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Item 1A. Risk Factors

2021-03-04 compared with 2020-03-05 · 283 added, 339 removed, 119 unchanged (84% of the section changed)

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These forward-looking statements and other information are subject to risks and uncertainties that could cause our actual results to differ materially from our historical results or currently anticipated results including the following:

Risks Related to Our Dependence on U.S.

Government Contracts

government contracts require ongoing funding decisions by the government, and the majority of the potential revenue under the 19C BARDA Contract is tied to options which may or may not be exercised at the sole discretion of BARDA.

Reduced or discontinued BARDA funding, or the non-exercise of contract options under the 19C BARDA contract, could cause our business, financial condition and operating results, to suffer materially.

The funding of government programs, which fund BARDA’s purchases under the 19C BARDA Contract, is subject to Congressional appropriations, generally made on a fiscal year basis even though a program may continue for several years.

Our government customers are subject to political considerations and budgetary constraints.

Our government customers are also subject to uncertainties as to continued funding of their budgets.

Additionally, government-funded contracts typically consist of a base period of performance and options for the performance of certain future activities.

Risks Related to Our Dependence on Government Contracts

Government contracts require ongoing funding decisions by governments.

A substantial percentage of potential contract revenues would come from the 19C BARDA Contract, and the majority of the potential revenue under the 19C BARDA Contract is tied to options which may or may not be exercised at the sole discretion of BARDA.

Reduced or discontinued BARDA funding, or the non-exercise of contract options under the 19C BARDA Contract, could cause our business, financial condition, results of operations and prospects to suffer materially.

Government-funded contracts typically consist of a base period of performance and options for the performance of certain future activities.

The value of goods and services subject to options may constitute the majority of the total value of the underlying contract, as in the case of the 19C BARDA Contract.

The 19C BARDA Contract is primarily option-based, with more than 80% of contract value tied to options which are exercisable in the sole discretion of BARDA.

There is no guarantee that any options will be exercised, or how many options will be exercised.

If some or all of the options under the 19C BARDA Contract are not exercised, whether because levels of government expenditures and authorizations for biodefense decrease or shift to programs other than those under which BARDA purchases are funded for any reason, our business, financial condition and operating results, our business development efforts or our product development efforts may suffer materially.

Government procurement contracts are mostly set at fixed prices and such pricing is based on estimates of the time, resources and expenses required to perform these contracts.

Our government customers are subject to political considerations and budgetary constraints, which result in uncertainties as to continued funding of their ongoing programs, including SIGA’s contracts.

More than 90% of remaining contract value of the 19C BARDA Contract is tied to options exercisable in the sole discretion of BARDA. There is no guarantee that any of the remaining options will be exercised, or if they are exercised when such exercise of options will occur.

If some of these options are not exercised, because levels of government expenditures and authorizations for biodefense decrease or shift to other programs, or for any other reason, our business, financial condition, results of operations and prospects may suffer materially.

Government procurement contracts are mostly set at fixed prices determined at inception of the contract based on estimates of the time, resources and expenses required to perform these contracts.

If our estimates are not accurate, we may not be able to earn an adequate return or may incur a loss under these arrangements.

The remaining unexercised options under the 19C BARDA Contract are predominately fixed-price.

Remaining unexercised options under current government procurement contracts, including the 19C BARDA Contract, are predominately fixed-price.

We expect that our future contracts with the U.S.

government for TPOXX® as well as contracts for other biodefense product candidates would also be fixed-price arrangements.

Under a fixed-price contract, we are required to deliver our products at a fixed price regardless of the actual costs we incur and to absorb any costs incurred in satisfaction of our obligations.

Estimating costs that are related to performance in accordance with contract specifications can be difficult, particularly where the period of performance is over several years.

Government and foreign governments for TPOXX®

as well as contracts for other biodefense product candidates would also be fixed-price arrangements.

Under a fixed-price contract, we are required to deliver our products at a fixed price determined at the inception of the contract regardless of the actual costs we incur, and to absorb any costs incurred in satisfaction of our obligations.

Our failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract could reduce the profitability of such contract or cause a loss, which could in turn negatively affect our operating results.

We expect future operating revenues to come significantly from contracts with BARDA for the provision and maintenance of the U.S.

Government’s stockpile of TPOXX®.

If BARDA does not enter into additional contracts after the 19C BARDA Contract to maintain or expand the stockpile of TPOXX®, our long-term business, financial condition and operating results could be materially harmed.

Government’s stockpile of TPOXX®.

The success of our business and our operating results for the foreseeable future will be substantially dependent on the U.S.

government’s commitment to maintaining or expanding its stockpile of TPOXX®.

Failure to secure and perform additional contracts after the 19C BARDA Contract to substantially maintain or expand the stockpile of TPOXX® could have a material adverse effect on our long-term business, financial condition and operating results.

Government’s commitment to maintaining or expanding its stockpile of TPOXX®.

Failure to secure and perform additional contracts after the 19C BARDA Contract to substantially maintain or expand the stockpile of TPOXX®

could have a material adverse effect on our long-term business, financial condition, results of operations and prospects.

Additionally, the 19C BARDA Contract does not necessarily increase the likelihood that we will secure future comparable contracts with the U.S.

The success of our business with the U.S.

government depends on our compliance with laws, regulations and obligations under our U.S.

government contracts and various federal statutes and authorities.

Laws and regulations affecting government contracts and grants might make it more costly and difficult for us to successfully conduct our business.

Our business with the U.S.

government is subject to specific procurement regulations and a variety of other legal and compliance obligations.

These laws and rules include those related to:

procurement integrity;

rates and pricing of services and goods to be reimbursed by the U.S.

export control;

government security regulations;

employment practices;

protection of the environment;

accuracy of records and the recording and reporting of costs;

foreign corrupt practices.

Federal Government, and any future business with state and local governmental agencies are subject to specific procurement regulations and a variety of other legal and compliance obligations.

These laws and rules include those related to procurement integrity, rates and pricing of services and goods to be reimbursed by the U.S.

Government, export control, government security regulations, employment practices, protection of the environment, accuracy of records and the recording and reporting of costs, and foreign corrupt practices. 

Among the most significant government contracting regulations that affect our business are:

the Federal Acquisition Regulation and other agency-specific regulations supplemental to the Federal Acquisition Regulation, which comprehensively regulate the procurement, formation, administration and performance of government contracts;

the business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act and the Foreign Corrupt Practices Act;

export and import control laws and regulations;

laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

Compliance with these obligations increases our performance and compliance costs.

A finding that we have failed to comply with these regulations and requirements could lead to suspension or debarment, for cause, from government contracting or subcontracting for a period of time.

The termination of a government contract or grant or relationship as a result of our failure to satisfy any of these obligations would have a material negative impact on our operations and harm our reputation and ability to procure other government contracts or grants in the future.

Failure to comply with these regulations and requirements could lead to suspension or debarment, for cause, from government contracting or subcontracting for a period of time.

The termination of a government contract as a result of our failure to satisfy any of these obligations would have a material negative impact on our operations and harm our reputation and ability to procure other government contracts or grants in the future.

Unfavorable provisions in government contracts and grants, some of which may be customary, may harm our future business, financial condition and potential operating results.

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cancel multi-year contracts or grants and related orders if funds for performance for any subsequent year become unavailable;

decline to exercise an option to renew a contract or grant;

decline to exercise an option to renew, or to exercise the maximum amount specified in, a contract or grant;

exercise an option to purchase only the minimum amount specified in a contract or grant;

decline to exercise an option to purchase the maximum amount specified in a contract or grant;

claim rights to products, including intellectual property, developed under a contract or grant;

claim rights to products or assets, including intellectual property, developed under a contract or grant;

take actions that result in a longer development timeline or higher costs than expected;

suspend or debar the contractor from doing business with the government or a specific government agency due to regulatory or compliance failures;

suspend or debar a contractor from doing business with the government or a specific government agency due to regulatory or compliance failures;

pursue criminal or civil remedies under the False Claims Act and the False Statements Accountability Act;

control or prohibit the export of products.

Generally, government contracts contain provisions permitting unilateral termination or modification, in whole or in part, at the government’s convenience.

Under general principles of government contracting law, if the government terminates a contract or grant for convenience, the terminated company may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination.

If the government terminates a contract or grant for default, the defaulting company is entitled to recover costs incurred and associated profits on accepted items only and may be liable for excess costs incurred by

the government in procuring undelivered items from another source.

Our government contracts and grants, including the 19C BARDA Contract, could be terminated under these circumstances.

