What changed in this filing

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Item 1A. Risk Factors

2023-02-16 compared with 2022-02-18 · 137 added, 151 removed, 640 unchanged (31% of the section changed)

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for the foreseeable future.

we cannot guarantee that we will generate sufficient revenues from LINZESS to cover our expenses.

We and our partner, AbbVie, began selling LINZESS in the U.S.

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The commercial success of LINZESS depends on a number of factors, including:

● the effectiveness of LINZESS as a treatment for adult patients with irritable bowel syndrome with constipation, or IBS-C, or chronic idiopathic constipation, or CIC;

● the effectiveness of LINZESS as a treatment for adult patients with irritable bowel syndrome with constipation, or IBS-C, or chronic idiopathic constipation, or CIC, and, if approved, as a treatment for pediatric patients aged 6-17 years with functional constipation, or FC;

● the size of the treatable patient population;

● the effectiveness of the sales, managed markets and marketing efforts by us and AbbVie, including our ability to adapt our commercial model and market strategy to the evolving landscape;

● the adoption of LINZESS by physicians, which depends on whether physicians view it as safe and effective treatment for adult patients with IBS-C and CIC;

● the adoption of LINZESS by physicians, which depends on whether physicians view it as safe and effective treatment for adult patients with IBS-C and CIC and, if approved, for pediatric patients aged 6-17 years with FC;

● our success in educating and activating adult IBS-C and CIC patients to enable them to more effectively communicate their symptoms and treatment history to their physicians;

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Our revenues from the commercialization of LINZESS are subject to these and other factors, and therefore may be unpredictable from quarter-to-quarter.

Revenues from LINZESS or other sources in any quarter may be insufficient to cover our expenses.

Our products may cause undesirable side effects or have other properties that could limit their commercial potential.

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In the linaclotide Phase III IBS-C and CIC trials, severe diarrhea was reported in 2% or less of the linaclotide-treated patients and its incidence was similar between the IBS-C and CIC populations.

or formulations, as well as explore potential combination products, in existing and new territories.

The number and type of patients treated with linaclotide could continue to grow if physicians prescribe linaclotide to more patients and as we and our partners conduct clinical trials, including in new indications, populations or formulations, as well as explore potential combination products, in existing and new territories.

As patient experience increases and expands, we and others may identify previously unknown side effects, known side effects may be found to be more frequent and/or severe than in the past, and we and others may detect unexpected safety signals for our products or any products perceived to be similar to our products.

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The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established.

These and other restrictions could limit the commercial potential of LINZESS.

We and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S.

FDA to understand the safety and efficacy of LINZESS in pediatric patients.

These and other restrictions could limit the commercial potential of LINZESS.

In September 2022, we announced positive topline data from a Phase III clinical trial evaluating linaclotide 72 mcg in pediatric patients aged 6-17 years with FC, and in December 2022, we and AbbVie submitted a Supplemental New Drug Application, or sNDA, to the U.S.

FDA seeking approval of a new indication of linaclotide for FC in pediatric patients aged 6-17 years.

In February 2023, the U.S.

FDA granted priority review to our sNDA and assigned a Prescription Drug User Free Act, or PDUFA, date of June 14, 2023.

The Phase III clinical trial demonstrated acceptable safety in the pediatric population aged 6-17 years.

The most common adverse event in the study was diarrhea, which occurred in 4.3% of linaclotide-treated patients versus 1.8% in the placebo group.

Additional clinical pediatric programs in IBS-C and FC are ongoing.

There can be no assurances, however, that the sNDA will be approved by the U.S.

FDA, and if approved, whether there may be any significant unknown side effects that could limit the commercial potential of LINZESS in this pediatric population.

We are subject to uncertainty relating to pricing and reimbursement policies in the U.S.

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In determining whether to approve reimbursement for our products and at what level, we expect that third-party payors will consider factors that include the efficacy, cost effectiveness and safety of our products, as well as the availability of other treatments including generic prescription drugs and over-the-counter alternatives.

Further, in order to obtain and maintain acceptable reimbursement levels and access for patients at copay levels that are reasonable and customary, we have offered, and expect to continue to face increasing pressure to offer, discounts or rebates from list prices or discounts to third-party payors or other unfavorable pricing modifications.

to third-party payors or other unfavorable pricing modifications.

Obtaining and maintaining favorable reimbursement can be a time consuming and expensive process, and there is no guarantee that we or AbbVie will be able to negotiate or continue to negotiate pricing terms with third-party payors at levels that are profitable to us, or at all.

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In addition, our business could be adversely affected if government healthcare programs, private health insurers, including managed care organizations, or other reimbursing bodies or payors limit or reduce the indications for or conditions under which our products may be reimbursed.

or procedures deemed “non-essential,” reduced interaction between patients and physicians, and increased unemployment), due to the COVID-19 pandemic may materially harm our business and commercialization efforts.

We expect to experience pricing pressures in connection with the sale of our current and future products due to the healthcare reforms discussed below, as well as the trend toward initiatives aimed at reducing healthcare costs, the increasing influence of managed care, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.

Moreover, as discussed further below, changes in insurance coverage or reimbursement levels by governmental authorities, private health insurers and other third-party payors, or in the type of such coverage held by patients, as well as the impacts to healthcare access or administration (including, for example, limitations on medications or procedures deemed “non-essential,” reduced interaction between patients and physicians, and increased unemployment), due to the COVID-19 pandemic or otherwise may materially harm our business and commercialization efforts.

We may experience pricing pressures in connection with the sale of our current and future products due to the healthcare reforms discussed below, as well as the trend toward initiatives aimed at reducing healthcare costs, the increasing influence of managed care, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.

There has been significant scrutiny of pharmaceutical pricing and the resulting costs of pharmaceutical products that could cause significant operational and reimbursement changes for the pharmaceutical industry.

There have been a number of federal and state efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices, price increases or other related costs.

For example, the Bipartisan Budget Act of 2018 contained various provisions that affect coverage and reimbursement of drugs, including an increase, which began in 2019, in the discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70%.

More recently, the Biden administration has focused on reforms that would address the high cost of drugs.

