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Item 1A. Risk Factors

2023-03-09 compared with 2022-04-13 · 758 added, 172 removed, 557 unchanged (63% of the section changed)

RISK FACTORS.

Any investment in our business involves a high degree of risk.

Before making an investment decision, you should carefully consider the risks described below, with all of the other information we include in this report and the additional information in the other reports we file with the Securities and Exchange Commission (the "SEC" or the "Commission").

These risks may result in material harm to our business, our financial condition, and the results of our operations.

If a material, adverse event was to occur, the market price of our common stock may decline, and you could lose part or all of your investment.

RISK FACTORS SUMMARY

We are subject to a variety of risks and uncertainties, including risks related to our industry and business, risks related to our finances and capital requirements, risks related to securities markets and investment in our stock, and certain general risks, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The summary below is not exhaustive and is qualified by reference to the full set of risk factors set forth in this "Risk Factors” section.

Risks Related to Our Industry and Business

• We are dependent on the commercial success of our products in the U.S.

• If generics or other versions of extended or controlled release oxcarbazepine or topiramate, or other products including generics containing apomorphine hydrochloride, amantadine, or viloxazine hydrochloride, are approved and successfully commercialized, our business could be materially harmed.

• We are subject to uncertainty relating to payment or managed care reimbursement policies, which, if not favorable for our products or product candidates, could hinder or prevent our commercial success.

• We depend on wholesalers, distributors, and specialty pharmacies for the retail distribution of our products.

If we lose any of our significant wholesaler, distributor, or specialty pharmacy accounts, our business could be harmed.

• Final marketing approval of any of our product candidates or approval of additional indications for existing products by the FDA or other regulatory authorities may be delayed, limited, or denied, any of which would adversely affect our ability to generate operating revenues.

• We rely on and will continue to rely on outsourcing arrangements for certain of our critical activities, including clinical research of our product candidates, manufacture of our compounds and product candidates, and the manufacture of our commercial products.

If we fail to produce our products and product candidates in the volumes that we require on a timely basis or fail to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization of our products and product candidates or be required to withdraw our products from the market.

RI S K FACTORS.

• If we do not obtain marketing exclusivity for our product candidates, our business may suffer.

• We depend on collaborators to work with us to develop, manufacture and commercialize our products and product candidates.

We have in-licensed or acquired a portion of our intellectual property necessary to develop certain of our product candidates.

If we fail to comply with our obligations under any of these arrangements, we could lose the benefit of such collaborative relationships, including licenses or intellectual property rights.

• Our clinical trials for our product candidates may fail to demonstrate acceptable levels of safety, efficacy, or other requirements, which could prevent or significantly delay regulatory approval.

• Delays or failures in the completion of clinical development of our product candidates would increase our costs, delay, or limit our ability to generate revenues.

• If we fail to comply with healthcare regulations, we could face substantial penalties.

Our business, operations, and financial condition could be adversely affected.

• We could be involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming, distracting, and ultimately unsuccessful.

• Limitations on our patent rights relating to our products and product candidates may limit our ability to prevent third parties from competing against us.

• We face potential litigation and product liability exposures.

If successful claims are brought against us, we may incur substantial liabilities.

• Cybersecurity incidents may adversely impact our financial condition, results of operations, and reputation.

Security breaches and other disruptions could compromise our information and expose us to liability which would cause our business and reputation to suffer.

• Compliance with the terms and conditions of our Corporate Integrity Agreement requires significant resources and management time and, if we fail to comply, we could be subject to penalties or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.

Risks Related to Our Finances and Capital Requirements

• Our operating results may fluctuate significantly.

• We identified material weaknesses in our internal controls which might cause stockholders to lose confidence in our financial and other public reporting, particularly if not remediated appropriately and timely, which in turn would harm our business and the trading price of our common stock.

• We have and may further expand our business through acquisitions of new product lines or businesses, which exposes us to various risks, including difficulties in integrating acquisitions.

Our recent acquisition poses certain incremental risks to the Company.

• Any impairment in the value of our intangible assets, including goodwill, would negatively affect our operating results and total capitalization.

Risks Related to Securities Markets and Investment in Our Stock

• Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control, which could negatively impact the market price of our common stock.

• Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition, and results of operations, and impair our ability to satisfy our obligations under the notes.

• Our Credit Line is secured by a portfolio of marketable securities and we may be required to post additional collateral.

• Our Credit Line is an uncommitted debt facility that may be terminated by the lender at any time.

General Risk Factors

• Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies.

Our patent protection could be reduced or eliminated for non-compliance with these requirements.

• Our insurance coverage may not be sufficient to cover our legal claims or other losses that we may incur in the future.

• Complying with increased financial reporting and securities laws reporting requirements has increased our costs and requires additional management resources.

We may fail to meet these obligations.

RI S K FACTORS.

Risks Related to Our Industry and Business

We are dependent on the commercial success of our products in the U.S.

Our financial performance, including our ability to replace revenue and income lost to generic products and other competitors as well as to grow our business, depends heavily on the commercial success of our products.

A substantial amount of our resources are focused on generating, maintaining and/or expanding the revenue generated by our approved products in the U.S.

If any of our major products, including, Oxtellar XR ® , Qelbree ® , GOCOVRI ® , or APOKYN ® , were to become subject to problems, such as changes in prescription growth rates, unexpected side effects, loss of intellectual property protection, supply chain or product supply shortages, regulatory proceedings, changes in labeling, publicity adversely affecting doctor or patient confidence in our product, material product liability litigation, pressure from new or existing competitive products, or adverse changes in coverage under managed care programs, the adverse impact on our revenue and profit could be significant.

As noted in the "Business" section of this report, sales of a generic version of Trokendi XR ® began in January 2023 and we expect those competitive products to significantly impact the sales of Trokendi XR and have an adverse impact on our revenue and profit.

In addition, our revenue and profit could be significantly impacted by the timing and rate of commercial acceptance of key new products.

Our ability to generate significant product revenue from sales of our products in the near term will depend on, among other things, our ability to:

• Defend our patents, intellectual property, and products from the competition, both branded and generic;

• Maintain commercial manufacturing arrangements with third-party manufacturers;

• Produce, through a validated process, sufficiently large quantities of our products to meet demand;

• Continue to maintain a wide variety of internal sales, distribution, and marketing capabilities, sufficient to sustain and grow revenue;

• Continue to maintain and grow widespread acceptance of our products from physicians, health care payors, patients, pharmacists, and the medical community;

• Properly price and obtain adequate reimbursement coverage of these products by governmental authorities, private health insurers, managed care organizations, and other third-party payors;

• Maintain compliance with ongoing FDA labeling, packaging, storage, advertising, promotion, recordkeeping, safety, and other post-market requirements;

• Obtain approval from the FDA to expand the labeling of our approved products for additional indications;

• Adequately protect against and effectively respond to any claims by holders of patents and other IP rights alleging that our products infringe their rights;

• Adequately protect against and effectively respond to any unanticipated adverse effects or unfavorable publicity that develops with respect to our products, as well as respond to the emergence of new or existing competitive products, which may be proven to be more clinically effective and cost-effective.

There are no guarantees that we will be successful in completing these tasks.

We will need to continue investing substantial financial and management resources to maintain our commercial sales and marketing infrastructure and recruit and train qualified marketing, sales, and other personnel.

Sales of our products may slow for a variety of reasons, including competing products or safety issues.

Any increase in sales of our products will be dependent on several factors, including our ability to educate physicians, to increase physician awareness, and physician acceptance of the benefits and cost-effectiveness of our products relative to competing products.

Our ability to increase market acceptance of any of our products or to gain market acceptance of approved product candidates among physicians, patients, health care payors, and the medical community will depend on a number of factors, including:

• Acceptable evidence of safety and efficacy;

RI S K FACTORS.

• Relative convenience and ease of administration;

• Prevalence, nature, and severity of any adverse side effects;

• Availability of alternative treatments, including branded and generic products;

• Pricing and cost effectiveness.

Further, our products are subject to continual review by the FDA.

We cannot provide assurance that newly discovered or reported safety issues would not arise.

With the use of any marketed drug by a broader patient population, serious adverse events may occur from time to time that initially does not appear to be related to the drug itself.

Any safety issues could cause us to suspend or to cease marketing of our approved products;

cause us to modify how we market our approved products;

subject us to substantial liabilities;

and adversely affect our revenues and financial condition.

In the event of a withdrawal of any of our products from the market, our revenues would decline significantly, and our business would be seriously harmed and could fail.

In addition, we have expressed certain long term revenue expectations.

If we are not successful in broadening and/or maintaining the current commercial acceptance of our products, such that we cannot achieve those revenue expectations with respect to such products, this could result in a material adverse impact on our anticipated revenue, earnings, and liquidity.

If generics or other versions of extended or controlled release oxcarbazepine or topiramate, or other products including generics containing apomorphine hydrochloride, amantadine, or viloxazine hydrochloride, are approved and successfully commercialized, our business could be materially harmed.

Third parties have, and in the future may, receive approval to manufacture and market their own versions of extended release topiramate in the U.S.

For example, Upsher-Smith launched Qudexy XR (extended release topiramate) and a branded generic version of Qudexy XR in 2014.

Upsher Smith also entered into a settlement with two generic companies to launch a generic to Qudexy XR in 2020.

In February 2021, one of the generic companies, Glenmark, entered the U.S.

market with its own therapeutically equivalent generic products to Qudexy XR.

The Company has entered into settlement agreements with third parties permitting the sale of a generic version of Trokendi XR on January 1, 2023.

Sales of a generic version of Trokendi XR ® began in January 2023.

We have the right to defend our products against third parties who may infringe or are infringing our patents.

Third parties in the future may receive approval to manufacture and market their own versions of extended release oxcarbazepine or generics of Oxtellar XR in the U.S.

In addition, we are aware of companies who are marketing modified-release oxcarbazepine products outside of the U.S., such as Apydan, which was developed by Desitin Arzneimittel GmbH and which requires twice-daily administration.

If companies with modified-release oxcarbazepine products outside of the U.S.

pursue or obtain approval of their products within the U.S., such competing products may limit the potential success of Oxtellar XR in the U.S.

Our business and growth prospects could be materially impaired.

Accordingly, if any third party is successful in obtaining approval to manufacture and market a generic or its own version of extended release oxcarbazepine or topiramate in the U.S., we may not be able to prospectively realize revenues from Oxtellar XR or Trokendi XR.

In addition, third parties have, and in the future may, receive approval to manufacture and market their own products, including generics containing apomorphine hydrochloride for the treatment of Parkinson’s Disease in the U.S.

For example, Acorda Therapeutics, Inc.

launched Inbrija, an inhalable form of levodopa in 2019 and Sunovion Pharmaceuticals, Inc.'s (Sunovion, a subsidiary of Sumitomo Dainippon Pharma Co.

Ltd) launched KYNMOBI, a sublingual film formulation of apomorphine hydrochloride, in 2020.

In February 2022, the FDA approved the first generic of APOKYN (apomorphine hydrochloride injection) to treat hypomobility "off" episodes ("end-of-dose wearing off" and unpredictable "on/off" episodes) associated with advanced Parkinson's Disease.

This approval is for an application of the drug cartridges only, which are compatible for use with the APOKYN pen, the brand-name pen injector.

Patients treated with generic apomorphine hydrochloride will need to separately obtain the APOKYN pen.

The success of these products and the entry of new products could adversely impact the sales of APOKYN.

Third parties in the future may receive approval to manufacture and market their own versions of viloxazine hydrochloride.

Accordingly, if any third party is successful in obtaining approval to manufacture and market its own version of viloxazine hydrochloride, such competing products may limit the potential success of Qelbree in the U.S.

Our business and growth prospects could be materially impaired.

RI S K FACTORS.

We are subject to uncertainty relating to payment or managed care reimbursement policies, which, if not favorable for our products or product candidates, could hinder or prevent our commercial success.

Our business is operating in an ever more challenging environment, with significant economic pressures exerted by federal and state governments, insurers, and private payors on the pricing of our products, affecting our ability to obtain and/or maintain satisfactory rates of reimbursement for our products.

federal and state governments and private payors are under intense pressure to control healthcare spending even more tightly than in the past.

These pressures are further compounded by consolidation among distributors, retailers, private insurers, managed care organizations, and other private payors, resulting in an increase in their negotiating power, particularly with respect to our products.

In addition, these pressures are intensified by increased, adverse publicity about pricing for pharmaceuticals.

These prices are sometimes characterized as excessive, leading to government investigations and legal proceedings regarding pharmaceutical pricing practices.

Our ability, or our collaborators' ability, to successfully commercialize our products and product candidates, including Qelbree and SPN-830, will depend in part on the coverage and reimbursement levels set by governmental authorities, private health insurers, managed care organizations, and other third-party payors.

As a threshold for coverage and reimbursement, third-party payors require that drug products be approved for marketing by the FDA.

Third-party payors are increasingly challenging the effectiveness of and prices charged for medical products and services.

Government authorities and third-party payors have attempted to control costs, in some instances, by limiting coverage, by limiting the amount of reimbursement for particular medications, or by encouraging the use of lower-cost generic products.

