What changed in this filing

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Item 1A. Risk Factors

2021-03-01 compared with 2020-02-21 · 325 added, 248 removed, 522 unchanged (52% of the section changed)

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This section contains forward-looking statements.

You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 1.

You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 4 of this Annual Report.

Risks Related to the Development and Commercialization of our Products and Product Candidates

Our success depends primarily on our ability to successfully commercialize EXPAREL.

We have invested a significant portion of our efforts and financial resources in the development and commercialization of our lead product, EXPAREL, which was approved by the FDA on October 28, 2011 and commercially launched in April 2012.

During 2019 , sales of EXPAREL constituted substantially all of our total revenue, and we expect it will do so for the foreseeable future.

We have invested a significant portion of our efforts and financial resources in the development and commercialization of our lead product, EXPAREL, which was first approved by the FDA on October 28, 2011 and commercially launched in April 2012.

EXPAREL was approved by the European Commission on November 16, 2020.

During 2020, sales of EXPAREL accounted for 96% of our total revenue, and we expect EXPAREL sales will remain of such importance for the foreseeable future.

Our success depends on our ability to continue to effectively commercialize EXPAREL.

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• secure formulary approvals for EXPAREL at a substantial number of targeted hospitals and ASCs;

manufacture EXPAREL in sufficient quantities in compliance with requirements of the FDA and similar foreign regulatory agencies and at acceptable quality and pricing levels in order to meet commercial demand;

• manufacture EXPAREL in sufficient quantities in compliance with requirements of regulatory agencies and at acceptable quality and pricing levels in order to meet commercial demand;

• implement and maintain agreements with wholesalers and distributors on commercially reasonable terms;

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• maintain compliance with regulatory requirements;

obtain regulatory approvals for additional indications for the use of EXPAREL;

• obtain regulatory approvals for additional indications and geographic expansion for the use of EXPAREL;

• ensure that our entire supply chain efficiently and consistently delivers EXPAREL to our customers;

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In addition to our extensive internal efforts, the successful commercialization of EXPAREL will require many third parties, over whom we have no control, to choose to utilize EXPAREL.

These third parties include physicians and hospital pharmacy and therapeutics committees, which we refer to as P&T committees.

These third parties include physicians and hospital pharmacy and therapeutics committees (“P&T committees”).

Generally, before we can attempt to sell EXPAREL in a hospital, EXPAREL must be approved for addition to that hospital’s list of approved drugs, or formulary list, by the hospital’s P&T committee.

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Therefore, we may experience substantial delays in obtaining formulary approvals.

Additionally, hospital pharmacists may be concerned that the cost of

acquiring EXPAREL for use in their institutions will adversely impact their overall pharmacy budgets, which could cause pharmacists to resist efforts to add EXPAREL to the formulary, or to implement restrictions on the usage of EXPAREL or to encourage use of a lower cost dose than a surgeon or anesthesiologist would otherwise choose in order to control costs.

We cannot guarantee that we will be successful in obtaining the approvals we need from enough P&T committees quickly enough to optimize hospital sales of EXPAREL.

Additionally, hospital pharmacists may be concerned that the cost of acquiring EXPAREL for use in their institutions will adversely impact their overall pharmacy budgets, which could cause pharmacists to resist efforts to add EXPAREL to the formulary, or to implement restrictions on the usage of EXPAREL or to encourage use of a lower cost dose than a surgeon or anesthesiologist would otherwise choose in order to control costs.

We cannot guarantee that we will be successful in obtaining the approvals we need from enough P&T committees quickly enough to optimize hospital sales of

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Even if we obtain hospital formulary approval for EXPAREL, physicians must still prescribe EXPAREL for its commercialization to be successful.

If EXPAREL does not achieve broad market acceptance, the revenues that we generate from its sales will be limited.

If EXPAREL does not achieve broader market acceptance, the revenues that we generate from its sales will be limited.

The degree of market acceptance of EXPAREL also depends on a number of other factors, including:

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• the prevalence and severity of adverse events associated with EXPAREL;

cost of treatment versus economic and clinical benefit, both in absolute terms and in relation to alternative treatments;

• the cost of treatment versus economic and clinical benefit, both in absolute terms and in relation to alternative treatments;

• the availability of adequate coverage or reimbursement by third parties, such as insurance companies and other healthcare payers, and by government healthcare programs, including Medicare and Medicaid;

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• the safety, efficacy and other potential advantages over, and availability of, alternative treatments, including, in the case of EXPAREL, a number of products already used to treat pain in the hospital setting;

distribution and use restrictions imposed by the FDA or to which we agree as part of a mandatory risk evaluation and mitigation strategy or voluntary risk management plan.

• distribution and use restrictions imposed by regulatory agencies or to which we agree as part of a mandatory risk evaluation and mitigation strategy or voluntary risk management plan.

Our ability to effectively promote and sell EXPAREL and any product candidates that we may develop, license or acquire in the hospital or ASC marketplace will also depend on pricing and cost effectiveness, including our ability to produce a product at a competitive price and therefore achieve acceptance of the product onto hospital formularies, and our ability to obtain sufficient third-party coverage or reimbursement.

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Market acceptance could be further limited depending on the prevalence and severity of any expected or unexpected adverse side effects associated with our product candidates.

In addition, the labeling approved by the FDA does not contain claims that EXPAREL is safer or more effective than competitive products and does not permit us to promote EXPAREL as being superior to competing products.

In addition, our approved labels for EXPAREL do not contain claims that EXPAREL is safer or more effective than competitive products and do not permit us to promote EXPAREL as being superior to competing products.

Further, the availability of inexpensive generic forms of postsurgical pain management products may also limit acceptance of EXPAREL among physicians, patients and third-party payers.

If EXPAREL does not achieve an adequate level of acceptance among physicians, patients and third-party payers, we may not generate meaningful revenues from EXPAREL, and we may not return to profitability.

We face significant competition from other pharmaceutical and biotechnology companies.

If EXPAREL does not achieve a broader level of acceptance among physicians, patients and third-party payers, we may not generate meaningful revenues from EXPAREL, and we may not remain profitable.

We face significant competition from other pharmaceutical, medical device and biotechnology companies.

Our operating results will suffer if we fail to compete effectively.

The pharmaceutical and biotechnology industries are intensely competitive and subject to rapid and significant technological change.

Our major competitors include organizations such as major multinational pharmaceutical companies, established biotechnology companies and specialty pharmaceutical and generic drug companies.

The pharmaceutical, medical device and biotechnology industries are intensely competitive and subject to rapid and significant technological change.

Our major competitors include organizations such as major multinational pharmaceutical and medical device companies, established biotechnology companies and specialty pharmaceutical and generic drug companies.

Many of our competitors have greater financial and other resources than we have, such as larger research and development staff, more extensive marketing, distribution, sales and manufacturing organizations and experience, more extensive clinical trial and regulatory experience, expertise in prosecution of intellectual property rights and access to development resources like personnel and technology.

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Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis technologies, drug products and medical devices that are more effective or less costly than EXPAREL, iovera° or any product candidate that we are currently developing or that we may develop, which could render our products obsolete and noncompetitive or significantly harm the commercial opportunity for EXPAREL, iovera° or our product candidates.

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis technologies, drug products and medical devices that are more effective or less costly than EXPAREL, iovera° or any product candidate that we are currently developing or that we may develop, license or acquire, which could render our products obsolete and noncompetitive or significantly harm the commercial opportunity for EXPAREL, iovera° or our product candidates.

As a result of these factors, our competitors may obtain patent protection or other intellectual property rights that may limit our ability to develop other indications for, or commercialize, EXPAREL, iovera° or our product candidates.

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Ketorolac, an NSAID is also available generically in the U.S.

from several manufacturers, and Caldolor (ibuprofen for injection), an NSAID, has been approved by the FDA for pain management and fever in adults.

In addition, EXPAREL competes with non-opioid products such as bupivacaine, marcaine, ropivacaine and other anesthetics/analgesics, all of which are also used in the treatment of postsurgical pain and are available as either oral tablets, injectable dosage forms or administered using novel delivery systems.

from several manufacturers, and Caldolor

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(ibuprofen for injection), an NSAID, has been approved by the FDA for pain management and fever in adults.

EXPAREL also competes with currently-marketed non-opioid products such as bupivacaine, marcaine, ropivacaine and other anesthetics/analgesics, all of which are also used in the treatment of postsurgical pain and are available as either oral tablets, injectable dosage forms or administered using novel delivery systems.

Additional products may be developed for the treatment of acute pain, including new injectable NSAIDs, novel opioids, new formulations of currently available opioids and NSAIDs, long-acting local anesthetics and new chemical entities as well as alternative delivery forms of various opioids and NSAIDs.

EXPAREL also competes with elastomeric bag/catheter devices intended to provide bupivacaine over several days.

Regulatory approval for any approved product is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated, and allegations of our failure to comply with such approved indications could limit our sales efforts and have a material adverse effect on our business.

The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drugs and medical devices.

EXPAREL also competes with elastomeric bags/catheter devices intended to provide bupivacaine over several days.

Regulatory approval for any approved product is limited to those specific indications and conditions for which clinical safety and efficacy have been demonstrated, and allegations of our failure to comply with such approved indications could limit our sales efforts and have a material adverse effect on our business.