In response to an

Executive Order from President Biden, the Secretary of Health and Human Services issued a comprehensive plan for

addressing high drug prices that describes a number of legislative approaches and identifies administrative tools to

address the high cost of drugs, such as capping Medicare Part D patients out-of-pocket costs, establishing penalties for

drug prices that increase faster than inflation in Medicare and authorizing the federal government to negotiate prices on

certain, select high cost drugs under Medicare Parts B and D.

Certain of these efforts have resulted in legislative and regulatory reforms.

For example, and as discussed further below, the Inflation Reduction Act, or IRA, of 2022, which could have the effect of reducing the prices we can charge and increasing the discounts we provide for our products and product candidates.

Healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications on pharmaceutical products, could impact our and our partners’ ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.

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In some foreign countries, particularly Canada, the countries of Europe, Japan and China, the pricing and payment of prescription pharmaceuticals is subject to governmental control.

In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch.

In these countries, pricing negotiations with governmental authorities can take 6 to 12 months or longer after the receipt of regulatory approval and product launch.

Reimbursement sources are different in each country, and each country may include a combination of distinct potential payors, including private insurance and governmental payors.

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To obtain favorable reimbursement for the indications sought or pricing approval in some countries, we and our partners may be required to conduct a clinical trial that compares the cost and clinical effectiveness of linaclotide to other available therapies.

In addition, in countries in which linaclotide is the only approved therapy for a particular indication, such as CONSTELLA as the only prescription product approved for the symptomatic treatment of moderate to severe IBS-C in adults in Europe and LINZESS as the only prescription treatment approved for the treatment of adults with IBS-C in Japan, there may be disagreement as to what the most comparable product is, or if there even is one.

Further, several countries have implemented government measures to either freeze or reduce pricing of pharmaceutical products.

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CONSTELLA was first launched in certain European countries for the symptomatic treatment of moderate to severe IBS-C in adults in the second quarter of 2013 and our partner, AbbVie, is currently commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain.

LINZESS was first launched in Japan for the treatment of IBS-C in adults in the first quarter of 2017, and for the treatment of chronic

constipation in adults in the third quarter of 2018, and our partner Astellas Pharma, Inc., or Astellas, is currently commercializing LINZESS in Japan.

LINZESS was first launched in Japan for the treatment of IBS-C in adults in the first quarter of 2017, and for the treatment of chronic constipation in adults in the third quarter of 2018, and our partner Astellas Pharma, Inc., or Astellas, is currently commercializing LINZESS in Japan.

In addition, LINZESS was first launched in China for the treatment of IBS-C in adults in November 2019, and our partner AstraZeneca AB (together with its affiliates), or AstraZeneca, is currently commercializing LINZESS in China (including Hong Kong and Macau).

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Any of the foregoing or other consequences could adversely impact our reputation, financial results and business.

We must work effectively and collaboratively with AbbVie to market and sell LINZESS in the U.S., and must adapt our commercial model and market strategy to the evolving landscape, for LINZESS to achieve its maximum commercial potential.

We must work effectively and collaboratively with AbbVie to market and sell LINZESS in the U.S., and we must adapt our commercial model and market strategy to the evolving landscape for LINZESS to achieve its maximum commercial potential.

We are working closely with AbbVie to execute our joint commercialization plan for LINZESS.

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Our commercialization plan also includes an integrated call plan for our sales forces in an effort to optimize the education of specific gastroenterologists and primary care physicians on whom our and AbbVie’s sales representatives call, and the frequency with which the representatives meet with them.

In addition, we are advancing a hybrid (virtual and in-person) selling model and access to technologies such as telehealth in an effort to expand the commercial potential of LINZESS and our other product candidates in the U.S.

In order to optimize the commercial potential of LINZESS, we and AbbVie must execute upon this commercialization plan effectively and efficiently.

In addition, we and AbbVie must continually assess, modify and adapt our commercialization plan in a coordinated and integrated fashion, including evaluating and adjusting as necessary the level and mix of marketing and promotion efforts, in response to changing business, market or other factors in order to advance the commercial potential of LINZESS.

For example, the decrease in physical access to

customers due to the COVID-19 pandemic prompted us to increase our virtual selling capabilities.

While our in-person selling efforts have returned to near pre-COVID-19 pandemic levels, we plan to maintain a certain level of virtual support as part of our commercial model designed to quickly respond to reduced physical access due to periodic spikes in infection rates, changing market dynamics and customer preference.

Further, we and AbbVie must continue to focus and refine our marketing campaign to ensure a clear and understandable physician-patient dialogue around IBS-C, CIC and the potential for LINZESS as an appropriate therapy.

Further, we and AbbVie must continue to focus our marketing campaign on the importance of treating both constipation and overall abdominal symptoms in adults with IBS-C and support an effective physician-patient dialogue around IBS-C, CIC and the potential for LINZESS as an appropriate therapy for such symptoms.

In addition, we and AbbVie must provide our sales forces with the highest quality support, guidance and oversight for them to continue to effectively promote LINZESS to gastroenterologists and primary care physicians.

If we and AbbVie fail to evolve with the changing commercial landscape successfully and perform these commercial functions in the highest quality manner and in accordance with our joint commercialization plan and related agreements, LINZESS will not achieve its maximum commercial potential and we may suffer financial harm.

Our efforts to further target and engage adult patients with IBS-C or CIC may not effectively increase appropriate patient awareness or patient/physician dialogue and may not increase the revenues that we generate from LINZESS.

In addition, most of our customer-facing employees are engaged in in-person work practices;

however, they are limited in the number of in-person details they are able to conduct due to containment and mitigation measures related to the COVID-19 pandemic.

We monitor the impact of the COVID-19 pandemic in the territories where our customer-facing employees are engaged in in-person work practices, and in some cases, we have paused or delayed in-person work practices as a result of the impact of the COVID-19 pandemic in those territories, and may do so again in the

Customer-facing employees who are not providing in-person services continue to support their customers virtually through telephone and web-based technologies.

Our headquarters have re-opened, but all headquarters employees have the option to work primarily remotely .

We may delay, stop or otherwise limit in-person work in the future pending relevant health authority guidance and additional safety or other considerations.

T he virtual support we continue to provide to customers may not be as effective as in-person efforts, and our in-person efforts may be limited and/or limited in their effectiveness.