We cannot be sure that reimbursement will be available for any of the products that we develop and, if reimbursement is available, the level of reimbursement.

Moreover, that level of reimbursement may change over time as a result of requests from payors for higher levels of fees.

Reduced or partial payment, or reduced reimbursement coverage, could make our products or product candidates less attractive to patients and prescribing physicians.

We also may be required to sell our products or product candidates at a significant discount, which would adversely affect our ability to realize an appropriate return on our investment in our products or product candidates or to maintain profitability.

Our business would also be adversely affected if private insurers, managed care organizations, the Medicare program, or other reimbursing bodies or payors limit the indications for which our products or product candidates will be reimbursed.

We expect that private insurers and managed care organizations will consider the efficacy, cost effectiveness, and safety of our products or product candidates in determining whether to approve reimbursement for such products or product candidates and to what extent they will provide reimbursement.

Moreover, they will consider the efficacy and cost effectiveness of comparable or competitive products, including generic products, in making reimbursement decisions for our products.

Because each third-party payor individually approves payment or reimbursement, obtaining these approvals can be a time consuming and expensive process, requiring us to provide scientific or clinical support for the use of each of our products or product candidates separately to each third-party payor.

In some cases, it could take months or years before a particular private insurer or managed care organization reviews a particular product.

Prior to that time, reimbursement may be negligible.

We may ultimately be unsuccessful in obtaining coverage.

In addition, our competitors may have more extensive existing business relationships with third-party payors that could adversely impact the coverage for our products.

Our business would be materially and adversely affected if we do not receive reimbursement for our products or product candidates from private insurers in a timely fashion or on a satisfactory basis.

Our products and product candidates may not be considered cost-effective, and coverage and reimbursement may not be available or economically sufficient to allow us to sell our products or product candidates on a profitable basis.

In addition, many managed care organizations negotiate the reimbursement price of products through the use of formularies, which establish reimbursement levels.

Exclusion of a product from a formulary can lead to sharply reduced usage in the managed care organization's patient population because reimbursement is limited and/or negligible.

If our products are not included within an adequate number of managed care formularies or reimbursed at adequate levels, or if those policies increasingly favor generic products, our market share and gross margins could be negatively affected.

This would have a material adverse effect on our overall business and financial condition.

There has been increasing legislative and enforcement interest in the U.S.

with respect to specialty drug pricing practices.

Specifically, there have been several recent U.S.

Congressional inquiries and proposed federal and state legislative initiatives designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under the Medicare program, to review the relationship between pricing and manufacturer patient programs, and to reform government reimbursement methodologies for drugs.

We expect to experience pricing pressures in connection with the sale of any of our products and product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, additional cost containment initiatives, and additional legislative changes.

RI S K FACTORS.

In some foreign jurisdictions, particularly Canada and Europe, the pricing of prescription pharmaceuticals is subject to strict governmental control.

In these countries, pricing negotiations with governmental authorities can take 6 to 12 months, or longer, after the receipt of regulatory approval and product launch.

To obtain favorable reimbursement for the indications sought, or to obtain pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our products or product candidates, if approved, to other available therapies.

If reimbursement for our products or product candidates is unavailable in any country in which reimbursement is sought or is limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be materially harmed and unprofitable.

As evidenced by the passage of the American Rescue Plan Act of 2021 and the Inflation Reduction Act of 2022, discussed in greater detail below, we expect these challenges to continue and to potentially intensify in 2023 and following years, as political pressures mount, and healthcare payors, including government-controlled health authorities, insurance companies, and managed care organizations, step up initiatives to reduce the overall cost of healthcare, restrict access to higher-priced new medicines, increase the use of generic products and impose overall price cuts.

Such pressures could have a material adverse impact on our business, financial condition, and results of operations.

We depend on wholesalers, distributors, and specialty pharmacies for the retail distribution of our products.

If we lose any of our significant wholesaler, distributor, or specialty pharmacy accounts, our business could be harmed.

The majority of our product sales are to pharmaceutical wholesalers, specialty pharmacies, and distributors who, in turn, sell our products to pharmacies, hospitals, and other customers, including federal and state entities.

The majority of sales of Oxtellar XR, Trokendi XR, XADAGO, and MYOBLOC are made to wholesalers and distributors.

In addition, MYOBLOC is available for direct purchase by physicians and hospitals.

The majority of sales of APOKYN, GOCOVRI, and Osmolex ER are made to specialty pharmacies.

Each of our three major customers, AmerisourceBergen Drug Corporation, Cardinal Health, Inc., and McKesson Corporation, individually accounted for more than 25% of our total product revenue in 2022 and collectively accounted for more than 80% of our total product revenue in 2022.

The loss of any of these wholesale pharmaceutical distributors or wholesale and specialty pharmacy accounts, or a material reduction in their purchases, could have a material adverse effect on our business, results of operations, financial condition, and prospects.

In addition, these wholesale customers comprise a significant part of the distribution network for pharmaceutical products in the U.S.

This distribution network has undergone and may continue to undergo significant consolidation marked by mergers and acquisitions.

As a result, a small number of large wholesale distributors control a significant share of the market.

Consolidation of drug wholesalers has increased.

This may result in increased competition and pricing pressures on pharmaceutical products.

We cannot assure you that we can manage these pricing pressures or that wholesaler purchases will not fluctuate unexpectedly from period to period.

Sales of our products can be greatly affected by the inventory levels that our respective wholesalers, specialty pharmacies, and distributors carry.

We monitor wholesalers, specialty pharmacies, and distributor inventory of our products using a combination of methods.

Pursuant to distribution service agreements with our three largest wholesale customers, we receive product inventory reports.

For other wholesalers where we do not receive inventory reports, our estimates of wholesaler inventories may differ significantly from actual inventory levels.

Significant differences between actual and estimated inventory levels may result in excessive stocking, resulting in our holding substantial quantities of unsold inventory, or, alternatively, inadequate supplies of product in the distribution channels.

This could result in our inability to support sales at the retail level.

These changes may cause our revenues to fluctuate significantly from quarter to quarter and, in some cases, may cause our operating results for a particular quarter to be below our expectations, the expectations of securities analysts, and/or the expectations of investors.

At times, wholesalers and distributors may increase inventory levels in response to anticipated price increases, resulting in both greater wholesaler purchases prior to the anticipated price increase and in reduced wholesaler purchases in later quarters.

Accordingly, this may cause substantial fluctuations in our results of operations from period to period.

If our financial results are below expectations for a particular period, the market price of our common stock may drop significantly.

We may not be able to effectively market and sell our product candidates, if approved, in the U.S.

We plan on building or expanding our sales and marketing capabilities in the U.S.

to commercialize our product candidates if approved.

This will require investing significant amounts of financial and management resources.

If we are unable to establish and maintain adequate sales and marketing capabilities for our product candidates or do so in a timely manner, we may

RI S K FACTORS.

not be able to generate sufficient product revenues from our product candidates to be profitable.

The cost of establishing and maintaining such marketing and sales capabilities may not be economically justifiable in light of the revenues generated by any of our product candidates.

With the approval of Qelbree, our sales representatives who supported Trokendi XR and Oxtellar XR now devote their full efforts to the launch of Qelbree.

This could have a detrimental impact on the future sales performance of Trokendi XR and Oxtellar XR.

Final marketing approval of any of our product candidates or approval of additional indications for existing products by the FDA or other regulatory authorities may be delayed, limited, or denied, any of which would adversely affect our ability to generate operating revenues.

We are dependent on obtaining regulatory approval of our product candidates and approval for additional indications for existing products.

Our business depends on successful clinical development;

i.e., successful completion of clinical trials and completion of requisite manufacturing information.

We are not permitted to market any of our product candidates in the U.S.

until we receive approval of an NDA from the FDA or market in any foreign jurisdiction until we receive approval from the requisite authority.

Satisfaction of regulatory requirements typically takes many years, is dependent upon the type, complexity, and novelty of the product, and requires the expenditure of substantial resources.

We cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates.

We cannot, therefore, predict the timing of any future revenues from these product candidates.

The FDA has substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate or deny a prior approval supplement for many reasons.

For example, the FDA

• Could reject or delay the marketing application for an NCE;

• Could determine that we cannot rely on Section 505(b)(2) for any approval of our product candidates;

• Could determine that the information provided by us was inadequate, contained clinical deficiencies, or otherwise failed to demonstrate the safety and effectiveness of any of our product candidates for a specific indication;

• May not find the data from bioequivalence studies and/or clinical trials sufficient to support the submission of an NDA or to obtain marketing approval in the U.S.;

• May find the clinical and other benefits of our product candidates do not outweigh their safety risks;

• May disagree with our trial design or our interpretation of data from preclinical studies, bioequivalence studies, and/or clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our trials;

the outcome and measurement scale used in the trials;

or the clinical protocols whether with or without a special protocol assessment process;

• May determine that we have identified the wrong reference listed drug or drugs, or that approval of our Section 505(b)(2) application of our product candidate is blocked by patent or non-patent exclusivity of the reference listed drug or drugs;

• May identify deficiencies in the manufacturing processes or facilities of third-party manufacturers with which we enter into agreements for the supply of raw materials, including the active pharmaceutical ingredient (API) or formulated product used in our product candidates, wherein those deficiencies may result in an interruption in the ability to supply product;

• Could reject or delay approval of a "prior approval supplement" required prior to distribution of the drug product made using changes that may impact product quality, identity strength, purity, or potency (i.e., major changes);

• May approve our product candidates for fewer or more limited indications than we request, or may grant approval contingent on the performance of costly post-approval clinical trials;

• May change their approval policies or adopt new regulations;

• May not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of our product candidates or may approve them with warnings and precautions that could limit the acceptance of our product candidates and their commercial success;

• May not approve the addition of new indications to the label of our existing products.

RI S K FACTORS.

Notwithstanding the approval of many products by the FDA pursuant to Sections 505(b)(1) and 505(b)(2), over the last few years, some pharmaceutical companies and others have objected to the FDA's interpretation of Section 505(b)(2).

If the FDA changes its interpretation of Section 505(b)(2), or if the FDA's interpretation is successfully challenged in court, this could delay or even prevent the FDA from approving any Section 505(b)(2) application that we submit.

Any failure to obtain regulatory approval of our product candidates would eliminate our ability to generate revenues for that candidate.

Any failure to obtain such approval for all of the indications and labeling claims we deem desirable could reduce our potential revenues.

The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming.

We may not be able to obtain these clearances or approvals on a timely basis, if at all.

The FDA exercises significant discretion over the regulation of combination products, including drug and device components in a combination product.

The FDA could in the future require additional regulation under the medical device provisions of the FDCA.

We must comply with the QSR, which sets forth the FDA's cGMP, requirements for medical devices, and other applicable government regulations and corresponding foreign standards for drug cGMPs.

If we fail to comply with these regulations, it could have a material adverse effect on our business and financial condition.

Following FDA approval of Qelbree in April 2021 for the treatment of ADHD in pediatric patients, additional indications may be submitted using the Section 505(b)(2) regulatory pathway.

We submitted a sNDA application, filing under Section 505(b)(2), to the FDA for Qelbree in adults in the third quarter of 2021.

In September 2021, the FDA acknowledged it received the sNDA for Qelbree for the treatment of ADHD in adult patients and assigned a PDUFA target action date in late April 2022.

In April 2022, the FDA approved an expanded indication for Qelbree for the treatment of ADHD in adult patients aged 18 and older.

In addition, we intend to complete the development of an infusion-pump delivery system containing apomorphine (SPN-830).

We have previously submitted the NDA for SPN-830 to the FDA in September 2020 and received a refusal to file letter from the FDA.

We met with the FDA in March 2021 to clarify the steps required for the resubmission of the NDA for SPN-830.

We resubmitted the NDA for SPN-830 in December 2021 and we received FDA acceptance for review of NDA for SPN-830 during February 2022.

In October 2022, we received a Complete Response Letter ("CRL") from the FDA regarding the NDA for SPN-830 requesting additional information and analysis related to the infusion device and drug product across several areas of the NDA.

In addition, the FDA mentions that approval of the NDA requires inspections that could not be completed in a timely manner due to COVID-19 travel restrictions.

Supernus will continue to work closely with the FDA to address all questions, and when possible, to provide clarity regarding the potential timing of a resubmission of the NDA.

The CRL does not request additional efficacy and safety clinical studies.

The FDA has made an initial determination that the amendment of the Company's application in response to the CRL will be subject to a Class 2, or six-month, review timeline.

In February 2023, the FDA granted the Company a Type C meeting request to discuss the CRL with the meeting scheduled in April 2023.The regulatory and developmental contingent consideration payments include a $25 million milestone due upon the FDA acceptance of the SPN-830 NDA for review, which was paid in first quarter of 2022.

We rely on and will continue to rely on outsourcing arrangements for certain of our critical activities, including clinical research of our product candidates, manufacture of our compounds and product candidates, and the manufacture of our commercial products.

We rely on outsourcing arrangements for some of our critical activities, including manufacturing, preclinical and clinical research, data collection and analysis, and electronic submission of regulatory filings.

