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Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us.
+Added: You should carefully consider the risks described below, together with the financial and other information contained in this Annual Report on Form 10-K.
+Added: If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected.
+Added: In that event, the price of our Class A common stock could decline, and you could lose all or part of your investment.
Summary of Risk Factors
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The list below is not exhaustive, and investors should read this “Risk Factors” section in full.
−Removed: Some of the risks we face include:
−Removed: • Until the 2020 fiscal year, we had incurred losses for each fiscal year since inception, we may incur losses in the future and we may not be able to generate sufficient revenue to maintain profitability.
−Removed: • Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
• Certain of our products are used by customers in the production of vaccines and therapies, some of which represent relatively new and still-developing modes of treatment.
−Removed: Unforeseen adverse events, negative clinical outcomes, or increased regulatory scrutiny of these and their financial cost may damage public perception of the safety, utility, or efficacy of these vaccines and therapies or other modes of treatment and may harm our customers’ ability to conduct their business.
+Added: Unforeseen adverse events, negative clinical outcomes, development of alternative therapies, or increased regulatory scrutiny of these and their financial cost may damage public perception of the safety, utility, or efficacy of these vaccines and therapies or other modes of treatment and may harm our customers’ ability to conduct their business.
Such events may negatively impact our revenue and have an adverse effect on our performance.
−Removed: • We are dependent on our customers’ spending on and demand for outsourced nucleic acid production, biologics safety testing and protein detection research products and services.
+Added: • We are dependent on our customers’ spending on and demand for outsourced nucleic acid production and biologics safety testing products and services.
A reduction in spending or demand could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
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Our reagents may not achieve or maintain significant commercial market acceptance.
+Added: • Until the 2020 fiscal year, we had incurred losses for each fiscal year since inception, we may incur losses in the future and we may not be able to generate sufficient revenue to maintain profitability.
+Added: • Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
• Product liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing products and limit commercialization of any products that we may develop.
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• Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management, even if beneficial to our shareholders.
−Removed: A description of the risks and uncertainties associated with our business is described below, but these risks are not the only ones we face.
−Removed: Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us.
−Removed: You should carefully consider the risks described below, together with the financial and other information contained in this Annual Report on Form 10-K.
−Removed: If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected.
−Removed: In that event, the price of our Class A common stock could decline, and you could lose all or part of your investment.
Risks Related to Our Business and Strategy
−Removed: Until the 2020 fiscal year, we had incurred losses for each fiscal year since inception, we may incur losses in the future and we may not be able to generate sufficient revenue to maintain profitability.
−Removed: Until the 2020 fiscal year, we had incurred losses for each fiscal year since our inception.
−Removed: For the years ended December 31, 2018 and 2019, we incurred net losses of $16.9 million and $5.2 million, respectively.
−Removed: As of December 31, 2019, we had an accumulated deficit of $42.4 million.
−Removed: Although we generated net income of $78.8 million for the year ended December 31, 2020 and had retained earnings of $0.9 million as of December 31, 2020, we expect that our operating expenses will continue to increase as we grow our business and as a result of our becoming a public company, and we may be unable to maintain profitability for the fiscal year ending December 31, 2020 or any future period.
−Removed: Since our inception, we have financed our operations primarily through the incurrence of indebtedness, revenue from our products and services and the sale of our equity securities, including our November 2020 initial public offering.
−Removed: We will need to generate significant additional revenue to maintain profitability and we cannot be sure that we will remain profitable for any substantial period of time.
−Removed: We may never be able to generate sufficient revenue to maintain profitability and our recent and historical growth should not be considered indicative of our future performance.
−Removed: Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
−Removed: Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
−Removed: These fluctuations may be driven by a variety of factors, many of which are outside of our control, including, but not limited to:
−Removed: • demand from our largest customers, which account for a significant percentage of our sales and orders, may not meet our expectations regarding volume and price in any given time period;
−Removed: • the level of continued demand for COVID-19 vaccine related products and services which currently comprise a significant portion of our revenue, which may decrease as populations are vaccinated and the COVID-19 pandemic subsides;
−Removed: • the level of demand for our other products and services, and which may vary significantly, and our ability to increase penetration in our existing markets and expand into new markets;
−Removed: • customers accelerating, canceling, reducing or delaying orders as a result of developments related to their pre-clinical studies and clinical trials;
−Removed: • impacts on us, our suppliers and our customers as a result of the COVID-19 pandemic;
−Removed: • the relative reliability and robustness of our products and services;
−Removed: • changes in governmental regulations or the regulatory posture toward our business;
−Removed: • the volume and mix of the products and services we sell or changes in the production or sales costs related to our products and services;
−Removed: • the success of our newer products, such as our CleanCap ® and mRNA products, and the introduction of other new products or product enhancements by us or others in our industry;
−Removed: • the timing and amount of expenditures that we may incur to acquire, develop or commercialize additional products, services and technologies or for other purposes, such as the expansion of our facilities;
−Removed: • changes in governmental and academic funding of life sciences research and developments or changes that impact budgets, budget cycles or seasonal spending patterns of our customers;
−Removed: • future accounting pronouncements or changes in our accounting policies;
−Removed: • difficulties encountered by our commercial carriers in delivering our products, whether as a result of external factors such as weather or internal issues such as labor disputes;
−Removed: • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors;
−Removed: • the other factors described in this “Risk Factors” section.
−Removed: The impact of any one of the factors discussed above, or the cumulative effects of a combination of such factors, could result in significant fluctuations and unpredictability in our quarterly and annual operating results.
−Removed: As a result, comparisons of our operating results on a period-to-period basis may not be meaningful.
−Removed: Investors should not rely on our past results as an indication of our future performance.
−Removed: As a result of variability and unpredictability, we may also fail to meet the expectations of industry or financial analysts or investors for any period.
−Removed: If our revenue or operating results fall short of the expectations of analysts or investors or any guidance we may provide, or if the guidance we provide falls short of the expectations of analysts or investors, the price of our Class A common stock could decline substantially.
−Removed: Such a stock price decline could occur even when we have met or exceeded any previously publicly stated guidance we may have provided.
Certain of our products are used by customers in the production of vaccines and therapies, some of which represent relatively new and still-developing modes of treatment.
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Such events may negatively impact our revenue and have an adverse effect on our performance.
−Removed: Gene therapy and nucleic acid vaccines remain relatively new and are under active development, with only a few gene therapies and no nucleic acid vaccines approved to date by regulatory authorities.
+Added: Gene therapy and nucleic acid vaccines remain relatively new and are under active development, with only a few gene therapies and nucleic acid vaccines, including those for COVID-19, approved to date by regulatory authorities.
Public perception may be influenced by claims that gene therapy or nucleic acid vaccines are unsafe or ineffective, and gene therapy may not gain the acceptance of the public or the medical community.
−Removed: In addition, ethical, social, legal and financial concerns about gene therapy and nucleic acid vaccines could result in additional regulations or limitations or even prohibitions on certain gene therapies or vaccine-related products.
+Added: Following the release of nucleic acid COVID-19 vaccines, including those that incorporate our CleanCap® products, segments of the population have criticized their safety and efficacy impacting vaccine demand.
+Added: In addition, ethical, social, legal and financial concerns about gene therapy and nucleic acid vaccines, including COVID-19 vaccines, could result in additional regulations or limitations or even prohibitions on certain gene therapies or vaccine-related products.
More restrictive regulations or negative public perception could reduce certain of our customers’ use of our products and services, which could negatively affect our revenue and performance.
−Removed: In addition, certain of the COVID-19 vaccine development programs that may incorporate our CleanCap ® products are still in early stages of development.
−Removed: There can be no assurance that these vaccine programs will proceed to clinical trials or result in a commercial product, or that any resulting vaccine will incorporate our CleanCap ® products.
−Removed: A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, has affected, and may continue to materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.
−Removed: In late 2019, COVID-19 surfaced in Wuhan, China.
−Removed: Since then, COVID-19 has spread to multiple other regions and countries, including the San Francisco Bay Area, where our protein detection business is located, the San Diego, California and Washington, D.C.
−Removed: areas, where our nucleic acid production business is located and the Wilmington, North Carolina area, where our biologics safety testing products business is located.
−Removed: The COVID-19 pandemic is evolving and to date has led to the implementation of various responses, including government imposed shelter-in-place orders, quarantines, travel restrictions and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers in California, across the United States and in other countries.