If this were to occur, or if we, AbbVie or any of our partners were unable to align on our strategy and development and commercial efforts as a result of the COVID-19 pandemic or otherwise, we may not be able to maintain or increase the revenues that we generate or our business may be otherwise materially harmed.

Our commercial efforts to further target and engage adult patients with IBS-C or CIC may not effectively increase appropriate patient awareness or patient/physician dialogue and may not increase the revenues that we generate from LINZESS.

During 2022, in-person work practices for customer-facing employees returned to near pre-COVID 19 levels.

However, new strains or variants of the virus that cause outbreaks of COVID-19 may present in the future risks to successful execution of the commercial operating plan for LINZESS due in part to limitations on in-person work practices for our customer-facing employees.

T he virtual support we may provide to customers may not be as effective as in-person efforts, and our in-person efforts may be limited and/or limited in their effectiveness.

If this were to occur,

or if we, AbbVie or any of our partners were unable to align on our strategy and development and commercial efforts as a result of the COVID-19 pandemic or otherwise, we may not be able to maintain or increase the revenues that we generate or our business may be otherwise materially harmed.

We face competition and new products may emerge that provide different or better alternatives for treatment of the conditions that our products are approved to treat.

The pharmaceutical industry and the markets in which we operate are intensely competitive.

We compete in the marketing and sale of our products, the development of new products and the acquisition of rights to new products with commercial potential.

We compete in the marketing and sale of our products, the development of new products or product candidates and the acquisition of rights to new products with commercial potential.

Certain of our competitors have substantially greater financial, technical and human resources than us.

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FDA for sale in the U.S.

for the treatment of IBS-C, CIC and opioid-induced constipation, an authorized generic version of AMITIZA became available in the U.S.

in January 2021 and is being commercialized by Endo International plc, and we expect additional generic versions of AMITIZA may become available;

for the treatment of IBS-C, CIC and opioid-induced constipation;

Bausch Health’s TRULANCE (plecanatide) is approved by the U.S.

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for the treatment of CIC in adults;

Alfasigma USA’s ZELNORM (tegaserod) is approved for sale in the U.S.

for treatment of IBS-C in women under the age of 65;

and in November 2021, Ardelyx, Inc., or Ardelyx, announced its plans to launch IBSRELA™ (tenapanor),

Ardelyx’s U.S.

FDA-approved treatment for IBS-C in adults, in the second quarter of 2022.

and in April 2022, Ardelyx launched in the U.S.

IBSRELA™ (tenapanor), a U.S.

FDA-approved treatment for IBS-C in adults.

Over-the-counter laxatives such as MiraLAX® and DULCOLAX®, and lactulose, a prescription laxative treatment, are also available for the treatment of constipation.

Additionally, we believe other companies are developing products which could compete with linaclotide, should they be approved by the U.S.

Additionally, we believe other companies are developing products that could compete with linaclotide, should they be approved by the U.S.

FDA or foreign regulatory authorities and become commercially available.

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FDA or foreign regulatory authorities, they could limit the demand for linaclotide.

In addition to competition from such prescription and over-the-counter products, we may also face competition from multiple low-cost generic versions of such products when available in the U.S.

For example, authorized generic versions of AMITIZA became available in the U.S.

by Endo International and Dash Pharmaceuticals in January 2021 and in October 2022, respectively, and we expect additional generic versions of AMITIZA to become available as early as 2023.

Even though LINZESS is approved by the U.S.

FDA for use in adult patients, post-approval development and regulatory requirements still remain, which present additional challenges.

FDA for use in adult patients, post-approval development and regulatory requirements still remain, which present additional challenges, and we may not be successful in obtaining approval for additional indications for LINZESS that we are seeking or may seek in the future.

In August 2012, the U.S.

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We and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S.

FDA to understand the safety and efficacy of LINZESS in pediatric patients, and clinical pediatric programs in IBS-C and functional constipation are ongoing.

ability to expand the indication or label information for LINZESS to pediatrics will depend on, among other things, our successful completion of pediatric clinical programs.

FDA to understand the safety and efficacy of LINZESS in pediatric patients.

FDA seeking approval of a new indication of linaclotide for FC in pediatric patients aged 6-17 years.

In February 2023, the U.S.

FDA granted priority review to our sNDA and assigned a PDUFA date of June 14, 2023.

We may not be successful in obtaining U.S.

FDA approval for this new indication of linaclotide for FC in

pediatric patients aged 6-17 years or any additional indications for linaclotide that we may seek in the future.

Additional clinical pediatric programs in IBS-C and FC are ongoing.

Our ability to expand the indication or label information for LINZESS to pediatrics will depend on, among other things, our successful completion of pediatric clinical programs.

These post-approval requirements impose burdens and costs on us.

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Additionally, we or our partners cannot be certain of the duration or extent to which the COVID-19 pandemic may impact operations of regulatory authorities in jurisdictions around the world, and any reduction in resources dedicated to review and approval of products in applicable jurisdictions could delay or otherwise impact approval or other regulatory decisions or actions.

Further, regulatory approval in one jurisdiction does not ensure regulatory approval in another, but a failure or delay in

obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others.

Further, regulatory approval in one jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others.

If linaclotide is not approved for all indications or patient populations or with the label requested, this would limit the uses of linaclotide and have an adverse effect on its commercial potential or require costly post-marketing studies.

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The development of product candidates in particular is a highly uncertain process, as we discuss further below.

Any product candidate that we in-license or acquire may require additional development efforts prior to commercial sale,

including extensive clinical testing and approval by the U.S.

Any product candidate that we in-license or acquire may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the U.S.

FDA and applicable foreign regulatory authorities.

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For example, we and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S.

FDA to understand the safety and efficacy of LINZESS in pediatric patients, and clinical pediatric trials in IBS-C and functional constipation are ongoing.

FDA to understand the safety and efficacy of LINZESS in pediatric patients.

FDA seeking approval of a new indication of linaclotide for FC in that age group.

In February 2023, the U.S.

FDA granted priority review to our sNDA and assigned a PDUFA date of June 14, 2023.

Additional clinical pediatric programs in IBS-C and FC are ongoing.