We may have limited control over third parties, and we cannot guarantee that they will perform their obligations in an effective, competent, and timely manner.

Our reliance on third parties, including third-party Clinical Research Organizations (CROs) and CMOs, entails risks including, but not limited to:

• Non-compliance by third parties with regulatory and quality control standards;

• Sanctions imposed by regulatory authorities if materials supplied or manufactured by a third party supplier or manufacturer fail to comply with applicable regulatory standards;

• Possible breach of the agreements by the CROs or CMOs because of factors beyond our control, insolvency or other financial difficulties of any of these third parties;

labor unrest;

natural disasters;

or other factors adversely affecting their ability to conduct their business;

RI S K FACTORS.

• Termination or non-renewal of an agreement by a third party at a time that is inconvenient for us and for reasons not entirely under our control.

We do not currently own or operate manufacturing facilities for the commercial production of any of our products or for production of clinical supplies of our product candidates, nor do we have plans to do so in the future.

We currently depend on third-party clinical manufacturing organizations (CMOs), who offer a comprehensive range of contract manufacturing and packaging services, in various countries for the supply of API for our products and product candidates, including raw materials and drug substances for our preclinical research and clinical trials.

For most of our products and product candidates, we rely on single source suppliers to produce and package final dosage forms for our products and raw materials, including API.

If any of these vendors are unable to perform their obligations to us, including due to violations of the FDA's requirements, our ability to meet regulatory requirements, projected timelines, and necessary quality standards for the development or commercialization of products would be adversely affected.

Further, if we were required to change vendors, it could result in substantial delays in our regulatory approval efforts, significantly increase our costs, and delay generation of revenues.

Accordingly, the loss of any of our current or future third-party manufacturers or suppliers could have a material adverse effect on our business, results of operations, financial condition, and business prospects.

There is a risk that supplies of our products or product candidates may be significantly delayed by or may become unavailable as a result of manufacturing, equipment, process, supply chain or business-related issues affecting our suppliers.

At this time while we do not know of any circumstances where our European supply chain is impacted by the war in Ukraine, it is unknown to us whether the war in Ukraine will ultimately have an impact on our European supply chains or whether it will create other unforeseen consequences affecting us or our suppliers.

Any future curtailment in the availability of raw materials or finished goods could result in production or other delays, with consequent adverse business effects.

In addition, because regulatory authorities must generally approve raw material sources for pharmaceutical products, changes in raw material suppliers may result in production delays or higher raw material costs.

We may also encounter similar risks with the other products and product candidates where raw materials or finished goods are purchased from suppliers outside the U.S., such as the case for example for SPN-830, APOKYN, XADAGO, and MYOBLOC where various suppliers are based in Europe.

The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.

Pharmaceutical companies and their suppliers often encounter difficulties in manufacturing, particularly in scaling up the production of their products.

These problems can adversely affect production costs and yields, quality control, the stability of the product and quality assurance testing, as well as compliance with federal, state, and foreign regulations.

If we are unable to demonstrate stability in accordance with commercial requirements, or if our manufacturers were to encounter difficulties or otherwise fail to comply with their obligations to us, our ability to obtain or maintain FDA approval and to market our products and product candidates, respectively, would be jeopardized.

In addition, any delay or interruption in producing clinical trial supplies could delay or prohibit the completion of our clinical trials, increase the costs associated with conducting our clinical trials and, depending upon the period of delay, require us to commence new trials at the significant additional expense or to terminate a trial.

Manufacturers of pharmaceutical products need to comply with cGMP requirements and other requirements enforced by the FDA, including electronic tracking and submission.

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

Manufacturers of our products and product candidates may be unable to comply with these cGMP requirements and other FDA and similar foreign regulatory requirements.

Failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval.

If the safety of any of our products or product candidates is compromised due to failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for such product candidates or to successfully commercialize such products.

We may be held liable for any injuries sustained as a result.

Any of these factors could cause a delay in clinical development, regulatory submissions, approvals, or commercialization of our product candidates, entail higher costs, or result in our being unable to effectively commercialize our product candidates.

Furthermore, if we fail to obtain the required commercial quantities on a timely basis from our suppliers and at commercially reasonable prices, we may be unable to meet the demand for our approved products or may not be able to sell our products profitably.

If we do not obtain marketing exclusivity for our product candidates, our business may suffer.

Under the Hatch-Waxman Amendments, three years of marketing exclusivity may be granted for the approval of NDAs and sNDAs, including Section 505(b)(2) applications, for, among other things, new indications, dosage forms, routes of administration, strengths, or for a new use of an existing drug.

If the clinical investigations that were conducted or sponsored by the applicant are determined by the FDA to be essential to the approval of the application, the FDA may grant exclusivity for the product, sometimes referred to as clinical investigation exclusivity.

This prevents the FDA from approving an application under Section 505(b)(2) for the same conditions of use for new clinical investigations prior to the expiration of three years from the date

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Such exclusivity, however, would not prevent the approval of another application if the applicant submits a full NDA and has conducted its own adequate, well-controlled clinical trials, demonstrating safety and efficacy.

It would not prevent approval of a generic product or Section 505(b)(2) product that did not incorporate the exclusivity-protected changes of the approved drug product.

Under the Hatch-Waxman Amendments, newly-approved drugs and indications may also benefit from a statutory period of non-patent marketing exclusivity.

The Hatch-Waxman Amendments provide five-year marketing exclusivity to the first applicant to gain the approval of an NDA for an NCE.

This would be the case if the FDA had not previously approved any other drug containing the same API or active moiety, which is the molecule responsible for the action of the drug substance.

Although protection under the Hatch-Waxman Amendments will not prevent the submission or approval of another full NDA, such an NDA applicant would be required to conduct its own preclinical and adequate, well-controlled clinical trials to demonstrate safety and effectiveness.

Currently, the Company has a five-year and seven-year marketing exclusivity period for Qelbree and GOCOVRI, respectively.

If we are unable to obtain marketing exclusivity for our subsequent product candidates, then our competitors may obtain approval for competing products more easily than if we had such marketing exclusivity.

In such an event, our future revenues could be reduced materially.

If the FDA or other applicable regulatory authorities approve generic products that compete with any of our products or product candidates, the sales of our products or the commercial success of our product candidates would be adversely affected.

Once an NDA, including a Section 505(b)(2) application, is approved, the product covered thereby becomes a listed drug, which can be cited by potential competitors in support of approval of an ANDA.

FDCA, FDA regulations and other applicable regulations and policies provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an ANDA or other application for generic substitutes.

These manufacturers might only be required to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use or labeling, as our product or product candidate and that the generic product is bioequivalent to our product.

Bioequivalence implies that a product is absorbed in the body at the same rate and to the same extent as our product or product candidate.

These generic equivalents, which must meet the same quality standards as branded pharmaceuticals, would be significantly less costly than ours to bring to market.

Companies that produce generic equivalents are generally able to offer their products at significantly lower prices.

Thus, regardless of the regulatory approval pathway, after the introduction of a generic competitor, a significant percentage of the sales of any branded product are typically lost to the generic product through both price and volume erosion.

Accordingly, competition from generic equivalents would adversely, materially, and permanently impact our revenues, profitability, and cash flows from those products.

In this eventuality, it would substantially limit our ability to obtain a return on the investments we have made in our products and product candidates.

If our competitors develop or market alternatives for the treatment of our target indications, our commercial opportunities will be reduced or eliminated.

The pharmaceutical industry is characterized by rapidly advancing technologies, intense product-driven competition, and a strong emphasis on proprietary therapeutics.

We face competition from a number of sources, some of which may target the same indications as to our products and product candidates.

These include large pharmaceutical companies, smaller pharmaceutical companies, biotechnology companies, academic institutions, government agencies, and private and public research institutions.

The availability of new products or the approval of new indications for existing products may limit the demand for and the price we are able to charge for any of our products.

We may be unable to differentiate our products from competitive offerings.

In addition to competition for our current commercial products, we anticipate that we will face intense competition when our pipeline product candidates are approved by regulatory authorities and begin their commercialization process.

In particular, we are aware of Serina Therapeutics and AbbVie developing product candidates that may compete with SPN-830.

New developments, including the development of other drug technologies, may render our products or product candidates obsolete or noncompetitive.

As a result, demand for our product may significantly decline or our products and product candidates may become obsolete before we recover expenses incurred in connection with their development or realize revenues from their commercialization.

Moreover, many competitors have substantially greater:

• Capital resources;

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• Research and development resources and experience, including personnel and technology;

• Drug development, clinical trial and regulatory resources and experience, including personnel and technology;

• Sales and marketing resources and experience;

• Manufacturing and distribution resources and experience;

• Name recognition;

• Resources, experience and expertise in prosecution and enforcement of intellectual property rights.

As a result of these factors, our competitors may obtain regulatory approval of their products more rapidly than we are able to or may obtain patent protection or other intellectual property rights that limit or block us from developing or commercializing our product candidates.

Our competitors may also develop drugs that are more effective, have faster onset to action, better tolerated, subject to fewer or less severe side effects, more widely prescribed or accepted, or less costly than ours.

They may also be more successful than us in manufacturing and marketing their products.

If we are unable to compete effectively with the products of our competitors, or if such competitors are successful in developing products that compete with any of our approved product candidates, our business, results of operations, financial condition, and prospects may be materially and adversely affected.

Mergers and acquisitions in the pharmaceutical industry may result in an even higher level of resources being concentrated at competitors.

Competition may intensify as a result of advances made in the commercial applicability of technologies and as a result of greater availability of capital for investment.

Our products and our product candidates may be subject to restrictions or withdrawal from the market.

We may be subject to penalties if we fail to comply with regulatory requirements.

Even though U.S.

regulatory approval has been obtained for our products, the FDA may impose significant restrictions on their indicated uses, or may impose restrictions on marketing, or may impose requirements for costly post-approval studies.

For example, certain of our products, including Qelbree, Trokendi XR, Oxtellar XR and MYOBLOC, were approved on the basis of post-approval commitments.

We received approval for Qelbree from the FDA, based on certain post-marketing commitments, including the requirement to conduct a clinical efficacy and six month open label safety extension study for ADHD in pediatric patients 4 to 5 years of age, a lactation study and a descriptive study related to the use of Qelbree during pregnancy, and to assess the risks of adverse events an potential complications.

We are working toward meeting these post-marketing commitments for Qelbree in a timely manner.

We have post-marketing clinical and manufacturing studies and data commitments for MYOBLOC.

We have initiated work on some of these commitments.

We are currently conducting the required post-marketing studies of MYOBLOC for treatment of spasticity.

With respect to Trokendi XR and Oxtellar XR, the post-marketing commitments include the development of additional age-appropriate formulations of the drugs and the conduct of post-approval clinical studies in accordance with timelines laid out in the approval letters.

The post-approval commitments required the creation of new drug product formulations, which we have not been able to accomplish.

Despite significant efforts, in certain cases, we have been unable to meet the FDA's timelines.

To date, the only consequence of our failure to meet our PREA commitment deadlines has been a notation on FDA websites, making the status of PREA publicly known.

We are also required to conduct an additional post-approval study with respect to Trokendi XR for the treatment of prophylaxis of migraine.

If we do not meet our post-marketing commitments and are unable to show good cause for our inability to adhere to the timetables laid out in the approval letters, the FDA could take enforcement action against us, including withdrawal of approval.

While we believe that we can show good cause for our inability to meet the timelines for our post-approval study requirements, the FDA may disagree.

Our products, product candidates, and our collaborators' approved products are subject to ongoing FDA requirements governing the labeling, packaging, storage, advertising, promotion, recordkeeping, and submission of safety and other information.

In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practice (cGMP) regulations.

If we, our collaborators, or a regulatory authority discovers previously unknown problems with a product, including side effects that are unanticipated in severity or frequency, or problems with the facility where the product is manufactured, a

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regulatory authority may impose restrictions on that product or on the manufacturer, including requiring withdrawal of the product from the market or suspension of manufacturing.

If we or our collaborators, or our products, product candidates, or our collaborators' products, or the manufacturing facilities for our products, product candidates or our collaborators' products fail to comply with applicable regulatory requirements, a regulatory authority may:

• Issue warning letters or untitled letters;

• Impose civil or criminal penalties;

• Suspend regulatory approval;

• Suspend any ongoing bioequivalence and/or clinical trials;

• Refuse to approve pending applications or supplements to applications filed by us;

• Impose restrictions on operations, including costly new manufacturing requirements, or suspend production for a sustained period of time;

• Seize or detain products or require us to initiate a product recall.

In addition, our product labeling, advertising, and promotion of our approved products are subject to regulatory requirements and continuing regulatory review.

The FDA strictly regulates the promotional claims that may be made about prescription products.

In particular, a product may not be promoted for uses that are not approved by the FDA, as reflected in the product's approved labeling.

Notwithstanding, physicians may nevertheless prescribe products to their patients in a manner that is inconsistent with the approved label, which is known as "off label use".

The FDA and other authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have promoted off-label use may be subject to significant sanctions.