−Removed: In response to the spread of COVID-19, and in accordance with direction from state and local government authorities, we have restricted access to our facilities mostly to personnel and third parties who must perform critical activities that must be completed on-site, limited the number of such personnel that can be present at our facilities at any one time, and requested that many of our personnel work remotely.
+Added: A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, has affected, and may continue to affect our business, financial condition, results of operations, cash flows and prospects.
+Added: The COVID-19 pandemic led to the implementation of various responses, including government imposed shelter-in-place orders, quarantines, travel restrictions and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers across the United States and in other countries.
+Added: In response to the spread of COVID-19, we restricted access to our facilities mostly to personnel and third parties required to perform critical activities that must be completed on-site, limited the number of such personnel that can be present at our facilities at any one time, and requested that many of our personnel work remotely.
In the event that government authorities were to further modify current restrictions, our employees conducting research and development or manufacturing activities may not be able to access our laboratory or manufacturing facilities and our core activities may be significantly limited or curtailed, possibly for an extended period of time.
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Any of these factors could severely impact our research and development activities, manufacturing business operations and sales or delay necessary interactions with local regulators, third-party vendors and other important contractors and customers.
−Removed: These and other factors arising from the COVID-19 pandemic could worsen in countries that are already experiencing significant levels of COVID-19 infections, could continue to spread to additional countries or could return to countries where the pandemic has been partially contained and could further adversely impact our ability to conduct our business generally and have a material adverse impact on our business, financial condition, results of operations, cash flows and prospects.
−Removed: For example, our protein detection segment experienced a decrease in sales for the second quarter of 2020 relative to the same period in 2019 due to stay-at-home orders in the San Francisco Bay Area and the closure of many academic laboratories that are the main customers of this segment and the reduced operations of other customers.
−Removed: Prolonged closures or shutdowns as a result of the COVID-19 pandemic would continue to affect sales of our protein detection segment adversely.
−Removed: The extent to which the pandemic may negatively impact our consolidated operations and results of operations or those of our third-party manufacturers, suppliers, partners or customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, the extent of travel restrictions, additional or modified government actions, new information that will emerge concerning the severity and impact of COVID-19 and actions to contain the pandemic or treat its impact, such as social distancing, quarantines, lock-downs or business closures.
−Removed: We cannot presently predict the scope and severity of any potential business shutdowns or disruptions as a result of the COVID-19 pandemic.
−Removed: If we or any of the third parties with whom we engage were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and
−Removed: negatively impacted, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
+Added: While our results of operations and cash flows have been positively impacted by the continued strong demand for our proprietary CleanCap analogs and ongoing demand for highly modified RNA products, particularly mRNA, continued demand for COVID-19 vaccine related products and services, which currently comprise a significant portion of our revenue, may decrease as populations are vaccinated, the COVID-19 pandemic subsides or antiviral therapeutic alternatives are developed successfully .
+Added: In addition, other effects of the COVID-19 pandemic may impact our financial results.
+Added: For example, our former protein detection segment experienced a decrease in sales for the second quarter of 2020 relative to the same period in 2019 due to stay-at-home orders in the San Francisco Bay Area and the closure of many academic laboratories.
+Added: The extent to which the pandemic may negatively impact our consolidated operations and results of operations or those of our third-party manufacturers, suppliers, partners or customers continues depend on future developments.
+Added: The factors that could cause such adverse impact include:
+Added: the severity and duration of the pandemic;
+Added: the emergence of new virus variants;
+Added: lack of demand for COVID-19 vaccines;
+Added: competition faced by our customers from other COVID-19 vaccine manufacturers;
+Added: economy and global economy, including impacts resulting from supply chain constraints and inflationary pressures;
+Added: and the timing, scope and effectiveness of U.S.
+Added: and international governmental, regulatory, fiscal, monetary and public health responses to the COVID-19 pandemic and associated economic disruptions.
Changes in economic conditions could negatively impact our revenue and earnings.
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Changes in government funding for certain research or reductions in overall healthcare spending could negatively impact us or our customers and, correspondingly, our sales to them.
−Removed: Currently, the U.S.
−Removed: and global economies are experiencing a period of economic downturn as a result of the COVID-19 pandemic.
−Removed: Other global economies have been slow to recover from past downturns.
−Removed: Any continued or further economic downturns or reductions or delays in governmental funding could cause customers to delay or forego purchases of our products and services.
+Added: As a result of COVID-19, the U.S.
+Added: and global economies experienced an economic downturn.
+Added: Further economic downturns or reductions or delays in governmental funding could cause customers to delay or forego purchases of our products and services.
In addition, the majority of our customers’ contracts can be terminated, delayed or reduced in scope upon short notice or no notice.
Changes in the level of orders received and filled can cause fluctuations in our quarterly revenue and earnings.
−Removed: We are dependent on our customers’ spending on and demand for outsourced nucleic acid production, biologics safety testing and protein detection research products and services.
+Added: We are dependent on our customers’ spending on and demand for outsourced nucleic acid production amd biologics safety testing products and services.
A reduction in spending or demand could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
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A slowing or reversal of any of these trends could have a significant adverse effect on the demand for our products and services.
−Removed: In addition to these industry trends, our customers’ willingness and ability to utilize our products and services are also subject to, among other things, their own financial performance, changes in their available resources, their decisions to acquire in-house manufacturing capacity, their spending priorities, their budgetary policies and practices and their need to develop new biological products, which, in turn, are dependent upon a number of factors, including their competitors’ discoveries, developments and commercial manufacturing initiatives and the anticipated market, clinical and reimbursement scenarios for specific products and therapeutic areas.
+Added: In addition to these industry trends, our customers’ willingness and ability to utilize our products and services are also subject to, among other things, their own financial performance, changes in their available resources, their decisions to acquire in-house manufacturing capacity, their spending priorities, their budgetary policies and practices and their need to develop new
+Added: biological products, which, in turn, are dependent upon a number of factors, including their competitors’ discoveries, developments and commercial manufacturing initiatives and the anticipated market, clinical and reimbursement scenarios for specific products and therapeutic areas.
In addition, consolidation in the industries in which our customers operate may have an impact on our customers’ spending as they integrate acquired operations, including research and development departments and associated budgets.
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A failure of our quality control systems could result in problems with facility operations or preparation or provision of products.
−Removed: In each case, such problems could arise for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials or environmental factors and damage to, or loss of, manufacturing operations.
+Added: In each case, such problems could arise for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw
+Added: materials or environmental factors and damage to, or loss of, manufacturing operations.
Such problems could affect production of a particular batch or series of batches of products, requiring the destruction of such products or a halt of facility production altogether.
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In the past, certain of our custom mRNA and CleanCap reagent products have been sold with insufficient capping efficiency or with incorrect transcription instructions.
−Removed: Additionally, several lots of our host cell protein enzyme-linked immunosorbent assay (“HCP”) (“ELISA”) biologics safety testing kits have experienced a possible instability drift and decrease in accuracy.
+Added: Additionally, several lots of our host cell protein (“HCP”) enzyme-linked immunosorbent assay (“ELISA”) biologics safety testing kits have experienced a possible instability drift and decrease in accuracy.
Although we have taken steps to improve our quality review, product documentation and reference testing procedures, we cannot guarantee that we will not experience quality assurance issues with our products in the future.
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In the event we, or our suppliers, produce products that fail to comply with required quality standards, we may incur delays in fulfilling orders, write-downs, damages resulting from product liability claims and harm to our reputation.
−Removed: Our business could be adversely affected by disruptions at our sites.
−Removed: We rely upon our internal manufacturing, packaging and distribution operations to produce many of the products we sell and our warehouse facilities to store products pending sale.
−Removed: Any significant disruption of those operations for any reason, such as labor unrest, power interruptions, fire, hurricanes, the COVID-19 pandemic, earthquakes or other events beyond our control, could adversely affect our sales and customer relationships and therefore adversely affect our business.
−Removed: We have significant operations in California, near major earthquake faults, which make us susceptible to earthquake risk.
+Added: Until the 2020 fiscal year, we had incurred losses for each fiscal year since inception, we may incur losses in the future and we may not be able to generate sufficient revenue to maintain profitability.
+Added: Until the 2020 fiscal year, we had incurred losses for each fiscal year since our inception.
+Added: For the years ended December 31, 2018 and 2019, we incurred net losses of $16.9 million and $5.2 million, respectively.
