Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS
On June 14, 2022, the Company received a paragraph IV notice of certification (the “Notice Letter”) from Fresenius Kabi USA, LLC (“Fresenius Kabi”) advising that Fresenius Kabi had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI in the U.S. prior to the expiration of U.S. Patent Nos.: 9,561,229, 9,808,465, 9,974,742, 9,974,793, 9,974,794, 10,500,208, 10,624,850, 10,953,018, and 11,173,118 (the “CINVANTI Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). The Notice Letter alleges that the CINVANTI Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Fresenius Kabi’s ANDA.
On July 27, 2022, the Company filed a complaint for patent infringement of the CINVANTI Patents against Fresenius Kabi and a related entity in the U.S. District Court for the District of Delaware in response to Fresenius Kabi’s ANDA filing. The complaint seeks, among other relief, equitable relief enjoining Fresenius Kabi from infringing the CINVANTI Patents. The action is currently in fact discovery, and a five-day bench trial is scheduled for June 24, 2024. The Company intends to vigorously enforce its intellectual property rights relating to CINVANTI. As a result of filing our complaint for patent infringement, the FDA may not approve the ANDA until the earlier of December 14, 2024 or resolution of the litigation.
ITEM 1A. RIS K FACTORS
Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. Other than the new risk factor described below, there have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K.
We do not have an adequate number of authorized shares of common stock that are unissued and available for issuance to enable us to support the advancement of our business, including, without limitation, the issuance of shares in connection with any new equity or convertible debt financings, acquisitions, the exercise of options or other awards granted under various equity compensation plans, or other employee benefit plans, and the exercise of any newly issued pre-funded warrants, any of which could severely and irreparably harm our business, our future prospects and our ability to recruit and retain skilled employees.
We are currently authorized to issue up to a total of 150,000,000 shares of common stock. As of March 31, 2023, 119,279,655 shares were issued and outstanding and 43,594,573 shares were reserved for future issuance under outstanding convertible notes, options, restricted stock units and pre-funded warrants. Given our currently issued and outstanding shares and shares reserved for future issuance, we effectively have no available unissued and unreserved authorized shares to meet the needs of our business. Accordingly, our Board of Directors has approved, subject to stockholder approval at our upcoming 2023 annual meeting of stockholders, an amendment to our Certificate of Incorporation, as amended (“Certificate of Incorporation”) to increase the aggregate number of shares of common stock that we are authorized to issue from 150,000,000 to 225,000,000 and an amendment to our 2007 Amended and Restated Equity Incentive Plan (“2007 Plan”) to increase the number of shares of common stock we are authorized to issue thereunder from 30,700,000 to 39,190,000.
There can be no assurance that we will be able to secure the necessary stockholder vote to increase our authorized shares of common stock under our Certificate of Incorporation and our 2007 Plan, and therefore, we may continue to be limited in the shares of common stock we may issue. If our stockholders do not approve the proposal to amend our Certificate of Incorporation and our 2007 Plan to increase the number of authorized shares of common stock, we will effectively not have any unissued and unreserved authorized shares of common stock to advance our business, support the growth needed to conduct the activities necessary to engage in financing transactions, or to respond to compensatory needs by implementing new or revised equity compensation plans or arrangements, any of which could severely and irreparably harm our business, future prospects and our ability to recruit and retain skilled employees.
Absent an increase in the shares of common stock authorized for issuance under our Certificate of Incorporation, we will be limited to non-equity financing structures in the event additional financing is required. Such alternative structures may be less favorable or unavailable in which case we may be forced to forego business opportunities or engage in restructuring activities to
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downsize operations due to lack of funding. Additionally, the terms of our Senior Unsecured Convertible Notes impose certain limitations on our ability to incur additional debt obligations. In addition, if our stockholders do not authorize an increase in the shares of common stock authorized for issuance under our 2007 Plan, we will be significantly limited in our ability to grant equity awards to recruit new employees and to compensate existing employees, which would put us at a significant disadvantage to other companies with whom we compete for qualified personnel. Accordingly, our ability to hire, retain, and motivate current and prospective employees would be harmed, the result of which could negatively impact our business and future prospects.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.