Some government contracts and grants permit the government the right to use, for or on behalf of the U.S.

government, any technologies developed by the contractor under a government contract.

For any technology we develop under a contract or grant with such a provision, we might not be able to prohibit third parties, including our competitors, from using that technology in providing products and services to the government.

Changing political or social factors and opposition, including protests and potential related litigation, may delay or impair our ability to market TPOXX® and any other biodefense product candidates and may require us to spend time and money to address these issues.

Products developed to treat diseases caused by or to combat the threat of bioterrorism or biowarfare will be subject to changing political and social environments.

The political and social responses to bioterrorism and biowarfare have been unpredictable and much debated.

Changes in the perception of the risk that military personnel or civilians could be exposed to biological agents as weapons of bioterrorism or biowarfare may delay or cause resistance to bringing investigational products to market or limit pricing or purchases of approved products, any of which could materially harm our business.

Lawsuits, publicity campaigns or other negative publicity may adversely affect the degree of market acceptance of, and thereby limit the demand for, TPOXX® and our biodefense product candidates.

In such event, our ability to market and sell such products may be hindered, the commercial success of TPOXX® and other products we develop may be harmed and we may need to expend time, attention and resources addressing such legal or publicity issues, thereby reducing our revenues and having a material adverse impact on us.

Government shutdown could negatively impact our business and liquidity

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Congress must pass all spending bills in the federal budget.

If any such spending bill is not timely passed, a government shutdown may close many federally run operations, and halt work for federal employees unless they are considered essential or such work is separately funded by industry.

If a government shutdown were to occur, we could experience a delay in contract funding decisions by the government.

Additionally, we could be materially and permanently harmed by any prolonged government shutdown.

Risks Related to Sales of Biodefense Products to the U.S.

Additionally, we could be materially harmed by any prolonged government shutdown.

Our business could be adversely affected by a negative audit by the U.S.

government agencies such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors.

These agencies review a contractor’s performance under its contracts and grants, cost structure, and compliance with applicable laws, regulations and standards.

The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.

Government agencies such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors.

These agencies review a contractor’s performance under its contracts and grants, cost structure, and compliance with applicable laws, regulations and standards.

Any cost found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded.

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including:

termination of contracts;

forfeiture of profits;

suspension of payments;

suspension, debarment or prohibition from doing business with the U.S.

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension, debarment or prohibition from doing business with the U.S.

Government. 

Such actions would also negatively affect our reputation.

Laws and regulations affecting government contracts and grants might make it more costly and difficult for us to conduct our business.

We must comply with numerous laws and regulations relating to the formation, administration and performance of government contracts and grants, which can make it more difficult for us to retain our rights under these contracts.

These laws and regulations affect how we do business with federal, state and local governmental agencies.

Among the most significant government contracting regulations that affect our business are:

the business ethics and public integrity obligations, which govern conflicts of interest and the hiring of

former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act and the Foreign Corrupt Practices Act;

export and import control laws and regulations;

laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

Risks Related to Regulatory Approvals

If we are not able to obtain regulatory approvals for certain additional indications or formulations of TPOXX® from the FDA, we may not be able to realize the full benefits of any BARDA contracts and may not be able to commercialize such formulations or indications other than through sales to BARDA, and our ability to generate revenue could be materially impaired.

The development and full commercialization of additional indications or formulations of TPOXX® in the U.S., including the testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries and jurisdictions.

We could fail to achieve FDA or other regulatory approval of certain indications or formulations of TPOXX®, or there could be delays in such approval of TPOXX®, or the approved version of TPOXX® may differ from expectations.

Failure to obtain regulatory approval of certain indications or formulations for TPOXX® may prevent us from fully commercializing TPOXX® in the United States other than through sales to BARDA under Project BioShield or from commercializing TPOXX® in other countries at all, and delays or alterations to regulatory applications could also have a material adverse effect on the Company.

If we are not able to obtain regulatory approvals for certain additional indications or formulations of TPOXX®

from the FDA, we may not be able to realize the full benefits of any BARDA contracts and may not be able to commercialize such formulations or indications other than through existing sales to BARDA, and our ability to generate future revenue could be materially impaired.

The development and full commercialization of additional indications or formulations of TPOXX®

in the U.S., such as the intravenous formulation or indication of use for post-exposure prophylaxis, including the testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries and jurisdictions.

We could fail to achieve FDA or other regulatory approval of certain indications or formulations of TPOXX®, or there could be delays in such approval of TPOXX®, or the approved labeling for such indications or formulations of TPOXX®

may differ from expectations.

Failure to obtain regulatory approval of certain indications or formulations for TPOXX®

may prevent us from fully commercializing TPOXX®

in the United States other than through existing sales to BARDA and may impact other regulatory authorities' review of TPOXX®, which in turn, could adversely impact commercializing TPOXX®

in other countries, and such delays or required alterations to regulatory applications could also have a material adverse effect on the Company.

Failure to obtain regulatory approval in international jurisdictions could prevent us from marketing our products abroad.

To market our products in the European Union and many other foreign jurisdictions, we may need to obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.

The approval procedure varies among countries and can involve additional testing.

The time required to obtain approval may differ from that required to obtain FDA approval.

The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval.

To market our products in Canada, the European Union and certain other foreign jurisdictions, we may need to obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.

The approval procedure varies among countries and can involve additional testing and differing manufacturing or labeling requirements.

Complying with such requirements may take additional time prior to approval and delay commercial activities in those jurisdictions.

The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval for expanded indications or new formulations of TPOXX®.

We may not obtain foreign regulatory approvals on a timely basis, if at all.

Approval by FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA.

In addition, failure to obtain approval in one jurisdiction may impact our ability to obtain approval elsewhere.

We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any non-U.S.

If we fail to obtain the non-U.S.

approvals required to market our product candidates outside the United States or if we fail to comply with applicable non-U.S.

regulatory requirements, our target market may be reduced and our ability to realize the full market potential of our product candidates may be harmed and our business, financial condition, results of operations and prospects may be adversely affected.

Regulatory approval by the FDA, which we obtained for oral TPOXX®, or by a foreign regulatory authority such as Canada or the European Medicines Agency (EMA) does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA for expanded indications or new formulations.

In addition, failure to obtain approval in one jurisdiction may impact our ability to obtain approvals elsewhere.

We may not be able to file for or receive necessary regulatory approvals to commercialize our products in any non-U.S.

market, in which case, our target market may be reduced and our ability to realize the full market potential of our product candidates may be harmed and our business, financial condition, results of operations and prospects may be adversely affected.

Risks Related to Commercial Activities

Because we must obtain regulatory clearance or otherwise operate under strict legal requirements in order to manufacture and market our products in the U.S., we cannot predict whether or when we will be permitted to commercialize our products other than the oral formulation of TPOXX® for smallpox antiviral treatment.

While we have received FDA approval for oral TPOXX® for use in smallpox treatment, we have not received FDA approval for the IV formulation of TPOXX® or any other indications for TPOXX®.

FDA approval is limited only to those conditions for which a product is demonstrated through clinical trials to be safe and efficacious as set forth in its approved product label.

We cannot ensure that other formulations of TPOXX® or any other compound developed by us, alone or with others, will prove to be safe and efficacious in pre-clinical or clinical trials or animal efficacy studies, or that oral TPOXX® will prove to be safe and efficacious in pre-clinical or clinical trials or animal efficacy studies for other indications, nor whether all of the applicable regulatory requirements needed to receive full marketing clearance for other indications or other formulations will be met.

Our ability to grow our business may depend in part on our ability to achieve sales of TPOXX® to customers other than the U.S.

An element of our business strategy is to sell TPOXX® to customers other than the U.S.

These potential customers include foreign governments, as well as state and local governments, non-governmental organizations focused on global health like the World Health Organization, health care institutions like hospitals (domestic and foreign) and certain large business organizations interested in protecting their employees against global threats and protecting first responders in cases of emergencies.

To the extent we seek such non-government sales in the U.S., we will need to meet additional regulatory requirements in light of the current labeling approved by the FDA for the Strategic Stockpile only.

The market for sales of TPOXX® to customers other than the U.S.

government is undeveloped, and we may not be successful in generating meaningful sales of TPOXX®, if any, to these potential customers.

If we fail to increase our sales of TPOXX® to customers other than the U.S.

We cannot predict whether or when we will be permitted to commercialize TPOXX ®

 other than the oral formulation for smallpox treatment.