+Added: As of December 31, 2019, we had an accumulated deficit of $42.4 million.
+Added: Although we generated net income of $469.3 million for the year ended December 31, 2021 and had retained earnings of $184.6 million as of December 31, 2021, we expect that our operating expenses will continue to increase as we grow our business and as a result of our becoming a public company, and we may be unable to maintain
+Added: profitability for any future period.
+Added: Since our inception, we have financed our operations primarily through the incurrence of indebtedness, revenue from our products and services and the sale of our equity securities, including our November 2020 initial public offering.
+Added: We will need to generate significant additional revenue to maintain profitability and we cannot be sure that we will remain profitable for any substantial period of time.
+Added: We may never be able to generate sufficient revenue to maintain profitability and our recent and historical growth should not be considered indicative of our future performance.
+Added: Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
+Added: Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
+Added: These fluctuations may be driven by a variety of factors, many of which are outside of our control, including, but not limited to:
+Added: • demand from our largest customers, which account for a significant percentage of our sales and orders, may not meet our expectations regarding volume and price in any given time period;
+Added: • the level of continued demand for COVID-19 vaccine related products and services which currently comprise a significant portion of our revenue, which may decrease as populations are vaccinated and the COVID-19 pandemic subsides;
+Added: • the level of demand for our other products and services, and which may vary significantly, and our ability to increase penetration in our existing markets and expand into new markets;
+Added: • customers accelerating, canceling, reducing or delaying orders as a result of developments related to their pre-clinical studies and clinical trials;
+Added: • impacts on us, our suppliers and our customers as a result of the COVID-19 pandemic;
+Added: • the relative reliability and robustness of our products and services;
+Added: • changes in governmental regulations or the regulatory posture toward our business;
+Added: • the volume and mix of the products and services we sell or changes in the production or sales costs related to our products and services;
+Added: • the success of our newer products, such as our CleanCap and mRNA products, and the introduction of other new products or product enhancements by us or others in our industry;
+Added: • the timing and amount of expenditures that we may incur to acquire, develop or commercialize additional products, services and technologies or for other purposes, such as the expansion of our facilities;
+Added: • changes in governmental and academic funding of life sciences research and developments or changes that impact budgets, budget cycles or seasonal spending patterns of our customers;
+Added: • future accounting pronouncements or changes in our accounting policies;
+Added: • difficulties encountered by our commercial carriers in delivering our products, whether as a result of external factors such as weather or internal issues such as labor disputes;
+Added: • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors;
+Added: • the other factors described in this “Risk Factors” section.
+Added: The impact of any one of the factors discussed above, or the cumulative effects of a combination of such factors, could result in significant fluctuations and unpredictability in our quarterly and annual operating results.
+Added: As a result, comparisons of our operating results on a period-to-period basis may not be meaningful.
+Added: Investors should not rely on our past results as an indication of our future performance.
+Added: As a result of variability and unpredictability, we may also fail to meet the expectations of industry or financial analysts or investors for any period.
+Added: If our revenue or operating results fall short of the expectations of analysts or investors or any guidance we may provide, or if the guidance we provide falls short of the expectations of analysts or investors, the price of our Class A common stock could decline substantially.
+Added: Such a stock price decline could occur even when we have met or exceeded any previously publicly stated guidance we may have provided.
If we are unable to manufacture in specific quantities, our operating results will be harmed.
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If we are unable to manufacture and ship our products consistently, in sufficient quantities and on a timely basis, our revenue, cash flow, gross margins and our other results of operations will be materially and adversely affected.
−Removed: Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products and services, which could negatively affect our operations and performance.
+Added: Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products and services, as well as our sites, which could negatively affect our operations and performance.
We are subject to the risk of disruption by earthquakes, hurricanes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war, terrorist attacks and other hostile acts, public health issues, epidemics or pandemics, such as the COVID-19 pandemic, and other events beyond our control and the control of the third parties on which we depend.
−Removed: Any of these catastrophic events, whether in the United States or abroad, may have a significant negative impact on the global
−Removed: economy, our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products and services, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products and services to our customers.
+Added: Any of these catastrophic events, whether in the United States or abroad, may have a significant negative impact on the global economy, our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products and services, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products and services to our customers.
+Added: We rely upon our internal manufacturing, packaging and distribution operations to produce many of the products we sell and our warehouse facilities to store products pending sale.
+Added: Any significant disruption of those operations for any reason, such as labor unrest, power interruptions, fire, hurricanes, the COVID-19 pandemic, earthquakes or other events beyond our control, could adversely affect our sales and customer relationships and therefore adversely affect our business.
+Added: We have significant operations in California, near major earthquake faults, which make us susceptible to earthquake risk.
In addition, a catastrophic event that results in damage to specific equipment that would be difficult to replace, the destruction or disruption of our research and production facilities or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected.
−Removed: Future strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, if at all.
+Added: Strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, if at all.
We plan to continue a strategy of growth and development for our business.
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In addition, future acquisitions may require the issuance or sale of additional equity, or equity-linked securities, which may result in additional dilution to our shareholders.
−Removed: Further, on October 19, 2020, we entered into a new credit agreement (the “New Credit Agreement”), which contains a number of restrictive covenants that impose significant restrictions on our ability to make acquisitions or certain other investments.
+Added: Further, on October 19, 2020, we entered into a credit agreement (the “Credit Agreement”), which contains a number of restrictive covenants that impose significant restrictions on our ability to make acquisitions or certain other investments.
If we are unable to continue to hire and retain skilled personnel, we will have trouble developing and marketing our products and services.
Our success depends largely upon the continued service of our management and scientific staff and our ability to attract, retain and motivate highly skilled technical, scientific, management and marketing personnel, who deliver high-quality and timely services to our customers and keep pace with cutting-edge technologies and developments in biologics.
−Removed: We also face significant competition in the hiring and retention of such personnel from other companies, other providers of outsourced biologics services, research and academic institutions, government and other organizations who have superior funding and resources.
−Removed: The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect the development of our products and services and our business, financial condition, results of operations, cash flows and prospects.
+Added: We face significant competition in the hiring and retention of such personnel from other companies, other providers of outsourced biologics services, research and academic institutions, government and other organizations who have superior funding and resources.
+Added: In recent years, recruiting, hiring and retaining employees with expertise in our industry and in the geographies where we operate has become increasingly difficult as the demand for skilled professionals has increased and as a result of labor shortages resulting from COVID-19.
+Added: The loss of key personnel or our inability to hire and retain skilled personnel could materially
+Added: adversely affect the development of our products and services and our business, financial condition, results of operations, cash flows and prospects.
Our success depends on the market acceptance of our life science reagents.
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• the rate of adoption of our products and services by biopharmaceutical companies, academic institutions and others;
−Removed: • the relative reliability and robustness of our products and services as a whole and the components of our life science offerings, including, for example, CleanCap ® , our assays for detecting host cell proteins and research products for labeling and detecting proteins;
+Added: • the relative reliability and robustness of our products and services as a whole and the components of our life science offerings, including, for example, CleanCap and our assays for detecting host cell proteins;
• our ability to develop new tools and solutions for customers;
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The market may not be receptive to our new products and services upon their introduction.
−Removed: We expect a portion of our future revenue growth to come from introducing new products, including plasmid DNA.
+Added: We expect a portion of our future revenue growth to come from introducing new products, including plasmid DNA and GMP-grade mRNA.
The commercial success of all of our products and services will depend upon their acceptance by the life science and biopharmaceutical industries.
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Our inability to manage successfully the geographically more diverse and substantially larger combined organization could materially adversely affect our operating results.
−Removed: Opportunistic acquisitions may pose risks and challenges.
−Removed: We have completed six acquisitions and several investments since April 2016 and, going forward, we may opportunistically pursue strategic acquisitions.
−Removed: However, we may be unable to continue to identify or complete promising acquisitions for many reasons, including competition among buyers, the high valuations of businesses in our industry, the need for regulatory and other approvals and the availability of capital.
−Removed: There can be no assurance that we will engage in any additional acquisitions or that we will be able to do so on terms that will enable us to realize the anticipated benefits.
−Removed: In addition, acquisitions financed with borrowings could increase our leverage and interest expense, which could make us more vulnerable to business downturns.
−Removed: Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
+Added: Opportunistic acquisitions may pose risks and challenges that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
We have made in the past, and may make in the future, selected opportunistic acquisitions of complementary businesses, products, services or technologies.