The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined companies from engaging in off-label promotion.

If we are found to have promoted off-label use, we may be enjoined from such off-label promotion and become subject to significant liability.

This could have an adverse effect on our reputation, business, and revenues.

Further, the FDA's policies may prospectively change.

Additional government regulations may be enacted that could affect our products or prevent, limit or delay regulatory approval of our product candidates.

If we are slow or unable to adapt to changes in existing requirements or to adopt new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we have obtained, adversely affecting our business, prospects, and ability to achieve or sustain profitability.

We depend on collaborators to work with us to develop, manufacture and commercialize their and our products and product candidates.

We have in-licensed or acquired a portion of our intellectual property necessary to develop certain of our product candidates.

If we fail to comply with our obligations under any of these arrangements, we could lose the benefit of such collaborative relationships, including licenses or intellectual property rights.

Under the Britannia Supply Agreement, we have been granted certain intellectual property and product rights in relation to APOKYN, including the right to use and market APOKYN in the United States.

Additionally, the Britannia Supply Agreement grants Britannia certain intellectual property and product rights in relation to APOKYN, including the right to use and market APOKYN in the rest of the world, excluding the United States.

Per the Agreement, Britannia has an obligation to supply us with APOKYN for our marketing and sale of the product.

Britannia may terminate its obligation to supply APOKYN for cause, or at any time, by giving at least twenty-four months' written notice.

The Britannia Supply Agreement does not provide technology transfer assistance from Britannia to any new suppliers we might engage following termination.

In addition, the Britannia Supply Agreement is silent in providing us with an explicit license grant to any intellectual property, or to access know-how necessary or useful for manufacturing APOKYN.

If we materially breach the Britannia Supply Agreement, or Britannia chooses to terminate the Britannia Supply Agreement for convenience, we could lose the right and resources necessary for the manufacture of APOKYN or could incur significant costs implementing technology transfer assistance.

We also have agreements with leading CMOs to manufacture our commercial products and the API for such products.

These CMOs offer a comprehensive range of contract manufacturing services.

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We have a license agreement with United Therapeutics Corporation to use one of our proprietary technologies in an oral formulation of treprostinil diethanolamine, or treprostinil, for the treatment of pulmonary arterial hypertension and for other indications.

United Therapeutics Corporation launched Orenitram (treprostinil) in 2014, which triggered payment of a milestone payment to us of $2.0 million.

In the third quarter of 2014, we received a cash payment of $30.0 million from HC Royalty for the purchase of certain of our rights under our license agreement with United Therapeutics Corporation related to the commercialization of Orenitram.

Ownership of the royalty rights will return to us if/when a certain cumulative threshold payment to HC Royalty is reached.

We are entitled to receive milestones and royalties for the use of this formulation in indications other than arterial hypertension.

If we materially breach any of our obligations under the license agreement, we could lose the right to receive any future royalty payments thereunder, which could be financially significant to us.

Namzaric (memantine hydrochloride extended release and donepezil hydrochloride) capsules for the treatment of moderate to severe dementia of an Alzheimer's type is currently marketed by Allergan plc under an exclusive license agreement between Adamas Pharmaceuticals, LLC and Forest Laboratories Holdings Limited ("Forest"), an indirect, wholly-owned subsidiary of Allergan plc (collectively, "Allergan") in the United States.

Adamas Pharmaceuticals LLC receives royalties on net sales of Namzaric from May 2020.

We rely on third-party collaborators to market and commercialize our products and product candidates outside the U.S.

We utilize strategic partners outside the U.S., where appropriate, to assist in the commercialization of our products and product candidates.

We are a party to and rely on several arrangements with third parties.

These arrangements give us rights to intellectual property that are necessary for the development of certain of our product candidates.

In addition, we may enter into similar arrangements in the future for other product candidates.

Our current arrangements impose various development, financial and other obligations on us.

If we materially breach these obligations, of if third parties fail to adequately perform their respective obligations, these arrangements could be terminated which could result in our inability to develop, manufacture, market and sell products that are covered by such intellectual properties.

We may not have sufficient resources to successfully establish future collaborations or license future arrangements on acceptable terms, if at all.

We also face competition in our search for collaborators and licensing partners.

By entering into strategic collaborations or similar arrangements, we rely on third parties to financially support their local operations, including support required for development, commercialization, sales, marketing, and regulatory activities, as well as expertise in each of those subject areas.

Refer to Part I, Item 1—Business — Collaborations and Licensing Agreements , of our Annual Report on Form 10-K for discussion on the different collaborations and licensing arrangements.

Our future collaboration agreements may limit the areas of research and development that we may pursue, either alone or in collaboration with third parties.

Much of the potential revenues from these future collaborations may consist of contingent payments, such as payments for achieving certain development milestones and royalties payable on product sales.

The milestones and royalty revenues that we may receive under these collaborations will depend upon our collaborators' ability to successfully develop, introduce, market and sell new products.

Future collaboration partners may fail to develop or effectively commercialize products, product candidates, or technologies because they, among other things, may:

• Change the focus of their development and commercialization efforts, or may have insufficient resources to effectively develop our product candidates;

• Pharmaceutical and biotechnology companies historically have re-evaluated their development and commercialization priorities following mergers and consolidations, which have been common in recent years.

The ability of some of our product candidates to reach their potential could be limited if our future collaborators fail to apply sufficient development or commercialization efforts related to those product candidates;

• Decide not to devote the necessary resources due to internal constraints, such as limited personnel with the requisite scientific expertise, limited cash resources, or in the belief that other internal drug development programs may have a higher likelihood of obtaining marketing approval, or may potentially generate a greater return on investment;

• Develop and commercialize, either alone or with others, drugs that are similar to or competitive with the product candidates that are the subject of their collaboration with us;

• Not have necessary and sufficient resources to develop the product candidate through clinical development, marketing approval, and commercialization;

• Fail to comply with applicable regulatory requirements;

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• Are unable to obtain the necessary marketing approvals;

• Breach or terminate their arrangement with us.

If collaboration partners fail to develop or fail to effectively commercialize our products for any of these reasons, we may not be able to replace the collaboration partner with another partner to develop and commercialize the product under the terms of the collaboration, if at all.

Further, even if we are able to replace the collaboration partner, we may not be able to do so on commercially favorable terms.

As a result, the development and commercialization of the affected product or product candidate could be delayed, impaired, or terminated because we may not have sufficient financial resources or capabilities to continue the development and commercialization of the product candidate on our own.

Failure of our third-party collaborators to successfully market and commercialize our products or product candidates within and outside the U.S.

could materially diminish our revenues and harm our results of operations.

Even if our product candidates receive regulatory approval in the U.S., we or our collaborators may not receive approval to commercialize our product candidates outside of the U.S.

To market any product outside of the U.S., we must establish and comply with numerous and varying regulatory requirements of other regulatory jurisdictions regarding safety and efficacy.

Approval procedures vary among jurisdictions and can involve product testing and administrative review periods different from, and greater than, those in the U.S.

The time required to obtain approval in other jurisdictions might differ from that required to obtain FDA approval.

The regulatory approval process in other jurisdictions may include all of the risks detailed above regarding FDA approval in the U.S., as well as other risks.

For example, legislation analogous to Section 505(b)(2) of the FDCA in the U.S., which relates to the ability of an NDA applicant to use published data not developed by such applicant, may not exist in other countries.

In territories where data are not freely available, we may not have the ability to commercialize our products without first negotiating with third parties to obtain their permission to refer to their clinical data in our regulatory applications.

This process could require the expenditure of significant additional funds and time.

In addition, regulatory approval in one jurisdiction does not ensure regulatory approval in another.

A failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others.

Failure to obtain regulatory approval in other jurisdictions, or any delay or setback in obtaining such approvals, could have the same adverse effects as detailed above regarding FDA approval.

As described above, such effects include the risks that any of our product candidates may not be approved for all requested indications, which could limit the uses of our product candidates and could have an adverse effect on their commercial potential or could require costly post-marketing studies.

Our failure to successfully develop and market our product candidates would impair our ability to grow.

As part of our growth strategy, we intend to develop and market additional product candidates.

We may spend substantial resources and several years completing the development of a particular current or future internal product candidate, during which process we can experience failure at any stage, and for many reasons.

The product candidates to which we allocate our resources, even if approved, may not be commercially successful.

In addition, because our internal research capabilities are limited, we may be dependent upon pharmaceutical companies, academic scientists, and other researchers to sell or license products or technologies to us.

The success of this strategy depends partly upon our ability to identify, select, discover and acquire promising pharmaceutical product candidates and approved products, and to manage our spending as expenses related to undertaking clinical trials can be substantial.

An existing team of experienced Supernus sales representatives who supported Trokendi XR and Oxtellar XR are focused on supporting Qelbree, which was launched in May 2021.

By removing these resources from the field promotion of Trokendi XR and Oxtellar XR there could be a detrimental impact on the performance of Trokendi XR and Oxtellar XR.

In September 2020, we submitted the NDA for SPN-830 to the FDA.

In November 2020, we received a Refusal to File (RTF) letter from the FDA regarding the NDA in which the FDA determined that the NDA was not sufficiently complete to permit a substantive review.

In the letter, the FDA requested certain documents and reports to be submitted in support of the NDA.

In March 2021, we met with the FDA to discuss the path forward for resubmission of the SPN-830 NDA.

The FDA provided additional clarity related to the contents of the RTF letter and the requirements for resubmission and in December 2021, the Company resubmitted the SPN-830 NDA to the FDA.

In February 2022, the Company received notice from the FDA that the company’s New Drug Application (NDA) resubmission for its apomorphine infusion device (SPN-830) for the continuous treatment of motor fluctuations ("off" episodes) in Parkinson's Disease is considered a Standard Review thereby assigning a timeline of 10 months for review by the FDA and establishing a Prescription Drug User Fee Act (PDUFA) target action date in early October, 2022.

In October 2022 we received a CRL from the FDA regarding the NDA for SPN-830 requesting additional information and analysis related to the infusion device and drug product across several areas of the NDA.

In addition, the FDA

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mentions that approval of the NDA requires inspections that could not be completed in a timely manner due to COVID-19 travel restrictions.

Supernus will continue to work closely with the FDA to address all questions, and when possible, to provide clarity regarding the potential timing of a resubmission of the NDA.

The CRL does not request additional efficacy and safety clinical studies.

The FDA has made an initial determination that the amendment to the Company’s application in response to the CRL will be subject to a Class 2, or six-month, review timeline.

In February 2023, the FDA granted the Company a Type C meeting request to discuss the CRL with the meeting scheduled in April 2023.

We may be unable to acquire product candidates or products.

The process of proposing, negotiating, and implementing a license, or acquiring a product candidate or an approved product, is lengthy and complex.

Other companies, including some with substantially greater financial, marketing and sales resources, may compete with us for the license, the product candidate, or approved product.

We have limited resources, including financial resources, to identify and execute the acquisition or in-licensing of third-party products, businesses, and technologies and integrate them into our current infrastructure.

Moreover, we may devote significant resources to potential acquisitions, or in-licensing opportunities wherein those transactions are never consummated, or we may fail to realize the anticipated benefits of such efforts.

We may not be able to acquire the rights to additional product candidates on terms that we find acceptable or at all.

In addition, future acquisitions may entail numerous operational and financial risks, including:

• Exposure to unknown liabilities;

• Disruption of our business, and diversion of our management's time and attention, to develop acquired products or technologies;

• Incur substantial debt, or dilutive issuances of securities, or depletion of cash to pay for acquisitions;

• Incur higher than expected acquisition, integration, and operating costs;

• Experience difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel;

• Impair relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership;

• Unable to retain and/or motivate key employees of any acquired businesses.

Our clinical trials for our product candidates may fail to demonstrate acceptable levels of safety, efficacy, or other requirements, which could prevent or significantly delay regulatory approval.

We may be unable to sufficiently demonstrate the safety and efficacy of our product candidates in obtaining regulatory approval.

We must demonstrate, with substantial evidence gathered in well-controlled studies and to the satisfaction of the relevant regulatory authorities, that each product candidate is safe and effective for use in the target indication.

We may be required to conduct additional studies or trials to adequately demonstrate safety and efficacy, which could prevent or significantly delay our receipt of regulatory approval, increase clinical costs, and ultimately delay or otherwise impair the commercialization of that product candidate.

Any product candidate that we in-license or acquire may require additional development prior to commercial sale, including formulation development, extensive clinical testing, and approval by the FDA or applicable foreign regulatory authorities.

All product candidates are prone to risks of failure typical to pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.

In addition, the results from the trials that we have completed for our product candidates may not be replicated in future trials.

A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced development, even after promising results in earlier trials.

If our product candidates are not shown to be safe and effective, these clinical development programs might be terminated.

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Delays or failures in the completion of clinical development of our product candidates would increase our costs, delay, or limit our ability to generate revenues.

Delays or failures in the completion of clinical trials for our product candidates could significantly raise our product development costs.

We do not know whether current or planned trials will be completed on schedule, if at all.