The marketing, labeling, advertising and promotion of prescription drugs and medical devices is strictly regulated.

These regulations include standards and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and off-label promotion.

Any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by the FDA.

Any regulatory approval granted is limited to those specific diseases and indications for which a product is deemed to be safe and effective by an appropriate regulatory agency.

For example, the FDA-approved label for EXPAREL does not include an indication in obstetrical paracervical block anesthesia.

In addition to the FDA approval required for new formulations, any new indication for an approved product also requires FDA approval.

If we are not able to obtain FDA approval for any desired future indications for our products and product candidates, our ability to effectively market and sell our products may be reduced and our business may be adversely affected.

While physicians in the U.S.

may choose, and are generally permitted to prescribe drugs or treatments for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our ability to promote the products is narrowly limited to those indications that are specifically approved by the FDA.

If we are not able to obtain regulatory approval for any desired future indications for our products and product candidates, our ability to effectively market and sell our products may be reduced and our business may be adversely affected.

As an example, in the U.S.

and Europe, while physicians may choose, and are generally permitted to prescribe drugs, medical devices or treatments for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our ability to promote the products is narrowly limited to those indications that are specifically approved by the FDA, EMA or MHRA.

These “off-label” uses are common across medical specialties and may constitute an appropriate treatment for some patients in varied circumstances.

Regulatory authorities in the U.S.

generally do not regulate the behavior of physicians in their choice of treatments.

Regulatory authorities generally do not regulate the behavior of physicians in their choice of treatments.

Regulatory authorities do, however, restrict communications by pharmaceutical and medical device companies on the subject of off-label use.

Although recent court decisions suggest that certain off-label promotional activities may be protected under the First Amendment of the U.S.

In the U.S., although recent court decisions suggest that certain off-label promotional activities may be protected under the First Amendment of the U.S.

Constitution, the scope of any such protection is unclear.

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In addition, our failure to follow FDA rules and guidelines relating to promotion and advertising may cause the FDA to issue warning letters or untitled letters, bring an enforcement action against us, suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.

If we are unable to establish and maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell EXPAREL, we may be unable to generate product revenues.

We are continuing to build our commercial infrastructure for the marketing, sale and distribution of pharmaceutical products.

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The establishment, development and training of our sales force and related compliance plans to market EXPAREL is expensive and time consuming.

In the event we are not successful in developing our marketing and sales infrastructure, we may not be able to successfully commercialize EXPAREL, which would limit our ability to generate product revenues.

In the event we are not successful in further developing our marketing and sales infrastructure, we may not be able to continue to successfully commercialize EXPAREL, including outside the U.S., which would limit our ability to generate additional product revenues.

In addition to our internal marketing and sales efforts, we have entered into agreements with third-party distributors to promote and sell EXPAREL in certain territories.

For example, in January 2017, we entered into a co-promotion agreement with DePuy Synthes to market and promote the use of EXPAREL for orthopedic procedures in the U.S.

market, and in June 2018, we entered into an agreement with Nuance to advance the development and commercialization of EXPAREL in China.

For example, we previously had a co-promotion agreement with DePuy Synthes to market and promote the use of EXPAREL for orthopedic procedures in the U.S.

market which we terminated effective January 2021, and in June 2018, we entered into an agreement with Nuance to advance the development and commercialization of EXPAREL in China.

There can be no assurance that such distributors and promoters will be successful in marketing and promoting EXPAREL.

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• fail to comply with their obligations to us;

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• fail to comply with laws and regulations to which they are subject, whether in the U.S.

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Our management, personnel, systems and facilities currently in place may not be adequate to support this future growth.

In addition, we may not be able to recruit and retain qualified personnel in the future, particularly marketing positions, due to competition for personnel among pharmaceutical and medical device businesses, and the failure to do so could have a significant negative impact on our future product revenues and business results.

In addition, we may not be able to recruit and retain qualified personnel in the future, particularly in marketing positions, due to competition for personnel among pharmaceutical and medical device businesses, and the failure to do so could have a significant negative impact on our future product revenues and business results.

Our need to effectively manage our operations, growth and various projects requires that we:

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• manage our development efforts and clinical trials effectively;

expand our manufacturing capabilities and effectively manage our co-production arrangement with Thermo Fisher;

• expand our manufacturing capabilities and effectively manage our co-production arrangements with Thermo Fisher and Providien;

• continue to carry out our own contractual obligations to our licensors and other third parties;

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If we are unable to effectively manage our growth, our product sales and resulting revenues will be negatively impacted.

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We may not be able to manage our business effectively if we are unable to attract and retain key personnel.

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Our industry has experienced a high rate of turnover of management personnel in recent years.

We are highly dependent on the development and manufacturing expertise for our DepoFoam delivery technology and the commercialization expertise of certain members of our senior management.

We are highly dependent on the development and manufacturing expertise for both our DepoFoam delivery technology and iovera° and the commercialization expertise of certain members of our senior management.

In particular, we are highly dependent on the skills and leadership of our senior management team.

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Replacing key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize products successfully.

Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate additional key personnel.

We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for EXPAREL, iovera°, DepoCyt(e) or product candidates that we may develop and may have to limit their commercialization.

The use of EXPAREL, iovera°, DepoCyt(e) and any product candidates that we may develop, license or acquire in clinical trials and the sale of any products for which we obtain regulatory approval expose us to the risk of product liability claims.

Competition to hire from this limited talent pool is intense, and we may be unable to hire, train, retain or motivate additional key personnel.

We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for EXPAREL, iovera° or product candidates that we may develop and may have to limit their commercialization.

The use of EXPAREL, iovera° and any product candidates that we may develop, license or acquire in clinical trials and the sale of any products for which we obtain regulatory approval expose us to the risk of product liability claims.

Product liability claims might be brought against us by consumers, health care providers or others using, administering or selling our products.

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Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage on acceptable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to liability.

We intend to expand our insurance coverage to include the sale of additional commercial products upon FDA approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing, or at all.

We intend to expand our insurance coverage to include the sale of additional commercial products upon regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing, or at all.

On occasion, large judgments have been awarded in class action lawsuits based on drugs or medical devices that had unanticipated side effects.

A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

A successful product liability claim or series of claims brought against us could cause the price of our common stock to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

If we fail to manufacture our products in sufficient quantities and at acceptable quality and pricing levels, or to fully comply with CGMP regulations, we may face delays in the commercialization of these products or be unable to meet market demand, and may lose potential revenues.

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These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation.

The FDA or similar foreign regulatory authorities at any time may implement new standards or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of our products.

The FDA or similar foreign regulatory authorities at any time may implement new standards or change their interpretation and

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enforcement of existing standards for manufacture, packaging or testing of our products.

Any failure by us or our manufacturing partner to comply with applicable regulations may result in fines and civil penalties, suspension of production, product seizure or recall, operating restrictions, imposition of a consent decree, modification or withdrawal of product approval or criminal prosecution and would limit the availability of our product.

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If we are unable to produce the required commercial quantities of our products to meet market demand those products on a timely basis or at all, or if we fail to comply with applicable laws for the manufacturing of our products, we will suffer damage to our reputation and commercial prospects, we will lose potential revenues and we may be required to expend significant resources to resolve any such issues.

We will need to expand our manufacturing operations or outsource such operations to third parties.

To successfully meet future customer demand for EXPAREL and iovera°, we will need to expand our existing commercial manufacturing facilities or establish large-scale commercial manufacturing capabilities.

We may need to expand our manufacturing operations or outsource such operations to third parties.

To successfully meet future customer demand for EXPAREL and iovera°, we may need to expand our existing commercial manufacturing facilities or establish large-scale commercial manufacturing capabilities.

In addition, as our drug development pipeline increases and matures, we will have a greater need for clinical trial and commercial manufacturing capacity.

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If market demand for EXPAREL does not align with our expanded manufacturing capacity, we may be unable to offset these costs and to achieve economies of scale, and our operating results may be adversely affected as a result of high operating expenses.

Alternatively, if we experience demand for EXPAREL in excess of our estimates, our facilities may be insufficient to support higher production volumes, which could harm our customer relationships and overall reputation.

Alternatively, if we experience demand for EXPAREL or iovera° in excess of our estimates, our facilities may be insufficient to support higher production volumes, which could harm our customer relationships and overall reputation.

Our ability to meet such excess demand could also depend on our ability to raise additional capital and effectively scale our manufacturing operations.

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Therefore, we may experience delays, additional or unexpected costs and other adverse events in connection with our capacity expansion projects, including those associated with potential delays in the procurement of manufacturing equipment required to manufacture EXPAREL.

In addition to expanding our internal manufacturing facilities, we may enter into arrangements with third parties to supply, manufacture, package, test and/or store EXPAREL, iovera° or our other products, such as our manufacturing arrangement with Thermo Fisher.

Entering into such arrangements requires testing and compliance inspections, FDA approvals and development of the processes and facilities necessary for the production of our products.

Entering into such arrangements requires testing and compliance inspections, regulatory agency approvals and development of the processes and facilities necessary for the production of our products.

Such arrangements also involve additional risks, many of which would be outside of our control.