−Removed: In April 2016, we acquired Vector Laboratories, which allowed our entry into the protein detection business.
In September 2016, we acquired TriLink BioTechnologies, LLC (“TriLink BioTechnologies”), in December 2016 we acquired the assets of Solulink Incorporated (“Solulink”) and in December 2017 we acquired Glen Research Corporation (“Glen Research”), which together have formed our nucleic acid business and production capabilities.
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which together constitute our biologics safety testing business.
−Removed: Any acquisition involves numerous risks, uncertainties and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, results of operations, cash flows and prospects:
+Added: More recently, in January 2022, we acquired MyChem LLC, a provider of proprietary, ultra-pure nucleotides to customers in the diagnostics, pharma, genomics and research markets to complement our nucleic acid business.
+Added: However, we may be unable to continue to identify or complete promising acquisitions for many reasons, including competition among buyers, the high valuations of businesses in our industry, the need for regulatory and other approvals and the availability of capital.
+Added: Even if we do engage in acquisitions, any acquisition involves numerous risks, uncertainties and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, results of operations, cash flows and prospects:
• difficulties in integrating new operations, systems, technologies, products, services and personnel of acquired businesses effectively;
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In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal, and information technologies;
−Removed: There can be no assurance that any of the acquisitions we have made, or that we may make, will be successful or will be, or will remain, profitable.
+Added: • increased leverage and interest expense from financing acquisitions, which could make us more vulnerable to downturns.
+Added: There can be no assurance we will identify promising acquisition opportunities.
+Added: Even if we do, there can be no assurance that any of the acquisitions we have made, or that we may make, will be successful or will be, or will remain, profitable.
Our failure to successfully address the foregoing risks may prevent us from achieving the anticipated benefits from any past or future acquisition in a reasonable time frame, or at all.
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Generally, if an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards and certain built-in losses is equal to the product of the applicable long-term, tax-exempt rate and the value of the company’s stock immediately before the ownership change.
−Removed: As a result, following any such ownership change, we might be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire, in which event we could incur larger federal and state income tax liabilities than we would have had we not experienced an ownership change.
+Added: As a result, following any such ownership change, we might be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire,
+Added: in which event we could incur larger federal and state income tax liabilities than we would have had we not experienced an ownership change.
We may be required to record a significant charge to earnings if our goodwill and other amortizable intangible assets, or other investments become impaired.
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Factors that could lead to impairment of goodwill, amortizable intangible assets and other assets acquired via acquisitions include significant adverse changes in the business climate and actual or projected operating results (affecting our company as a whole or affecting any particular segment) and declines in the financial condition of our business.
−Removed: We may be required in the future to
−Removed: record additional charges to earnings if our goodwill, amortizable intangible assets or other investments become impaired.
+Added: We may be required in the future to record additional charges to earnings if our goodwill, amortizable intangible assets or other investments become impaired.
Any such charge would adversely impact our consolidated financial results.
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A change in these principles or guidance, or in their interpretations, may have a material effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results.
−Removed: For example, during February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842).
−Removed: The updated standard requires the recognition of a liability for lease obligations and a corresponding right-of-use asset on the balance sheet, and disclosures of certain information regarding leasing arrangements.
−Removed: We are still assessing the full effects of Topic 842 on our consolidated financial statements but do expect the adoption to have a material impact on our financial statements and related footnote disclosures.
Our revenue recognition and other factors may impact our financial results in any given period and make them difficult to predict.
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In some instances, we could reasonably use different estimates and assumptions, and changes in estimates may occur from period to period.
−Removed: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Revenue Recognition.”
+Added: See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Revenue Recognition.”
Given the foregoing factors, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.
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Our manufacturing business involves the controlled use of hazardous materials and chemicals and is therefore subject to numerous environmental and safety laws and regulations and to periodic inspections for possible violations of these laws and regulations.
−Removed: In addition to these hazardous materials and chemicals, our facility in Burlingame, California also produces certain toxins for research use that can cause severe illness in humans.
The costs of compliance with environmental and safety laws and regulations are significant.
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Delays or difficulties in securing these raw materials or other laboratory materials could result in an interruption in our production operations if we cannot obtain an acceptable substitute.
−Removed: Any such interruption could significantly affect our business, financial condition, results of operations, cash flows and prospects.
−Removed: While we may identify other suppliers, raw materials furnished by such replacement suppliers may require us to alter our production operations or perform extensive validations, which may be time consuming and expensive.
+Added: As a consequence of the COVID-19 pandemic, global supply chains are facing challenges, including material availability, global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers.
+Added: Any interruption of our supply chain could significantly affect our business, financial condition, results of operations, cash flows and prospects.
+Added: While we may identify other suppliers, raw materials furnished by such replacement suppliers may require us to alter our production operations or perform extensive
+Added: validations, which may be time consuming and expensive.
There can be no assurance that we will be able to secure alternative materials and revalidate them without experiencing interruptions in our workflow.
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Because we rely heavily on third-party package-delivery services, a significant disruption in these services, damages or losses sustained during shipping or significant increases in prices could adversely affect our business, financial condition, results of operations, cash flows and prospects.
−Removed: We ship a significant portion of our products to our customers through independent package delivery companies, such as FedEx, UPS and DHL.
+Added: We ship a significant portion of our products to our customers through independent package delivery companies, such as World Courier, FedEx, UPS and DHL.
If one or more of these third-party package-delivery providers were to experience a major work stoppage, preventing our products from being delivered in a timely fashion or causing us to incur additional shipping costs we could not pass on to our customers, our costs could increase and our relationships with certain of our customers could be adversely affected.
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Risks Related to Laws and Regulations
+Added: Our products could become subject to more onerous regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay or prevent commercialization of our products, thereby materially and adversely affecting our business, financial condition, results of operations, cash flows and prospects.
+Added: We make certain of our products available to customers as research-use-only (“RUO”) products.
+Added: RUO products are regulated by the FDA as medical devices, and include in vitro diagnostic products in the laboratory research phase of development that are being shipped or delivered for an investigation that is not subject to the FDA’s investigational device exemption requirements.
+Added: Although medical devices are subject to stringent FDA oversight, products that are intended for RUO and are labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or approval, manufacturing requirements, and others.
+Added: A product labeled RUO but which is actually intended for clinical diagnostic use may be viewed by the FDA as adulterated and misbranded under the FDCA, and subject to FDA enforcement action.
+Added: The FDA has indicated that when determining the intended use of a product labeled RUO, the FDA will consider the totality of the circumstances surrounding distribution and use of the product, including how the product is marketed and to whom.
+Added: The FDA could disagree with our assessment that our products are properly marketed as RUO, or could conclude that products labeled as RUO are actually intended for clinical diagnostic use, and could take enforcement action against us, including requiring us to stop distribution of our products until we are in compliance with applicable regulations, which would reduce our revenue,
+Added: increase our costs and adversely affect our business, prospects, results of operations and financial condition.
+Added: In the event that the FDA requires us to obtain marketing authorization of our RUO products in the future, there can be no assurance that the FDA will grant any clearance or approval requested by us in a timely manner, or at all.
+Added: Our raw material products are manufactured following the voluntary quality standards of ISO 9001:2015.
+Added: Our GMP-grade raw material products follow ISO 9001:2015 standards, additional voluntary GMP quality standards and customer specific requirements.
+Added: We believe these raw material products, including our GMP-grade raw material products, are exempt from compliance with the FDCA and the cGMP regulations of the FDA, as our products are further processed by our customers and we do not make claims related to their safety or effectiveness.
+Added: We provide API products to customers for use in preclinical studies through and including clinical trials.
+Added: Our API products are manufactured following the principles detailed in the International Council for Harmonisation (ICH) Q7, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients (Section 19, APIs For Use in Clinical Trials) in order to comply with the applicable requirements of the FDCA, and the comparable GMP principles for Europe;
+Added: European Community, Part II, Basic Requirements for Active Substances Used as Starting Materials (Section 19, APIs For Use in Clinical Trials).
+Added: Manufacture of APIs for use in clinical trials is regulated under § 501(a)(2)(B) of the FDCA, but is not subject to the current GMP regulations in 21 CFR § 211 by operation of 21 CFR § 210.
+Added: Our API products are provided to customers under customer contracts that outline quality standards and product specifications.