These development efforts may fail or may not increase the revenues that we generate from LINZESS.

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If we enter into any partnering arrangements with third parties, any revenues we receive will depend upon the efforts of such third parties.

If we are unable to establish successful partnering arrangements, we may not gain access to the financial resources and industry experience necessary to develop, commercialize or successfully market our products or product candidates, may be forced to curtail, delay or stop a development program or one or more of our other development programs, delay commercialization, reduce the scope of our planned sales or marketing activities or undertake development or commercialization activities at our own expense, and therefore may be unable to generate revenue from products or product candidates or do so to their full potential.

If we are unable to establish successful partnering arrangements when advantageous, we may not gain access to the financial resources and industry experience necessary to develop, commercialize or successfully market our products or product candidates, may be forced to curtail, delay or stop a development program or one or more of our other development programs, delay commercialization, reduce the scope of our planned sales or marketing activities or undertake development or commercialization activities at our own expense, and therefore may be unable to generate revenue from products or product candidates or do so to their full potential.

Delays in the completion of clinical testing of any of our products or product candidates could result in increased costs and delay or limit our ability to generate revenues.

Delays in the completion of clinical testing could significantly affect our product development costs.

We do not know whether planned clinical trials will be completed on schedule, if at all.

Delays in the completion of clinical testing could significantly affect our product development costs and timing

of data readouts and regulatory submissions and potential approvals We do not know whether planned clinical trials will be completed on schedule, if at all.

The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

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● maintaining patients who have initiated a clinical trial but may be prone to withdraw due to side effects from the therapy, lack of efficacy or personal issues, or who are lost to further follow-up.

The COVID-19 pandemic has impacted enrollment in our clinical trials and may impact clinical trial enrollment or participation in the future, for example due to suspension of in-person procedures required for enrollment or lower or discontinued patient participation compared to pre-COVID-19 pandemic levels.

Clinical trials may also be delayed or discontinued as a result of ambiguous or negative interim results or assessments.

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AbbVie is also responsible for the development, regulatory approval and commercialization of linaclotide in countries worldwide other than Japan and China (including Hong Kong and Macau).

AbbVie is commercializing LINZESS in Mexico and CONSTELLA in Canada, as well as commercializing CONSTELLA in certain countries in Europe.

AbbVie is commercializing LINZESS in Mexico and CONSTELLA in Canada as well as in certain countries including in Europe.

Astellas and AstraZeneca are responsible for development and commercialization of LINZESS in Japan and China (including Hong Kong and Macau), respectively.

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We are the holder of the global safety database for linaclotide responsible for coordinating the safety surveillance and adverse event reporting efforts worldwide with respect to linaclotide;

each of Astellas, AstraZeneca and AbbVie is responsible for reporting adverse event information from its territory to us.

each of Astellas, AstraZeneca and AbbVie is responsible

for reporting adverse event information from its territory to us.

If we fail to perform such activities and maintain the global safety database for linaclotide or if our partners do not report adverse events related to linaclotide, or fail to do so in a timely manner, we may not receive the information that we or our partners are required to report to the U.S.

FDA or a foreign regulatory authority regarding such products.

Furthermore, we or our partners may fail to adequately monitor,

identify or investigate adverse events, or to report adverse events to the U.S.

Furthermore, we or our partners may fail to adequately monitor, identify or investigate adverse events, or to report adverse events to the U.S.

FDA or foreign regulatory authority accurately and within the prescribed timeframe.

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New manufacturers would need to develop and implement the necessary production techniques and processes, which along with their facilities, would need to be inspected and approved by the regulatory authorities in each applicable territory.

If our partners or the third-party manufacturers we or our partners engage fail to adhere to applicable GMP or other regulatory requirements, experience delays or disruptions in the availability of raw materials or experience manufacturing or distribution problems, we will suffer significant consequences, including product seizures or recalls, loss of product approval, fines and sanctions, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs.

loss of product approval, fines and sanctions, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs.

If we experience any of these results, or if maximum or available manufacturing capacities are insufficient to meet demand, our and our partners’ development or commercialization efforts may be materially harmed.

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The use of our product candidates in clinical trials and the sale of our approved products, including the sale of linaclotide, expose us to product liability claims.

If we do not successfully defend ourselves against product liability

claims, we could incur substantial liabilities.

If we do not successfully defend ourselves against product liability claims, we could incur substantial liabilities.

In addition, regardless of merit or eventual outcome, product liability claims may result in:

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FDA and other regulatory agencies do not regulate a physician’s choice of treatments, the U.S.

FDA and other regulatory agencies do restrict manufacturer

communications on off-label use.

FDA and other regulatory agencies do restrict manufacturer communications on off-label use.

Companies are not permitted to promote drugs or medical devices for off-label uses or to promote unapproved drugs or medical devices.

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We intend to engage in medical education activities and communicate with healthcare providers in compliance with all applicable laws, regulatory guidance and industry best practices.

Although we believe we have put in place a robust compliance program, which is designed to ensure that all such activities are performed in a legal and compliant manner, we cannot be certain that our program will address all areas of potential exposure and the risks in this area cannot be entirely eliminated.

Although we believe we have put

in place a robust compliance program, which is designed to ensure that all such activities are performed in a legal and compliant manner, we cannot be certain that our program will address all areas of potential exposure and the risks in this area cannot be entirely eliminated.

If we fail to comply with healthcare and other regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.

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● federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs;

● the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians and teaching hospitals (and additional categories of healthcare practitioners beginning with reports submitted in 2022) to the federal government for re-disclosure to the public;

● the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians, certain non-physician practitioners and teaching hospitals to the federal government for re-disclosure to the public;

● state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, state transparency laws, state laws limiting interactions between pharmaceutical manufacturers and members of the healthcare industry, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.

Our global activities are subject to the U.S.

Foreign Corrupt Practices Act which prohibits corporations and individuals from paying, offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

We are also subject to similar anti-bribery laws in the other countries in which we do business.

In addition, we may be subject to privacy and security laws in the various jurisdictions in which we operate, obtain or store personally identifiable information.

We also are subject to the U.S.

activities, as well as other similar anti-bribery laws in any other country in which we may do business.