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If we are unable to timely achieve and maintain satisfactory production yields and quality, whether through our internal manufacturing capabilities or arrangements with contract manufacturers, our relationships with potential customers and overall reputation may be harmed and our revenues could decrease.

Our inability to continue manufacturing adequate supplies of the product could result in a disruption in the supply to our customers and partners, which could have a material adverse impact on our business and results of operations.

Our inability to continue manufacturing adequate supplies of our products could result in a disruption in the supply to our customers and partners, which could have a material adverse impact on our business and results of operations.

EXPAREL is currently manufactured at our facilities in San Diego, California and at the Thermo Fisher facility in Swindon, England, and iovera° is currently manufactured at our facility in Fremont, California.

These facilities are the only currently-FDA approved sites for manufacturing EXPAREL and iovera° in the world.

We may experience temporary or prolonged suspensions in production of our products due to issues in our manufacturing process that must be remediated or in response to inspections conducted by the FDA or similar foreign regulatory authorities, which could have a material adverse effect on our business, financial position and results of operations.

For example, in June 2017, we discontinued production of DepoCyt(e) due to persistent technical issues specific to the DepoCyt(e) manufacturing process.

Our San Diego and Fremont facilities in California and the Thermo Fisher facility in Swindon, England are also subject to the risks of a natural or man-made disaster, including earthquakes, floods and fires, or other business disruptions.

In addition, we have obtained limited property and business interruption insurance coverage for our manufacturing sites in San Diego, Fremont and England.

These facilities are the only currently approved sites for manufacturing EXPAREL and iovera° in the world.

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business, financial position and results of operations.

For example, in June 2017, we discontinued production of DepoCyt ® (U.S.

and Canada) and DepoCyte ® (E.U.) due to persistent technical issues specific to the DepoCyt(e) manufacturing process.

Our San Diego and Fremont facilities in California, the Thermo Fisher facility in Swindon, England and the Providien facility in Tijuana, Mexico are also subject to the risks of a natural or man-made disaster, including earthquakes, floods and fires, or other business disruptions.

In addition, we have obtained limited property and business interruption insurance coverage for our manufacturing sites in San Diego, Fremont, England and Mexico.

However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer.

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If we are required to change or add a new manufacturer or supplier, the process would likely require prior FDA and/or equivalent foreign regulatory authority approval and would be very time consuming.

An inability to continue manufacturing adequate supplies of EXPAREL at our facilities in San Diego, California or at the Thermo Fisher facility in Swindon, England or iovera° at our facility in Fremont, California could result in a disruption in the supply of EXPAREL or iovera° to our customers and partners and a breach of our contractual obligations to such counterparties.

Our co-production and other agreements with Thermo Fisher may involve unanticipated expenses and delays, including the need for the Thermo Fisher facilities to receive regulatory approvals required for manufacturing to commence at the Thermo Fisher suites.

An inability to continue manufacturing adequate supplies of EXPAREL or iovera° at our facilities could result in a disruption in the supply of EXPAREL or iovera° to our customers and partners and a breach of our contractual obligations to such counterparties.

Our co-production and other agreements with Thermo Fisher may involve unanticipated expenses and delays, including the need for the Thermo Fisher facility to receive regulatory approvals required for manufacturing to commence at the second Thermo Fisher suite.

We and Thermo Fisher have entered into a Co-Production Agreement, Technical Transfer and Service Agreement and Manufacturing and Supply Agreement.

Under these agreements, Thermo Fisher undertook certain technical transfer activities and construction services to prepare Thermo Fisher’s Swindon, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites, of which one suite received FDA approval in May 2018 and began commercial production in February 2019.

Under these agreements, Thermo Fisher undertook certain technical transfer activities and construction services to prepare Thermo Fisher’s Swindon, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites, of which the first suite received FDA approval in May 2018 and began commercial production in February 2019.

We agreed with Thermo Fisher, among other things, to provide them with the process equipment necessary to manufacture EXPAREL in these suites.

We have anticipated and budgeted for capital expenditures associated with the two Thermo Fisher suites, including the equipment purchase and construction of the suites as well as payments to be made to Thermo Fisher.

The Thermo Fisher facilities require FDA approval prior to any production and manufacturing of EXPAREL.

We have anticipated and budgeted for capital expenditures associated with both Thermo Fisher suites, including the equipment purchase and construction of the suites as well as payments to be made to Thermo Fisher.

The Thermo Fisher facilities require regulatory approval prior to any production and manufacturing of EXPAREL.

If the construction of the second Thermo Fisher suite is delayed, if Thermo Fisher experiences unanticipated cost overruns, or if the additional Thermo Fisher suite does not receive or maintain regulatory approvals in the timeframe anticipated (if at all), this could have a material adverse effect on our business, financial position and results of operations.

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• difficulty or inability to secure financing to fund development activities for such development, acquisition or in-licensed products or technologies;

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• incurrence of substantial debt or dilutive issuances of securities to pay for development, acquisition or in-licensing of new products;

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Our business and operations would suffer in the event of system failures.

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses, human error, unauthorized access, natural disasters, intentional acts of vandalism, terrorism, war and telecommunication and electrical failures.

Any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our product development programs.

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Any future collaboration arrangements that we enter into may not be successful.

The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.

The success of our collaboration arrangements will depend

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heavily on the efforts and activities of our collaborators.

Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaboration arrangements.

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Clinical trials may fail to demonstrate the safety and efficacy of our drug products or medical devices, which could prevent or significantly delay obtaining regulatory approval.

Prior to receiving approval to commercialize any of our drug products or medical devices, we must demonstrate with scientifically appropriate and statistically sound evidence from well-controlled clinical trials, and to the satisfaction of the FDA, other regulatory authorities in the U.S., and other countries, that each of the products is both safe and effective.

Prior to receiving approval to commercialize any of our drug products or medical devices, we must demonstrate with scientifically appropriate and statistically sound evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities, that each of the products are both safe and effective.

For each drug product, we will need to demonstrate its efficacy and monitor its safety throughout the process.

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All of our drug and medical device products are prone to the risks of failure inherent in development.

Clinical trials of new drug and medical device products sufficient to obtain regulatory marketing approval are expensive and take years to complete.

Clinical trials of new drug and medical device products sufficient to obtain regulatory approval are expensive and take years to complete.

We may not be able to successfully complete clinical testing within the time frame we have planned, or at all.

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Later-stage clinical trials may fail to demonstrate that a product is safe and effective despite having progressed through initial clinical testing.

Even if we believe the data collected from clinical trials of our products is promising, such data may not be sufficient to support approval by the FDA or any other U.S.

or foreign regulatory approval authority.

Even if we believe the data collected from clinical trials of our products is promising, such data may not be sufficient to support approval by regulatory agencies.

Pre-clinical and clinical data can be interpreted in different ways.

Accordingly, the FDA or other regulatory authorities could interpret such data in different ways than we or our partners do, which could delay, limit or prevent regulatory approval.

The FDA, other regulatory authorities, our institutional review boards, our contract research organizations or we ourselves may suspend or terminate our clinical trials for our drug products and medical devices.

Accordingly, regulatory authorities could interpret such data in different ways than we or our partners do, which could delay, limit or prevent regulatory approval.

Regulatory authorities, our institutional review boards, our contract research organizations or we ourselves may suspend or terminate our clinical trials for our drug products and medical devices.

Any failure or significant delay in completing clinical trials for our drug products or medical devices, or in receiving regulatory approval for the sale of any drugs or medical devices resulting from our products, may severely harm our business and reputation.

Even if we receive FDA and other regulatory approvals, our drug and medical device products may later exhibit adverse effects that may limit or prevent their widespread use, may cause the FDA to revoke, suspend or limit their approval, or may force us to withdraw products derived from those drug or medical device products from the market.

Even if we receive regulatory approvals, our drug and medical device products may later exhibit adverse effects that may limit or prevent their widespread use, may cause the regulatory authority to revoke, suspend or limit their approval, or may force us to withdraw products derived from those drug or medical device products from the market.

Our dependence on contract research organizations could result in delays in and additional costs for our drug development efforts.

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Our clinical trials may be delayed or terminated due to the inability of our clinical investigators to enroll enough patients.

Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the trial.

Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the

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proximity of patients to clinical sites and the eligibility criteria for the trial.

If our clinical investigators and clinical sites fail to enroll a sufficient number of patients in our clinical trials or fail to enroll them on our planned schedule, we may face increased costs, delays or termination of the trials, which could delay or prevent us from obtaining regulatory approvals for our product candidates.

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Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such proceedings.

See Item 3 Legal Proceedings in Part I of this Annual Report.

See Note 21, Commitments and Contingencies , to our consolidated financial statements included herein for information about our legal proceedings.

An unfavorable outcome in these or other proceedings could have an adverse impact on our business, financial condition and results of operations.

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Regulatory Risks

We have reached an agreement in principle regarding our inquiry by the United States Department of Justice for roughly $3.5 million.

If the agreement is not finalized, an ongoing investigation could result in significant liability and have a material adverse effect on our sales, financial condition, results of operations and cash flows.

In April 2015, we received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL.

We are cooperating with the government’s inquiry.

We can make no assurances as to the time or resources that will need to be devoted to this inquiry or its final outcome, or the impact, if any, of this inquiry or any proceedings on our business, financial condition, results of operations and cash flows.

