periods, or to make all payments under the debt instruments when due, would cause us to be in default under the

applicable debt instrument.

In the event of any such default, SWK may be able to foreclose on our assets that secure the debt

or declare all borrowed funds, together with accrued and unpaid interest, immediately due and payable, thereby potentially causing

all of our available cash to be used to pay our indebtedness or forcing us into bankruptcy or liquidation if we do not then have

sufficient cash available.

Any such event or occurrence could severely and negatively impact our operations and prospects.

may need additional capital in order to continue operating our business, and such additional funds may not be available when needed,

on acceptable terms, or at all.

only recently started generating cash from operations, but we do not currently earn sufficient revenues to support our operations.

We may need significant additional capital to execute our business plan and fund our proposed business operations.

Additionally,

our plans may change or the estimates of our operating expenses and working capital requirements could be inaccurate, we may pursue

acquisitions of pharmacies or other strategic transactions that involve large expenditures, or we may experience growth more quickly

or on a larger scale than we expect, any of which may result in the depletion of capital resources more rapidly than anticipated

and could require us to seek additional financing earlier than we expect to support our operations.

have raised over $59,000,000 in funds through equity and debt financings since January 2015.

We may seek to obtain additional

capital through equity or debt financings, funding from corporate partnerships or licensing arrangements, sales of assets or other

financing transactions.

If we issue additional equity or convertible debt securities to raise funds, our existing stockholders

may experience substantial dilution, and the newly issued equity or debt securities may have more favorable terms or rights, preferences

and privileges senior to those of our existing stockholders.

If we raise additional funds through collaboration and licensing

arrangements or sales of assets, we may have to relinquish potentially valuable rights to our drug candidates or proprietary technologies,

or grant licenses on terms that are not favorable to us.

If we raise funds by incurring additional debt, we may be required to

pay significant interest expenses and our leverage relative to our earnings or to our equity capitalization may increase.

commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments and may

impose restrictions on our activities, such as the financial and operating covenants included in our loan agreement with SWK.

Further, we may incur substantial costs in pursuing future capital and/or financing transactions, including investment banking

fees, legal fees, accounting fees, printing and distribution expenses and other costs.

We may also be required to recognize non-cash

expenses in connection with certain securities we may issue, such as options, convertible notes and warrants, which would adversely

impact our financial results.

may prove to be wrong, and we may invest capital and other resources on formulations that do not generate sufficient revenues

for us to recoup our investment.

have in the past and may in the future participate in strategic transactions that could impact our liquidity, increase our expenses

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other operational and financial risks, including, among others, exposure to unknown liabilities, disruption of our business and

diversion of our management’s time and attention in order to develop acquired products, drug candidates, technologies or

part of our efforts to complete any significant transaction, we would need to expend significant resources to conduct business,

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be subject to significant costs and damage to our reputation, business, results of operations and financial condition.

we are unable to establish, train and maintain an effective sales and marketing infrastructure, we will not be able to commercialize

our drug candidates successfully.

have started to build an internal sales and marketing infrastructure to implement our business plan by developing internal sales

teams and education campaigns to market our proprietary formulations.

We will need to expend significant resources to further

establish and grow this internal infrastructure and properly train sales personnel with respect to regulatory compliance matters.

We may also choose to engage or enter into other arrangements with third parties to provide sales and marketing services for us

in place of or to supplement our internal commercialization infrastructure.

We may not be able to secure sales personnel or relationships

with third-party sales organizations that are adequate in number or expertise to successfully market and sell our proprietary

formulations and pharmacy services.

Further, any third-party organizations we may seek to partner with or engage may not be able

to provide sales and marketing services in accordance with our expectations and standards, may be more expensive than we can afford

or may not be available on otherwise acceptable terms or at all.

If we are unable to establish and maintain compliant and adequate

sales and marketing capabilities, through our own internal infrastructure or third-party services or other arrangements, we may

be unable to sell our formulations or services or generate meaningful revenue.

business and operations would suffer in the event of cybersecurity or other system failures.

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operations, any of which could severely harm our business and prospects.

market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

time to time, including recently as a result of the COVID-19 pandemic, global credit and financial markets have experienced extreme

volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence,

declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

Our general business strategy

may be adversely affected by any such economic downturn, volatile business environment and continued unpredictable and unstable

market conditions.

If the equity and credit markets deteriorate it may make any debt or equity financing more difficult to complete,

more costly, and more dilutive.