In addition, we may be subject to privacy and security laws in the various jurisdictions, both inside and outside the U.S., in which we operate, obtain or store personally identifiable information.

The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.

For example, the processing of personal data in the European Economic Area, or the EEA, is subject to the General Data Protection Regulation, or the GDPR, which took effect in May 2018.

The GDPR increases obligations with respect to clinical trials conducted in the EEA, such as in relation to the provision of fair processing notices, exercising data subject rights and reporting certain data breaches to regulators and affected

individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf.

The GDPR also increases the scrutiny applied to transfers of personal data from the EEA (including from clinical trial sites in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection, such as the United States.

The July 2020 invalidation of the EU-U.S.

Privacy Shield framework also may lead to increased scrutiny on data transfers from the EEA to the United States generally and increase our costs of compliance with data privacy legislation.

In addition, we are subject to the California Consumer Privacy Act, or CCPA, which became effective on January 1, 2020.

The CCPA gives California consumers (defined to include all California residents) certain rights, including the right to ask companies to disclose the types of personal information collected, specific pieces of information collected by a company, the categories of sources from which such information was collected, the business purpose for collecting or selling the consumer’s personal information, and the categories of third parties with whom a company shares personal information.

The CCPA also imposes several obligations on companies to provide notice to California consumers regarding a company’s data processing activities.

Additionally, the CCPA gives California consumers the right to ask companies to delete a consumer’s personal information and it places limitations on a company’s ability to sell personal information, including providing consumers a right to opt out of sales of their personal information.

The compliance obligations imposed by the GDPR and the CCPA have required us to revise our operations.

In addition, the GDPR and the CCPA impose substantial fines and other regulatory penalties for breaches of data protection requirements, and they confer a private right of action on data subjects (in the case of the GDPR) and consumers (in the case of the CCPA) and their representatives for breaches of certain data protection requirements.

Moreover, we will be subject to the California Privacy Rights Act, which will impose additional obligations on companies processing personal

information of California residents beyond those found in the CCPA.

For example, we are subject to the California Consumer

Privacy Act, or CCPA, as amended by the California Privacy Rights Act, or CPRA, which became effective on January 1, 2023 (the CPRA, together with CCPA, the California Privacy Law).

The California Privacy Law gives California consumers (defined to include all California residents) certain rights regarding personal information collected about them;

the California Privacy Law also imposes certain obligations and limitations on companies regarding the collection, use, selling or sharing (as defined in the California Privacy Law) of personal information collected from or about California consumers.

The compliance obligations imposed by the California Privacy Law, and other applicable privacy laws, have required us to revise our operations.

Breaches of applicable data protection requirements may result in substantial fines and other regulatory penalties, as well as confer a private right of action on consumers and their representatives for breaches of certain data protection requirements.

We expect to be subject to additional privacy laws at both the U.S.

state level and abroad as many jurisdictions have either recently passed data privacy legislation or are considering enacting such legislation.

state level and abroad as many jurisdictions either recently have data privacy legislation or are considering enacting such legislation to which we may become subject.

Achieving and sustaining compliance with applicable international, federal and state privacy, security, fraud and reporting laws may prove time-consuming and costly.

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The ACA has also been subject to judicial challenge.

Beyond the ACA, other health care reform efforts are ongoing.

Some healthcare reform efforts have sought to address certain issues related to the COVID-19 pandemic, including an expansion of telehealth coverage under Medicare, accelerated or advanced Medicare payments to healthcare providers and payments to providers for COVID-19-related expenses and lost revenues.

Other reform efforts affect pricing or payment for prescription drug products, including the increase in

discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70%.

Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.

For example, in November 2020, the Centers for Medicare & Medicaid Services, or CMS, issued an interim final rule implementing a new “most favored nation” payment model for select drugs covered under Medicare Part B.

The rule was challenged and became subject a nationwide preliminary injunction, and ultimately rescinded by CMS.

Beyond the ACA, there have been ongoing legislative and administrative and other health care reform efforts.

Some healthcare reform efforts affect pricing or payment for drug products or the healthcare industry more generally.

Drug pricing and payment reform was a focus of the Trump Administration and has been a focus of the Biden Administration.

For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024.

As another example, the IRA contains various drug pricing and payment provisions.

Among other provisions, the IRA imposes a yearly cap ($2,000 in 2025) on out-of-pocket prescription drug costs in Medicare Part D, implements a new Medicare Part D manufacturer discount drug program in 2025, requires manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologicals covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation and, in 2026, creates a drug price negotiation program under which the prices for certain high Medicare spend drugs and biologicals without generic or biosimilar competition will be limited by a cap that is defined by reference to, among other things, a specified non-federal average manufacturer price.

The effect of IRA on our business and the healthcare industry in general is not yet known.

Some of the health care reform changes have been and may continue to be subject to revisions to regulations under the federal anti-kickback statute that would remove protection for traditional Medicare Part D discounts offered by

pharmaceutical manufacturers to pharmacy benefit managers and health plans.

Pursuant to court order, the removal was delayed, and the IRA further delayed implementation of the rule until January 1, 2032.

Adoption of new healthcare reform legislation at the federal or state level could negatively affect demand for, or pricing of, our products or product candidates if approved for sale.

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federal income tax treatment of the distribution.

Consistent with the guidelines set forth in Revenue Procedure 2017-52, the IRS private letter ruling does not cover all of the issues that are relevant to determining whether the distribution is generally tax free for U.S.

tax free for U.S.

federal income tax purposes.

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patent statutes.

These changes permit third parties to challenge our patents more easily and create uncertainty

with respect to the interpretation and practice of U.S.

These changes permit third parties to challenge our patents more easily and create uncertainty with respect to the interpretation and practice of U.S.

Moreover, the U.S.

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Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction of our management and other employees.

In addition, we may not be able to prevent, alone or with our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

In addition, we may not be able to prevent, alone or with

our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, as well as the potential for public announcements of the results of hearings, motions or other interim proceeding or developments, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

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In recent years, we have focused primarily on developing, manufacturing and commercializing linaclotide, as well as developing our other product candidates.