In December 2019, we reached an agreement in principle with the Department of Justice and more than one state Attorney General’s office (the “Plaintiffs”) on a proposal for a global civil settlement in the amount of $3.5 million, subject to accrual of interest on the settlement amount from the date of the agreement in principle, negotiation of a definitive settlement agreement and other contingencies.

As part of the settlement, Pacira will admit no wrongdoing and will explicitly deny the Plaintiffs’ allegations.

Pacira has been given assurances that, if the parties can agree to negotiation of the settlement, this will conclude the investigation that originated from the U.S.

Department of Justice subpoena in April 2015.

If a final settlement cannot be reached, and as a result of this inquiry that started with the April 2015 subpoena, proceedings are initiated and we are found to have violated one or more applicable laws, we may be subject to significant liability, including without limitation, civil fines, criminal fines and penalties, civil damages and exclusion from federal funded healthcare programs such as Medicare and Medicaid, as well as potential liability under the federal False Claims Act and state false claims acts, and/or be required to enter into a corporate integrity or other settlement with the government, any of which could materially affect our reputation, business, financial condition, results of operations and cash flows.

Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payors or other persons allegedly harmed by such conduct.

In addition, if some of our existing business practices are challenged as unlawful, we may have to change those practices, including changes and impacts on the practices of our sales force, which could also have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business could be materially adversely affected if the FDA determines that we are promoting or have in the past promoted the “Off-label” use of our products.

The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drugs and medical devices.

Our business could be materially adversely affected if a regulatory or enforcement agency determines that we are promoting or have in the past promoted the “Off-label” use of our products.

The marketing, labeling, advertising and promotion of prescription drugs and medical devices is strictly regulated.

According to these regulations, companies may not promote drugs or medical devices for “Off-label” uses—that is, uses that are not consistent with the product’s labeling and that differ from those that were approved by the FDA.

For example, the FDA-approved label for EXPAREL does not include an indication in obstetrical paracervical block anesthesia.

In addition to the FDA approval required for new formulations or device enhancements, any new indication for an approved product also requires FDA approval.

While physicians in the U.S.

may choose, and are generally permitted to prescribe drugs and/or medical devices for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, under the FDA’s regulations our ability to promote the products is narrowly limited to those indications that are approved by the FDA.

As an example, while physicians may choose, and are generally permitted to prescribe drugs and/or medical devices for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by a regulatory authority, our ability to promote the products is narrowly limited to those indications that are approved by the FDA or other regulatory agency.

“Off-label” uses are common across medical specialties and may constitute an appropriate treatment for some patients in varied circumstances.

Regulatory authorities in the U.S.

generally do not regulate the behavior of physicians in their choice of treatments.

Regulatory authorities generally do not regulate the behavior of physicians in their choice of treatments.

Regulatory authorities do, however, restrict communications by pharmaceutical and medical device companies on the subject of off-label use.

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Constitution, the scope of such protection is unclear.

Moreover, while we promote our products consistent with what we believe to be the approved indication for our drugs and medical devices, the FDA may disagree.

If the FDA determines that our promotional activities fail to comply with the FDA’s regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities.

In September 2014, we received a warning letter from the OPDP pertaining to certain promotional aspects of EXPAREL.

Moreover, while we promote our products consistent with what we believe to be the approved indication for our drugs and medical devices, regulators may disagree.

If a regulatory agency determines that our promotional activities fail to comply with their regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities.

In addition, our failure to follow rules and guidelines relating to promotion and advertising may cause a regulatory body to issue warning letters or untitled letters, bring an enforcement action against us, suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.

In September 2014, we received a warning letter from the FDA’s Office of Prescription Drug Promotion (OPDP) pertaining to certain promotional aspects of EXPAREL.

We took actions to immediately address the FDA’s concerns and minimize further disruption to our business.

Ultimately, however, in September 2015, we, along with two independent physicians, filed a lawsuit in federal court against the FDA and other governmental defendants seeking to exercise our lawful rights to communicate truthful and non-misleading information about EXPAREL.

The complaint outlined our belief that the FDA’s warning letter received in September 2014 and regulations restricting our truthful and non-misleading speech about EXPAREL violated the Administrative Procedure Act and the First and Fifth Amendments of the U.S.

The complaint outlined our belief that the

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FDA’s warning letter received in September 2014 and regulations restricting our truthful and non-misleading speech about EXPAREL violated the Administrative Procedure Act and the First and Fifth Amendments of the U.S.

Constitution.

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The FDA also approved a labeling supplement for EXPAREL that further clarified that EXPAREL was not limited to any specific surgery type or site, that the proper dosage and administration of EXPAREL is based on various patient and procedure-specific factors, that there was a significant treatment effect for EXPAREL compared to placebo over the first 72 hours in the pivotal hemorrhoidectomy trial and that EXPAREL may be admixed with bupivacaine, provided certain medication ratios are observed.

The Warning Letter and labeling supplement only applied to the infiltration indication that was approved at that time, and does not apply to the interscalene brachial plexus nerve block indication approved in April 2018.

We and the FDA agreed that, in future interactions, the parties will deal with each other in an open, forthright and fair manner.

In April 2015, we received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL.

In July 2020, we formally entered into settlement agreements that resolved all outstanding investigations and claims by the U.S.

Department of Justice, the U.S.

of Health and Human Services, various States Attorneys’ General and a private plaintiff (the “Plaintiffs”).

This agreement concluded a five-year investigation related to the sale and marketing of EXPAREL.

Under the various settlement agreements, we paid a global settlement of $3.5 million.

As part of the settlement, we admitted to no wrongdoing and explicitly denied the Plaintiffs’ allegations.

We have been given assurances that this concludes the investigation that originated from the U.S.

Department of Justice subpoena in April 2015.

We are unable to predict whether any future regulatory actions will have an effect on our product sales, and even if such actions are ultimately resolved favorably, our sales may suffer due to reputational or other concerns.

We can make no assurances that we will not receive FDA warning letters in the future or be subject to other regulatory action.

We can make no assurances that we will not receive warning letters in the future from the FDA or other regulatory authority or be subject to other regulatory action.

As noted above, any regulatory violation or allegations of a violation may have a material adverse effect on our reputation and business.

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In December 2019, we announced positive results for our extended pharmacokinetic and safety study for local analgesia in children aged 6 to 17 undergoing cardiovascular or spine surgeries.

Those positive results will provide the foundation for an sNDA.

We are also working with the FDA to define a program to study the administration of EXPAREL as a nerve block in the pediatric setting.

These trials will be expensive and time consuming and we are required to meet the timelines for submission of protocols and data and for completion as agreed with the FDA, and we may be delayed in meeting such timelines.

Those positive results provided the foundation for an sNDA submitted in May 2020 that has a PDUFA action date of March 22, 2021.

Additionally, we are in negotiations with the FDA and EMA for clarity on other pediatric study obligations.

These trials will be expensive and time consuming and we are required to meet the timelines for submission of protocols and data and for completion as agreed with the FDA and EMA, and we may be delayed in meeting such timelines.

We are required to conduct these trials even if we believe that the costs and potential benefits of conducting the trials are not warranted from a scientific or financial perspective.

The failure to conduct these pediatric trials or to meet applicable deadlines could result in the imposition of sanctions, including, among other things, issuance of warnings letters or imposition of seizures or injunctions.

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For iovera° and any other potential medical device, we must obtain clearance or approval from the FDA or other regulatory authorities prior to introducing a new product or a modification to an existing product.

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The process of obtaining regulatory clearances and approvals to market a medical device can be costly, time consuming, involve rigorous pre-clinical and clinical testing, require changes in products or result in limitations on the indicated uses of products.

There can be no assurance that these clearances and

approvals will be granted on a timely basis, if at all.

There can be no assurance that these clearances and approvals will be granted on a timely basis, if at all.

In addition, once a medical device has been cleared or approved, a new clearance or approval may be required before the medical device may be modified, its labeling changed or marketed for a different use.

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The regulatory clearance and approval process may result in, among other things, delayed, if at all, realization of product net sales, substantial additional costs and limitations on the types of products we may bring to market or their indicated uses, any one of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The FDA may determine that our products or any of our product candidates have undesirable side effects.

If concerns are raised regarding the safety of a new product candidate as a result of undesirable side effects identified during clinical testing, the FDA may decline to approve the drug or medical device or issue a letter requesting additional data or information prior to making a final decision regarding whether or not to approve the product.

The number of such requests for additional data or information issued by the FDA in recent years has increased, and resulted in substantial delays in the approval of several new drugs and medical devices.

A regulatory authority may determine that our products or any of our product candidates have undesirable side effects.

If concerns are raised regarding the safety of a new product candidate as a result of undesirable side effects identified during clinical testing, a regulatory authority may decline to approve the drug or medical device or issue a letter requesting additional data or information prior to making a final decision regarding whether or not to approve the product.

Undesirable side effects caused by our products or any product candidate could also result in the inclusion of unfavorable information in our product labeling, imposition of distribution or use restrictions, a requirement to conduct post-market studies or to implement a risk evaluation and mitigation strategy, denial, suspension or withdrawal of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications, and in turn prevent us from commercializing and generating revenues from the sale of EXPAREL, iovera° or any product candidate.

