What changed in this filing

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Item 1A. Risk Factors

2021-07-28 compared with 2021-05-04 · 27 added, 0 removed, 19 unchanged (59% of the section changed)

18 unchanged sentences

Lingering safety concerns about DEFINITY among some healthcare providers or future unanticipated side effects or safety concerns associated with DEFINITY could limit expanded use of DEFINITY and have a material adverse effect on the unit sales of this product and our financial condition and results of operations.

In the U.S., we are heavily dependent on a few large customers to generate a majority of our revenues for our nuclear medical imaging products.

Outside of the U.S., we rely primarily on distributors to generate a substantial portion of our revenue.

In the U.S., we have historically relied on a limited number of radiopharmacy customers, primarily Cardinal, RLS, UPPI, Jubilant Radiopharma and PharmaLogic, to distribute our current largest volume nuclear imaging products.

Among the existing radiopharmacies in the U.S., continued consolidations, divestitures and reorganizations may have a negative effect on our business, results of operations, financial condition and cash flows.

We generally have distribution arrangements with our major radiopharmacy customers pursuant to multi-year contracts, each of which is subject to renewal.

Recently, we extended our contract with Jubilant Radiopharma with respect to certain products, other than TechneLite and Thallium-201, through December 31, 2023.

If these contracts are terminated prior to the expiration of their term, or are not renewed, or are renewed on terms that are less favorable to us, then such an event could have a material adverse effect on our business, results of operations, financial condition and cash flows.

For all of our medical imaging products, we continue to experience significant pricing pressures from our competitors, large customers and group purchasing organizations, and any significant, additional pricing pressures could lead to a reduction in revenue which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Outside of the U.S.

and Canada, we have no sales force and, consequently, rely on third-party distributors, either on a country-by-country basis or on a multi-country, regional basis, to market, sell and distribute our products.

In Canada, we maintain our own direct sales force to sell DEFINITY.

In certain circumstances, distributors may also sell competing products to our own or products for competing diagnostic modalities and may have incentives to shift sales towards those competing products.

As a result, we cannot assure you that our international distributors will increase or maintain current levels of unit sales or that we will be able to increase or maintain our current unit pricing, which, in turn, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The CVRs we issued as part of the Progenics Acquisition may result in substantial future payments and could divert the attention of our management;

in addition, the actual payments made in connection with the CVRs, if any, may not be consistent with the estimated fair value of the CVRs that we are required to prepare for accounting purposes.

As part of the consideration for the Progenics Acquisition, we issued CVRs to the stockholders of Progenics and holders of in-the-money Progenics equity awards entitling them to future cash payments of 40% of PYLARIFY net sales over $100.0 million in 2022 and over $150.0 million in 2023.

These payments could be substantial and could adversely impact our liquidity.

In addition, we are obligated to exercise a level of effort, expertise and resources consistent with those normally used in a medical diagnostics business similar to our size and resources with respect to developing, seeking regulatory approval for and commercializing a product of similar market potential at a similar stage in its development or product life to PYLARIFY.

We are also required to produce net sales statements for PYLARIFY that may be reviewed and challenged by CVR holders, with any disagreement to be resolved by an independent accountant.

These requirements could divert management time and resources and result in additional costs.

Because the CVRs are considered contingent consideration liabilities, for accounting purposes we are required by U.S.

GAAP to estimate their fair value on a recurring basis.

Adjustments in the estimated fair value of the CVRs can impact our financial statements on a quarterly or annual basis.

The estimated fair value of the CVRs is determined based on a Monte Carlo simulation model that include significant estimates and assumptions pertaining to commercialization events, sales targets, market conditions and discount rates.

These estimates and assumptions are subject to the judgment of our management team and are not prepared with a view towards public disclosure of projected sales.

Our sales targets are also subject to significant economic, competitive, industry and other uncertainties and contingencies, which are difficult to predict and in many cases are beyond our control.

We can give no assurance that the actual amounts paid, if any, in connection with the CVRs will be consistent with any recurring fair value estimate for such CVRs.

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-Q

Item 1A. Risk Factors