We have only received FDA approval for the oral formulation of TPOXX®, not the intravenous or liquid suspension/pediatric formulation, or any other indication beyond treatment for smallpox, for TPOXX®. Because pharmaceutical manufacturers are only permitted to commercialize indications and formulations that have received FDA approval (or in other jurisdictions according to their applicable regulatory and legal frameworks), any regulatory or legal setbacks as described above could have an adverse impact on the Company’s ability to sell other formulations or for other uses of TPOXX®

pending such approvals.

Changing political or social factors and opposition, including protests and potential related litigation, may delay or impair our ability to market TPOXX®

and any other biodefense product candidates and may require us to spend time and money to address these issues.

Products developed to treat diseases caused by or to combat the threat of bioterrorism or biowarfare will be subject to changing political and social environments.

The political and social responses to bioterrorism and biowarfare have been unpredictable and much debated.

Lawsuits, publicity campaigns or other negative publicity may adversely affect the degree of market acceptance of, and thereby limit the demand for, TPOXX®

and our biodefense product candidates.

In such event, our ability to market and sell such products may be hindered, the commercial success of TPOXX®

and other products we develop may be harmed and we may need to expend time, attention and resources addressing such legal or publicity issues, thereby reducing our revenues and having a material adverse impact on us.

Our ability to grow our business may depend in part on our ability to achieve sales of TPOXX®

to customers other than the U.S.

An element of our business strategy is to sell TPOXX®

internationally to foreign governments, as well as to customers other than the U.S.

These potential non-U.S.

Government customers include foreign governments, as well as state and local governments, non-governmental organizations focused on global health like the World Health Organization, health care institutions like hospitals (domestic and foreign) and certain large business organizations interested in protecting their employees against global threats and protecting first responders in cases of emergencies.

To the extent we seek such non-government sales in the U.S., we may need to meet additional regulatory requirements.

The market for sales of TPOXX®

customers other than the U.S.

Government is undeveloped, and we may not be successful in generating meaningful sales of TPOXX®, if any, to these potential customers.

If we fail to increase our sales of TPOXX®

to customers other than the U.S.

Government, our business and opportunities for growth could be limited.

If we are unable to expand our internal sales and marketing capabilities or enter into agreements with third parties with expertise in sales and marketing, we may be unable to generate cash flows from product sales to customers other than the U.S.

To achieve commercial success for any approved product, we may need to enhance our own sales and marketing capabilities, enter into collaborations with third parties able to perform these services or outsource these functions to third parties.

We recently entered into the International Promotion Agreement described under “Business”, pursuant to which we granted a third party, Meridian, exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in all geographic regions except for the United States and South Korea (the “Territory”), and Meridian agreed not to commercialize any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory.

Our future revenues may depend heavily on the success of the efforts of Meridian pursuant to the International Promotion Agreement, which may not be successful.

In the United States and South Korean markets, we will retain sales and marketing rights with respect to oral TPOXX®.

In these markets, we currently employ a small, targeted group to support development and business activities related to TPOXX®.

For the South Korean market, we are continually assessing the best approach for business development.

Even if we deem it necessary or advisable, we may have difficulty establishing relationships with third parties with respect to this market on terms that are acceptable to us or at all.

For the United States market, we plan to continue our current approach for sales to the U.S.

We expect our future international revenues to depend heavily on the success of the efforts of Meridian pursuant to an International Promotion Agreement, which may not be successful. 

Pursuant to the International Promotion Agreement described under “Business," we granted a third party, Meridian Medical Technologies, a division of Pfizer, exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX®

in all geographic regions except for the United States (the “Territory”), and Meridian agreed not to commercialize any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory. 

Our future international revenues will likely depend heavily on the success of the efforts of Meridian pursuant to the International Promotion Agreement, which may not be successful.

If we are unable to expand our internal sales and marketing capabilities or enter into agreements with third parties with expertise in sales and marketing, we may be unable to expand our sales of TPOXX®

or other product candidates in the U.S., including to 

customers other than the U.S.

In the United States market, we have retained all sales and marketing rights with respect to oral TPOXX®.

In this market, we currently employ a small, targeted group to support development and business activities related to TPOXX®. We plan to continue our current approach for sales to the U.S.

Government of any other biodefense product candidates that we may successfully develop.

If we are unable to adequately support our development and business activities in the United States, we may be unable to expand our sales of TPOXX® or other product candidates, which could have an adverse effect on our growth.

We may be required to perform additional clinical trials or change the labeling of TPOXX® if we or others identify side effects after we are on the market, which could harm future sales of such product.

This approach may prove insufficient to adequately support our development and business activities in the United States.

In order to expand our sales of TPOXX®

or other product candidates in the U.S., including to U.S.

customers other than the U.S.

Government, we may need to enhance our own sales and marketing capabilities, and/or enter into collaborations with third parties able to perform these services or outsource these functions to third parties. 

There is no assurance that we will be able to do so successfully, and even if we are able to do so that it will have a significant impact on our growth or profitability.

Although TPOXX®

is currently stockpiled only by the U.S.

and Canadian governments and not sold commercially, in the future we may be required to perform additional clinical trials or change the labeling of TPOXX®

if we or others identify side effects after we are on the market, which could harm future sales of such product.

If we or others identify side effects of any approved product, or if manufacturing problems occur:

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Any of the above occurrences could harm or prevent future sales of the affected product or could increase the costs and expenses of commercializing and marketing these products.

The biopharmaceutical market in which we compete and will compete is highly competitive.

The biopharmaceutical industry is characterized by rapid and significant technological change.

Our success will depend on our ability to develop and apply our technologies in the design and development of our product candidates and to establish and maintain a market for our product candidates.

In addition, there are many companies, both public and private, including major pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions engaged in developing pharmaceutical and biotechnology products.

Many of these companies have substantially greater financial, technical, research and development resources, and human resources than us.

Competitors may develop products or other technologies that are more effective than any that are being developed by us or may obtain FDA approval for products more rapidly than us.

If we commence commercial sales of products, we still must compete in the manufacturing and marketing of such products, areas in which it is very difficult to succeed and in which we have limited experience and in which we are partially dependent on third parties.

Many potential competitors have manufacturing facilities and established marketing capabilities that would enable such companies to market competing products through existing channels of distribution which could provide a substantial advantage.

Product liability lawsuits could cause us to incur liabilities, which could be substantial, and require us to limit commercialization of any products that we may develop.

We face an inherent business risk related to the sale of TPOXX® and any other products that we successfully develop and the testing of our product candidates in clinical trials.

TPOXX® is currently identified as a covered countermeasure under the PREP Act declaration issued in October 2008, as amended, which provides us with substantial immunity with respect to the manufacture, administration or use of TPOXX®.

Under our BARDA Contracts, the U.S.

government should indemnify us against claims by third parties for death, personal injury and other damages related to TPOXX®, including reasonable litigation and settlement costs, to the extent that the claim or loss results from specified risks not covered by insurance or caused by our grossly negligent or criminal behavior.

The collection process under the PREP Act can be lengthy and complicated, and there is no guarantee that we will be able to recover these amounts from the U.S.

If we cannot successfully defend ourselves against future claims that our product or product candidates caused injuries and we are not entitled to or able to obtain indemnity by the U.S.

government with respect to such claims, or if the U.S.

government does not honor its indemnification obligations, we may incur liabilities, which could be substantial.

Regardless of merit or eventual outcome, product liability claims may result in:

decreased demand for any product candidate or product that we may develop;

injury to our reputation;

withdrawal of a product from the market;

costs and management time and focus to defend the related litigation;

substantial monetary awards to trial participants or patients;

loss of revenue;

harm to our reputation;

the inability to commercialize any products that we may develop.

We currently have product liability insurance with coverage up to a $10 million annual aggregate limit and a $10 million per occurrence limit.

The amount of insurance that we currently hold may not be adequate to cover all liabilities that may occur.

Product liability insurance is difficult to obtain and increasingly expensive.

We may not be able to maintain insurance coverage at a reasonable cost and we may not be able to maintain or obtain insurance coverage that will be adequate to satisfy any liability that may arise.

Additionally, a successful product liability claim or series of claims brought against us could cause our stock price to fall, could decrease our financial resources and materially exhaust our existing insurance or limit our ability to obtain insurance going forward, all of which would materially adversely affect our business.

If we seek to sell TPOXX ® to non-government customers , healthcare reform and controls on healthcare spending may limit the price we charge for our products and the amounts that we can sell.

There have been a number of legislative and regulatory proposals in the United States to change the health care system in ways that could affect our ability to sell our products profitably if we seek to sell TPOXX® to non-government customers.

One enacted proposal, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Healthcare Reform Act”), substantially changed the way healthcare is financed by both governmental and private insurers and could have a substantial effect on the pharmaceutical industry.