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In addition, the class of drugs that EXPAREL belongs to has been associated with nervous system and cardiovascular toxicities at high doses.

We cannot be certain that these side effects and others will not be observed in the future, or that the FDA will not require additional trials or impose more severe labeling restrictions due to these side effects or other concerns.

We cannot be certain that these side effects and others will not be observed in the future, or that regulatory authorities will not require additional trials or impose more severe labeling restrictions due to these side effects or other concerns.

The active component of EXPAREL is bupivacaine and bupivacaine infusions have been associated with the destruction of articular cartilage, or chondrolysis.

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Any of these events could prevent us from achieving or maintaining market acceptance of our products or any of our product candidates and could substantially increase our commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from its sale.

Regulatory approval for any approved product is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated.

Any regulatory approval is limited to those specific diseases and indications for which a product is deemed to be safe and effective by the FDA.

For example, the FDA-approved label for EXPAREL does not include an indication in obstetrical paracervical block anesthesia.

In addition to the FDA approval required for new products or product enhancements, any new indication for an approved product also requires FDA approval.

If we are not able to obtain FDA approval for any desired

future indications for our products and product candidates, our ability to effectively market and sell our products may be reduced and our business may be adversely affected.

While physicians may choose to prescribe drugs and medical devices for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA.

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If we do not comply with federal, state and foreign laws and regulations relating to the health care business, we could face substantial penalties.

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The design, development, manufacture, supply and distribution of EXPAREL are all highly regulated.

We, along with our third-party providers, must comply with all applicable regulatory requirements of the FDA and foreign authorities.

We, along with our third-party providers, must comply with all applicable regulatory requirements of the FDA and foreign regulatory authorities.

In addition, the facilities used to manufacture, store and distribute EXPAREL are subject to inspection by regulatory authorities at any time to determine compliance with applicable regulations.

The manufacturing techniques and facilities used for the manufacture and supply of our products must be operated in conformity with cGMP and other FDA and MHRA regulations, including potentially prior regulatory approval.

In addition, any expansion of our existing manufacturing facilities or the introduction of any new manufacturing facilities, including the manufacturing suites at Thermo Fisher’s facility, also require conformity with cGMP and other FDA and MHRA regulations.

The manufacturing techniques and facilities used for the manufacture and supply of our products must be operated in conformity with CGMP and other FDA, EMA and MHRA regulations, including potentially prior regulatory approval.

In addition, any expansion of our existing manufacturing facilities or the introduction of any new manufacturing facilities, including the manufacturing suites at the Thermo Fisher and Providien facilities, also require conformity with CGMP and other FDA, EMA and MHRA regulations.

In complying with these requirements, we, along with our co-production partners and suppliers, must continually expend time, money and effort in production, record keeping and quality assurance and control to ensure that our products meet applicable specifications and other requirements for safety, efficacy and quality.

In addition, we, along with our co-production partners and suppliers, are subject to unannounced inspections by the FDA, MHRA and other regulatory authorities.

In addition, we, along with our co-production partners and suppliers, are subject to unannounced inspections by the FDA, EMA, MHRA and other regulatory authorities.

Any failure to comply with regulatory and other legal requirements applicable to the manufacture, supply and distribution of our products could lead to remedial action (such as recalls), civil and criminal penalties and delays in manufacture, supply and distribution of our products.

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Quality control and manufacturing procedures regarding EXPAREL and our product candidates must conform to CGMP.

Regulatory authorities, including the FDA and the MHRA, periodically inspect manufacturing facilities to assess compliance with cGMP.

Our failure, or the failure of any contract manufacturers with whom we may work in the future, to comply with the laws administered by the FDA, the MHRA or other governmental authorities could result in, among other things, any of the following:

Regulatory authorities,

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including the FDA, EMA and the MHRA, periodically inspect manufacturing facilities to assess compliance with CGMP.

Our failure, or the failure of any contract manufacturers with whom we may work in the future, to comply with the laws administered by the FDA, EMA, the MHRA or other governmental authorities could result in, among other things, any of the following:

• product recall or seizure;

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• warning letters;

• injunctions;

• refusal to permit import or export of an approved product;

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Although hospitals and ASCs may receive separate reimbursement for EXPAREL, iovera° or any product candidates that we may develop, in-license or acquire, if approved, will face competition from other therapies and drugs for these limited hospital and ASC financial resources.

We may need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any future products to the satisfaction of hospitals, ASCs, other target

customers and their third-party payers.

We may need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any future products to the satisfaction of hospitals, ASCs, other target customers and their third-party payers.

Such studies might require us to commit a significant amount of management time, financial and other resources.

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or international markets, which could have a negative effect on our business, results of operations, financial condition and prospects.

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Public concern regarding the safety of drug products such as EXPAREL and medical device products such as iovera° could result in the inclusion of unfavorable information in our labeling, or require us to undertake other activities that may entail additional costs.

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Data from clinical trials may receive greater scrutiny, particularly with respect to safety, which may make the FDA or other regulatory authorities more likely to require additional preclinical studies or clinical trials.

If the FDA requires us to provide additional clinical or preclinical data for EXPAREL or iovera°, the indications for which these products were approved may be limited or there may be specific warnings or limitations on dosing, and our efforts to commercialize EXPAREL or iovera° may be otherwise adversely impacted.

If the FDA or any other regulatory agency requires us to provide additional clinical or preclinical data for EXPAREL or iovera°, the indications for which these products were approved may be limited or there may be specific warnings or limitations on dosing, and our efforts to commercialize EXPAREL or iovera° may be otherwise adversely impacted.

Risks Related to Intellectual Property

The patents and the patent applications that we have covering our products are limited to specific injectable formulations, processes and uses of drugs encapsulated in our DepoFoam drug delivery technology and our market opportunity for our product candidates may be limited by the lack of patent protection for the active ingredient itself and other formulations and delivery technology and systems that may be developed by competitors.

The patents and the patent applications that we have covering our DepoFoam products are limited to specific injectable formulations, processes and uses of drugs encapsulated in our DepoFoam drug delivery technology and our market opportunity for our product candidates may be limited by the lack of patent protection for the active ingredient itself and other formulations and delivery technology and systems that may be developed by competitors.

The active ingredient in EXPAREL is bupivacaine.

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As a result, competitors who obtain the requisite regulatory approval can offer products with the same active ingredient as EXPAREL so long as the competitors do not infringe any process, use or formulation patents that we have developed for drugs encapsulated in our DepoFoam drug delivery technology.

For example, we are aware of at least one long-acting injectable bupivacaine product in development which utilizes an alternative delivery system to EXPAREL.

For example, we are aware of at least one long-acting instillable bupivacaine product in development which utilizes an alternative delivery system to EXPAREL.

Such a product is similar to EXPAREL in that it also extends the duration of effect of bupivacaine, but achieves this clinical outcome using a completely different drug delivery system as compared to our DepoFoam drug delivery technology.

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The commercial opportunity for EXPAREL could be significantly harmed if competitors are able to develop and commercialize alternative formulations of bupivacaine that are long-acting but outside the scope of our patents.

Because EXPAREL has been approved by the FDA, one or more third parties may challenge the patents covering this product, which could result in the invalidation or unenforceability of some or all of the relevant patent claims.

For instance, because EXPAREL has been approved by the FDA, one or more third parties may challenge the patents covering this product, which could result in the invalidation or unenforceability of some or all of the relevant patent claims.

For example, if a third-party files an Abbreviated New Drug Application, or ANDA, for a generic drug product containing bupivacaine and relies in whole or in part on studies conducted by or for us, the third-party will be required to certify to the FDA that either:

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(ii) the patents listed in the Orange Book have expired;

(iii) the listed patents have not expired, but will expire on a particular date and approval is sought after patent expiration;

or (iv) the listed patents are invalid or will not be infringed by the manufacture, use or sale of the third-party’s generic drug product.

(iii) the listed patents have not expired, but will expire on a particular date and approval is sought after patent expiration or (iv) the listed patents are invalid or will not be infringed by the manufacture, use or sale of the third-party’s generic drug product.

A certification that the new product will not infringe the Orange Book-listed patents for EXPAREL, or that such patents are invalid, is called a paragraph IV certification.

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If we do not file a patent infringement lawsuit within the required 45-day period, the third-party’s ANDA will not be subject to the 30-month stay.

Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-consuming, may divert our management’s attention from our core business and may result in unfavorable results that could adversely impact our ability to prevent third parties from competing with our products.

Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-

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consuming, may divert our management’s attention from our core business and may result in unfavorable results that could adversely impact our ability to prevent third parties from competing with our products.

The patents and the patent applications that we have covering our iovera° products are primarily limited to specific handheld cryogenic needle devices that are cooled by a cryogen and methods for applying cryotherapy to nerve tissue using the cryogenic devices.

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are even more uncertain.

Changes in either the patent laws or in interpretations of patent

laws in the U.S.

Changes in either the patent laws or in interpretations of patent laws in the U.S.

and other countries may diminish the value of our intellectual property.