The commencement and completion of clinical development can be delayed or halted for a number of reasons, including:

• Difficulties in obtaining regulatory approval to commence a clinical trial or in complying with conditions imposed by a regulatory authority regarding the scope or term of a clinical trial;

• Difficulties obtaining IRB or ethics committee approval to conduct a trial at a prospective site;

• Delays in reaching or failure to reach agreement on acceptable terms with prospective trial sites and investigators, the contractual terms of which can be subject to extensive negotiation and may vary significantly from site to site;

• Insufficient or inadequate supply of or quantity of a product candidate for use in trials;

• Challenges recruiting and enrolling patients to participate in clinical trials, for any and all reasons, including competition from other programs for the treatment of similar conditions;

• Severe or unexpected drug-related side effects experienced by patients in a clinical trial;

• Difficulty retaining patients who have enrolled in a clinical trial but who may be prone to withdraw due to side effects from the therapy, lack of efficacy, or personal issues;

• Temporary cessation of clinical trials (clinical holds);

• Delays due to ambiguous or negative interim results in clinical trials.

Clinical trials may be suspended or terminated by us;

or at a trial site by the site's Data Safety Monitoring Board (DSMB) or ethics committee overseeing the clinical trial;

or by the FDA;

or by other regulatory authorities due to a number of factors, including:

• Failure to conduct the clinical trial in accordance with regulatory requirements or the trial protocols;

• Observations during an inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities which ultimately result in the imposition of a delay or clinical hold;

• Unforeseen safety issues;

• Lack of adequate funding to continue the trial.

Failure to conduct the clinical trial in accordance with regulatory requirements or the trial protocols may result in the inability to use the trial data to support product approval.

Changes in regulatory requirements and guidance may occur, and we may need to amend clinical trial protocols to reflect these changes.

Amendments may require us to resubmit our clinical trial protocols to IRBs or ethics committees for reexamination, which may adversely impact the cost, timing, and/or successful completion of a clinical trial.

In addition, many of the factors that cause or lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

If we experience delays in completion, or if we terminate any of our clinical trials, our ability to obtain regulatory approval of our product candidates may be materially harmed, and our commercial prospects and ability to generate product revenues diminished.

Additionally, the current inflationary environment, unstable economic conditions and geopolitical events may delay our trials or significantly increase our product development costs.

Our products and product candidates may cause undesirable side effects or have other characteristics that limit their commercial potential, delay, or prevent their regulatory approval.

Undesirable side effects caused by any of our product candidates could cause us or regulatory authorities to interrupt, delay or halt development.

This could result in the denial of regulatory approval by the FDA or other regulatory authorities and result in potential product liability claims.

Undesirable side effects caused by any of our products could cause regulatory

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authorities to temporarily or permanently halt product sales, which could have a material adverse effect on our business.

As required by the FDA, the labels for our products include precautions and warnings about side effects, and in certain cases, the need for monitoring patients receiving the product.

If our products cause side effects, or if any of our product candidates receive marketing approval, and we or others later identify undesirable side effects caused by our products or product candidates, a number of potentially significant negative consequences could result, including, among others:

• regulatory authorities may withdraw approval of the product or otherwise require us to take the approved product off the market;

• regulatory authorities may require additional warnings or a narrowing of the indication on the product label;

• we may be required to create a medication guide outlining the proper use of the medication and the risks of side effects for distribution to patients;

• we may be required to modify the product in some way;

• regulatory authorities may require us to conduct additional clinical trials, or costly post-marketing testing and surveillance, to monitor the safety or efficacy of the product;

• sales of approved products may decrease significantly;

• we could be sued and be held liable for harm caused to patients;

• our reputation may suffer.

Any of these events could prevent us from achieving or maintaining the commercial success of our products and product candidates and could substantially increase commercialization costs.

We may not obtain or maintain the benefits associated with orphan drug designation, including market exclusivity.

Regulatory authorities in the United States may designate drugs for relatively small patient populations as orphan drugs.

The FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals annually in the U.S.

Orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax credits for certain research, and user fee waivers under certain circumstances.

In addition, if a drug receives its first FDA approval in an indication for which it has orphan drug designation, that drug is entitled to seven years of market exclusivity.

This implies that the FDA may not approve any other firm's application for the same drug for that same indication for a period of seven years.

Exceptions are limited, such as showing clinical superiority over the drug with orphan drug exclusivity.

GOCOVRI has been granted orphan drug exclusivity until August 24, 2024 for the treatment of dyskinesia in patients with Parkinson’s Disease receiving levodopa-based therapy with or without concomitant dopaminergic medications.

Although we have been granted FDA orphan drug designation for SPN-817 for the treatment of Dravet Syndrome and Lennox-Gaustaut Syndrome, and we intend to expand our designation for alternative uses where applicable, we may not receive the benefits associated with orphan drug designation.

This may result from a failure to maintain orphan drug status, or it may result from a competing product reaching the market with an orphan designation for the same disease indication.

rules for orphan drugs, if such a competing product reaches the market before ours does, the competing product could potentially obtain a scope of market exclusivity that limits or precludes our product from being sold in the U.S.

for seven years.

Even if we obtain exclusivity, the FDA could subsequently approve an alternative drug for the same condition if the FDA concludes that the second to reach the market is clinically superior in that it is safer, more effective, or makes a major contribution to patient care.

In addition, a competitor may receive approval of different products for the same indication for which our orphan product has exclusivity or may obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

In August 2017, the FDA Reauthorization Act of 2017 (FDARA) was enacted.

FDARA, among other things, codified the FDA's pre-existing regulatory interpretation to require that a drug sponsor demonstrate clinical superiority of an orphan drug that is otherwise the same as a previously approved drug for the same rare disease in order to receive orphan drug exclusivity.

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new legislation reverses prior precedent holding that the Orphan Drug Act unambiguously requires that the FDA recognize the orphan exclusivity period, regardless of showing clinical superiority.

The FDA may further reevaluate the Orphan Drug Act, including the FDARA amendment, its regulations, and policies.

We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future.

It is uncertain how any changes might affect our business.

Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.

Healthcare reform measures could hinder or prevent the commercial success of our products or product candidates.

The U.S., certain states, and certain foreign governments have shown significant, increased interest in pursuing healthcare reform and changes to the healthcare delivery system.

Government-adopted reform measures could adversely impact the pricing of healthcare products and services in the U.S.

or internationally, adversely impacting the level of reimbursement available from governmental agencies and/or commercial third-party payors.

The continuing efforts of third-party payors, including U.S.

federal and state agencies, foreign governments, insurance companies, managed care organizations, employers, and other payors of healthcare services to contain or reduce healthcare costs may adversely affect our ability to set prices at launch or to increase prices once launched.

These initiatives could adversely impact our ability to generate revenues, to achieve profitability, or to maintain profitability.

There have been a number of legislative and regulatory proposals and initiatives to change the healthcare system in ways that could adversely affect our ability to profitably sell any approved product.

Some of these proposed reforms would result in reduced reimbursement rates for our products, which would adversely affect our business strategy, operations, and financial results.

Recently, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which as of January 1, 2024 will eliminate the statutory Medicaid drug rebate cap that is currently set at 100% of a drug’s average manufacturer price.

Accordingly, starting in 2024, manufacturers of certain drugs whose prices have increased substantially since their launch may be required to make larger rebate payments.

This could result in situations where certain pharmaceutical manufacturers pay Medicaid more for certain drugs than they receive in compensation.

The American Rescue Plan of 2021 may push certain pharmaceutical manufacturers to reconsider pricing strategies and overall business in Medicaid and other federal programs.

This legislation is one in a series of legislative changes that have been proposed and adopted in the U.S.

since the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (referred to, along with its regulations as the "HealthCare Reform Law") was enacted in 2010.

These subsequent changes include reductions in Medicare payments to several types of healthcare providers and extensions to the statute of limitations period for the government to recover overpayments to providers from three to five years.

In March 2010, then President Obama signed into law a comprehensive change to the U.S.

healthcare system, known as the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010.

These laws and their regulations, which we refer to collectively as the "HealthCare Reform Law," have far reaching consequences for pharmaceutical companies like us.

Possible revisions to the HealthCare Reform Law are the subject of ongoing legislative debates and litigation.

Since its enactment in 2010, the HealthCare Reform Law continues to exert downward pressure on pharmaceutical pricing, especially under the Medicare and Medicaid programs, and has increased the industry's regulatory burden and operating costs.

Among the provisions of the HealthCare Reform Law of importance to our products and product candidates are the following:

• An annual, nondeductible fee payable to the U.S.

federal government by any entity that manufactures or imports specified branded prescription drugs or biologic agents.

This fee is based on each company's market share of prior year total sales of branded products to certain federal healthcare programs;

• An increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

• Rebates owed by manufacturers under the Medicaid Drug Rebate Program for drugs that are inhaled, infused, instilled, implanted, or injected.

In addition, on December 21, 2020, the Centers for Medicare & Medicaid Services issued a Final Rule that makes significant modifications to the Medicaid Drug Rebate Program regulations in several areas, including with respect to the treatment of value-based purchasing arrangements, the definition of key terms, and the price reporting treatment of manufacturer-sponsored patient benefit programs;

• A Medicare Part D coverage gap discount program, in which manufacturers must agree to offer a substantial point-of-sale discount off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D;

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• Extension of manufacturers' Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;

• Expansion of the eligibility criteria for Medicaid programs in certain states;

• Expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

• A requirement to annually report the number of drug samples that manufacturers and distributors provide to physicians;

• A Patient-Centered Outcomes Research Institute to oversee, identify priorities for, and conduct comparative clinical effectiveness research, along with funding for such research.

Since its enactment, there have been judicial, executive, and Congressional challenges to certain aspects of the HealthCare Reform Law.

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the HealthCare Reform Law brought by several states without specifically ruling on the constitutionality of the HealthCare Reform Law.

Accordingly, the HealthCare Reform Law remains in effect.

Further, prior to the U.S.

Supreme Court ruling, President Biden issued an executive order instructing certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including, among others, re-examining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create barriers to obtaining access to health insurance coverage through Medicaid or the HealthCare Reform Law.

Congress may consider other legislation to repeal or replace elements of the HealthCare Reform Law.

It is difficult to predict the extent to which any of these changes to the HealthCare Reform Law, or additional changes if made, may impact our business or any financial condition.

FDA statutes, regulations, and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products.

It is impossible to predict whether additional legislative changes will be enacted or whether FDA regulations, guidance, or interpretations will be changed, and what the impact of such changes, if any, may be.

Future regulatory changes could make it more difficult for us to maintain or attain approval to develop and commercialize our products and technologies.

The FDA has enhanced its post-marketing authority, including the authority to require post-marketing studies and clinical trials, labeling changes based on new safety information, or to require compliance with risk evaluation and mitigation strategies.

Further, the 2012 Food and Drug Administration Safety and Innovation Act expanded drug supply chain reporting requirements and strengthened the FDA's response to drug shortages.

The FDA's exercise of its authority could result in delays or could increase costs during product development and regulatory review.

It could also result in increased costs to assure compliance with post-approval regulatory requirements and could result in potential restrictions on the sale and/or distribution of any approved product.

Healthcare cost containment legislation and the failure of third-party payors to provide appropriate levels of coverage and reimbursement for the use of products and treatments facilitated by our products could harm our business and prospects.

Our products are dependent upon the coverage decisions and reimbursement policies established by government healthcare programs and private health insurers.

These policies affect which products customers purchase and the prices customers are willing to pay.

Reimbursement varies by country and can significantly impact the acceptance of new products and technologies.

Even if we develop a promising new product, we may find limited demand for the product unless appropriate reimbursement approval is obtained from private and governmental third-party payors.

Further legislative or administrative reforms to the reimbursement systems in the U.S.

and other countries in a manner that significantly reduces reimbursement for our products, including price regulation, competitive bidding and tendering, coverage and payment policies, comparative effectiveness of therapies, technology assessments, and managed-care arrangements, could have a material adverse effect on our business, financial condition or results of operations.

states have become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, and restrictions on access to certain products.

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Alternatively, these could prevent us from being able to commercialize our products or to generate an acceptable return on our investment.

The availability of generic products may also substantially increase pricing pressures and reduce reimbursement for our future products.

We expect to experience continued pricing pressures in connection with the sale of any of our products due to the increasing influence of health maintenance organizations, their increasing leverage in pricing negotiations, and additional legislative changes.

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The American Taxpayer Relief Act of 2012 further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three years to five years.

In 2019, the former Trump Administration put forth a proposal to eliminate certain rebates pharmaceutical companies pay insurance companies under Medicare.

The proposal would allow pharmaceutical companies and pharmacy benefit managers to negotiate rebates as long as the savings are passed directly to consumers at the pharmacy.

More recently, there have been several Congressional inquiries and proposed bills designed to, among other things, bring:

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Further, the Cures Act directed the Centers for Disease Control and Prevention to expand surveillance of neurological diseases.

The FDA is in the process of implementing the Cures Act requirements.

In August 2017, then President Trump signed the FDA Reauthorization Act of 2017 (FDARA) into law.

