You should carefully consider the factors discussed in Part I, Item 1A.
−Removed: “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 , which could materially affect our business, financial condition, cash flows or future results, including those related to the ongoing COVID-19 pandemic.
−Removed: Except as described below, there have been no material changes in our risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 , which could materially affect our business, financial condition, cash flows or future results.
+Added: There have been no material changes in our risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2021.
The risks described in our Annual Report on Form 10-K for the year ended December 31, 2021 are not the only risks facing our Company.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
−Removed: Our ability to realize the benefits from the acquisition of Flexion is substantially dependent on the commercial success of ZILRETTA ® (triamcinolone acetonide extended-release injectable suspension) and the cost savings resulting from the timely and effective integration of the operations of Pacira and Flexion.
−Removed: Our ability to realize the benefits from the acquisition of Flexion is substantially dependent on our ability to successfully commercialize ZILRETTA.
−Removed: Combining with Pacira may not accelerate the growth and success of ZILRETTA.
−Removed: If we are unsuccessful at convincing hospitals and health care providers to increase their rate of adoption of ZILRETTA, our sales could be adversely affected, and our business could suffer.
−Removed: Further, our ability to realize the benefits from the acquisition of Flexion is substantially dependent on the cost savings resulting from the timely and effective integration of the operations Pacira and Flexion.
−Removed: The process of integrating the operations of Pacira and Flexion could encounter unexpected costs and delays, which include:
−Removed: the loss of key personnel;
−Removed: the loss of key customers;
−Removed: the loss of key suppliers;
−Removed: and unanticipated issues in integrating sales, marketing and administrative functions.
−Removed: If we are unable to timely and effectively integrate the operations of Pacira and Flexion, our costs could be adversely affected, and our business could suffer.
−Removed: Further, even if the integration is timely and effective, we may never realize the cost savings expected from the integration of the operations of our two companies.
−Removed: The announcement and pendency of the Merger may have an adverse effect on our business, financial condition, operating results and cash flows.
−Removed: On October 11, 2021, we entered into the Merger Agreement, relating to the proposed acquisition of Flexion.
−Removed: Following the completion of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Purchaser will merge with and into Flexion, with Flexion surviving as a wholly owned subsidiary of Pacira.
−Removed: Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, (i) each share of Flexion’s common stock that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined in the Merger Agreement)) will cease to be outstanding and will be converted into the right to receive $8.50 per Share in cash, net of applicable withholding taxes and without interest (the “Cash Amount”), plus (ii) one contingent value right per Share (the “CVR”, and together with the Cash Amount, the “Offer Price”), which will represent the right to receive one or more contingent payments up to $8.00 per Flexion Share in the aggregate (the “Milestone Payments”) upon the achievement of specified milestones pursuant to the terms of the Contingent Value Right Agreement in the form attached as Exhibit C to the Merger Agreement (the “CVR Agreement”) as further described below under the heading—CVR Agreement.
−Removed: Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, on October 22, 2021, Purchaser commenced the Offer to acquire all of the outstanding Flexion Shares, at an offer price of (i) $8.50 per Flexion Share in cash, net of applicable withholding taxes and without interest, plus (ii) one CVR per Flexion Share, which will represent the right to receive one or more contingent payments up to $8.00 per Flexion Share in the aggregate upon the achievement of specified milestones on or prior to December 31, 2030.
−Removed: Uncertainty about the effect of the proposed Merger on our employees, partners, customers and other third parties may disrupt our sales and marketing or other key business activities and may have a material adverse effect on our business,
−Removed: Pacira BioSciences, Inc.
−Removed: | Q3 2021 Form 10-Q | Page 46
−Removed: financial condition, operating results and cash flows.
−Removed: Current and prospective employees may experience uncertainty about their roles following the Merger, and this may have an effect on our corporate culture.
−Removed: There can be no assurance we will be able to attract and retain key talent to the same extent that we have previously been able to attract and retain employees.
−Removed: Any loss or distraction of such employees could have a material adverse effect on our business, financial condition and operating results.[2] In addition, we have devoted, and will continue to devote, significant management and other internal resources towards the completion of the Merger and planning for integration, which could materially adversely affect our business, financial condition, operating results and cash flows.
−Removed: The failure to complete the Merger in a timely manner or at all could negatively impact the market price of our common stock as it currently reflects an assumption that the transaction will be completed.
−Removed: It could also adversely affect our business, financial condition, operating results and cash flows.
−Removed: Completion of the Merger is subject to conditions beyond our control that may prevent, delay or otherwise adversely affect its completion in a material way, including, but not limited to, those described herein.
−Removed: The Merger cannot be completed until the conditions to closing are satisfied or (if permissible under applicable law) waived.