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• the issued patents covering our product candidates may not provide a basis for commercially viable active products, may not provide us with any competitive advantages, may not have sufficient scope or strength to protect the technologies they were intended to protect or may be challenged by third parties;

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• others may design around our patent claims to produce competitive products that fall outside the scope of our patents;

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In the event that a third-party has also filed a U.S.

patent application relating to our product candidates or a similar invention, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention in the U.S.

patent application relating to our product candidates or a similar invention, we may have to participate in interference proceedings declared by the United States Patent and Trademark Office, or USPTO, to determine priority of invention in the U.S.

The costs of these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a material adverse effect on our U.S.

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in 2013 and its equivalents in Canada, Germany, France, Spain, Italy and the United Kingdom expired in 2014.

In Europe, manufacturers qualify for 8 years of data exclusivity upon marketing authorization approval and an additional two years of market exclusivity, for a total of 10 years of regulatory exclusivity.

Our earliest patent family for iovera° is scheduled to expire in 2025.

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Policing unauthorized use of our trade secrets or enforcing a claim that a third-party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable.

In addition, trade secret laws in other countries may not be as

protective as they are in the U.S.

In addition, trade secret laws in other countries may not be as protective as they are in the U.S.

Thus, courts outside the U.S.

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In order to protect the goodwill associated with our company and product names, we rely on trademark protection for our marks.

We have registered the “Pacira”, “EXPAREL”, “iovera°”, “DepoCyt”, and “DepoCyte” marks with the USPTO.

A third-party may assert a claim that one of our marks is confusingly similar to its mark, and such claims or the failure to timely register a mark or objections by the FDA could force us to select a new name for one of our product candidates, which could cause us to incur additional expense or delay the commercialization of such product.

If we fail to obtain or maintain patent protection or trade secret protection for EXPAREL, iovera°, DepoFoam or any product candidate that we may develop, license or acquire, third parties could use our proprietary information, which could impair our ability to compete in the market and adversely affect our ability to generate revenues and achieve profitability.

We have registered the “Pacira”, “EXPAREL”, “iovera°”, “DepoFoam”, “DepoCyt”, and “DepoCyte” marks with the USPTO.

A third-party may assert a claim that one of our marks is confusingly similar to its mark, and such claims or the failure to timely register a mark or objections by the FDA or other regulatory agency could force us to select a new name for one of our product candidates, which could cause us to incur additional expense or delay the commercialization of such product.

If we fail to obtain or maintain patent, trade secret and/or trademark protection for EXPAREL, iovera°, DepoFoam or any product candidate that we may develop, license or acquire, third parties could use our proprietary information, which could impair our ability to compete in the market and adversely affect our ability to generate revenues and achieve profitability.

If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.

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Because of the uncertainty inherent in any patent or other litigation involving proprietary rights, we and our licensors may not be successful in defending intellectual property claims by third parties, which could have a material adverse effect on our results of operations.

Regardless of the outcome of any litigation, defending the litigation may be expensive, time-consuming and distracting to management.

Regardless of the outcome of any litigation, defending the

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litigation may be expensive, time-consuming and distracting to management.

In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that EXPAREL or iovera° may infringe.

There could also be existing patents of which we are not aware that EXPAREL or iovera° may inadvertently infringe.

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries in general.

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology, biopharmaceutical and medical device industries in general.

If a third-party claims that we infringe on their products or technology, we could face a number of issues, including:

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Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Risks Related to Cybersecurity

Risks Related to our Indebtedness and our Common Stock

Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.

Our ability to make payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2.375% convertible senior notes due 2022, or 2022 Notes, issued in our private offering completed on March 13, 2017, and the 0.750% convertible senior notes due 2025, or 2025 Notes, issued in our private offering completed on July 10, 2020, each as described below, or to make cash payments in connection with any conversion of the 2022 Notes or 2025 Notes depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.

Our business may not generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring indebtedness or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

On July 10, 2020, we completed a private placement of $402.5 million in aggregate principal amount of 2025 Notes, and entered into an indenture agreement, or 2025 Indenture, with respect to the 2025 Notes.

The 2025 Notes accrue interest at a fixed rate of 0.750% per year, payable semiannually in arrears on February 1 and August 1 of each year.

The 2025 Notes mature on August 1, 2025.

On March 13, 2017, we completed a private placement of $345.0 million in aggregate principal amount of

our 2022 Notes, and entered into an indenture agreement, or 2022 Indenture, with respect to the 2022 Notes.

The 2022 Notes accrue interest at a fixed rate of 2.375% per year, payable semiannually in arrears on April 1 and October 1 of each year.

We used a portion of the net proceeds from the 2025 Notes to repurchase $185.0 million in aggregate principal amount of the 2022 Notes.

The 2022 Notes mature on April 1, 2022.

As of December 31, 2020, our total consolidated gross indebtedness was $562.5 million, which consisted of $402.5 million and $160.0 million of principal outstanding on the 2025 Notes and 2022 Notes, respectively, and all of which was unsecured indebtedness.

Additionally, our subsidiaries had no indebtedness (excluding trade payables, intercompany liabilities and income tax-related liabilities).

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We may not have the ability to raise the funds necessary to settle conversions of the 2025 Notes and/or 2022 Notes in cash to the extent elected or to repurchase the 2025 Notes and/or 2022 Notes upon a fundamental change, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of the 2025 Notes and/or 2022 Notes or limitations on our ability to repurchase the 2025 Notes and/or 2022 Notes.

Holders of the 2025 Notes and 2022 Notes will have the right to require us to repurchase their 2025 Notes and 2022 Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

We have the option to pay the principal in cash, shares of our common stock, or any combination thereof.

While it is our intention to pay the principal in cash, upon conversion of the 2025 Notes and/or 2022 Notes we will be required to make cash payments for each $1,000 in principal amount of 2025 Notes and/or 2022 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2025 Notes and/or 2022 Notes surrendered therefor or 2025 Notes and/or 2022 Notes being converted.

Any credit facility or other agreement that we may enter into may limit our ability to make cash payments at the time of a fundamental change or upon conversion of the 2025 Notes and/or 2022 Notes.

Further, our ability to repurchase the 2025 Notes and/or 2022 Notes or to pay cash upon conversions of the 2025 Notes and/or 2022 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.

Our failure to repurchase 2025 Notes and/or 2022 Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the 2025 Notes and/or 2022 Notes as required by the 2025 Indenture and/or 2022 Indenture would constitute a default under the 2025 Indenture and/or 2022 Indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2025 Notes and/or 2022 Notes or make cash payments upon conversions thereof.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and our bylaws, as well as provisions of the Delaware General Corporation Law, or DGCL, could make it more difficult for a third-party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares.

These provisions include:

• authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

• prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

• eliminating the ability of stockholders to call a special meeting of stockholders;

• establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

In addition, we are subject to Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors.

This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.

Our common stock price may be subject to significant fluctuations and volatility.

Our stock price is volatile, and from February 3, 2011, the first day of trading of our common stock, to February 24, 2021, the trading prices of our stock have ranged from $6.16 to $121.95 per share.

Our stock could be subject to wide fluctuations in price in response to various factors, including the following:

• the commercial success of EXPAREL and iovera°;

• results of clinical trials of our products, product candidates or those of our competitors;

• changes or developments in laws or regulations applicable to our products or product candidates;

• introduction of competitive products or technologies;

• failure to meet or exceed financial projections we provide to the public;

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• actual or anticipated variations in quarterly operating results;

• failure to meet or exceed the estimates and projections of the investment community;

• the perception of the pharmaceutical and medical device industry by the public, legislatures, regulators and the investment community;

• regulatory concerns or government actions;

• general economic and market conditions and overall fluctuations in U.S.

equity markets;

• developments concerning our sources of manufacturing supply;

• disputes or other developments relating to patents or other proprietary rights;

• additions or departures of key scientific or management personnel;

• the extent to which we acquire or invest in products, businesses and technologies;

• issuances of debt, equity or convertible securities;

• changes in the market valuations of similar companies;

• the other factors described in this “Risk Factors” section.

In addition, the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

Fluctuations in our stock price could, among other things, adversely impact the trading price of our shares.

We do not intend to pay dividends on our common stock for the foreseeable future.

We have never declared or paid any dividends on our common stock.

We currently intend to retain our future earnings to finance the future development and expansion of our business, and as such we do not expect to pay any cash dividends on our common stock in the foreseeable future.

The payment of future dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future financing instruments, provisions of applicable law and any other factors our board of directors deems relevant.

Future sales in the public market or issuances of our common stock could lower the market price for our common stock.

In the future, we may sell additional shares of our common stock to raise capital.

Except under limited circumstances, we are not restricted from issuing additional common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, common stock.

The issuance of additional shares of our common stock or convertible securities, including upon exercise of our outstanding options, vesting of our restricted stock units or otherwise, will dilute the ownership interest of our common stockholders.

In addition, our greater than 5% stockholders may sell a substantial number of their shares in the public market, which could also affect the market price for our common stock.

We cannot predict the size of future sales or issuances of our common stock or the effect, if any, that they may have on the market price for our common stock.

The issuance and/or sale of substantial amounts of common stock, or the perception that such issuances and/or sales may occur, could adversely affect the market price of our common stock and impair our ability to raise capital through the sale of additional equity or debt securities.

Raising additional funds by issuing securities would cause dilution to existing stockholders and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, our existing stockholders’ ownership would be diluted.