We have financed our business to date primarily through the issuance of equity, our collaboration and license arrangements, and debt issuances, including our June 2015 issuance of our 2.25% Convertible Senior Notes due June 15, 2022, or the 2022 Convertible Notes, and our August 2019 issuance of our 0.75% Convertible Senior Notes due 2024, or the 2024 Convertible Notes, and our 1.50% Convertible Senior Notes due 2026, or the 2026 Convertible Notes (together with the 2022 Convertible Notes and the 2024 Convertible Notes, the Convertible Senior Notes).

We have financed our business to date primarily through the issuance of equity, our collaboration and license arrangements, and debt issuances, including our June 2015 issuance of our 2.25% Convertible Senior Notes that matured and were repaid in full on June 15, 2022, or the 2022 Convertible Notes, and our August 2019 issuance of our 0.75% Convertible Senior Notes due 2024, or the 2024 Convertible Notes, and our 1.50% Convertible Senior Notes due 2026, or the 2026 Convertible Notes (together with the 2024 Convertible Notes, the Convertible Senior Notes).

We currently derive a significant portion of our revenue from our LINZESS collaboration with AbbVie for the U.S.

We believe that the revenues from the LINZESS collaboration will continue to constitute a significant portion of our total revenue for the foreseeable future.

Such revenue is highly dependent on LINZESS demand and other factors such as wholesaler buying patterns.

Such revenue is highly dependent on LINZESS demand and other factors such as fluctuations in retail chains’ and wholesalers’ buying patterns and inventory levels, pricing and reimbursement.

Our collaborative arrangements revenue outside of the U.S.

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As of December 31, 2022, we had an accumulated deficit of $696.4 million.

We cannot be certain that sales of our products, and the revenue from our other commercial activities will not fall short of our projections or be delayed, particularly in light of the negative financial impact that the COVID-19 pandemic may have on our business in the future.

We cannot be certain that sales of our products, and the revenue from our other commercial activities will not fall short of our projections or be delayed.

Further, we expect to continue to incur substantial expenses in connection with our efforts to commercialize linaclotide, research and develop our product candidates, and access externally developed products or product candidates.

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However, marketing and selling gastrointestinal drugs, purchasing commercial quantities of pharmaceutical products, developing product candidates, conducting clinical trials and accessing externally developed products or product candidates are expensive and uncertain.

Circumstances, our strategic imperatives, or opportunities to create or acquire new programs, as well as maturities, redemptions or repurchases of our outstanding debt securities, could require us to, or we may choose

to, seek to raise additional funds.

The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:

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Our ability to pay principal of and interest on our outstanding debt securities will depend in part on the receipt of payments from AbbVie under our collaboration agreement for North America.

In June 2015, we issued $335.7 million aggregate principal amount of our 2022 Convertible Notes bearing an annual interest rate of 2.25%.

In August 2019, we issued $200.0 million aggregate principal amount of our 2024 Convertible Notes bearing an annual interest rate of 0.75% and $200.0 million aggregate principal amount of our 2026 Convertible Notes bearing an annual interest rate of 1.50%, and we used a portion of the proceeds from this offering to repurchase $215.0 million aggregate principal amount of the 2022 Convertible Notes.

Semi-annual payments on our 2022 Convertible Notes began on December 15, 2015 and semi-annual payments on each of our 2024 Convertible Notes and 2026 Convertible Notes began on December 15, 2019.

The 2022 Convertible Notes matured and were repaid in full on June 15, 2022.

Semi-annual payments on each of our 2024 Convertible Notes and 2026 Convertible Notes began on December 15, 2019.

We expect that for the next few years, at a minimum, the net quarterly payments from AbbVie will be a significant source of cash flows from operations.

If the cash flows derived from the net quarterly payments that we receive from AbbVie under the collaboration agreement for North America are insufficient on any particular payment date to fund the interest payment on our outstanding indebtedness, at a minimum, we will be obligated to pay the amounts of such shortfall out of our general funds.

The determination of whether AbbVie will be obligated to make a net quarterly payment to us in respect of a particular quarterly period is a function of the

revenue generated by LINZESS in the U.S.

The determination of whether AbbVie will be obligated to make a net quarterly payment to us in respect of a particular quarterly period is a function of the revenue generated by LINZESS in the U.S.

as well as the development, manufacturing and commercialization expenses incurred by each of us and AbbVie under the collaboration agreement for North America.

Accordingly, since we cannot guarantee that our company will maintain net income or positive cash flows, we cannot provide assurances that (i) we will have the available funds to fund the interest payment on our outstanding indebtedness, at a minimum, in the event that there is a deficiency in the net quarterly payment received from AbbVie, (ii) there will be a net quarterly payment from AbbVie at all or (iii) we will not also be required to make a true-up payment to AbbVie under the collaboration agreement for North America, in each case, in respect of a particular quarterly period.

Accordingly, since we cannot guarantee that our company will maintain net income or positive cash flows, we cannot provide assurances for any particular quarterly period that (i) we will have the available funds to fund the interest payment on our outstanding indebtedness, at a minimum, in the event that there is a deficiency in the net quarterly payment received from AbbVie, (ii) there will be a net quarterly payment from AbbVie at all or (iii) we will not also be required to make a true-up payment to AbbVie under the collaboration agreement for North America.

Our indebtedness could adversely affect our financial condition or restrict our future operations.

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In the event of such default, the trustee or noteholders could elect to declare all amounts outstanding to be immediately due and payable under the applicable indenture, which could have a material adverse effect on our business, financial condition and results of operations.

Convertible note hedge and warrant transactions entered into in connection with our 2022 Convertible Notes and capped call transactions entered into in connection with our 2024 Convertible Notes and our 2026 Convertible Notes may affect the value of our Class A Common Stock.

The note hedge warrant transactions entered into in connection with our 2022 Convertible Notes and capped call transactions entered into in connection with our 2024 Convertible Notes and our 2026 Convertible Notes may affect the value of our Class A Common Stock.

In connection with the issuance of our 2022 Convertible Notes, we entered into convertible note hedge transactions, or the Convertible Note Hedges, and separate note hedge warrant transactions, or the Note Hedge Warrants, with certain financial institutions.

The Convertible Note Hedges and Note Hedge Warrants were partially terminated in connection with the repurchase of $215.0 million aggregate principal amount of the 2022 Convertible Notes in August 2019.