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and authorized the FDA to designate a drug as a "regenerative advanced therapy," thereby making it eligible for certain expedited review and approval designations.

On September 19, 2019, U.S.

House Speaker Nancy Pelosi unveiled a plan to lower the cost of prescription drugs by allowing the federal government to negotiate prices annually for the most expensive drugs on the market.

On December 6, 2019, House Republican leaders released a bipartisan alternative to Speaker Pelosi's plan.

On December 12, 2019, the House passed H.R.3.

known as the Lower Drug Costs Now Act and sent it to the Senate for consideration.

Any prescription drug pricing legislation that is ultimately adopted may affect the success of our products, product candidates, and profitability.

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In addition, the former Trump administration released a "Blueprint" to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers.

Department of Health and Human Services has solicited feedback on some of these measures and has implemented others.

On July 24, 2020, and September 13, 2020, then President Trump announced several executive orders related to prescription drug pricing that seek to implement several of the administration's proposals.

The FDA also released a final rule on September 24, 2020, providing guidance for states to build and submit plans to import drugs from Canada.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

The likelihood of implementation of any of the other Trump administration reform initiatives is uncertain, particularly in light of the new administration.

The Inflation Reduction Act of 2022 (“IRA”), signed into law on August 16, 2022, includes several measures intended to lower the cost of prescription drugs and related healthcare reforms, including limits on price increases and subjecting an escalating number of drugs to annual price negotiations with The Centers for Medicare & Medicaid Services.

Specifically, the IRA authorizes and directs HHS to set drug price caps for certain high-cost Medicare Part B and Part D qualified drugs, with the initial list of drugs to be selected by September 1, 2023, and the first year of maximum price applicability to begin in calendar year 2026.

The IRA further authorizes HHS to penalize pharmaceutical manufacturers that increase the price of certain Medicare Part B and Part D drugs faster than the rate of inflation.

Finally, the IRA creates significant changes to the Medicare Part D benefit design by capping Part D beneficiaries’ annual out-of-pocket spending beginning in calendar year 2025.

We cannot predict whether additional legislation or rulemaking related to the IRA will be issued or enacted, or what impact, if any, such changes will have on the profitability of any of our products.

There may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our products, and we cannot predict the scope of any future changes or the impact that those changes may have on our business.

We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and lower reimbursement, and additional downward pressure on the price that we receive for any approved product.

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and in other countries could limit the prices that can be charged for our products and product candidates or may otherwise limit our commercial opportunities.

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Implementation of any change in healthcare laws could cause us to incur significant compliance expenses or could subject us to substantial penalties and fines if our business is found to violate these requirements.

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A person or entity does not need to have actual knowledge or specific intent to violate the statute in order to have committed a violation.

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government may assert that a claim, including items and services resulting from a violation of the federal Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the federal False Claims Act, as discussed below.

Further, the government may assert that a claim, including items and services resulting from a violation of the federal Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the federal False Claims Act, as discussed below.

On December 2, 2020, additional Anti-Kickback regulations were finalized, creating new and change existing safe harbors, which took effect in January 2021.

Safe harbors protect certain arrangements from prosecution if each of the elements of the safe harbor is satisfied;

• On November 16, 2020, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a Special Fraud Alert addressing manufacturer Speaker Programs signaling both a more narrow government view of Anti-Kickback Statute compliance with respect to such programs as well as potential for increased enforcement in the space by government oversight agencies such as OIG and the Department of Justice;

• Federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things:

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Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge or specific intent to violate the statute in order to have committed a violation.

On December 10, 2020, the U.S.

Department of Health and Human Services released proposed modifications to the HIPAA Privacy Rule, which, if adopted, would change rules related to patient access to HIPAA protected records, among others;

On December 10, 2020, HHS released proposed modifications to the HIPAA Privacy Rule, which, if adopted, would change rules related to patient access to HIPAA protected records, among others;

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• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, also imposes certain requirements relating to the privacy, security, and transmission of individually identifiable health information;

• Federal physician payment transparency requirements under the Affordable Care Act, commonly referred to as the Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to physician payments, and to report other transfers of value, physician ownership, and investment interests;

• Federal physician payment transparency requirements under the Affordable Care Act, commonly referred to as the Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the HHS information related to physician payments, and to report other transfers of value, physician ownership, and investment interests;

• Federal price reporting laws, which require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our commercial products;

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Many of these state laws differ from one another in significant ways and often are not preempted by federal laws, thus complicating compliance efforts;

• Certain state laws require pharmaceutical companies to comply with voluntary compliance guidelines promulgated by a pharmaceutical industry association and relevant compliance guidance issued by HHS Office of Inspector General, bar drug manufacturers from offering or providing certain types of payments or gifts to physicians and other healthcare providers, and/or require disclosure of gifts or payments to physicians and other healthcare providers;

• Various state and foreign laws also govern the privacy and security of health information in some circumstances;

many of these laws differ from each other in significant ways and often are not preempted by HIPAA;

• Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended.

If our products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.

Under the Veterans Health Care Act (VHCA) drug companies are required to offer certain pharmaceutical products at a reduced price to a number of federal agencies including the United States Department of Veterans Affairs and United States Department of Defense, the Public Health Service and certain private Public Health Service—designated entities in order to participate in other federal funding programs including Medicare and Medicaid.

Recent legislative changes purport to require that discounted prices be offered for certain United States Department of Defense purchases for its TRICARE program via a rebate system.

Participation under the VHCA requires submission of pricing data and calculation of discounts and rebates pursuant to complex statutory formulas, as well as the entry into government procurement contracts governed by the Federal Acquisition Regulations;

• Similar healthcare laws in the European Union and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations could be costly.

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Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, and fraud laws may prove costly.

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Guidelines and recommendations published by various organizations can reduce the use of our products and product candidates.

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In connection with an ANDA, a Paragraph IV Certification Notice Letter notifies the FDA that one or more patents listed in the FDA's Orange Book is alleged to be invalid, unenforceable, or will not be infringed by the competitive ANDA product.

For example, we received a Paragraph IV Notice Letter from generic drug makers Apotex Inc.

and Apotex Corp.

(collectively "Apotex") and RiconPharma ("Ricon") directed to the Oxtellar XR Orange Book patents, which generally cover once-a-day oxcarbazepine formulations and methods of treating seizures using those formulations.

We have filed lawsuits against Apotex and Ricon alleging infringement of these Orange Book patents.

The Company intends to vigorously enforce its intellectual property rights relating to Oxtellar XR.

Similarly, we have received Paragraph IV Notice Letters from our generic drug makers directed to the Trokendi XR Orange Book patents, which generally cover once-a-day topiramate formulations and methods of treating seizure using those formulations.

We have filed lawsuits against all four generic companies alleging infringement of these Orange Book patents.

The Company intends to vigorously enforce its intellectual property rights relating to Trokendi XR.

We have also received Paragraph IV Notice Letters from six generic drug makers directed to the Xadago Orange Book patents.

The Company, jointly with Zambon S.p.A.

(“Zambon”) and Newron Pharmaceuticals S.p.A.

(“Newron”), filed lawsuits against the six companies alleging infringement of these Orange Book patents.

For example, we have received Paragraph IV Notice Letters from generic drug makers directed to the Orange Book patents of several of our products.

We have filed lawsuits against the generic drug makers and intend to vigorously enforce our intellectual property rights relating to our products.

For more information, refer to Part I, Item 3—Legal Proceedings contained in this Annual Report Form 10-K.

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If securities analysts or investors perceive these results to be negative or perceive that the presence or continuation of these cases creates a level of uncertainty regarding our ability to increase or sustain product sales, it could have a substantial adverse effect on the price of our common stock.

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There can be no assurance that our product candidates will not be subject to the same risks.

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and abroad (including Europe, Canada, and certain other countries when appropriate) relating to proprietary technologies that are important to the development of our business.

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The strength of patents in the pharmaceutical industry involves complex legal and scientific questions and can have uncertain results.

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Such a trial may not occur for several years.

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There is a substantial amount of litigation involving patent and other intellectual property rights in the pharmaceutical industry.

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If the court finds that the infringement was willful, we could be ordered to pay treble damages and pay the patent owner's legal fees;

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• Court rulings prohibiting us from selling our products or product candidates, unless the third party licenses its rights to us, which it is not required to do;

• If a license is available from a third party, we may have to pay substantial royalties, fees or grant cross-licenses to our intellectual property rights;

• Incurring the costs and expending the time necessary to defend against such litigation;

• Redesigning our products or product candidates so they do not infringe.

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If successful claims are brought against us, we may incur substantial liabilities.

In recent years, the volume of claims and the amount of damages claimed in litigation against the pharmaceutical industry have increased.

In recent years, the volume and variety of claims and the amount of damages claimed in litigation against the pharmaceutical industry have increased.

For example, recently we or our subsidiaries have been involved in litigations alleging violation of federal and state false claims acts and antitrust laws.

For more information, refer to Part I, Item 3 - Legal Proceedings contained in this Annual Report Form 10-K.

While we strive to conduct our business in accordance with the highest standards, we nevertheless remain exposed to litigation risk.

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In the future, the potential inability to obtain sufficient product liability insurance at an acceptable cost, or at all, to protect against potential product liability claims could prevent or inhibit the development and commercialization of the pharmaceutical products we develop.

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As we continue to increase the size of our organization, we may experience difficulties in managing growth.

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• Manage regulatory approvals and clinical trials effectively;

• Manage our internal development efforts effectively and in a cost effective manner while complying with our contractual obligations to licensors, licensees, contractors, collaborators, and other third parties;

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• Manage our internal developmental efforts efficiently while complying with our contractual obligations to licensors, licensees, contractors, collaborators, and other third parties;

• Commercialize our product candidates;

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This growth could place a strain on our administrative and operational infrastructure and may require our management to divert a disproportionate amount of its attention away from our day-to-day activities.

We may not be able to effectively manage the expansion of our operations or to recruit and train additional qualified personnel.

We may not be able to effectively manage the expansion of our operations or to recruit, train, and retain additional qualified personnel, particularly in an inflationary economic environment.

This may result in weaknesses in our infrastructure;

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Cybersecurity incidents may adversely impact our financial condition, results of operations, and reputation.

Security breaches and other disruptions could compromise our information and expose us to liability which would cause our business and reputation to suffer.

Our operations involve the use of multiple systems that process, store and transmit sensitive information about our customers, suppliers, employees, financial position, operating results, and strategies.

Cyberattacks or security breaches, similar to the 2021 ransomware attack, could compromise confidential client information, confidential employee information or other sensitive data, cause a disruption or delay in our operations, harm our reputation, result in improper use of our systems and networks, the manipulation and destruction of data, or the release of defective products and may otherwise expose us to liability, including as a result of the release of third party information improperly obtained from our systems, any of which in turn could negatively impact our business, financial results, reputation and the value of our common shares.

In the ordinary course of our business, we or our vendors collect and store sensitive data in our or their data centers and on our networks, including:

intellectual property;

proprietary business information;

proprietary information of our customers, suppliers, and business partners;

and identifiable personal information of our employees and patients in our clinical trials.

Hardware, software, or applications we develop or procure from third parties or through open source solutions may contain defects in design or other problems that could unexpectedly compromise information security.

Additionally, cyberattacks or security breaches, similar to the 2021 ransomware attack, could compromise confidential client information, confidential employee information or other sensitive data, cause a disruption or delay in our operations, harm our reputation, result in improper use of our systems and networks, the manipulation and destruction of data, or the release of defective products and may otherwise expose us to liability, including as a result of the release of third party information improperly obtained from our systems, any of which in turn could negatively impact our business, financial results, reputation and the value of our common shares.

We have and continue to implement measures to safeguard our systems and information and mitigate potential risks, but there is no assurance that such actions will be sufficient to prevent cyberattacks or security breaches that manipulate or improperly use our systems, compromise sensitive information, destroy or corrupt data, or otherwise disrupt our operations.

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Additionally, a cyberattack or security breach may remain undetected for an extended period of time, potentially escalating the adverse effects of any such incident.

In response to a cyberattack or security breach, as was the case following the 2021 ransomware attack, we may accelerate previously planned information technology investments in ways designed to improve our information security and technology infrastructure.

As a result, we have incurred costs in 2021 and expect to continue to incur costs in the future, which may be significant, in connection with efforts designed to enhance our data security and take further steps designed to protect against unauthorized access to, or manipulation of, our systems and data.

In response to any future cyberattack or security breach

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we may further increase our information technology investments.

Despite these efforts, we may not have identified and remediated all of the potential causes of the 2021 ransomware attack and similar incidents may occur in the future.

While integrating acquired businesses and operations, including those of Adamas, undertaking a transition to a more modern ERP system for financial reporting, and upgrading the Company's information technology systems, we may face an elevated cybersecurity risk.

We also face the possibility of having a material weakness of internal control.

The continued occurrence of high-profile data breaches provides evidence of an external environment which is increasingly hostile to information security and to the secure processing, maintenance, and transmission of information critical to our operations and business strategy.

In response to a cyberattack or security breach, as was the case following the 2021 ransomware attack, we accelerated previously planned information technology investments in ways designed to improve our information security and technology infrastructure.