If we raise additional funds through licensing arrangements, it may be necessary to relinquish potentially valuable rights to our potential products or proprietary technologies, or grant licenses on terms that are not favorable to us.

Any debt financing we enter into may involve covenants that restrict our operations.

These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our stock or make investments.

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General Risk Factors

A pandemic, epidemic or outbreak of a contagious disease (such as the novel coronavirus (COVID-19) pandemic), or fear of such an event, could have a material adverse effect on our business, operating results and financial condition.

A pandemic, epidemic or outbreak of an infectious disease, including the current COVID-19 pandemic, or other public health crisis, could have a material adverse effect on our business, financial condition and operations, including but not limited to our revenue and cash flows, including potential decreases in sales, manufacturing issues, supply issues and delays in payments by our customers.

For example, as a result of the COVID-19 pandemic, elective surgeries were suspended in many jurisdictions, and while elective surgery restrictions have lifted in most states beginning in April of 2020, we do not know if, and how, future restrictions may affect the surgical communities’ return to, or redefining of, normal operations, whether due to governmental restrictions, institutional, patient or clinical decisions or general economic conditions.

New or prolonged suspensions of elective surgeries by governmental restrictions or action would cause net sales of our products to decrease.

In addition, due to health concerns from the COVID-19 pandemic or negative economic conditions, patients and clinicians could cancel or defer elective procedures or otherwise avoid medical treatment, which would result in reduced patient volumes and revenues, which could potentially continue over an extended period of time.

Business disruptions could include disruptions or restrictions to our workforce, including the ability of our sales teams to interact with our customers and healthcare professionals to educate them on the benefits of our products and perform typical sales activities.

For example, the ongoing COVID-19 pandemic had significantly impacted the ability of our sales representatives to access customers and healthcare professionals through personal interactions within the healthcare setting, including hospitals and ambulatory surgical centers.

With the reopening of many states, the ability of our sales representatives to renew their in-person engagement efforts, in conjunction with remote efforts, has occurred across all sites of care, with more focus on physician offices and ambulatory surgical centers.

In addition, any temporary closures of our manufacturing facilities or the facilities of our suppliers and contract manufacturers (and the resulting impact on production or our products) or the workforce at such facilities, could cause delays in the shipment or production of our products.

If our customers experience disruptions to their businesses and cash flows, we could experience delays or difficulties with the collection of our accounts receivable.

Any sustained impacts and business disruptions to our facilities or workforce, our customers, our suppliers, or our contract manufacturers would likely adversely impact our cash flows, sales and operating results.

The significant increase in the number of our employees who are working remotely as a result of the pandemic, and an extended period of remote work arrangements and subsequent reintroduction into the workplace could introduce operational risk, strain our business continuity plans, negatively impact productivity and/or collaboration, and give rise to claims by employees or otherwise adversely affect our business.

Additionally, the COVID-19 pandemic could require new or modified processes, procedures and controls to respond to changes in our business environment.

We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.

There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19.

Ultimately, the extent to which COVID-19 or other public health crises could continue to impact our business is difficult to predict and will depend on many factors beyond our control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on elective surgeries, travel and other activity through quarantines/social distancing and other measures, the timing of effective vaccines becoming widely available and accepted by the public, public reactions to these factors and more.

The extent to which COVID-19 impacts our business, revenues and results of operations will depend on future developments, which are highly uncertain, constantly changing and cannot be predicted.

This includes new information that may emerge concerning the severity of COVID-19, the spread and proliferation of COVID-19 around the world, the duration of the outbreak and the actions taken to contain COVID-19 or treat its impact, among others.

If we do not maintain the privacy and security of personal and business information, we could damage our reputation with customers and employees, incur substantial additional costs and become subject to litigation.

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In addition, a breach could require that we expend significant additional resources related to the security of information systems and could disrupt our operations.

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The use of data by our business is regulated at the national and state or local level in all of our operating countries.

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Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse effect on our business and results of operations.

Changes in data privacy and protection laws and regulations, particularly in Europe, or any failure to comply with such laws and regulations, could adversely affect our business and financial results.

We are subject to a variety of continuously evolving and developing laws and regulations globally regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data.

Significant uncertainty exists as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements.

These laws apply to transfers of information among our affiliates, as well as to transactions we enter into with third-party vendors.

For example, the E.U.

adopted a comprehensive General Data Privacy Regulation, or GDPR, in May 2016 that replaced the then-current E.U.

Data Protection Directive and related country-specific legislation in May 2018.

GDPR requires companies to satisfy new requirements regarding the handling of personal and sensitive data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves.

Failure to comply with GDPR requirements could result in penalties of up to 4% of worldwide revenue.

Complying with the enhanced obligations imposed by the GDPR may result in significant costs to our business and require us to revise certain of our business practices.

In addition, legislators and regulators in the U.S.

are proposing new and more robust cybersecurity rules in light of the recent broad-based cyberattacks at a number of companies.

These and similar initiatives around the world could increase the cost of developing, implementing or securing our servers and require us to allocate more resources to improved technologies, adding to our information technology and compliance costs.

In addition, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase.

The enactment of more restrictive laws, rules, regulations, or future enforcement actions or investigations could impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability.

Risks Related to our Financial Condition and Capital Requirements

Cumulatively, we have incurred significant losses since our inception and may incur additional losses in the future.

To date, we have focused primarily on developing and commercializing EXPAREL.

We incurred net losses of $11.0 million , $0.5 million and $42.6 million for the years ended December 31, 2019 , 2018 and 2017, respectively.

We recorded net income of $145.5 million for the year ended December 31, 2020 and net losses of $11.0 million and $0.5 million for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2020, we had an accumulated deficit of $253.9 million.

Our losses, among other things, have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

We incurred significant pre-commercialization expenses as we prepared for the commercial launch of EXPAREL, and we incur significant sales, marketing and manufacturing expenses, as well as continued development expenses related to the commercialization of EXPAREL and

As a result, we had not been profitable prior to 2015 and have not been since.

Because of the numerous risks and uncertainties associated with developing pharmaceutical products and medical devices, we are unable to predict the extent of any future losses.

We may not return to profitability.

Our ability to return to profitability depends upon our ability to generate revenue from EXPAREL and iovera°.

Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to:

manufacture commercial quantities of EXPAREL and iovera° at acceptable cost levels;

continue to develop a commercial organization and the supporting infrastructure required to successfully market and sell both EXPAREL and iovera°.

We anticipate incurring significant additional costs associated with the commercialization of both EXPAREL and iovera° and are unsure as to whether we will be able to return to profitability.

If we are unable to generate additional revenues, we will not be able to do so and may be unable to continue operations without continued funding.

Losses, among other things, have had an adverse effect on stockholders’ equity and working capital.

As a result, we had not been profitable prior to 2015 and were not again until 2020.

Because of the numerous risks and uncertainties associated with developing pharmaceutical products and medical devices, we are unable to predict the extent of future losses, if any.

We may need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts.

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• in-license and develop additional product candidates;

refinance our 2.375% convertible senior notes, due April 2022.

• refinance our 2.375% convertible senior notes, due April 1, 2022 and our 0.750% convertible senior notes, due August 1, 2025.

We may not have sufficient financial resources to continue our operations or meet all of our objectives, which could require us to postpone, scale back or eliminate some, or all, of these objectives.

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• the effect of competing technological and market developments;

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• the terms and timing of any collaborative, licensing, co-promotion or other arrangements that we may establish;

the potential that we may be required to file a lawsuit to defend our patent rights or regulatory exclusivities from challenges by companies seeking to market generic versions of extended-release liposome injection of bupivacaine or a cryoanalgesic device that infringes on the various patents covering iovera°.

• the potential that we may be required to file a lawsuit to defend our patent rights or regulatory exclusivities from challenges by companies seeking to market generic versions of extended-release liposome injections of bupivacaine or a cryoanalgesic device that infringes on the various patents covering iovera°.

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies.

Until we can generate a sufficient amount of product revenue, if ever, we expect to finance or supplement future cash needs through public or private equity offerings, debt financings, royalties, collaboration and licensing arrangements, as well as through interest income earned on cash and investment balances.

Until we can generate sufficiently more product revenue, if ever, we expect to finance or supplement future cash needs through public or private equity offerings, debt financings, stock option exercises, royalties, collaboration and licensing arrangements, as well as through interest income earned on cash and investment balances.

We cannot be certain that additional funding will be available on acceptable terms, or at all.

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From time to time, we may complete acquisitions of companies and certain businesses of companies, and we may not realize the expected benefits from such acquisitions because of integration difficulties or other challenges.

For example, on April 9, 2019, we completed the MyoScience Acquisition.

For example, in April 2019, we completed the MyoScience Acquisition.

The success of any acquisitions will depend, in part, on our ability to realize all or some of the anticipated synergies and other benefits from integrating the acquired businesses with our existing businesses.

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• adverse effects on our or our acquired companies’ and businesses’ existing business relationships;

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• unanticipated changes in applicable laws and regulations;

operating risks inherent in our acquired companies’ and businesses’ business and operations;

• risks inherent in our acquired companies’ and businesses’ industry and operations;

• unanticipated expenses and liabilities;

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If any of the above risks occur, our business, financial condition, results of operations and cash flows may be materially and adversely impacted, we may fail to meet the expectations of investors or analysts, and our stock price may decline as a result.