+Added: As products advance through the clinical phases, requirements become more stringent and we work with customers to define and agree on requirements and risks associated with their product.
+Added: The FDA could disagree with our assessment that our products are exempt from current GMP regulations.
+Added: In addition, the FDA could conclude that the raw material and API products we provide to our customers are actually subject to the pharmaceutical or drug quality-related regulations for manufacturing, processing, packing or holding of drugs or finished pharmaceuticals, and could take enforcement action against us, including requiring us to stop distribution of our products until we are in compliance with applicable regulations, which would reduce our revenue, increase our costs and adversely affect our business, prospects, results of operations and financial condition.
+Added: In the event that the FDA requires us to comply with FDA regulations, for our raw material and API products in the future, including the FDA’s current GMP regulations, there can be no assurance that the FDA will find our operations are in compliance in a timely manner, or at all.
We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies and contractual obligations could adversely affect our business, financial condition, results of operations, cash flows and prospects.
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For example, the California Consumer Privacy Act of 2018 (“CCPA”), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020.
−Removed: Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data
−Removed: protection and privacy rights, including the ability to opt-out of certain sales of personal information.
+Added: Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data protection and privacy rights, including the ability to opt-out of certain sales of personal information.
The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.
−Removed: This law and others like it are as yet untested and may subject us to increased regulatory scrutiny, litigation, and overall risk.
−Removed: State laws are changing rapidly and there is discussion in Congress of a new federal data protection and privacy law to which we would become subject, if it is enacted.
+Added: Further, the California Privacy Rights Act (the “CPRA”), which was approved by California voters as a ballot initiative in November 2020, creates additional obligations with respect to processing and storing personal information that are scheduled to take effect on January 1, 2023 (with certain provisions having retroactive effect to January 1, 2022).
+Added: These laws and others like it are as yet untested and may subject us to increased regulatory scrutiny, litigation, and overall risk.
+Added: State laws are changing rapidly, Virginia and Colorado have passed comprehensive data privacy laws that take effect in January 1, 2023, and there is discussion in Congress of a new federal data protection and privacy law to which we would become subject, if it is enacted.
Various foreign countries in which we operate also have, or are developing, laws that govern the collection, use, disclosure, security and cross-border transmission of personal information.
−Removed: 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 that have the potential to affect our business.
+Added: The legislative and regulatory landscape for privacy and data
+Added: protection continues to evolve, and there has been an increasing focus on privacy and data protection issues that have the potential to affect our business.
For example, privacy requirements in the European Union (the “EU”) govern the transfer of personal information from the European Economic Area to the United States.
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Such fines are in addition to any civil litigation claims by data subjects.
−Removed: Brexit may also lead to further legislative and regulatory changes and increase our compliance costs.
−Removed: The United Kingdom has transposed the GDPR into domestic law, with a United Kingdom version of the GDPR that took effect in January 2021, after the end of the Brexit transitional period.
−Removed: This could have the result of exposing us to two parallel data privacy regimes in Europe, each of which potentially authorizes significant fines for certain violations.
Other jurisdictions outside the EU are similarly introducing or enhancing privacy and data security laws, rules and regulations, which could increase our compliance costs and the risks associated with noncompliance.
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and international healthcare industry is subject to changing political, economic and regulatory influences that could significantly affect the drug development process, research and development costs and the pricing and reimbursement for pharmaceutical products.
−Removed: Any significant change in
−Removed: regulations could have an adverse effect on both our customers’ business and our business, which could result in reduced demand for our products and services or increases in our expenses.
+Added: Any significant change in regulations could have an adverse effect on both our customers’ business and our business, which could result in reduced demand for our products and services or increases in our expenses.
For example, we provide products and services used for basic research, raw materials used by biopharmaceutical customers for further processing, and active pharmaceutical ingredients used for preclinical studies and clinical trials.
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Any such non-compliance, even if prohibited by our internal policies, could have an adverse effect on our business and result in significant fines or penalties.
−Removed: Our products could become subject to more onerous regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay or prevent commercialization of our products, thereby materially and adversely affecting our business, financial condition, results of operations, cash flows and prospects.
−Removed: We make certain of our products available to customers as research-use-only (“RUO”) products.
−Removed: RUO products are regulated by the FDA as medical devices, and include in vitro diagnostic products in the laboratory research phase of development that are being shipped or delivered for an investigation that is not subject to the FDA’s investigational device exemption requirements.
−Removed: Although medical devices are subject to stringent FDA oversight, products that are intended for RUO and are labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or approval, manufacturing requirements, and others.
−Removed: A product labeled RUO but which is actually intended for clinical diagnostic use may be viewed by the FDA as adulterated and misbranded under the FDCA, and subject to FDA enforcement action.
−Removed: The FDA has indicated that when determining the intended use of a product labeled RUO, the FDA will consider the totality of the circumstances surrounding distribution and use of the product, including how the product is marketed and to whom.
−Removed: The FDA could disagree with our assessment that our products are properly marketed as RUO, or could conclude that products labeled as RUO are actually intended for clinical diagnostic use, and could take enforcement action against us, including requiring us to stop distribution of our products until we are in compliance with applicable regulations, which would reduce our revenue, increase our costs and adversely affect our business, prospects, results of operations and financial condition.
−Removed: In the event that
−Removed: the FDA requires us to obtain marketing authorization of our RUO products in the future, there can be no assurance that the FDA will grant any clearance or approval requested by us in a timely manner, or at all.
−Removed: Our raw material products are manufactured following the voluntary quality standards of ISO 9001:2015.
−Removed: Our GMP-grade raw material products follow ISO 9001:2015 standards, additional voluntary GMP quality standards and customer specific requirements.
−Removed: We believe these raw material products, including our GMP-grade raw material products, are exempt from compliance with the FDCA and the cGMP regulations of the FDA, as our products are further processed by our customers and we do not make claims related to their safety or effectiveness.
−Removed: We provide API products to customers for use in preclinical studies through and including clinical trials.
−Removed: Our API products are manufactured following the principles detailed in the International Council for Harmonisation (ICH) Q7, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients (Section 19, APIs For Use in Clinical Trials) in order to comply with the applicable requirements of the FDCA, and the comparable GMP principles for Europe;
−Removed: European Community, Part II, Basic Requirements for Active Substances Used as Starting Materials (Section 19, APIs For Use in Clinical Trials).
−Removed: Manufacture of APIs for use in clinical trials is regulated under § 501(a)(2)(B) of the FDCA, but is not subject to the current GMP regulations in 21 CFR § 211 by operation of 21 CFR § 210.
−Removed: Our API products are provided to customers under customer contracts that outline quality standards and product specifications.
−Removed: As products advance through the clinical phases, requirements become more stringent and we work with customers to define and agree on requirements and risks associated with their product.
−Removed: The FDA could disagree with our assessment that our products are exempt from current GMP regulations.
−Removed: In addition, the FDA could conclude that the raw material and API products we provide to our customers are actually subject to the pharmaceutical or drug quality-related regulations for manufacturing, processing, packing or holding of drugs or finished pharmaceuticals, and could take enforcement action against us, including requiring us to stop distribution of our products until we are in compliance with applicable regulations, which would reduce our revenue, increase our costs and adversely affect our business, prospects, results of operations and financial condition.
−Removed: In the event that the FDA requires us to comply with FDA regulations, for our raw material and API products in the future, including the FDA’s current GMP regulations, there can be no assurance that the FDA will find our operations are in compliance in a timely manner, or at all.
Our activities are and will continue to be subject to extensive government regulation, which is expensive and time consuming.
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and abroad such as anti-corruption and anti-competition laws.
−Removed: Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary permits and licenses could result in criminal, civil and administrative penalties and could have an adverse effect on our results of operations.
+Added: noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary permits and licenses could result in criminal, civil and administrative penalties and could have an adverse effect on our results of operations.
+Added: Increasing scrutiny and changing expectations from investors, lenders, customers, government regulators and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies and activities may impose additional costs on us or expose us to additional risks.
+Added: Companies across all industries and around the globe are facing increasing scrutiny relating to their ESG policies, initiatives and activities by investors, lenders, customers, government regulators and other market participants.
+Added: Regulatory requirements related to ESG have been issued in the E.U., its Member States and other countries, particularly with respect to climate change, emission reduction and environmental stewardship.