Since 2021 we have incurred costs and expect to continue to incur costs in the future, which may be significant, in

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connection with efforts designed to enhance our data security and take further steps designed to protect against unauthorized access to, or manipulation of, our systems and data.

In response to any future cyberattack or security breach we may further increase our information technology investments.

Despite our security measures, our information technology and infrastructure may be vulnerable to additional attacks breached due to employee error, malfeasance, or other disruptions.

It is possible that the security controls we have implemented to safeguard personal data and our networks, train our employees and vendors on data security, and implement security requirements and other practices may not prevent the compromise of our networks or the improper disclosure of data that we or our vendors store and manage.

Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, other forms of deceiving our employees, contractors, and vendors.

If we, our vendors, or other third parties with whom we do business experience significant data security breaches or fail to detect and appropriately respond to significant data security breaches, we could be exposed to government enforcement actions.

Improper disclosure could also harm our reputation, create risks for customers, or subject us to liability under laws that protect personal information.

This could adversely affect our business, revenues, and competitive position.

While integrating acquired businesses and operations and upgrading the Company's information technology systems, we may face an elevated cybersecurity risk.

At the time of the 2021 ransomware attack we self-insured by assuming the full risk of costs related to cybersecurity incidents.

Following the attack and re-assessment of our likelihood of being the target of a cybersecurity attack, we are in the process of obtaining cyber insurance in addition to our business insurance coverage, however, it will not cover the 2021 ransomware attack.

We have obtained cyber insurance, which is effective January 2023, in addition to our business insurance coverage, however, it will not cover the 2021 ransomware attack.

Our insurance coverage may be insufficient to cover the full impact of a cyberattack.

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In addition, our ability to hire qualified personnel also depends on our flexibility to reward superior performance and to pay competitive compensation.

In our industry, during the current inflationary economic environment, compensation levels for qualified personnel and competition among employers to recruit and retain such personnel have and continue to increase.

We may not be able to attract or motivate qualified management, scientific and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical, and other businesses.

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As a result, despite significant efforts on our part, we may be unable to attract and retain qualified individuals in sufficient numbers, which could have an adverse effect on our business, financial condition, and results of operations.

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Our business involves the use of hazardous materials, and we must comply with environmental laws and regulations.

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In the event of an accident, local, city, state, or federal authorities may curtail the use of these materials and may interrupt our business operations, including our commercialization, research and development efforts.

Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards

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prescribed by applicable laws and regulations, we have no direct control over our third-party manufacturers, and therefore cannot guarantee that this is the case.

Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by applicable laws and regulations, we have no direct control over our third-party manufacturers, and therefore cannot guarantee that this is the case.

We can eliminate the risk of accidental contamination or that such safety procedures will prevent injury from these materials.

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Any or all of these effects could adversely affect our business, financial condition, and results of operations.

Provisions in our agreement with Shire, or its successor, impose restrictive covenants on us, which could limit our ability to operate effectively in the future.

Provisions in our agreement with Shire, or its successor, Takeda Pharmaceutical Company Limited, impose restrictive covenants on us, which could limit our ability to operate effectively in the future.

In 2005, we purchased substantially all of the assets of Shire Laboratories Inc., the predecessor of Supernus Pharmaceuticals.

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Although these various restrictions and covenants on us do not currently impact our products, product candidates, or business, they could in the future limit or delay our ability to take advantage of business opportunities that may relate to such compounds.

The Company’s financial condition and results of operations for fiscal year 2021 and beyond may be materially and adversely affected by the ongoing COVID-19 outbreak.

The Company’s financial condition and results of operations for fiscal year 2023 and beyond may be materially and adversely affected by the ongoing COVID-19 and any future pandemic.

The Company is currently following the recommendations of local and federal health authorities to minimize exposure risk for its various stakeholders, including employees.

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This would result in lost sales, additional costs, penalties, or damage to the Company's reputation.

Workforce limitations and travel restrictions resulting from related government actions taken to contain the spread of the disease may impact many aspects of our business.

If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with the COVID-19 outbreak, our operations may be negatively impacted.

As a result of government restrictions and social distancing guidelines in the United States, there is an increased reliance on working from home for our employees.

For example, the Company’s sales force is currently functioning largely utilizing digital engagement tools, tactics, and virtual detailing, which may be less effective than the Company’s ordinary course sales and marketing programs.

In addition, patients may not be able to get their prescriptions or visit their physicians, which in turn could adversely impact the prescription volumes of our commercial products.

Similarly, investigative sites, subjects in clinical trials, and vendors that include our contract research organizations may be subject to the same workforce limitations and travel restrictions.

As a result, we may experience delays or disruptions in our preclinical studies, clinical studies, and non-clinical experiments due to unforeseen circumstances, including but not limited to, interruption of key clinical trial activities, such as clinical trial site data monitoring, and interruption of clinical trial subject visits and study procedures.

The Company may also experience other unknown impacts from COVID-19 that cannot be predicted.

While there has been no specific notice of delay from the federal authorities, potential interruptions, delays, or changes to the operations of the U.S.

Food and Drug Administration may impact the approval of the NDA of SPN-812 in adults with ADHD.

The COVID-19 and any future pandemic may result in workforce limitations and travel restrictions resulting from related government actions taken to contain the spread of the disease, any of which may impact many aspects of our business.

If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with the pandemic, our operations may be negatively impacted.

During a pandemic, government restrictions and social distancing guidelines may continue to drive an increased reliance on working from home for our employees.

For example, during the current pandemic, the Company’s sales force is functioning largely utilizing digital engagement tools, tactics, and virtual detailing, which may be less effective than the Company’s ordinary course sales and marketing programs.

In addition, during a pandemic, patients may not be able to get their prescriptions or visit their physicians, which in turn could adversely impact the prescription volumes of our commercial products.

Similarly, investigative sites, subjects in clinical trials, and vendors that include our contract research organizations may be subject to the same workforce limitations and travel restrictions during a pandemic.

As a result, during a pandemic, we may experience delays or disruptions in our preclinical studies, clinical studies, and non-clinical

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experiments due to unforeseen circumstances, including but not limited to, interruption of key clinical trial activities, such as clinical trial site data monitoring, and interruption of clinical trial subject visits and study procedures.

The Company may also experience other unknown impacts from a pandemic that cannot be predicted.

For example, in its CRL related to SPN-830, the FDA mentions that approval of the NDA for SPN-830 requires inspections that could not be completed in a timely manner due to COVID-19 travel restrictions.

We may also experience delays in receiving supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns, stoppages, disruptions in delivery systems.

The Company may also require an increased level of working capital if it experiences extended billing and collection cycles as a result of displaced employees at the Company, payors, revenue cycle management contractors, or otherwise.

In addition, the disease outbreak could result in a widespread health crisis that could adversely affect the U.S.

economy and financial

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markets, resulting in an economic downturn that could affect customers' demand for our products and our ability to raise additional capital or obtain financing on favorable terms.

In addition, any disease outbreak could result in a widespread health crisis that could adversely affect the U.S.

economy and financial markets, resulting in an economic downturn that could affect customers' demand for our products and our ability to raise additional capital or obtain financing on favorable terms.

The Company may experience delays in receipt of financial information, which may preclude timely reporting of financial results to investors and to the U.S.

Securities and Exchange Commission.

Accordingly, disruptions to the Company's business as a result of COVID-19 could result in a material adverse effect on the Company's business, results of operations, financial condition, and prospects in the near-term and beyond 2020.

While the Company has developed a comprehensive COVID-19 contingency plan designed to potentially address the challenges and risks presented by this pandemic, there can be no assurance that such plan will be effective in mitigating the effects of the COVID-19 pandemic on our business operations and consequently the potential material adverse impact on our anticipated revenue, earnings and liquidity.

Accordingly, disruptions to the Company's business as a result of a pandemic could result in a material adverse effect on the Company's business, results of operations, financial condition, and prospects in the near and long terms.

There can be no assurance that any of the Company's plans will be effective in mitigating the effects of a pandemic on our business operations and consequently the potential material adverse impact on our anticipated revenue, earnings and liquidity.

Compliance with the terms and conditions of our Corporate Integrity Agreement requires significant resources and management time and, if we fail to comply, we could be subject to penalties or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.

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• Any delays in regulatory review and approval of product candidates in clinical development;

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• The timing of any regulatory approvals, if received, of additional indications for our existing products;

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• Our dependency on third-party manufacturers to supply or manufacture our products and product candidates;

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• Competition from existing products, new products, or potential generics to our products or to competitive products that may emerge;

• Regulatory developments affecting our products and product candidates;

• Increased costs as a result of inflation, unstable economic conditions and geopolitical events, including increases in compensation and professional expenses, cost of goods sold, and research and development expenses;

• Changes in reimbursement environment and regulatory changes.

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Our ability to utilize our U.S.

federal and state net operating losses or U.S.

federal tax credits is currently limited and may be limited further, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

federal and state net operating losses is currently limited and may be limited further, under Sections 382 of the Internal Revenue Code.

The limitations apply if an ownership change, as defined by Section 382, occurs.

Generally, an ownership change occurs when certain shareholders change their aggregate ownership position by more than 50 percentage points over their lowest ownership percentage in a testing period, which is typically three years, or since the last ownership change.

We are already subject to Section 382 limitations due to cumulative ownership changes that, as of November 15, 2013, totaled more than 50%.

In addition, our acquired tax attributes are subject to Section 382 limitations.

Our acquired tax attributes are subject to Section 382 limitations.

As of December 31, 2022, we had U.S.

Federal and state net operating loss carryforwards of approximately $449.3 million and $431.9 million, respectively.

As of December 31, 2021, we had research and development tax credit carryforwards of approximately $1.6 million.

Future changes in stock ownership may also trigger an additional ownership change and, consequently, another Section 382 or 383 limitation.

Federal net operating loss carryforwards of approximately $416.7 million.

Future changes in stock ownership may also trigger an additional ownership change and, consequently, another Section 382 limitation.

Any limitation may result in expiration of a portion of the net operating loss or tax credit carryforwards before utilization, which would reduce our gross deferred income tax assets.

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Moreover, we are required to maintain effective disclosure controls and procedures in order to provide reasonable assurance that the information required to be reported in our periodic reports filed with the SEC is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We have identified material weaknesses in our internal control over financial reporting as of December 31, 2021.

Refer to Part II, Item 9A for additional information regarding the material weaknesses.

We have identified material weaknesses in our internal control over financial reporting as of December 31, 2021 which persist on, a narrower basis, as of December 31, 2022.

Refer to Part II, Item 9A for additional information regarding the material weaknesses and our remediation efforts.

We have been implementing and will continue to implement measures designed to ensure that the control deficiencies contributing to the material weaknesses are remediated;

however, we cannot provide assurances that these measures will be successful.

If we are unable to remediate the material weaknesses or are unable to otherwise maintain effective internal control over financial reporting, our ability to report financial information timely and accurately could be adversely affected.

If we are unable to remediate the material weaknesses or are unable to otherwise maintain

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effective internal control over financial reporting, our ability to report financial information timely and accurately could be adversely affected.

As a result, we could lose investor confidence and become subject to litigation or investigations, which could adversely affect our business, operations, and financial condition and trading price of our Common Stock.

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Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

If we continue to be unable to maintain effective internal control over financial reporting or disclosure controls and procedures or remediate any material weakness, it could result

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in a material misstatement of our consolidated financial statements that would require a restatement or other materially deficient disclosures, investor confidence in the accuracy and timeliness of our financial reports and other disclosures may be adversely impacted, and the market price of our common shares could be negatively impacted.

If we continue to be unable to maintain effective internal control over financial reporting or disclosure controls and procedures or remediate any material weakness, it could result in a material misstatement of our consolidated financial statements that would require a restatement or other materially deficient disclosures, investor confidence in the accuracy and timeliness of our financial reports and other disclosures may be adversely impacted, and the market price of our common shares could be negatively impacted.

We are required to disclose changes made in our internal control procedures on a quarterly basis.

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We may also encounter difficulties in addressing possible differences in business backgrounds, corporate cultures and management philosophies, and maintaining adequate staffing, which could potentially pose challenges in the implementation and operation of controls.

We may also identify or fail to identify potential deficiencies in internal controls at the acquired or combined business.

The integration of the internal controls relating to the business acquired through the Adamas Acquisition into ours is currently ongoing.

We have excluded the acquisition of Adamas Pharmaceuticals, Inc.

from our evaluation of internal control over financial reporting for the year ended December 31, 2021.

This exclusion is in accordance with the U.S.

Securities and Exchange Commission's guidance permitting a company to exclude an acquired business from management's assessment of the effectiveness of internal control over financial reporting for up to one year following the acquisition.

We may also identify or fail to identify potential deficiencies in internal controls at the acquired or combined business level.

Any difficulties in the assimilation of acquired businesses into our internal control framework could harm our operating results or cause us to fail to meet our financial reporting obligations.

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We are continuing to refine our financial reporting and disclosure controls and other procedures that are designed to ensure that the information that we are required to disclose in the reports that we will file with the SEC are properly recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

However, we have identified material weaknesses in our internal control over financial reporting as of December 31, 2021.