In June 2022, the Convertible Note Hedges terminated unexercised upon expiry.

Note Hedge Warrants are exercisable at a strike price of $18.82 over the 150 trading day period beginning on September 15, 2022.

Additionally, in connection with the issuance of our 2024 Convertible Notes and our 2026 Convertible Notes, we entered into capped call transactions, or the Capped Calls, with certain financial institutions.

These transactions are expected generally to reduce the potential dilution upon any conversion of our 2022 Convertible Notes, our 2024 Convertible Notes or our 2026 Convertible Notes, as applicable, or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be.

These transactions are expected generally to reduce the potential dilution upon any conversion of our 2024 Convertible Notes or our 2026 Convertible Notes, as applicable, or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be.

In connection with these transactions, the financial institutions likely purchased our Class A Common Stock in secondary market transactions and entered into various over-the-counter derivative transactions with respect to our Class A Common Stock.

These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the 2022 Convertible Notes, the 2024 Convertible Notes and the 2026 Convertible Notes, as applicable, by purchasing and selling shares of our Class A Common Stock or other instruments they may wish to use in connection with such hedging.

Any of these activities could adversely affect the value of our Class A Common Stock and, as a result, the number of shares and the value of the Class A Common Stock noteholders will receive upon conversion of the 2022 Convertible Notes, the 2024 Convertible Notes or the 2026 Convertible Notes, as applicable.

In addition, under certain circumstances the counterparties have the right to terminate the Convertible Note Hedges and Capped Calls and settle the Note Hedge Warrants on terms set forth in the applicable confirmations, which may result in us not receiving all or any portion of the anticipated benefit of the Convertible Note Hedges and Capped Calls.

If the price of our Class A Common Stock increases such that the hedge transactions settle in our favor, we could also be exposed to credit risk related to the counterparties to the Convertible Note Hedges and Capped Calls, which would limit or eliminate the benefit of such transactions to us.

These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the 2024 Convertible Notes and the 2026 Convertible Notes, as applicable, by purchasing and selling shares of our Class A Common Stock or other instruments they may wish to use in connection with such hedging.

Any of these activities could adversely affect the value of our Class A Common Stock and, as a result, the number of shares and the value of the Class A Common Stock noteholders will receive upon conversion of the 2024 Convertible Notes, or the 2026 Convertible Notes, as applicable.

In addition, under certain circumstances the counterparties have the right to terminate the Capped Calls and settle the Note Hedge Warrants on terms set forth in the applicable confirmations, which may result in us not receiving all or any portion of the anticipated benefit of the Capped Calls.

If the price of our Class A Common Stock increases such that the hedge transactions settle in our favor, we could also be exposed to credit risk related to the counterparties to the Capped Calls, which would limit or eliminate the benefit of such transactions to us.

Our quarterly and annual operating results may fluctuate significantly.

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Our net income (loss) and other operating results will be affected by numerous factors, including:

● the level of underlying demand for our products in the countries in which they are approved;

● wholesalers’ buying patterns with respect to our products;

● the level of underlying demand and price for our products in the countries in which they are approved;

● retail chains’ and wholesalers’ buying patterns and inventory levels with respect to our products;

● the costs associated with commercializing our products in the U.S.;

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Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially.

There can be no assurance that we will repurchase shares of our Class A Common Stock or that we will repurchase shares of our Class A Common Stock at favorable prices.

Our board of directors has authorized a share repurchase program of up to $150.0 million to repurchase shares of our Class A Common Stock.

The amount and timing of share repurchases are subject to market conditions, stock price and other factors, including compliance with all respective laws and our applicable agreements.

The amount, timing and execution of our repurchases of our Class A Common Stock will depend upon, among other factors, our cash balances and potential future capital requirements for strategic transactions, our results of operations, our financial condition, tax laws, and other factors that we may deem relevant.

A reduction in repurchases under, or the completion of, our share repurchase program could have a negative effect on our stock price.

We can also provide no assurance that we will repurchase shares of our Class A Common Stock at favorable prices, if at all.

Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that our net operating loss and tax credit carryforwards may expire before we generate sufficient taxable income to use such carryforwards, or that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.

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Public health emergencies, epidemics, or pandemics, such as the COVID-19 pandemic, impact our business.

The COVID-19 pandemic has impacted, and is expected to continue to impact, our business and operations in a number of ways and there are significant uncertainties surrounding the extent and duration of such impacts.

Factors that will influence the impact on our business and operations include the duration and extent of the outbreak, the duration and extent of imposed or recommended containment and mitigation measures, periodic spikes in infection rates, new strains or variants of the virus that cause outbreaks of COVID-19, the broad availability of effective vaccines, the rate of

vaccinations, and vaccine mandates and the general economic consequences of the pandemic.

Addressing the impacts of the COVID-19 pandemic has, and likely will for an extended period, required significant time and has diverted the attention of our management, other employees and our board of directors.

The decrease in physical access to customers due to the COVID-19 pandemic prompted us to increase our virtual selling capabilities.

While our in-person selling efforts have returned to near pre-COVID-19 pandemic levels, we plan to maintain a certain level of virtual support as part of our commercial model designated to quickly respond to reduced physical access due to periodic spikes in infection rates, changing market dynamics and customer preference.

The COVID-19 pandemic has impacted, and may continue to impact, our business and operations in a number of ways.

Factors that will influence the impact on our business and operations include the duration and extent of the pandemic, the duration and extent of imposed or recommended containment and mitigation measures, periodic spikes in infection rates, new strains or variants of the virus that cause outbreaks of COVID-19, the rate of vaccinations, the availability and efficacy of vaccines for new strains or variants and vaccine mandates and the general economic consequences of the pandemic.

Addressing the impacts of the COVID-19 pandemic has required, and may continue to require significant time and has diverted, and may divert in the future, the attention of our management, other employees and our board of directors.

During 2022, in-person work practices for customer-facing employees returned to near pre-COVID 19 levels.

However, new strains or variants of the virus that cause outbreaks of COVID-19 may present risks to successful execution of the commercial operating plan for LINZESS due in part to limitations on in-person work practices for our customer facing employees.