+Added: In the U.S., amongst other regulatory efforts, in February 2021, the Acting Chair of the SEC issued a statement directing the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings, and in March 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement.
+Added: We expect regulatory requirements related to ESG matters to continue to expand globally and increase our costs of compliance.
+Added: We risk damage to our brand and reputation, impacts to our ability to secure government contracts, or limited access to capital markets and loans if we fail to adapt to, or comply with, investor, lender, customer or other stakeholder expectations and standards and potential government regulation with respect to ESG matters, including in areas such as diversity and inclusion, environmental stewardship, support for local communities and corporate governance and transparency.
Risks Related to Our Intellectual Property and Technology
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In any of these types of proceedings, a court or agency of competent jurisdiction may find our patents invalid or unenforceable.
−Removed: Our competitors and other third parties may also be able to
−Removed: circumvent our patents by developing similar or alternative products in a non-infringing manner.
+Added: Our competitors and other third parties may also be able to circumvent our patents by developing similar or alternative products in a non-infringing manner.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
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The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S.
−Removed: In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States.
+Added: In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such
+Added: inventions in the United States.
If we fail to comply with those requirements, we could lose our ownership of or other rights to any patents subject to such regulations.
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The launch of a similar version of one of our products would likely result in an immediate and substantial reduction in the demand for our product.
−Removed: For example, certain patents related to our SoluLINK products expired in 2020 and certain other patents related to such products are due to expire in 2021 and 2022.
As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
+Added: If we are prevented from enforcing our intellectual property rights because of governmental regulatory policies or political pressure or action, our sales and profitability may be materially adversely affected.
+Added: Our ability to maintain and grow our product sales and profitability depends, in part, on our ability to maintain and enforce our patents and other intellectual property rights.
+Added: Proposed actions to waive intellectual property protections for COVID-19 vaccines and associated technology, such as those under discussion at the World Trade Organization, which are supported by the U.S.
+Added: government, may impact our ability to fully assert our intellectual property rights related to our CleanCap product in connection with the production of COVID-19 vaccines.
+Added: Further, these policy actions may complicate our analysis and decision-making with respect to both research and development and capital investment, given the potential for lower returns on those investments that could result from our inability to fully protect our intellectual property.
+Added: If we are unable to successfully navigate these considerations, the future revenues and profitability of our business could be negatively impacted.
+Added: We are unable to estimate the impact of these potential policies given that they remain undefined and their adoption is uncertain.
Our internal computer systems, or those of our customers, collaborators or other contractors, have been and may in the future be subject to cyber-attacks or security breaches, which could result in a material disruption of our product development programs or otherwise adversely affect our business, financial condition, results of operations, cash flows and prospects.
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We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.
−Removed: To maintain the confidentiality of trade secrets and other proprietary information, we enter into confidentiality agreements with our employees, consultants, contractors, collaborators, contract development and manufacturing organizations (“CDMOs”), contract research organizations (“CROs”) and others upon the commencement of their relationships with us.
+Added: To maintain the confidentiality of trade secrets and other proprietary information, we enter into confidentiality agreements with our employees, consultants, contractors, collaborators, CDMOs, CROs and others upon the commencement of their relationships with us.
These agreements require that all confidential information developed by the individual or entity or made known to the individual or entity by us during the course of the individual’s or entity’s relationship with us be kept confidential and not disclosed to third parties.
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Many of our partners also collaborate with our competitors and other third parties.
−Removed: The disclosure of our trade secrets to our competitors, or more broadly, would
−Removed: impair our competitive position and may materially harm our business, financial condition, results of operations, cash flows and prospects.
+Added: The disclosure of our trade secrets to our competitors, or more broadly, would impair our competitive position and may materially harm our business, financial condition, results of operations, cash flows and prospects.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our rights, and failure to maintain trade secret protection could adversely affect our competitive business position.
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Such proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our current or future products or provide any competitive advantage.
−Removed: The outcome following legal assertions of invalidity and unenforceability is unpredictable.
+Added: The outcome following legal assertions of invalidity and unenforceability is
+Added: unpredictable.
If a third party were to prevail on a legal assertion of invalidity or unenforceability, we could lose part or all of the patent protection on one or more of our current or future products, which could result in our competitors and other third parties using our technology to compete with us.
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The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
−Removed: If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, and we may not be able to do this.
+Added: If we are sued for patent infringement, we would need to demonstrate that
+Added: our products or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, and we may not be able to do this.
Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
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A finding of infringement could prevent us from commercializing our future products or force us to cease some of our business operations, which could harm our business.
−Removed: Claims that we have misappropriated the confidential information or trade secrets of third parties could have
−Removed: a similar negative impact on our business.
+Added: Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
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We may also need to obtain additional licenses in the future to advance our research or allow commercialization of our future products and it is possible that we may be unable to do so at a reasonable cost or on reasonable terms, if at all.
−Removed: Moreover, such licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our future products.
+Added: Moreover, such licenses may not provide exclusive
+Added: rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our future products.
In addition, our existing license agreements impose, and any future license agreements we enter into may impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent prosecution and enforcement or other obligations on us.
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federal courts.
−Removed: Therefore, it is generally considered easier for a competitor or third party to have a
+Added: Therefore, it is generally considered easier for a competitor or third party to have a U.S.
patent invalidated in a USPTO post-grant review or inter partes review proceeding than in a litigation in a U.S.
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We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names or marks which we need for name recognition by potential partners or customers in our markets of interest.
−Removed: trademark registration proceedings, we may receive rejections.
+Added: During trademark registration proceedings, we may receive rejections.
Although we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections.
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Our existing indebtedness could adversely affect our business and growth prospects.
−Removed: As of December 31, 2020, we had total current and long-term indebtedness outstanding of approximately $534.6 million, including term loans of $550.0 million, no drawdowns under the Revolving Credit Facility (as defined herein) and unamortized debt issuance costs of $15.4 million.
+Added: As of December 31, 2021, we had total current and long-term indebtedness outstanding of approximately $530.6 million, including term loans of $544.0 million, and unamortized debt issuance costs of $13.4 million.
Our indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
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We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.
−Removed: Our indebtedness, the cash flow needed to satisfy our debt and the covenants contained in the New Credit Agreement have important consequences, including:
+Added: Our indebtedness, the cash flow needed to satisfy our debt and the covenants contained in the Credit Agreement have important consequences, including:
• limiting funds otherwise available for financing our capital expenditures by requiring us to dedicate a portion of our cash flows from operations to the repayment of debt and the interest on this debt;
• limiting our ability to incur or prepay existing indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes in the nature of the business, among other things;
−Removed: • making us more vulnerable to rising interest rates, as certain of our borrowings, including borrowings under the New Credit Agreement, bear variable rates of interest;
+Added: • making us more vulnerable to rising interest rates, as certain of our borrowings, including borrowings under the Credit Agreement, bear variable rates of interest;
• making us more vulnerable in the event of a downturn in our business.
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In addition, tax laws, including the disallowance or deferral of tax deductions for interest paid on outstanding indebtedness, could have an adverse effect on our liquidity and our business, financial condition, results of operations, cash flows and prospects.
−Removed: Further, our New Credit Agreement contains customary affirmative and negative covenants and certain restrictions on operations that could impose operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business.
+Added: Further, our Credit Agreement contains customary affirmative and negative covenants and certain restrictions on operations that could impose operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business.
We expect to use cash flow from operations to meet current and future financial obligations, including funding our operations, debt service requirements and capital expenditures.
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Variable rate indebtedness that we have incurred or may in the future incur will subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
−Removed: Certain of our borrowings, including certain borrowings under our New Credit Agreement, bear variable rates of interest.
+Added: Certain of our borrowings, including certain borrowings under our Credit Agreement, bear variable rates of interest.
An increase in interest rates would increase our debt service obligations, which would have a negative impact on our net income and cash flows, including cash available for servicing our indebtedness.
−Removed: The phase-out of the London Interbank Offered Rate (“LIBOR”), or the replacement of LIBOR with a different reference rate, may adversely affect interest rates.
−Removed: Borrowings under our New Credit Agreement bear interest at rates determined using LIBOR as the reference rate.
−Removed: On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021.
−Removed: It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021, or if alternative rates or benchmarks will be adopted, and currently it appears highly likely that LIBOR will be discontinued or substantially modified by 2021.