Raising additional funds by issuing securities may cause dilution to existing stockholders and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, our existing stockholders’ ownership would be diluted.

Any debt financing we enter into may involve covenants that restrict our operations.

The use of our net operating loss carryforwards and research tax credits will be limited.

The use of our net operating loss carryforwards and research and development tax credits will be limited.

We have significant federal and state net operating loss, or NOL, carryforwards and federal and state research and development tax credit carryforwards.

Our NOL carryforwards and research and development tax credits may expire and not be used.

Our NOL carryforwards will begin expiring in 2026 for federal purposes and in 2024 for state purposes if we have not used them prior to that time.

Our NOL carryforwards will begin expiring in 2024 for both federal and state purposes if we have not used them prior to that time.

For any federal NOLs generated after December 31, 2017, the NOLs will have an indefinite life and utilization will be subject to a limitation of 80% of taxable income.

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Such an annual limitation will significantly reduce the utilization of the NOLs and research tax credits before they expire.

Accordingly, we have not recognized a benefit in our consolidated financial statements for the NOLs and tax credits which may expire unused.

In addition, California and certain states have suspended use of NOL carryforwards for certain taxable years, and other states are considering similar measures.

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Depending on our future tax position, continued suspension of our ability to use NOL carryforwards in states in which we are subject to income tax could have an adverse impact on our results of operations and financial condition.

Risks Related to our Indebtedness and our Common Stock

Our common stock price may be subject to significant fluctuations and volatility.

Our stock price is volatile, and from February 3, 2011, the first day of trading of our common stock, to February 19, 2020, the trading prices of our stock have ranged from $6.16 to $121.95 per share.

Our stock could be subject to wide fluctuations in price in response to various factors, including the following:

the commercial success of EXPAREL and iovera°;

results of clinical trials of our products, product candidates or those of our competitors;

changes or developments in laws or regulations applicable to our products or product candidates;

introduction of competitive products or technologies;

failure to meet or exceed financial projections we provide to the public;

actual or anticipated variations in quarterly operating results;

failure to meet or exceed the estimates and projections of the investment community;

the perception of the pharmaceutical and medical device industry by the public, legislatures, regulators and the investment community;

regulatory concerns or government actions

general economic and market conditions and overall fluctuations in U.S.

equity markets;

developments concerning our sources of manufacturing supply;

disputes or other developments relating to patents or other proprietary rights;

additions or departures of key scientific or management personnel;

the extent to which we acquire or invest in products, businesses and technologies;

issuances of debt, equity or convertible securities;

changes in the market valuations of similar companies;

the other factors described in this “Risk Factors” section.

In addition, the stock market in general, and the market for small pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

Fluctuations in our stock price could, among other things, adversely impact the trading price of our shares.

Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.

Our ability to make payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2.375% convertible senior notes due 2022, or 2022 Notes, issued in our private offering completed on March 13, 2017, as described below, or to make cash payments in connection with any conversion of the 2022 Notes depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.

Our business may not generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures.

Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

On March 13, 2017, we completed a private placement of $345.0 million in aggregate principal amount of

our 2022 Notes, and entered into an indenture agreement, or 2022 Indenture, with respect to the 2022 Notes.

The 2022 Notes accrue interest at a fixed rate of 2.375% per year, payable semiannually in arrears on April 1 and October 1 of each year.

The 2022 Notes mature on April 1, 2022.

As of December 31, 2019 , our total consolidated gross indebtedness was $345.0 million, all of which was the principal outstanding on the 2022 Notes and all of which was unsecured indebtedness.

Additionally, our subsidiaries had no indebtedness (excluding trade payables, intercompany liabilities and income tax-related liabilities).

We may not have the ability to raise the funds necessary to settle conversions of the 2022 Notes in cash to the extent elected or to repurchase the 2022 Notes upon a fundamental change, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of the 2022 Notes or limitations on our ability to repurchase the 2022 Notes.

Holders of the 2022 Notes will have the right to require us to repurchase their 2022 Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

In addition, upon conversion of the 2022 Notes (if we choose to settle the principal amount in cash at our option), we will be required to make cash payments for each $1,000 in principal amount of 2022 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2022 Notes surrendered therefor or 2022 Notes being converted.

Any credit facility or other agreement that we may enter into may limit our ability to make cash payments at the time of a fundamental change or upon conversion of the 2022 Notes.

Further, our ability to repurchase the 2022 Notes or to pay cash upon conversions of the 2022 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.

Our failure to repurchase 2022 Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the 2022 Notes as required by the 2022 Indenture would constitute a default under the 2022 Indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2022 Notes or make cash payments upon conversions thereof.

Future sales in the public market or issuances of our common stock could lower the market price for our common stock.

In the future, we may sell additional shares of our common stock to raise capital.

In addition, our greater than 5% stockholders may sell a substantial number of their shares in the public market, which could also affect the market price for our common stock.

We cannot predict the size of future sales or issuances of our common stock or the effect, if any, that they may have on the market price for our common stock.

These provisions include:

authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

eliminating the ability of stockholders to call a special meeting of stockholders;

establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.

We do not intend to pay dividends on our common stock for the foreseeable future.

We have never declared or paid dividends on our common stock.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay dividends in the foreseeable future.

Any future determination to declare or pay dividends will be at the discretion of our board of directors and will depend upon our financial condition, results of operations, capital requirements, restrictions contained in future financing instruments, provisions of applicable law and any other factors our board of directors deems relevant.

We have recognized a tax benefit only for those NOLs and tax credits which are more likely than not to be utilized.

Changes in data privacy and protection laws and regulations, particularly in Europe and the State of California, or any failure to comply with such laws and regulations, could adversely affect our business and financial results.

Significant uncertainty exists as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements.

These laws apply to transfers of information among our affiliates, as well as to transactions we enter into with third-party vendors.

For example, the E.U.

adopted a comprehensive General Data Privacy Regulation, or GDPR, in May 2016 that replaced the then-current E.U.

Data Protection Directive and related country-specific legislation in May 2018.

Failure to comply with GDPR requirements could result in penalties of up to 4% of total worldwide revenue.

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Additionally, the California Consumer Privacy Act, or CCPA, became effective in January 2020 and imposed new responsibilities on us for the handling, disclosure and deletion of personal information for our employees and consumers who reside in California.

The CCPA permits California to assess potentially significant fines for violating CCPA and creates a right for individuals to bring class action suits seeking damages for violations.

In addition, we will be required to implement more stringent privacy regulations by January 1, 2023 as the California Privacy Rights Act passed in November 2020.

Furthermore, legislators and regulators in the U.S.

are proposing new and more robust cybersecurity rules in light of the recent broad-based cyberattacks at a number of companies.

Our efforts to comply with GDPR, the CCPA and other privacy and data protection laws may impose significant costs and challenges that are likely to increase over time and may require us to revise certain of our business practices.

In addition, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase.

The enactment of more restrictive laws, rules, regulations, or future enforcement actions or investigations could impact us through increased costs or restrictions on our business, and noncompliance could result in substantial regulatory penalties and significant legal liability or litigation related to violation of existing or future data privacy laws and regulations.

We face risks related to cybersecurity threats and incidents.

We regularly face attempts by others to gain unauthorized access through the internet, or to introduce malicious software, to our Information Technology, or IT, systems.

Individuals or organizations, including malicious hackers and insider threats including employees and third-party service providers, or intruders into our physical facilities, at times attempt to gain unauthorized access to our software and services.

We could also be a target of malicious attackers who attempt to gain access to our network or data centers;

steal proprietary information related to our business, products, employees, suppliers and customers;

interrupt our systems and services or those of our suppliers, customers, or others;

or demand ransom to return control of such systems and services.

Such attempts, including but not limited to “phishing” attempts, are increasing in number and in technical sophistication, and if successful, expose us and any affected parties to risk of loss or misuse of proprietary or confidential information or disruptions of our business operations, including our manufacturing operations.

Our IT infrastructure also includes services provided by third parties, and these providers can experience breaches of their systems and products that impact the security of our systems and our proprietary or confidential information.

Significant changes in the global climate, extreme weather conditions and water availability could adversely affect our business or operations.

We could experience adverse impacts to our business if climate change, other extreme weather conditions and/or water availability challenges adversely affect our operations or the operations of our suppliers, distributors and customers.

There is mounting scientific evidence, as well as concern from the general public, that emissions of greenhouse gases and contributing human activities have caused and will continue to cause significant changes in global temperatures and weather patterns and increase the frequency or severity of weather events, wildfires and flooding.

While such conditions cannot be predicted, if such conditions were to impact our manufacturing sites or otherwise alter production schedules, including those of our third-party suppliers of raw materials, our manufacturing equipment, or our distributors, we could experience a disruption in the supply of EXPAREL or iovera° to our customers and partners, or we could see an unfavorable impact on the cost or availability of our raw or packaging materials.

Disruptions to the operations of our customers could also adversely impact the demand for our products.

Regulations in response to climate change could result in increased manufacturing costs associated with increased compliance and water and energy costs.

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Unresolved Staff Comments

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

What changed 10-K

Item 1A. Risk Factors