Should we be unable to evolve with any further changes in the commercial landscape, we may be unable to maintain or grow our revenues from the commercialization of LINZESS or successfully commercialize future products.

In addition, changes in insurance coverage or reimbursement levels by governmental authorities, private health insurers and other third-party payors, or changes in the type of such coverage held by patients (including changes from commercial insurance to Medicaid) or the loss of coverage by some patients, due to the impacts of the COVID-19 pandemic (including the related increase in unemployment in the U.S.) may negatively impact our revenue from LINZESS.

Moreover, continuing impacts to healthcare access or administration (including, for example, limitations on medications or procedures deemed “non-essential” and reduced interaction between patients and physicians) due to the COVID-19 pandemic may impact demand for LINZESS and materially harm our business and commercialization efforts.

Most of our customer-facing employees are engaged in in-person work practices;

however, they are limited in the number of in-person details they are able to conduct due to containment and mitigation measures related to the COVID-19 pandemic.

Customer-facing employees who are not providing in-person services continue to support their customers virtually through telephone and web-based technologies.

Our headquarters have re-opened, but all headquarters employees have the option to work primarily remotely .

We may delay, stop or otherwise limit in-person work in the future pending relevant health authority guidance and additional safety or other considerations.

In addition, headquarters employees have the option to work primarily remotely .

If our employees are unable to work from home effectively, or if the COVID-19 pandemic otherwise impacts employees’ ability to work, for example due to containment and mitigation measures related to the COVID-19 pandemic, illness, lack of resources or inadequate technology, or restrictions, closures or other limits on school and other childcare options, our business will be materially harmed .

Specifically, new or continuing limits on the ability of our customer-facing employees to meet with physicians and patients to visit healthcare providers and pharmacists (including due to continued or future remote working arrangements, containment and mitigation measures that limit access to customers or other restrictions related to the COVID-19 pandemic) may have an extended negative impact on LINZESS sales.

pandemic (including the related increase in unemployment in the U.S.) may negatively impact our revenue from LINZESS.

Revenue from LINZESS sales or the progression of our trials will be affected should the COVID-19 pandemic cause significant disruptions to manufacturing operations or supply of LINZESS to the U.S.

or API, finished drug product or finished goods for linaclotide or our product candidates , for example due to impacts of the COVID-19 pandemic on personnel involved in the manufacturing and supply chain, international travel and shipping restrictions, inability of vendors to provide services, closed manufacturing sites, or any other disruptions in the international supply chain.

In addition, the COVID-19 pandemic has impacted enrollment in our clinical trials, and may impact clinical trial enrollment or participation in the future, for example due to suspension of in-person procedures required for enrollment or lower or discontinued patient participation compared to pre-COVID-19 pandemic levels.

In addition, the progression of our pipeline could be impacted should any of our key vendors, including clinical research organizations, or CROs, and other clinical vendors, be unable to provide timely or sufficient services due to the impact of the COVID-19 pandemic.

In addition, the COVID-19 pandemic has impacted enrollment in our clinical trials, and may impact clinical trial enrollment or participation in the future compared to pre-COVID-19 pandemic levels.

In addition, the COVID-19 pandemic has impacted enrollment in our clinical trials and may impact clinical trial enrollment or participation in the future, for example, due to suspension of in-person procedures required for enrollment or lower or discontinued patient participation compared to pre-COVID-19 pandemic levels as a result of new strains or variants

The spread of COVID-19 continues to disrupt the U.S.

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We may not be able to manage our business effectively if we lose any of our current management team or if we are unable to attract, motivate and retain key personnel.

We may not be able to attract, motivate or retain qualified management and scientific, clinical, operations and commercial personnel due to the intense competition for qualified personnel among biotechnology, pharmaceutical and

other businesses, particularly in the greater-Boston area.

If we are not able to attract, motivate and retain necessary personnel to accomplish our business objectives, we will experience constraints that will significantly impede the achievement of our objectives.

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McCourt, our chief executive officer;

Emany, our senior vice president, chief financial officer, John Minardo, our senior vice president, chief legal officer and secretary;

Emany, our senior vice president, chief financial officer;

Andrew Davis, our senior vice president, chief business officer;

John Minardo, our senior vice president, chief legal officer and secretary;

Jason Rickard, our senior vice president, chief operating officer;

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In the ordinary course of our business, we collect, process and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers and business partners, as well as personally identifiable information of our patients, clinical trial participants and employees.

We also rely to a large extent on information technology systems to operate our business, including to deliver our products.

We also rely to a large extent on

information technology systems to operate our business, including to deliver our products.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we are managing independent vendor relationships with third parties who may or could have access to our confidential information.

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These provisions include the following:

● While our board of directors is currently divided into three classes serving staggered terms, at our 2019 annual meeting of stockholders, our stockholders approved an amendment to our certificate of incorporation to declassify our board of directors to allow our stockholders to vote on the election of the entire board of directors on an annual basis, rather than on a staggered basis.

This declassification has been phased in, and beginning at our 2022 annual meeting of stockholders, stockholders will have the opportunity to replace the entire board at a single stockholders’ meeting and at each annual stockholders’ meeting thereafter.

As required by Delaware law, the amendment to our certificate of incorporation also reflects that, once the board of directors is declassified, stockholders may remove directors with or without cause.

● Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors.

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● Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting.

Furthermore, as described above, until our board of directors is declassified, stockholders may only remove a member of our board of directors for cause.

These provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect such acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

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In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.

These and other provisions in our certificate of incorporation and our bylaws and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors.

These and other provisions in our certificate of incorporation and our bylaws and in the Delaware General Corporation

Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors.

If we identify a material weakness in our internal control over financial reporting, it could have an adverse effect on our business and financial results and our ability to meet our reporting obligations could be negatively affected, each of which could negatively affect the trading price of our Class A Common Stock.

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● sales of additional shares of our Class A Common Stock or sales of securities convertible into Class A Common Stock or the perception that these sales might occur;

● any conversions of our Convertible Senior Notes into Class A Common Stock, exercises of the Note Hedge Warrants or activities undertaken by the counterparties to the Capped Calls;

● additions or departures of key personnel;

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

What changed 10-K

Item 1A. Risk Factors