−Removed: If LIBOR is unavailable, we may be required to pay interest on borrowings based on historical LIBOR, which may be higher than market rates prevailing at such time.
−Removed: Changes in the method of calculating LIBOR, or the replacement of LIBOR with an alternative rate or benchmark, may adversely affect interest rates and result in higher borrowing costs.
−Removed: This could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
−Removed: We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks.
−Removed: Furthermore, we may need to renegotiate our New Credit Agreement or incur other indebtedness, and changes in the method of calculating LIBOR, or the use of an alternative rate or benchmark, may negatively impact the terms of such indebtedness.
We may not be able to generate sufficient cash flow to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.
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Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants.
−Removed: Refinancings may not be successful and may not permit us to meet our scheduled debt service obligations.
+Added: Refinancing may not be successful and may not permit us to meet our scheduled debt service obligations.
In the absence of such cash flows and resources, we could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet our debt service obligations.
−Removed: The financing documents governing our New Credit Agreement include certain restrictions on our ability to conduct asset sales and/or use the proceeds from asset sales for certain purposes.
+Added: The financing documents governing our Credit Agreement include certain restrictions on our ability to conduct asset sales and/or use the proceeds from asset sales for certain purposes.
We may not be able to consummate these asset sales to raise capital or sell assets at prices and on terms that we believe are fair and any proceeds that we do receive may not be adequate to meet any debt service obligations then due.
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In such an event, we may not have sufficient assets to repay all of our indebtedness.
−Removed: The terms of the financing documents governing our New Credit Agreement restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
−Removed: The financing documents governing our New Credit Agreement contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:
+Added: The terms of the financing documents governing our Credit Agreement restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
+Added: The financing documents governing our Credit Agreement contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:
• incur additional indebtedness;
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We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms or at all.
−Removed: If we raise additional equity financing, our security holders may experience significant dilution of their ownership interests.
−Removed: If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make
−Removed: acquisitions.
+Added: If we raise additional equity financing, our security holders may experience significant dilution of their ownership
+Added: If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things:
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federal income tax.
−Removed: Certain wholly-owned subsidiaries of Topco LLC are taxed as corporations for U.S.
−Removed: federal and most applicable state, local income tax and foreign tax purposes.
federal income tax purposes, taxable income of Topco LLC is allocated to the LLC Unitholders of Topco LLC, including us.
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Payments under the Tax Receivable Agreement will be based on the tax reporting positions we determine.
−Removed: Although we are not aware of any issue that would cause the IRS to challenge existing tax basis, a tax basis increase or other tax attributes subject to the Tax Receivable Agreement, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, we would not be reimbursed for any payments previously made under the applicable Tax Receivable Agreement (although we would reduce future amounts otherwise payable under such Tax Receivable Agreement).
+Added: Although we are not aware of any issue that would cause the IRS to challenge existing tax basis, a tax basis increase or other tax attributes subject to
+Added: the Tax Receivable Agreement, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, we would not be reimbursed for any payments previously made under the applicable Tax Receivable Agreement (although we would reduce future amounts otherwise payable under such Tax Receivable Agreement).
In addition, the actual state or local tax savings we realize may be different than the amount of such tax savings we are deemed to realize under the Tax Receivable Agreement, which will be based on an assumed combined state and local tax rate applied to our reduction in taxable income as determined for U.S.
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As a result, we expect that aggregate payments under the Tax Receivable Agreement over this 15-year period will be approximately $713.8 million.
−Removed: These estimates are based on the initial public offering price of $27.00 per share of Class A common stock.
Future payments in respect of subsequent exchanges or financing would be in addition to these amounts and are expected to be substantial.
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Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we determine.
−Removed: Although we are not aware of any issue that would cause the Internal Revenue Service (“IRS”) to challenge a tax basis increase or the availability of tax attributes of the corporations merged into our corporate structure as part of the Organizational Transactions, if any, we will not be reimbursed for any cash payments previously made to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement if any tax benefits initially claimed by us are subsequently disallowed, in whole or in part, by the IRS or other applicable taxing authority.
+Added: Although we are not aware of any issue that would cause the Internal Revenue Service (“IRS”) to challenge a tax basis increase or the availability of tax attributes of the corporations merged into our corporate structure as part of the Organizational Transactions, if
+Added: any, we will not be reimbursed for any cash payments previously made to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement if any tax benefits initially claimed by us are subsequently disallowed, in whole or in part, by the IRS or other applicable taxing authority.
For example, if the IRS later asserts that we did not obtain a tax basis increase or disallows (in whole or in part) the availability of Net Operating Losses (“NOLs”) due to a potential ownership change under Section 382 of the Internal Revenue Code (“IRC” or “the Code”), among other potential challenges, then we would not be reimbursed for any cash payments previously made to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement with respect to such tax benefits that we had initially claimed.
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Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1 and MLSH 2 that will not benefit the other common shareholders to the same extent as they will benefit MLSH 1 and MLSH 2.
−Removed: Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1, as the only other LLC Unitholder in Topco LLC, and MLSH 2 that will not benefit the other holders of our Class A common stock to the same
−Removed: We have entered into a Tax Receivable Agreement with MLSH 1 and MLSH 2, which will provide for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes of certain of the entities (the “Blocker Entities) through which GTCR and other existing members of MLSH 1 and MLSH 2 held their ownership interests in MLSH 1, Topco LLC and subsidiaries of Topco LLC that existed prior to our initial public offering and (iii) certain other tax benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make under the Tax Receivable Agreement.
+Added: Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1, as the only other LLC Unitholder in Topco LLC, and MLSH 2 that will not benefit the other holders of our Class A common stock to the same extent.
+Added: We have entered into a Tax Receivable Agreement with MLSH 1 and MLSH 2, which will provide for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes of certain of the entities (the
+Added: “Blocker Entities) through which GTCR and other existing members of MLSH 1 and MLSH 2 held their ownership interests in MLSH 1, Topco LLC and subsidiaries of Topco LLC that existed prior to our initial public offering and (iii) certain other tax benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make under the Tax Receivable Agreement.
Due to the uncertainty of various factors, we cannot estimate the likely tax benefits we will realize as a result of purchases of LLC Units and LLC Unit exchanges, and the resulting amounts we are likely to pay out to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement;
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Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.
−Removed: We are subject to income taxes in the U.S., Canada and the U.K.
+Added: We are subject to income taxes in the U.S.
+Added: and certain foreign jurisdictions.
Our tax liabilities will be subject to the allocation of expenses in differing jurisdictions.
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Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if it (1) is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.
−Removed: government securities and cash items) on an unconsolidated basis.
+Added: government securities and cash items) on an unconsolidated
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.
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If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we may be subject to investigation or sanctions by the SEC.
−Removed: We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of the fiscal year 2022.
−Removed: This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
−Removed: We will also be required to disclose changes made in our internal control and procedures on a quarterly basis.
−Removed: Further, we also expect that our independent registered public accounting firm will be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for fiscal year 2022.
+Added: We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
+Added: This assessment must be made yearly and must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
+Added: We also must disclose changes made in our internal control and procedures on a quarterly basis.
+Added: Further, our independent registered public accounting firm must report on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.
Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating, which could cause the price of our Class A common stock to decline, and we may be subject to investigation or sanctions by the SEC.
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The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price.
−Removed: To comply with these requirements, we may need to undertake various costly and time-consuming actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our business, financial condition, results of operations, cash flows and prospects.
−Removed: The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”
+Added: Compliance with these requirements is costly, and we may need to undertake various costly and time-consuming actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our business, financial condition, results of operations, cash flows and prospects.
+Added: The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly now that we are no longer an “emerging growth company.”
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Sarbanes-Oxley Act, the listing requirements of NASDAQ and other applicable securities rules and regulations.
−Removed: Compliance with these rules and regulations has increased our legal and financial compliance costs and are expected to continue to increase in the future, making some activities more difficult, time-consuming or costly and increasing demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires that we file annual, quarterly and current reports with respect to our business, financial condition, results of operations, cash flows and prospects.
+Added: Compliance with these rules and regulations has increased our legal and financial compliance costs and are expected to continue to increase in the future, making some activities more difficult, time-consuming or costly and increasing demand on our systems and resources, particularly now that we are no longer an “emerging growth company.” The Exchange Act requires that we file annual, quarterly and current reports with respect to our business, financial condition, results of operations, cash flows and prospects.
The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting.