In the event the Company or one of its subsidiaries needed to access additional capital, failure

to secure financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial

performance and stock price and could require us to delay or abandon development plans.

In addition, there is a risk that one

or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly

affect our ability to attain our operating goals on schedule and on budget.

Related to Regulatory Approval and Other Legal Compliance Matters

business is significantly impacted by state and federal statutes and regulations.

proprietary formulations are comprised of active pharmaceutical ingredients that are components of drugs that have received marketing

approval from the FDA, although our proprietary compounded formulations have not themselves received FDA approval.

is not required in order to market and sell our compounded formulations.

In the future, we may choose to pursue FDA approval to

market and sell certain potential drug candidates.

The marketing and sale of compounded formulations is subject to and must comply

with extensive state and federal statutes and regulations governing compounding pharmacies.

These statutes and regulations include,

among other things, restrictions on compounding for office use or in advance of receiving a patient-specific prescription or,

for outsourcing facilities, requirements regarding preparation, such as regular FDA inspections and cGMP requirements, prohibitions

on compounding drugs that are essentially copies of FDA-approved drugs, limitations on the volume of compounded formulations that

may be sold across state lines, and prohibitions on wholesaling or reselling.

These and other restrictions on the activities of

compounding pharmacies and outsourcing facilities may significantly limit the market available for compounded formulations, compared

to the market available for FDA-approved drugs.

pharmacy business is impacted by federal and state laws and regulations governing the following:

the purchase, distribution, management,

compounding, dispensing, reimbursement, marketing and labeling of prescription drugs and related services including:

state regulation affecting the pharmacy and pharmaceutical industries, including state pharmacy licensure and registration or

permit standards;

rules and regulations issued pursuant to HIPAA and other state and federal laws related to the use, disclosure

and transmission of health information;

and state and federal controlled substance laws.

Our failure to comply with any of these

laws and regulations could severely limit or curtail our pharmacy operations, which would materially harm our business and prospects.

Further, our business could be adversely affected by changes in these or any newly enacted laws and regulations, and federal and

state agency interpretations of the statutes and regulations.

Statutory or regulatory changes could require us to make changes

to our business model and operations and/or could require us to incur significantly increased costs to comply with such regulations.

July 30, 2020, the FDA issued a notice for comments related to certain bulk drug substances to be removed from the 503B Bulk’s

List (or Category 1 List).

Included in this notice for comment were certain bulk drug substances which we currently use in some

of our compounded products.

In the event one or more of these bulk substances are ultimately removed from the Category 1 List,

we intend to utilize commercially available versions of these substances or similar active pharmaceutical ingredients as replacements

of the bulk powders contained in our sterile products.

In addition, nothing in the FDA’s notice affects the dispensing of

bulk powder-containing products from our 503A pharmacy.

Nonetheless, if all or some of the bulk drug substances we use are removed

from the 503B Bulk’s List, this may result in a disruption in our operations, revenues and cash flows.

October 27, 2020, the FDA announced availability of a final Memorandum of Understanding, Addressing Certain Distributions of Compounded

Human Drug Products Between the State Board of Pharmacy or Other Appropriate State Agency and the Food and Drug Administration

The MOU describes the responsibilities of a state board of pharmacy, or other appropriate state agency

that chooses to sign the MOU, in investigating and responding to complaints related to drug products compounded in such state

and distributed outside such state and in addressing the interstate distribution of inordinate amounts of compounded human drug

Additionally, as part of the MOU, FDA refined the definition of “inordinate amount,” a threshold for certain

information identification and sharing which does not place a limit on the distribution of compounded human drug products interstate

by a pharmacy located in a state that has entered into the MOU.

Section 503A of the FDCA sets a five percent limit on compounded

drugs distributed outside the state by a pharmacist, pharmacy or physician located in a state that has not entered into the MOU.

have 365 days to sign the MOU, before the FDA intends to enforce the five percent limit described in Section 503A of the FDCA

in states that have not signed the MOU.

Our pharmacy is based in the state of New Jersey, and we believe the state board of pharmacy

in New Jersey will sign the MOU and as a result, our operations will not be materially affected by the MOU.

In the event New Jersey

does not sign the MOU, our pharmacy that operates under Section 503A may be materially affected, and we will transition as many

prescription orders as possible to our outsourcing facility, which is not subject to the MOU.

one of our pharmacies fails to comply with state statutes and regulations, the pharmacy could be required to cease operations

or become subject to restrictions that could adversely affect our business.

pharmacy laws require pharmacy locations in those states be licensed as an in-state pharmacy to dispense pharmaceuticals.

state controlled substance laws require registration and compliance with state pharmacy licensure, registration or permit standards

promulgated by the state’s pharmacy licensing authority.