The Healthcare Reform Act contains a number of provisions, including those governing enrollment in federal healthcare programs like Medicare, reimbursement changes and rules protecting against fraud and abuse that will change existing healthcare programs and will result in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

If we obtain marketing approval for sale of TPOXX® beyond the Strategic Stockpile, it is possible that some of our revenue may be derived from governmental healthcare programs, including Medicare.

Furthermore, beginning in 2011, the Healthcare Reform Act imposed a non-deductible excise tax on pharmaceutical manufacturers or importers who sell “branded prescription drugs,” which includes innovator drugs and biologics (excluding orphan drugs or generics) to U.S.

If we obtain the necessary marketing approval to sell TPOXX ®

to non-government customers and are able to charge higher prices than we do to the U.S.

Government , healthcare reform and controls on healthcare spending may nonetheless limit the price we charge for our products and the amounts that we can sell.

There have been a number of legislative and regulatory proposals in the United States to change the health care system in ways that could affect pricing if we seek to sell TPOXX®

to non-government customers.

One enacted proposal, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Healthcare Reform Act”), substantially changed the way healthcare is financed by both governmental and private insurers and had a substantial effect on the pharmaceutical industry.

If we obtain marketing approval for sale of TPOXX®

beyond the U.S.

government customers and are able to charge higher prices than we do to the U.S.

Government, healthcare reform and controls on healthcare spending may nonetheless limit the price we charge for our products and the amounts that we can sell.

For example, it is possible that some of our revenue may be derived from governmental healthcare programs, including Medicare.

Furthermore, beginning in 2011, the Healthcare Reform Act imposed a non-deductible excise tax on pharmaceutical manufacturers or importers who sell “branded prescription drugs,”

which includes innovator drugs and biologics (excluding orphan drugs or generics) to U.S.

Government programs.

The Healthcare Reform Act and other healthcare reform measures that may be adopted in the future could have an adverse effect on our industry generally and potential future sales and profitability of our current or future products specifically.

Laws and regulations governing international operations may preclude us from developing, manufacturing and selling certain product candidates outside of the United States and require us to revise and implement costly compliance programs.

If we expand our operations outside of the United States, we must comply with numerous laws and regulations relating to business operations in each jurisdiction in which we plan to operate.

The creation and implementation of international business practices and compliance programs may be costly and such programs can be difficult to enforce, particularly where reliance on third parties is required.

Laws and regulations governing international operations may hinder us from developing, manufacturing and selling certain product candidates outside of the United States and require us to revise and implement costly compliance programs.

As we expand our operations outside of the United States, we must comply with numerous laws and regulations relating to business operations in each jurisdiction in which we plan to operate.

The creation and implementation of international business practices and compliance programs may be time-consuming and costly, and such programs can be challenging to oversee and to enforce, particularly where reliance on third parties is required.

The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S.

individual or business from paying, offering, or authorizing payment or offering anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the Company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

The anti-bribery provisions of the FCPA are enforced primarily by the U.S.

Department of Justice.

The SEC is involved with enforcement of the books and records provisions of the FCPA.

If we expand our operations outside of the U.S., compliance with the FCPA may be expensive and can be difficult, particularly in countries in which corruption is a recognized problem.

In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials.

Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

As we expand our operations outside of the U.S., compliance with the FCPA, U.K.

Bribery Act and similar anti-corruption provisions in other jurisdictions may be expensive and can be difficult, particularly in countries in which corruption is a recognized problem. Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

In addition, biodefense companies like SIGA often sell their products directly to foreign governments.

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nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products.

If we expand our presence outside of the United States, it may require us to dedicate additional resources to compliance with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

As we expand our presence outside of the United States, we may require additional resources to ensure compliance with these laws.

The failure to comply with laws governing international business practices may result in substantial penalties, including suspension or debarment from government contracting.

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The termination of a government contract or relationship as a result of our failure to satisfy any of our obligations under laws governing international business practices could have a material negative impact on our operations and harm our reputation and ability to procure government contracts.

The SEC also may suspend or bar issuers from trading securities on United States exchanges for violations of the FCPA’s accounting provisions.

Other countries such as the UK have anti-bribery laws similar to or more expansive in scope than the FCPA which may be applicable to our operations if we expand outside the U.S.

In connection with our International Promotion Agreement with Meridian, Meridian will serve as the entity that markets and promotes oral TPOXX® (except in the U.S.

and South Korea) and will be the counterparty to any agreements with covered foreign jurisdictions.

As such, Meridian will be responsible for anti-corruption compliance related to their activities.

The SEC also may suspend or bar issuers from trading securities on United States exchanges for violations of the FCPA’s accounting provisions.

Other countries such as the UK have anti-bribery laws similar to or more expansive in scope than the FCPA which may be applicable to our operations as we expand outside the U.S.

In connection with our International Promotion Agreement with Meridian, Meridian will serve as the entity that markets and promotes oral TPOXX®

(except in the United States) and will be the counterparty to any agreements with covered foreign jurisdictions.

As such, Meridian will be responsible for anti-corruption compliance related to its activities.

We could incur net losses in the future if options are not exercised under the 19C BARDA Contract.

While our current cash position is strong, our ability to continue to fund future operations will be substantially impacted by cash flows from the 19C BARDA Contract, which may not be sufficient if BARDA elects, in its sole discretion, not to exercise or to significantly delay exercise of some or all of the remaining options under the 19C BARDA Contract.

If cash flows from the 19C BARDA Contract are significantly different from expectations, or if operating expenses or other expenses meaningfully exceed our expectations or cannot be adjusted accordingly, then our business, financial condition, results of operations and prospects could be materially adversely affected.

Risks Related to Manufacturing, Storage and Our Dependence on Third Parties

If third parties on whom we rely for manufacturing and raw materials of TPOXX®, and managing our inventory, do not perform as contractually required or as we expect, we may not be able to successfully satisfy our obligations under the 19C BARDA Contract and our business would suffer.

We currently rely on third-party manufacturers and service providers to provide raw materials and manufacture, package, test and ship TPOXX®.

Under the 19C BARDA Contract, we are responsible for the performance of these third-party contractors, and our contracts with these third parties give us certain supervisory and quality control rights, but we do not exercise day-to-day control over their activities.

Additionally, we may rely on a third-party provider, or multiple providers, to store or transport a portion of the stockpile of IV TPOXX®

under the 19C BARDA Contract, entrusting such vendor or vendors with the care and handling of a substantial portion of IV TPOXX®

If a third-party provider fails to comply with applicable laws and regulations, fails to meet expected deadlines, fails to conduct trials in accordance with regulatory requirements or our stated protocols, experiences shortages or delays, or otherwise does not carry out its contractual duties to us, or encounters physical damage or natural disaster or disruptions at its facilities, for example as a result of the novel coronavirus COVID-19 pandemic, our ability to meet our obligations under the 19C BARDA Contract or to develop, obtain approval and commercialization of IV TPOXX®

or other drug candidates, could be significantly impaired or delayed.

We do not currently have the internal capacity to perform these important functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.

If third parties do not manufacture our drug candidates or products in sufficient quantities and at an acceptable cost or in compliance with regulatory or contractual requirements and specifications, the fulfillment of contractual requirements under the 19C BARDA Contract, or any other procurement contract, or the development of our drug candidates could be delayed, prevented or impaired.

If our contract manufacturers are unable to generate enough materials to meet commercial obligations or satisfy clinical needs, for example as a result of disruption resulting from the novel coronavirus COVID-19 pandemic, the success of drug products may be jeopardized.

Our current and anticipated future dependence upon others for the manufacture of our drug candidates may adversely affect our ability to develop drug candidates and perform on commercial contracts on a timely and competitive basis.

If our third-party manufacturers’

production processes malfunction or contaminate our drug supplies during manufacturing, we may incur significant inventory loss that may not be covered by our contractual provisions or insurance policies.

We currently rely on third parties to demonstrate regulatory compliance, for regulatory and science support and for quality assurance with respect to the drug candidates manufactured for us.

We intend to continue to rely on these third parties for these purposes with respect to production of commercial supplies of drugs that we successfully develop.

Manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state and foreign agencies or their designees to ensure strict compliance with applicable laws and regulations.

We cannot be certain that our present or future manufacturers will be able to comply with these regulations and other FDA regulatory requirements or similar regulatory requirements outside the U.S.

In addition, due to the novel coronavirus COVID-19 pandemic, regulatory authorities may not conduct required inspections at our CMO facilities, and without such inspections, drug approvals could be delayed.