−Removed: Furthermore, the need to continue to establish the corporate infrastructure demanded of a public company may divert our management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition, results of operations, cash flows and prospects.
+Added: Furthermore, the need to continue to establish the corporate infrastructure demanded of a
+Added: public company may divert our management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition, results of operations, cash flows and prospects.
We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company.
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These additional obligations could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
+Added: As of December 31, 2021, we have ceased to qualify as an “emerging growth company,” and are required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
+Added: Consequently, our independent registered public accounting firm is required to provide the attestation report on our system of internal control over financial reporting in our Annual Reports on an ongoing basis.
+Added: If we are ever unable to assert that our internal control over financial reporting is effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or expresses an adverse opinion, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to capital markets or other sources of funds and our stock price may be adversely affected.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.
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GTCR controls us, and its interests may conflict with ours or yours in the future.
−Removed: Investment entities affiliated with GTCR control approximately 73% of the voting power of our outstanding common stock and therefore GTCR will control the vote of all matters submitted to a vote of our shareholders.
−Removed: This control will enable GTCR to control the election of the members of the Board and all other corporate decisions.
+Added: As of December 31, 2021, investment entities affiliated with GTCR controlled approximately 57% of the voting power of our outstanding common stock and therefore GTCR controls the vote of all matters submitted to a vote of our shareholders.
+Added: This control enables GTCR to control the election of the members of the Board and all other corporate decisions.
Even when GTCR ceases to control a majority of the total voting power, for so long as GTCR continues to own a significant percentage of our Class A common stock, GTCR will still be able to significantly influence the composition of our Board and the approval of actions requiring shareholder approval.
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We entered into a Director Nomination Agreement with GTCR that provides GTCR the right to nominate to the Board a number of designees equal to at least:
−Removed: (i) 100% of the total number of directors comprising the Board, so long as GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 40% of the total amount of shares of Class A common stock and Class B common stock it beneficially owned as of November 19, 2020, (ii) 40% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 30% but less than 40% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iii) 30% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 20% but less than 30% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iv) 20% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at
−Removed: least 10% but less than 20% of the total amount of shares of Class A common stock and Class B common stock it owns as of November 19, 2020 and (v) one director, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 5% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020.
+Added: (i) 100% of the total number of directors comprising the Board, so long as GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 40% of the total amount of shares of Class A common stock and Class B common stock it beneficially owned as of November 19, 2020, (ii) 40% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 30% but less than 40% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iii) 30% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 20% but less than 30% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iv) 20% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 10% but less than 20% of the total amount of shares of Class A common stock and Class B common stock it owns as of November 19, 2020 and (v) one director, in the event that GTCR beneficially owns shares of Class A common stock and Class
+Added: B common stock representing at least 5% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020.
The Director Nomination Agreement provides that GTCR may assign such right to a GTCR affiliate.
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Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of NASDAQ.
−Removed: We are an “emerging growth company” and we have elected and comply with reduced public company reporting requirements, which could make our Class A common stock less attractive to investors.
−Removed: We are an “emerging growth company,” as defined in the JOBS Act.
−Removed: For as long as we continue to be an emerging growth company, we are eligible for certain exemptions from various public company reporting requirements.
−Removed: These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
−Removed: We expect that we will cease to be an “emerging growth company” as of December 31, 2021.
−Removed: Until then, or such later date that we cease to be an “emerging growth company”, we intend to rely on certain elections we have made with regard to the reduced disclosure obligations regarding executive compensation in this annual report on Form 10-K and our forthcoming proxy statement and may elect to take advantage of other reduced disclosure obligations in future filings.
−Removed: As a result, the information that we provide to holders of our Class A common stock may be different than you might receive from other public reporting companies in which you hold equity interests.
−Removed: We cannot predict if investors will find our Class A common stock less attractive as a result of
−Removed: reliance on these exemptions.
−Removed: If some investors find our Class A common stock less attractive as a result of any choice we make to reduce disclosure, there may be a less active trading market for our Class A common stock and the market price for our Class A common stock may be more volatile.
−Removed: The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
−Removed: We are electing to take advantage of this extended transition period for complying with new or revised accounting standards provided for by the JOBS Act.
−Removed: We will therefore comply with new or revised accounting standards when they apply to private companies.
−Removed: As a result, our consolidated financial statements may not be comparable with companies that comply with public company effective dates for accounting standards.
Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management, even if beneficial to our shareholders.
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provided, however, at any time when GTCR controls, in the aggregate, at least 10% in voting power of our stock entitled to vote generally in the election of directors, such advance notice procedure will not apply to GTCR.
−Removed: We will opt out of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any interested shareholder for a period of three years following the date on which the shareholder became an interested shareholder.
−Removed: However, our certificate of incorporation contains a provision that provides us with protections similar to Section 203, and will prevent us from engaging in a business combination with a person (excluding GTCR and any of its direct or indirect transferees and any group as to which such persons are a party) who acquires at least 85% of our Class A common stock for a period of three years from the date such person acquired such common stock, unless board or shareholder approval is obtained prior to the acquisition.
+Added: We opted out of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any interested shareholder for a period of three years following the date on which the shareholder became an interested shareholder.
+Added: However, our certificate of incorporation contains a provision that provides us with protections similar to Section 203, and prevents us from engaging in a business combination with a person (excluding GTCR and any of its direct or indirect transferees and any group as to which such persons are a party) who acquires at least 85% of our Class A common stock for a period of three years from the date such person acquired such common stock, unless board or shareholder approval is obtained prior to the acquisition.
These provisions could discourage, delay or prevent a transaction involving a change in control of our company.
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The existence of these provisions could negatively affect the price of our Class A common stock and limit opportunities for you to realize value in a corporate transaction.
−Removed: Our certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
−Removed: Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any claims in state court for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine;
+Added: Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
+Added: Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for any claims in state court for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine;
provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any “derivative action,” will not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
−Removed: Our certificate of incorporation will also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
−Removed: Our certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our certificate of incorporation described above.
+Added: Our certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
+Added: Our certificate of incorporation further provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our certificate of incorporation described above.
The forum selection provisions in our certificate of incorporation may have the effect of discouraging lawsuits against us or our directors and officers and may limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
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Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.
−Removed: A significant portion of our total outstanding shares of Class A common stock are subject to restrictions on resale but may be sold into the market in the near future.
+Added: A significant portion of our total outstanding shares of Class A common stock, including newly issued shares of Class A common stock issued upon the exchange of UP-C interests by MLSH 1, may be sold into the market in the near future.
This could cause the market price of our Class A common stock to drop significantly, even if our business is doing well.
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These sales, or the perception in the market that the holders of a large number of shares of Class A common stock intend to sell shares, could reduce the market price of our Class A common stock.
−Removed: As of December 31, 2020, we had 96,646,515 outstanding shares of Class A common stock, 27,646,515 of which are subject to restrictions on resale including those associated with lock-up agreements executed in connection with our initial public offering and those imposed by federal securities laws.
−Removed: All of these shares of Class A common stock will, however, be able to be resold after the expiration of the lock-up period, as well as pursuant to customary exceptions thereto or upon the waiver of the lock-up agreement by the representatives on behalf of the underwriters, subject to restrictions imposed by federal securities laws.
−Removed: We also intend to register shares of Class A common stock that we may issue under our equity compensation plans.
+Added: As of December 31, 2021, we had 131,487,659 outstanding shares of Class A common stock, 21,681,033 of which are subject to restrictions imposed by federal securities laws.
+Added: All of these shares of Class A common stock could, however, be sold from time to time, subject to restrictions imposed by federal securities laws.
+Added: We also register shares of Class A common stock that we issue under our equity compensation plans.
Once we register these shares, they can be freely sold in the public market upon issuance.
−Removed: As restrictions on resale end, and as new shares are issued pursuant to our equity compensation plans, the market price of our stock could decline if the holders of those shares sell them or are perceived by the market as intending to sell them.
+Added: Further, as of December 31, 2021, an additional 123,669,196 shares of Class A common stock are issuable upon the exchange by MLSH 1 of its interest in Topco.
+Added: The market price of our stock could decline if the holders of those shares sell them or are perceived by the market as intending to sell them.
Because we have no current plans to pay regular cash dividends on our Class A common, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.
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Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of the price of our Class A common stock on the open market, which may not occur.
−Removed: See “Dividend Policy” for more detail.
We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
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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.