−Removed: These conditions are more fully described in the Tender Offer Statement on Schedule TO filed with the SEC on October 22, 2021 (together with any amendments and supplements thereto).
−Removed: We cannot guarantee that the closing conditions set forth in the Merger Agreement will be satisfied or, even if satisfied, that no event of termination will take place.
−Removed: Furthermore, if the Merger is significantly delayed or not completed, we may suffer other consequences that could adversely affect our business, results of operations and stock price, including the following:
−Removed: • we would have incurred significant costs in connection with the Merger that we would be unable to recover;
−Removed: • we may be subject to negative publicity or be negatively perceived by the investment or business communities;
−Removed: • we may be subject to additional legal proceedings related to the Merger;
−Removed: • any disruptions to our business resulting from the announcement and pendency of the Merger, including any adverse changes in our relationships with our customers, suppliers, other business partners and employees, may continue or intensify in the event the Merger is not consummated;
−Removed: • we may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures.
−Removed: There can be no assurance that our business, financial condition, operating results and cash flows will not be adversely affected, as compared to our condition prior to the announcement of the Merger, if the Merger is not consummated.
−Removed: We will incur transaction fees and costs in connection with the Merger.
−Removed: As of September 30, 2021, we have incurred $1.0 million of expenses and fees for professional services and other transaction costs in connection with the Merger and expect to continue to incur additional costs.
−Removed: A material portion of these expenses are payable by us whether or not the Merger is completed.
−Removed: While we have assumed that a certain amount of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses.
−Removed: Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.
−Removed: These expenses may exceed the costs historically borne by us.
−Removed: These costs could adversely affect our business, financial condition, operating results and cash flows.
−Removed: The patents and the patent applications that we have covering our multivesicular liposome products are limited to specific injectable formulations, processes and uses of drugs encapsulated in our multivesicular liposome 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.
−Removed: The active ingredient in EXPAREL is bupivacaine.
−Removed: Patent protection for the bupivacaine molecules themselves has expired and generic immediate-release products are available.
−Removed: 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 multivesicular liposome drug delivery technology.
−Removed: Pacira BioSciences, Inc.
−Removed: | Q3 2021 Form 10-Q | Page 47
−Removed: For example, we are aware of at least one FDA-approved long-acting instillable bupivacaine product on the market which utilizes an alternative delivery system to EXPAREL.
−Removed: 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 multivesicular liposome drug delivery technology.
−Removed: The number of patents and patent applications covering products in the same field as EXPAREL indicates that competitors have sought to develop and may seek to market competing formulations that may not be covered by our patents and patent applications.
−Removed: 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.
−Removed: 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.
−Removed: 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:
−Removed: (i) there is no patent information listed in the FDA’s Orange Book with respect to our NDA for EXPAREL;
−Removed: (ii) the patents listed in the Orange Book have expired;
−Removed: (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.
−Removed: 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.
−Removed: If the third-party submits a paragraph IV certification to the FDA, a notice of the paragraph IV certification must also be sent to us once the third-party’s ANDA is accepted for filing by the FDA.
−Removed: We may then initiate a lawsuit to defend the patents identified in the notice.
−Removed: The filing of a patent infringement lawsuit within 45 days of receipt of the notice automatically prevents the FDA from approving the third-party’s ANDA until the earliest of 30 months or the date on which the patent expires, the lawsuit is settled or the court reaches a decision in the infringement lawsuit in favor of the third-party.
−Removed: 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.
−Removed: 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.
−Removed: In October 2021, we received a Paragraph IV Certification Notice Letter advising that eVenus Pharmaceutical Laboratories, Inc., or eVenus, of Princeton, New Jersey, submitted an Abbreviated New Drug Application, or ANDA, to the FDA seeking authorization for the manufacturing and marketing of a generic version of EXPAREL in the U.S.
−Removed: In the Notice Letter, eVenus alleges that the claims of an FDA Orange Book-listed patent are invalid, unenforceable and/or will not be infringed by eVenus’s manufacture, use, or sale of the product described in eVenus’s ANDA submission.
−Removed: The FDA published rigorous criteria for proving bioequivalence to multivesicular liposomal bupivacaine in February 2018.
−Removed: Matching comparative characteristics must be conducted on at least three batches of an ANDA product with at least one batch manufactured at commercial scale and include liposome composition, internal aqueous environment of the liposome and in vitro drug release rates.
−Removed: We are currently assessing the Notice Letter and have 45 days from the date of receipt to commence a patent infringement lawsuit against eVenus.
−Removed: In the event that we bring a patent infringement lawsuit against eVenus, the FDA would enter a 30-month stay of final approval of eVenus’s ANDA.
−Removed: We intend to vigorously defend our intellectual property rights relating to EXPAREL.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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