Our government contracts and grants call for compliance with all applicable legal and regulatory requirements, however, we do not control third-party manufacturers and their methods for ensuring adherence to regulatory and legal standards.

If we or these third parties fail to comply with applicable regulations, sanctions could be imposed on us which could significantly delay and adversely affect supplies of our drug candidates.

Problems related to large-scale commercial manufacturing could cause an increase in costs or shortages of products or a delay in product launches.

Manufacturing API and finished drug products, especially in large quantities, is complex.

Our products require several manufacturing steps at multiple facilities, and may involve complex techniques to assure quality and sufficient quantity, especially as the manufacturing scale increases.

Our products must be made consistently and in compliance with a clearly defined manufacturing process.

Accordingly, it is essential to be able to validate and control the manufacturing process to assure that it is reproducible.

Slight deviations anywhere in the manufacturing process, including obtaining materials, filling, labeling, packaging, storage, shipping, quality control and testing, some of which all pharmaceutical companies, including SIGA, experience from time to time, may result in lot failures, delay in the release of lots, product recalls or spoilage.

Success rates can vary dramatically at different stages of the manufacturing process, which can lower yields and increase costs.

We may experience deviations in the manufacturing process that may take significant time and resources to resolve and, if unresolved, may affect manufacturing output and/or cause us to fail to satisfy contractual commitments, lead to delays in our clinical trials or result in litigation or regulatory action.

Such actions would hinder our ability to meet contractual obligations and could cause material adverse consequences for our business.

Risks Related to Product Development

Growth of our business may be impacted significantly by our success in completing development and commercialization of drug candidates, or additional indications for TPOXX®.

If we are unable to commercialize new drug candidates or additional indications, or experience significant delays in doing so, our business may be materially harmed.

Growth of our business may be impacted significantly by our success in completing development and commercialization of drug candidates, new formulations or additional indications for TPOXX®.

If we are unable to commercialize new drug candidates, new formulations, or additional indications, or experience significant delays in doing so, our business may be materially harmed.

We have invested a substantial amount of our efforts and financial resources in the development of our drug candidates.

Our ability to generate near-term cash flows is primarily dependent on the success of our smallpox antiviral drug TPOXX®, which has only been approved by the FDA in oral form.

The commercial success of our current and future drug candidates, or additional indications for TPOXX®, will depend on many factors, including:

Our ability to generate near-term cash flows is primarily dependent on the success of our smallpox antiviral drug TPOXX®, which has only been approved by the FDA in oral form.

The commercial success of our current and future drug candidates, new formulations or additional indications for TPOXX®, will depend on many factors, including:

successful development, formulation and cGMP scale-up of drug manufacturing that meets FDA requirements;

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successful completion of clinical trials;

receipt of marketing approvals from FDA for IV TPOXX® and similar foreign regulatory authorities;

receipt of marketing approvals from FDA for IV and liquid suspension/pediatric formulations of TPOXX®

and similar foreign regulatory authorities;

establishing arrangements on reasonable terms with suppliers and contract manufacturers;

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acceptance of the product by potential government customers, public health experts, physicians, patients, healthcare payors and others in the medical community.

We may rely on FDA regulations known as the “Animal Rule” to obtain approval for most of our biodefense drug candidates.

We may rely on FDA regulations known as the “Animal Rule”

to obtain approval for most of our biodefense drug candidates.

The Animal Rule permits the use of animal efficacy studies together with human clinical safety trials to support an application for marketing approval.

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It is possible that results from these animal efficacy studies may not be predictive of the actual efficacy of our drug candidates in humans.

If we are not successful in completing the development and commercialization of our drug candidates, whether due to our efforts or due to concerns raised by our governmental regulators or customers, our business could be materially adversely harmed.

We may not be able to fully commercialize the IV formulation of TPOXX®, or other additional indications for TPOXX®, if our clinical trials do not demonstrate adequate safety or our animal studies do not demonstrate adequate efficacy.

We may not be able to fully commercialize the IV and liquid suspension/pediatric formulation of TPOXX®, or other additional indications for TPOXX®, if our clinical trials do not demonstrate adequate safety or our animal studies do not demonstrate adequate efficacy.

Before obtaining regulatory approval for the sale of our drug candidates, extensive development is required.

The goal of development is to use clinical studies to demonstrate the safety of our drug candidates and animal trials to demonstrate the efficacy of our drug candidates.

Clinical trials and animal studies, and related work, are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome.

Clinical trials and animal studies, and related work, are resource-intensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome.

Success in pre-clinical testing and early clinical trials does not ensure that later clinical trials or animal efficacy studies will be successful, and interim results of a clinical trial or animal efficacy study do not necessarily predict final results.

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regulators or institutional review boards may require that we hold, suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements;

the cost of our clinical trials could escalate and become cost prohibitive;

the resources required to manage and oversee our clinical trials could escalate and become cost prohibitive;

our governmental regulators may impose requirements on clinical trials, pre-clinical trials or animal efficacy studies that we cannot meet or that may prohibit or limit our ability to perform or complete the necessary testing in order to obtain regulatory approval;

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the effects of our drug candidates may not be the desired effects or may include undesirable side effects or the drug candidates may have other unexpected characteristics;

the costs, regulations, or challenges associated with animal studies may increase and make our studies more difficult.

IV TPOXX® is currently in product development and there can be no assurance of successful commercialization beyond the 19C BARDA contract.

The fact that the FDA has approved the oral formulation of TPOXX® does not guarantee that our approach to drug development will be effective or will result in the successful commercialization of any other drug, the IV formulation of TPOXX® or any new indication of TPOXX®.

the required resources, regulations, or challenges associated with animal studies may increase and make our studies more difficult.

IV and Liquid Suspension/Pediatric TPOXX®

formulations are currently in product development and there can be no assurance of successful development or ultimate commercialization beyond the 19C BARDA Contract.

The fact that the FDA has approved the oral formulation of TPOXX®

does not guarantee that our approach to drug development will be effective or will result in the successful commercialization of the IV or liquid suspension/pediatric formulation of TPOXX®, any new indication such as post-exposure prophylaxis, of TPOXX® or any other drug.

We cannot predict with certainty whether any other drug candidate or expanded indication resulting from our research and development efforts will be approved by the FDA.

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In addition, third parties may seek to preclude us from marketing our drugs through enforcement of their proprietary or intellectual property rights that we are not aware of, or third parties may succeed in marketing equivalent or superior drug products that do not infringe our intellectual property.

Our failure to develop safe, commercially viable future drug candidates or obtain approval for expanded indications and formulations of TPOXX® would have a material adverse effect on our ability to grow our business, and impair our financial condition and operations.

Risks Related to Our Dependence on Third Parties

We currently rely on third-party manufacturers and service providers to provide raw materials and manufacture, package, test and ship TPOXX®.

Additionally, we may rely on a third-party provider, or multiple providers, to store a portion of the stockpile of IV TPOXX® under the 19C BARDA Contract, entrusting such vendor or vendors with the care and handling of a substantial portion of our inventory of IV TPOXX®.

If a third-party provider fails to comply with applicable laws and regulations, fails to meet expected deadlines, experiences shortages or delays, or otherwise does not carry out its contractual duties to us, or encounters physical damage or natural disaster or disruptions at its facilities, for example as a result of the coronavirus outbreak, our ability to meet our obligations under the 19C BARDA Contract could be significantly impaired.

We do not currently have the internal capacity to perform these important functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.

Our reliance on third parties that we do not control does not relieve us of the responsibilities and requirements imposed by the 19C BARDA Contract.

Third parties may not complete activities on schedule, or may not conduct trials in accordance with regulatory requirements or our stated protocols.

The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of IV TPOXX® or other drug candidates.

Risks Related to Manufacturing and Manufacturing Facilities

Problems related to large-scale commercial manufacturing could cause us to delay product launches, an increase in costs or shortages of products.

Manufacturing API and finished drug products, especially in large quantities, is complex.

Our drug candidates require several manufacturing steps at multiple facilities, and may involve complex techniques to assure quality and sufficient quantity, especially as the manufacturing scale increases.

Our products must be made consistently and in compliance with a clearly defined manufacturing process.

Accordingly, it is essential to be able to validate and control the manufacturing process to assure that it is reproducible.

Success rates can vary dramatically at different stages of the manufacturing process, which can lower yields and increase costs.

Such actions would hinder our ability to meet contractual obligations and could cause material adverse consequences for our business.

We currently rely on third parties to manufacture drug candidates, including TPOXX®.

Any significant delay in obtaining adequate supplies of our drug candidates could adversely affect our ability to develop drug candidates or perform commercial contracts.