Pharmacy and controlled substance laws often address the qualification

of an applicant’s personnel, the adequacy of its prescription fulfillment and inventory control practices and the adequacy

of its facilities.

If one of our pharmacies, or one with which we may partner, is found not to comply with state pharmacy and

controlled substance laws and regulations, the pharmacy could be required to cease operations or become subject to burdensome

restrictions and limitations on its business.

For example, in March 2018, the California Board of Pharmacy filed an accusation

against our subsidiary Park related to a compounded formulation we believe was legally dispensed and was, without our knowledge,

inappropriately administered to a patient unknown to us, by the prescribing healthcare professionals.

While we dispute all claims

against Park, we did enter into a settlement agreement with the California Board of Pharmacy and surrendered Park’s pharmacy

license and ceased its sterile compounding operations.

We have transferred approximately half of Park’s business to our

New Jersey based pharmacy.

Although we distribute our proprietary formulations through other compounding pharmacies, and not solely

through Park, the loss of Park’s ability to compound sterile formulations could have an adverse impact on our ability to

implement our business plan in a timely manner.

we or our partner facilities fail to comply with the Controlled Substances Act, FDCA, or similar state statutes and regulations,

the pharmacy facilities could be required to cease operations or become subject to restrictions that could adversely affect our

pharmacy laws require pharmacy locations in those states to be licensed as an in-state pharmacy to dispense pharmaceuticals.

addition, state controlled substance laws require registration and compliance with state pharmacy licensure, registration or permit

standards promulgated by the state’s pharmacy licensing authority.

Pharmacy and controlled substance laws often address

the qualification of an applicant’s personnel, the adequacy of its prescription fulfillment and inventory control practices

and the adequacy of its facilities.

These laws also subject pharmacies to oversight by state boards of pharmacy and other regulators

that could impose burdensome requirements or restrictions on operations if a pharmacy is found not in compliance with these laws.

We believe that our compounding pharmacies are in material compliance with applicable regulatory requirements.

Further, if any

of our compounding pharmacies (including Park) fail to comply with regulatory requirements, they could be forced to permanently

or temporarily cease or limit their compounding operations, which would severely limit our ability to market and sell our proprietary

formulations and would materially harm our operations and prospects.

Any noncompliance could also result in complaints or adverse

actions by other state boards of pharmacy.

FDA inspection of a facility to determine compliance with the FDCA, if not successful,

may result in the loss of FDCA exemptions provided under Sections 503A and 503B, warning letters, injunctions, prosecution, fines

and loss of required government licenses, certifications and approvals, any of which could involve significant costs and could

cause us to be unable to realize the expected benefits of these pharmacies’ operations.

Additionally, the permanent injunction

entered on July 22, 2019, by the United States District Court of the Central District of California in the Allergan litigation

(also referenced in Item.

3 Legal Proceedings), enjoins the Company from engaging in activities that are inconsistent with current

FDA guidelines for 503A and 503B operations.

While the Company believes its operations fully comply with the injunction, if the

Court were to find the Company to be in violation of the injunction, further sanctions including fines and limitations on the

pharmacies’ operations could occur.

we seek FDA approval to market and sell any of our proprietary formulations, such as drug candidates that we have royalty interests

in that are being developed by Melt and Surface, we may be unable to demonstrate the necessary safety and efficacy to obtain such

FDA approval.

Historically,

our business strategy was focused on developing and commercializing product opportunities as compounded formulations.

have, and in the future may, alone or with project partners, seek FDA regulatory approval to market and sell one or more of our

assets as a FDA-approved drug.

Obtaining FDA approval to market and sell pharmaceutical products is costly, time consuming, uncertain

and subject to unanticipated delays.

The FDA or other regulatory agencies may not approve a drug candidate on a timely basis or

Before we obtain FDA approval for the sale of any potential drug candidates, we will be required to demonstrate through

preclinical studies and clinical trials that it is safe and effective for each intended use, which we may not be able to do.

failure to demonstrate safety and efficacy of a drug candidate to the FDA’s satisfaction would result in our failure to

obtain FDA approval.

Moreover, even if the FDA were to grant regulatory approval of a drug candidate, the approval may be limited

to specific therapeutic areas or limited as to its distribution, which could reduce revenue potential, and we will be subject

to extensive and costly post-approval requirements and oversight with respect to commercialization of the drug candidate.