If our contract manufacturers are unable to generate enough materials to meet commercial obligations or satisfy clinical needs, for example as a result of disruption resulting from the coronavirus outbreak, the success of drug products may be jeopardized.

If our third-party manufacturers’ production processes malfunction or contaminate our drug supplies during manufacturing, we may incur significant inventory loss that may not be covered by our contractual provisions or insurance policies.

We currently rely on third parties to demonstrate regulatory compliance, for regulatory and science support and for quality assurance with respect to the drug candidates manufactured for us.

We intend to continue to rely on these third parties for these purposes with respect to production of commercial supplies of drugs that we successfully develop.

We cannot be certain that our present or future manufacturers will be able to comply with these regulations and other FDA regulatory requirements or similar regulatory requirements outside the U.S.

Our contracts and grants call for compliance with all applicable legal and regulatory requirements, however, we do not control third-party manufacturers and their methods for ensuring adherence to regulatory and legal standards.

If we or these third parties fail to comply with applicable regulations, sanctions could be imposed on us which could significantly delay and adversely affect supplies of our drug candidates.

Our activities may involve hazardous materials, use of which may subject us to environmental regulatory liabilities.

Our biopharmaceutical research and development sometimes may involve the use of hazardous and radioactive materials and generation of biological waste.

We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and certain waste products.

Although we believe that our CMO's safety procedures for handling and disposing of these materials comply with legally prescribed standards, the risk of accidental contamination or injury from these materials cannot be completely eliminated.

In the event of an accident, we could be held liable for damages, and this liability could exceed our resources.

We use through third parties, for example, small amounts of radioactive isotopes commonly used in pharmaceutical research, which are stored, used and disposed of in accordance with Nuclear Regulatory Commission regulations.

Our general liability policy provides coverage up to annual aggregate limits of $2 million and coverage of $2 million per occurrence.

We believe that we are in compliance in all material respects with applicable environmental laws and regulations and currently do not expect to make material additional capital expenditures for environmental control facilities in the near term.

However, we may have to incur significant costs to comply with current or future environmental laws and regulations.

Risks Related to Our Business

We could incur net losses in the future if options are not exercised under the 19C BARDA Contract.

Given the nature of option-based government contracts, we cannot guarantee that we can sustain or enhance our current level of operations.

Cash flows could fluctuate significantly and could be delayed from one quarter to another based on several factors.

As such, if cash flows from the 19C BARDA Contract are different from expectations, or if operating expenses or other expenses exceed our expectations or cannot be adjusted accordingly, then our business, results of operations, and financial condition could be materially adversely affected.

Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our operating results and financial condition.

We may in the future seek to acquire or invest in businesses, products or technologies that we believe could complement or expand our services, enhance our technical capabilities or otherwise offer growth opportunities.

The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing businesses.

In addition, we may not be able to find and identify desirable acquisition targets or be successful in entering into an agreement with any particular target or consummating any such agreement.

Even if we do consummate an agreement, we may not be able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined business following the acquisitions.

Acquisitions could also result in dilutive issuances of equity securities or the issuance of debt, which could adversely affect our operating results.

In addition, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer.

Our business and operations would suffer in the event of computer system failures, cyber-attacks or a deficiency in our cyber-security.

Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization or persons with access to systems inside our organization.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs.

For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Also, confidential patient and other information may be compromised in a cyber-attack or cyber-intrusion.

To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability, damage to our reputation, and the further development of our drug candidates could be delayed.

Global economic, infectious disease or climate-related matters could negatively impact our business .

Occurrence of a global infectious disease outbreak, such as coronavirus (COVID-19) or other climate-related disasters, could have a broad impact on global economic conditions, sourcing of raw materials and may impact our ability to promote our products successfully to international governments who may need to divert resources to address such matters.

The loss of key personnel or our ability to recruit or retain qualified personnel could adversely affect our results of operations.

We rely upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team.

Our success is dependent upon our personnel and our ability to recruit and train high quality employees.

We must continue to recruit, retain and motivate management and other employees sufficient to maintain our current business and support our projected growth.

The loss of services of any of our key management could have a material adverse effect on our business.

Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.

The loss of the services of any key executive might impede the achievement of our research, development and commercial objectives.

Replacing key employees may be difficult and time-consuming because of the limited number of individuals in our industry with the skills and experiences required to develop, gain regulatory approval of and commercialize our product candidates successfully.

We generally do not maintain key person life insurance to cover the loss of any of our employees.

Recruiting and retaining qualified scientific personnel, clinical personnel and business development personnel will also be critical to our success.

We may not be able to attract and retain these personnel on acceptable terms, if at all, given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.

We also experience competition for the hiring of scientific and clinical personnel from other companies, universities and research institutions.

In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development, regulatory and commercialization strategy.

Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

We may have difficulty managing our growth.

Potential future growth could place a significant strain on our management and operations.

Our ability to manage any future growth will depend upon our ability to broaden our management team and our ability to attract, hire and retain skilled employees.

Our success will also depend on the ability of our officers and key employees to continue to implement and improve our operational and other systems and to hire, train and manage our employees.

Our ability to use our net operating loss carryforwards may be limited.

As of December 31, 2019 , we had federal net operating loss carryforwards, or NOLs, of $38.2 million to offset future taxable income.

The remaining federal NOLs expire in 2036, if not utilized.

Under the provisions of the Internal Revenue Code, substantial changes in our ownership, in certain circumstances, will limit the amount of NOLs that can be utilized annually in the future to offset taxable income.

In particular, section 382 of the Internal Revenue Code imposes a limitation on a company’s ability to use NOLs if the company experiences a more-than-50% ownership change over a three-year period.

If we are limited in our ability to use our NOLs in future years in which we have taxable income, we may be required to pay more taxes than if we were able to utilize our NOLs fully.

Our failure to develop safe, commercially viable future drug candidates or obtain approval for expanded indications and formulations of TPOXX®

could have a material adverse effect on our ability to grow our business, and impair our financial condition and operations.

Risks Related to Our Intellectual Property

Our ability to compete may decrease if we do not adequately protect our intellectual property rights.

Our commercial success will depend in part on our ability to obtain and maintain patent and intellectual property protection for our proprietary technologies, drug targets and potential products and to preserve our trade secrets and trademark rights.

Because of the substantial length of time and expense associated with bringing potential products through the development and regulatory clearance processes to reach the marketplace, the pharmaceutical industry places considerable importance on obtaining patent and trade secret protection.

Our commercial success will depend in part on our ability to obtain and maintain regulatory exclusivity, patent and other intellectual property protection for our proprietary technologies, drug targets and potential products and to preserve our trade secrets and trademark rights.

The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions.

No consistent policy regarding the breadth of claims allowed in biotechnology patents worldwide has emerged to date.

Accordingly, we cannot predict the type and breadth of claims allowed in patents covering our products.

SIGA exclusively owns its key patent portfolios, which relate to its leading drug candidate TPOXX® (also known as ST-246, tecovirimat).

As of January 30, 2020, the TPOXX® patent portfolio has seven patent families consisting of 23 U.S.

utility patents, 70 issued foreign patents, six U.S.

utility patent applications, and 38 foreign patent applications.

Accordingly, we cannot definitively predict the type and breadth of claims allowed in patents covering our products.

SIGA exclusively owns its key patent portfolios, which relate to its leading drug product, TPOXX®

(also known as ST-246, tecovirimat).

As of January 12, 2021, the TPOXX®

patent portfolio has seven patent families consisting of 27 U.S.

utility patents, 86 issued foreign patents, three U.S.

utility patent applications, and 30 foreign patent applications.

With FDA regulatory approval of oral TPOXX®

in July 2018, we were awarded seven years of regulatory exclusivity by the U.S.

Patent and Trademark Office based on orphan drug designation for the product.

Such protection is separate from, and in addition to, our patent and other intellectual property rights and provides for exclusivity to July 2025.

We also rely on trade secrets, know-how, continuing technological innovation and licensing opportunities.

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If there is an adverse outcome in any dispute concerning rights to these technologies, then we could be subject to significant liability, required to license disputed rights from or to other parties and/or required to cease using a technology necessary to carry out our research, development and commercialization activities.

We do not currently license any patent rights from third parties relative to TPOXX®.

If our patents are challenged and found to be invalid or unenforceable, the value of our products could be harmed, and we could be subject to competition earlier than we anticipated.

The costs to establish or defend against claims of infringement or interference with patents or other proprietary rights can be expensive, distracting and time-consuming, even if the outcome is favorable.

An outcome of any patent or proprietary rights administrative proceeding or litigation that is unfavorable to us may have a material adverse effect on us.

We could incur substantial costs if we are required to defend ourselves in suits brought by third parties or if we initiate such suits.

We may not have sufficient

funds or resources in the event of litigation.

Additionally, we may not prevail in any such action and such litigation often takes years to resolve creating business uncertainty if we are not able to resolve it quickly.

Any dispute resulting from claims based on patents and proprietary rights could result in a significant reduction in the coverage of the patents or proprietary rights owned, optioned by or licensed to us and limit our ability to obtain meaningful protection for our rights.

If patents are issued to third parties that contain competitive or conflicting claims, we may be legally prohibited from researching, developing or commercializing potential products or be required to obtain licenses to these patents that carry royalty payments or to develop or obtain alternative technology.

We may be legally prohibited from using technology owned by others, may not be able to obtain any license to the patents or technologies of third parties on acceptable terms, if at all, or may not be able to obtain or develop alternative technologies.

An outcome of any patent or proprietary rights administrative proceeding or litigation that is unfavorable to us may cause us to incur significant costs, and have a material adverse effect on us. Additionally, we may not prevail in any such action and such litigation often takes years to resolve creating business uncertainty if we are not able to resolve it quickly.

Furthermore, like many biopharmaceutical companies, we may from time to time hire scientific personnel formerly employed by other companies involved in one or more areas similar to the activities conducted by us.

It is possible that we and/or these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of their prior affiliations.

Risks Related to Our Financial Position and Need for Additional Financing

We may need additional funding, which may not be available to us, and which may force us to delay, reduce or eliminate any of our product development programs or commercial efforts.

While we have raised funds through credit facilities and the issuance of new equity or the exercise of options or warrants in the past, there is no guarantee that we will continue to be successful in raising such funds should we need to seek to do so.

If we are unable to raise additional funds, we could be forced to discontinue, cease or limit certain operations and equity investors could experience significant or total losses of their investments.

Our cash flows may fall short of our projections or be delayed, or our expenses may increase, which could result in our capital being consumed significantly faster than anticipated.

Although our current cash position is strong, we may require additional financing and we may not be able to raise additional funds.

If we are able to obtain additional financing through the sale of equity or convertible debt securities, such sales may contain terms, such as liquidation and other preferences that are not favorable to us or our stockholders.

If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies or product candidates or grant licenses on terms that may not be favorable to us.

Debt financing arrangements, if available, may require us to pledge certain assets or enter into covenants that could restrict our business activities or our ability to incur further indebtedness and may be at interest rates and contain other terms that are not favorable to our stockholders.

Indebtedness may make it more difficult to obtain additional financing or reduce our flexibility to act in our best interests, and default on our indebtedness would have a material adverse effect on our business, financial condition and results of operations.

The level of our indebtedness under our $80.0 million loan and security agreement dated September 2, 2016 (as amended from time to time, the "Loan Agreement") with OCM Strategic Credit SIGTEC Holdings, LLC ("Lender), could affect us by:

making it more difficult to obtain additional financing for working capital, capital expenditures, debt service requirements or other purposes;

shortening the duration of available revolving credit because lenders may seek to avoid conflicting maturity dates;

constraining our ability to react quickly in an unfavorable economic climate or to changes in our business or the pharmaceutical industry;

or potentially requiring the dedication of substantial amounts to service the repayment of outstanding debt, including periodic interest payments, thereby reducing the amount of cash available for other purposes.

In addition, the Loan Agreement contains customary covenants which could impact our ability to obtain additional financing and restrict our flexibility in carrying out our business strategy.

Under the Loan Agreement, we are obligated to make periodic interest payments on the outstanding principal amount.

Any accrued and unpaid interest or unpaid principal will be due on the maturity date of the loan (November 16, 2020).

If we do not generate sufficient operating cash flows to fund these payments or obtain additional funding from external sources at acceptable terms, we may not have sufficient funds to satisfy our principal and interest payment obligations when those obligations are due, which would place us into default under the terms of the Loan Agreement (as further described below).

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants.

These covenants, among other things, require a minimum cash balance throughout the term of the loan under the Loan Agreement and the achievement of regulatory milestones by certain dates, and contain certain limitations on the ability of the Company to incur unreimbursed research and development expenditures over a certain threshold, make capital expenditures over a certain threshold, incur indebtedness, dispose of assets outside of the ordinary course of business and enter into certain merger

or consolidation transactions.

These covenants could impact our ability to obtain additional financing and restrict our flexibility in carrying out our business strategy.

The Loan Agreement includes customary events of default, including, among others:

(i) non-payment of amounts due thereunder, (ii) the material inaccuracy of representations or warranties made thereunder, (iii) non-compliance with covenants thereunder, (iv) non-payment of amounts due under, or the acceleration of, other material indebtedness of the Company and (v) bankruptcy or insolvency events.

Such default would have a material adverse effect on our business, financial condition and results of operations.

Upon the occurrence and during the continuance of an event of default under the Loan Agreement, the interest rate may increase by 2.00% per annum above the rate of interest otherwise in effect, and the Lender would be entitled to accelerate the maturity of the Company’s outstanding obligations thereunder.

In addition, our indebtedness under the Loan Agreement is secured by a first priority lien on all of our existing and after-acquired property, including intellectual property.

If we default on our obligations under the Loan Agreement, the Lender could foreclose on our assets.

We may issue additional debt or incur other types of indebtedness in the future, subject to compliance with the terms of the Loan Agreement, and such additional indebtedness may carry with it similar risks.

Risks Related to Our Common Stock

Our stock price is, and we expect it to remain, volatile, which could limit investors’ ability to sell stock at a profit.

The volatile price of our stock makes it difficult for investors to predict the value of their investments, to sell shares at a profit at any given time, or to plan purchases and sales in advance.

A variety of factors may affect the market price of our common stock.

These include, but are not limited to:

publicity regarding actual or potential clinical or animal test results relating to products under development by our competitors or us;

initiating, completing or analyzing, or a delay or failure in initiating, completing or analyzing, pre-clinical or clinical trials or animal trials or the design or results of these trials for products in development;

achievement or rejection of regulatory approvals for products in development by our competitors or us;

announcements of technological innovations or new commercial products by our competitors or us;

developments concerning our collaborations and supply chain;

regulatory developments in the United States and foreign countries;

economic or other crises and other external factors;

period-to-period fluctuations in our revenues and other results of operations;

changes in financial estimates by securities analysts;

publicity or activity involving possible future acquisitions, strategic investments, partnerships or alliances.

Additionally, because the volume of trading in our stock fluctuates significantly at times, any information about us in the media or public domain may result in significant volatility in our stock price.

We will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance.

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

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.

If one or more of the analysts who may cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline.

A future issuance of preferred stock may adversely affect the rights of the holders of our common stock.

Our certificate of incorporation allows our Board of Directors to issue up to 20,000,000 shares of preferred stock and to fix the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of these shares without any further vote or action by the stockholders.

The rights of the holders of common stock will be subject to, and could be adversely affected by, the rights of the holders of any preferred stock that we may issue in the future.

The issuance of preferred stock, while providing desirable flexibility in connection with our future activities, could also have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock, thereby delaying, deferring or preventing a change of control.

Concentration of ownership of our capital stock could delay or prevent a change of control.

5 unchanged sentences

Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

On March 5, 2020 our Board of Directors authorized a share repurchase program for up to $50 million of our common stock through December 31, 2021.

This stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of our common stock and may be suspended or discontinued at any time, which could cause the market price of our common stock to decline.

Repurchases pursuant to our stock repurchase program could affect the price of our common stock and increase its volatility.

Important factors that could cause us to limit, suspend or delay the Company’s stock repurchases, without prior notice, and that could in any event impact on management’s exercise of its discretion as to the amount and timing of such repurchases include exercise of procurement options under government contracts, alternative opportunities for strategic uses of cash, the stock price of the Company’s common stock, market conditions, and other corporate liquidity requirements and priorities.

Additionally, repurchases under our stock repurchase program would diminish our cash reserves, which could impact our ability to pursue other opportunities, further develop our technology or adversely affect our operating results.

There can be no assurance that any stock repurchases would enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares.

Any failure to repurchase shares could negatively impact our reputation and investor confidence in us and our stock price.

On March 5, 2020 our Board of Directors authorized a share repurchase program for up to $50 million of our common stock through December 31, 2021. This stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of our common stock and may be suspended or discontinued at any time, which could cause the market price of our common stock to decline. Repurchases pursuant to our stock repurchase program could affect the price of our common stock and increase its volatility. Important factors that could cause us to limit, suspend or delay the Company’s stock repurchases, without prior notice, and that could in any event impact management’s exercise of its discretion as to the amount and timing of such repurchases include exercise of procurement options under government contracts, alternative opportunities for strategic uses of cash, the stock price of the Company’s common stock, market conditions, and other corporate liquidity requirements and priorities.

The existence of our stock repurchase program could cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under our stock repurchase program would diminish our cash reserves, which could impact our ability to pursue other opportunities, further develop our technology or adversely affect our operating results. There can be no assurance that any stock repurchases would enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares could negatively impact our reputation and investor confidence in us and our stock price.

A future issuance of preferred stock may adversely affect the rights of the holders of our common stock.

The rights of the holders of common stock will be subject to, and could be adversely affected by, the rights of the holders of any preferred stock that we may issue in the future.

The issuance of preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock, thereby delaying, deferring or preventing a change of control.

Global infectious disease outbreaks, such as the COVID-19 pandemic, or climate-related matters could negatively impact the global economy on a broad scale and our business in particular.

Occurrence of a global infectious disease outbreak, such as the novel coronavirus (COVID-19) that escalated into a worldwide pandemic, or climate-related disasters, could have a broad impact on global economic conditions, sourcing of raw materials and may continue to impact our ability to promote our products successfully to international governments who may need to divert resources to address the ongoing pandemic and other such matters.

Such delays may reduce our expected revenue from international sales to foreign governments and thereby adversely impact our projected business growth.

The COVID-19 pandemic, for example, has caused significant societal and economic disruption.

Such disruption, and the associated risks and costs, are expected to continue for an indeterminate period of time.

Given the uncertain future course of the COVID-19 pandemic, and the uncertain scale and scope of its future impact, the Company is continually reviewing business and financial risks related to the pandemic and seeking coordination with its government partners with respect to the performance of current and future government contracts.

Additionally, the Company is continually coordinating with service providers and vendors, in particular Contract Manufacturing Organizations ("CMOs") that constitute our supply chain, to review actions and risks caused by the COVID-19 pandemic.

As of the filing date of this document, the Company has not identified or been notified by government customers of impediments to the continued full performance of their government contracts.

Additionally, the Company’s supply chain for the manufacture of TPOXX®

has remained operational on current projects without material COVID-19 related disruption, and in the ordinary course of operations, the supply chain has secured sufficient raw materials to support manufacture and product delivery activities on current projects.

With regard to day-to-day operations, the COVID-19 pandemic has at times slowed the daily pace of execution of government contracts as well as new contract generation, as U.S.

and foreign government staff overseeing health security preparedness has been involved directly or indirectly in governmental responses to the pandemic, which has diverted government staff time that would normally be directed toward contract matters involving SIGA.

The Company expects to experience delays, or slower-than-usual pace, in connection with certain research and development activities, such as those that involve clinical trials.

The Company does not currently expect any pandemic-related delays in research and development activities to have a material adverse impact on the financial condition or annual financial results of the Company, or its long-term performance, but there can be no assurance that such delays will not have such a material adverse impact in the future.

While to date the COVID-19 pandemic has not adversely affected the liquidity position of the Company, and is not currently expected to have a material adverse effect on the financial condition of the Company, there can be no assurance that it will not have such adverse effects, which may be material, in the future. 

Given that the pandemic has diverted foreign government staff time normally directed toward contract matters involving SIGA, the COVID-19 pandemic could affect the timing of international contract awards for oral TPOXX, which could potentially have a material adverse effect on the short-term financial results of the Company.

The pandemic has resulted in almost all of our employees working from home;

however, the shift in location for employees has not had a material adverse impact on the day-to-day operations of the Company.

If the general negative effect of the COVID-19 pandemic becomes more acute or is prolonged, there could be potentially be a material adverse impact on our business and cash flows.

Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, materially change the risk profile of the Company and/or adversely affect our operating results and financial condition.

The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing businesses.

In addition, we may not be able to find and identify desirable acquisition targets or be successful in entering into an agreement with any particular target or consummating any such agreement.

Even if we do consummate an acquisition, in connection therewith we may be required to issue equity (thereby diluting our current stockholders) or debt, we may not be able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined business following the acquisition, or the acquired business could otherwise fail to meet our expectations, which, in each case, could have a material adverse effect on our business projections, financial condition, results of operations and prospects.

The health security market in which we compete and will compete is highly competitive.

The health security industry is characterized by rapid and significant technological change.

Our success will depend on our ability to develop and apply our technologies in the design and development of our product candidates and to establish and maintain a market for our product candidates.

Many of these companies have substantially greater financial, technical, research and development resources, and human resources than us.

Competitors may develop products or other technologies that are more effective than any that are being developed by us or may obtain FDA approval for products more rapidly than us.

Many potential competitors have manufacturing facilities and established marketing capabilities that may enable such companies to market competing products through existing channels of distribution which could provide a substantial advantage.

Product liability lawsuits could cause us to incur liabilities, which could be substantial, and require us to limit commercialization of any products that we may develop.

Like all pharmaceutical companies, we face an inherent business risk related to the sale of TPOXX®

and any other products that we successfully develop and the testing of our product candidates in clinical trials.

is currently identified as a covered countermeasure under the PREP Act declaration issued in October 2008, as amended, which provides us with substantial immunity with respect to the manufacture, administration or use of TPOXX®.

Under our BARDA Contracts, the U.S.

Government should indemnify us against claims by third parties for death, personal injury and other damages related to TPOXX®, including reasonable litigation and settlement costs, to the extent that the claim or loss results from specified risks not covered by insurance or caused by our grossly negligent or criminal behavior.

The collection process under the PREP Act can be lengthy and complicated, and there is no guarantee that we would be able to recover these amounts from the U.S.

If we cannot successfully defend ourselves against future claims that our product or product candidates caused injuries and we are not entitled to or able to obtain indemnity by the U.S.

Government with respect to such claims, or if the U.S.

Government does not honor its indemnification obligations, we may incur liabilities, which could be substantial.

Regardless of merit or eventual outcome, product liability claims may result in decreased demand for any product candidate or product that we may develop;

withdrawal of a product from the market;

costs and management time and focus to defend the related litigation;

substantial monetary awards to trial participants or patients;

loss of revenue;

harm to our reputation;

the inability to commercialize any products that we may develop.

We currently have product liability insurance with coverage up to a $10 million annual aggregate limit and a $10 million per occurrence limit.

Product liability insurance is difficult to obtain and increasingly expensive.

Should we face claims, we may not be able to maintain insurance coverage at a reasonable cost and we may not be able to maintain or obtain insurance coverage that will be adequate to satisfy any liability that may arise.

Our activities may involve hazardous materials, use of which may subject us to environmental regulatory liabilities.

Our biopharmaceutical research and development sometimes may involve the use of hazardous and radioactive materials and generation of biological waste.

We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and certain waste products, and may have to incur significant costs to comply with current or future environmental laws and regulations.

Although we believe that our CMOs’

safety procedures for handling and disposing of these materials comply with legally prescribed standards, the risk of accidental contamination or injury from these materials cannot be completely eliminated.

In the event of an accident, we could be held liable for damages, and this liability could exceed our resources.

Our general liability policy provides coverage up to annual aggregate limits of $2 million and coverage of $2 million per occurrence.

The loss of key personnel or our ability to recruit or retain qualified personnel could adversely affect our results of operations.

We rely upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team, including our Chief Executive Officer, Chief Scientific Officer and other key executives.

Our success is dependent upon our personnel and our ability to recruit, retain and train high quality employees.

We must continue to recruit, retain and motivate management and other employees sufficient to maintain our current business and support our projected growth.

The loss of services of any members of our key management team could have a material adverse effect on our business.

Our business and operations would suffer in the event of computer system failures, cyber-attacks or a deficiency in our cyber-security.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs.

Also, confidential patient and other information may be compromised in a cyber-attack or cyber-intrusion.

We may need additional funding, which may not be available to us, and which may force us to delay, reduce or limit proposed acquisitions or strategic investments or any of our non-government funded product development programs or commercial efforts.

Although our current cash position is strong, we may require additional financing and, while we have raised funds through credit facilities and the issuance of new equity or the exercise of options or warrants in the past, there is no guarantee that we will continue to be successful in raising such funds should we need to seek to do so.

If we are unable to raise additional funds, we could be forced to discontinue, cease or limit certain strategic transactions or operations and equity investors could experience significant or total losses of their investments.

Our cash flows may fall short of our projections or be delayed, or our expenses may increase, which could result in our capital being consumed significantly faster than anticipated.

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