However, we have identified material weaknesses in our internal control over financial reporting as of December 31, 2021, which persists on a narrower basis, as of December 31, 2022.

We have expended and anticipate that we will continue to expend significant resources in order to improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, including to remediate the material weaknesses that have been identified.

Refer to Part II, Item 9A for additional information regarding the material weaknesses that have been identified and our remediation plans.

Refer to Part II, Item 9A for additional information regarding the material weaknesses that have been identified and the status of our remediation efforts.

We have and may further expand our business through acquisitions of new product lines or businesses, which exposes us to various risks, including difficulties in integrating acquisitions.

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We anticipate competition for attractive candidates from other parties, some of whom have substantially greater financial and other resources than we have.

Any acquisition, alliance, joint venture, investment, or partnership could impair our business, financial condition, reputation, and operating results.

Any acquisition, alliance, joint venture, investment, or partnership could impair our business, financial

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condition, reputation, and operating results.

For instance, the benefits of an acquisition, or new alliance, joint venture, investment, or partnership may take more time than expected to develop or integrate into our operations, and we cannot guarantee that previous or future acquisitions, alliances, joint ventures, investments, or partnerships will, in fact, produce any benefits.

Whether or not any particular acquisition is successfully completed, each of these activities is expensive and time consuming and would likely require our management to spend considerable time and effort to complete, which would detract from our management's

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ability to run our current business.

Although we may spend considerable funds and efforts to pursue acquisitions, we may not be able to complete them.

Acquisitions, including our recent USWM Acquisition and Adamas Acquisition, may involve a number of risks, the occurrence of which could adversely affect our business, reputation, financial condition, and operating results, including:

Acquisitions, including our recent Adamas Acquisition and USWM Acquisition, may involve a number of risks, the occurrence of which could adversely affect our business, reputation, financial condition, and operating results, including:

• Dilutive issuances of equity securities;

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• Impacts as a result of purchase accounting adjustments, incorrect estimates made in the accounting for acquisitions, the incurrence of non-recurring charges, or other potential financial accounting or reporting impacts

The Company acquired Adamas through a tender offer for $8.10 per share in cash (or an aggregate of approximately $400 million), payable at closing plus two non-tradable contingent value rights (CVR) collectively worth up to $1.00 per share in cash (or an aggregate of approximately $50 million), for a total consideration of $9.10 per share in cash (or an aggregate of approximately $450 million).

The first CVR, represents a contractual right to receive a contingent payment of $0.50 per share in cash, is payable upon achieving net sales of GOCOVRI of $150 million in any four consecutive quarters between closing and the

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The second CVR represents a contractual right to receive a contingent payment of $0.50 per share in cash, is payable upon achieving net sales of GOCOVRI of $225 million in any four consecutive quarters between closing and the end of 2025.

In regards to the USWM Acquisition, the Company acquired the right to further develop and commercialize APOKYN, XADAGO, and the Apomorphine Infusion Device (SPN-830) in the U.S.

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Sales-based milestones are dependent on achievement of future product sales targets.

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As regards the Adamas Acquisition, the Company acquired Adamas through a tender offer for $8.10 per share in cash (or an aggregate of approximately $400 million), payable at closing plus two non-tradable contingent value rights (CVR) collectively worth up to $1.00 per share in cash (or an aggregate of approximately $50 million), for a total consideration of $9.10 per share in cash (or an aggregate of approximately $450 million).

The first CVR, worth $0.50 per share, is payable upon achieving net sales of GOCOVRI of $150 million in any four consecutive quarters between closing and the end of 2024.

The second CVR, worth $0.50 per share, is payable upon achieving net sales of GOCOVRI of $225 million in any four consecutive quarters between closing and the end of 2025.

In addition, the assets acquired from the acquisitions, which included intangible assets, were recorded at their estimated fair value at date of acquisition.

The fair value of intangible assets, including acquired in-process research and development (IPR&D), were determined using information available as of the acquisition date and were based on estimates and assumptions that were deemed reasonable by management.

The fair value of these contingent consideration liabilities and the CVR is determined as of the acquisition date using estimated or forecast inputs.

In addition, the assets acquired from the acquisitions, which included intangible assets, were recorded at their estimated fair value at the applicable date of acquisition.

The fair value of intangible assets, including acquired in-process research and development (IPR&D), were determined using information available as of the applicable acquisition date and were based on estimates and assumptions that were deemed reasonable by management.

The fair value of these contingent consideration liabilities and the CVR is determined as of the applicable acquisition date using estimated or forecast inputs.

Changes in any of the inputs or assumptions to the fair value estimate may result in a significantly different fair value adjustment, which may impact the results of operations in the period in which the adjustment is made.

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Any impairment in the value of our intangible assets, including goodwill, would negatively affect our operating results and total capitalization.

We completed the Adamas Acquisition in November 2021 and the USWM Acquisition in June 2020.

As part of the acquisitions, we acquired substantial intangible assets, including goodwill.

As part of the Adamas Acquisition and the USWM Acquisition, we acquired substantial intangible assets, including goodwill.

We may not realize all the economic benefits from the acquisition, which could cause an impairment of goodwill or intangibles.

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Factors that may cause a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in our stock price and market capitalization, reduced future cash flow estimates if significant and prolonged negative industry or economic trends exist or significant changes occur in the competitive landscape and slower growth rates in industry segments in which we participate.

For example, in February 2022 the FDA approved the first generic of APOKYN (apomorphine hydrochloride injection) to treat hypomobility "off" episodes ("end-of-dose wearing off" and unpredictable "on/off" episodes) associated with advanced Parkinson’s disease.

The approval is for an application of the drug cartridges only, which are compatible for use with the APOKYN Pen, the brand-name pen injector.

At this time, we cannot forecast what impact, if any, the FDA's approval of this generic may have on sales of APOKYN, or the value of our intangible asset associated with APOKYN.

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We have financed our operations through revenue generated from operations and various transactions, including the following:

• The completion of our $52.3 million initial public offering in May 2012;

• The completion of our follow-on $49.9 million equity offering in November 2012;

• The completion of our $90.0 million private placement offering of 7.50% Convertible Senior Secured Notes (2019 Notes) in May 2013;

• The $30.0 million monetization of certain future royalty streams in 2014, under our existing license for Orenitram;

• The execution of $150.0 million uncommitted demand secured credit line with a financial institution in February 2023 (the "Credit Line");

• The completion of our $402.5 million private placement of 0.625% Convertible Senior Notes (2023 Notes) in March 2018;

Our ability to remain profitable depends upon our ability to generate the same or increasing levels of revenue from sales of our commercial products while simultaneously funding the requisite research expenditures to gain FDA approval for our

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product candidates.

• The $30.0 million monetization of certain future royalty streams in 2014, under our existing license for Orenitram;

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• The completion of our $90.0 million private placement offering of 7.50% Convertible Senior Secured Notes (2019 Notes) in May 2013;

• The completion of our follow-on $49.9 million equity offering in November 2012;

• The completion of our $52.3 million initial public offering in May 2012

Since 2013, the first year in which we generated revenue from our first commercial products, we have demonstrated the ability to become and remain profitable.

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We expect our selling, general and administrative costs to continue to increase as we continue to support the ongoing commercialization of our products and to further increase in anticipation of launching our product candidates.

While we anticipate operating profitably in 2022 and beyond, we cannot be certain that we will do so.

While we operated profitably in 2022, we cannot be certain that we will continue to do so.

Any potential future losses, if and when they occur, could have an adverse impact on our stockholders' equity and working capital.

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Also, as of December 31, 2022, we had outstanding options to purchase 5,797,569 shares of common stock that, if exercised, would result in these additional shares becoming available for sale.

Approximately 6.3% of these shares and options are held by senior management of the Company.

We have also registered all common stock subject to options, restricted stock units and performance stock units outstanding or reserved for issuance under our 2005 Stock Plan, 2012 Equity Incentive Plan, 2021 Equity Incentive Plan and 2012 Employee Stock Purchase Plan.

An aggregate of 3,757,018 and 777,822 shares of our common stock are reserved for future issuance under the 2021 Equity Incentive Plan and the 2012 Employee Stock Purchase Plan, respectively.

The indenture for the 2023 Notes will not restrict our ability to issue additional equity securities in the future.

The indenture for the 2023 Notes does not restrict our ability to issue additional equity securities in the future.

If we issue additional shares of our common stock or issue rights to acquire shares of our common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading price of our common stock, and, accordingly, the 2023 Notes, may significantly decrease.

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stock market;

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• The commercial performance of products, including Trokendi XR, Oxtellar XR, Qelbree, APOKYN, and GOCOVRI, or any of our product candidates that receive regulatory approval;

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• The filing of ANDAs by generic companies seeking approval to market generic versions of our products;

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• Plans for, progress in, and results from clinical trials of our product candidates generally;

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The ability to authorize preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us;

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• Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders' meeting.

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As a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions outside of a stockholders' meeting;

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• Special meetings of stockholders may be called only by the chairman of our board of directors or a majority of our board of directors.

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Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition, and results of operations, and impair our ability to satisfy our obligations under the notes.

We incurred $402.5 million of additional indebtedness as a result of the sale of 0.625% Convertible Senior Notes due 2023 (2023 Notes).

We may also incur additional indebtedness to meet future financing needs.

We incurred $402.5 million of additional indebtedness as a result of the sale of 0.625% Convertible Senior Notes, which mature on April 1, 2023 (2023 Notes).

During the first quarter of 2023, we entered into the Credit Line, an uncommitted demand secured credit line with a financial institution for up to $150.0 million.

We may also incur additional indebtedness to meet future financing needs or otherwise refinance existing indebtedness.

Our indebtedness could have significant negative consequences for our security holders and our business, results of operations, and financial condition by, among other things:

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• Limiting our flexibility to plan for, or react to, changes in our business;

• Diluting the economic interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the 2023 Notes, notwithstanding the convertible hedge and warrant transactions;

• Diluting the economic interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of any convertible notes, notwithstanding any applicable convertible hedge and warrant transactions;

• Placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves to pay amounts due under our indebtedness, including the 2023 Notes.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves to pay amounts due under our indebtedness, including the 2023 Notes or the Credit Line.

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We may be unable to raise the funds necessary to repurchase the 2023 Notes for cash following a fundamental change or to pay any cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the 2023 Notes or pay cash upon their conversion.

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In addition, applicable law and/or regulatory authorities may restrict our ability to repurchase the 2023 Notes or to pay the cash amounts due upon conversion.

Our failure to repurchase 2023 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the

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Our failure to repurchase 2023 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in other indebtedness becoming immediately payable in full.

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In either case, and in other cases, our obligations under the 2023 Notes and the indenture could increase the cost of acquiring us, or otherwise discourage a third party from acquiring us, to remove incumbent management, including in a transaction that noteholders or holders of our common shares may view as favorable.

The accounting method for the 2023 Notes could adversely affect our reported financial condition and results.

The accounting method for reflecting the 2023 Notes on our balance sheet, accruing interest expense for the Notes, and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

Under applicable accounting principles, we record the initial liability carrying amount of the 2023 Notes at the fair value of a similar debt instrument that does not have a conversion feature and is valued using our cost of capital for straight, unconvertible debt.

We reflect the difference between the net proceeds from this offering and the initial carrying amount as a debt discount for accounting purposes, with the debt discount being amortized as interest expense over the term of the notes.

As a result of this amortization, the interest expense that we recognize for the 2023 Notes for accounting purposes will be greater than the cash interest payments we will pay on the 2023 Notes.

This will result in lower reported net income.

The lower reported income resulting from this accounting treatment could depress the trading price of our common stock and the 2023 Notes.

In addition, because we intend to settle conversions of the 2023 Notes by paying the conversion value in cash, up to the principal amount being converted and any excess in shares, we are eligible to use the treasury stock method to reflect the shares underlying the 2023 Notes in our diluted earnings per share.

In order to continue to apply the treasury stock method, we will need to consider on a quarterly basis our ability and intent to settle conversions by paying the conversion value in cash up to the principal amount being converted.

Under the treasury method, if the conversion value of the 2023 Notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share assuming, that all the 2023 Notes were converted and that we issue shares of our common stock to settle the excess.

However, if reflecting the 2023 Notes in diluted earnings per share in this manner is anti-dilutive, or if the conversion value of the 2023 Notes does not exceed their principal amount for a reporting period, then the shares underlying the 2023 Notes will not be reflected in our diluted earnings per share.

If accounting standards change in the future or we determine that we are no longer able or intend to settle the conversion value in cash up to the principal amount being converted, and we, therefore, are no longer permitted to use the treasury stock method, then our diluted earnings per share may decline.

Furthermore, if any of the conditions to the convertibility of the notes are satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the notes as a current, rather than a long-term, liability.

This reclassification could be required even if no noteholders convert their 2023 Notes.

This could materially reduce our reported working capital.

Our Credit Line is secured by a portfolio of marketable securities and we may be required to post additional collateral.

During the first quarter of 2023, we entered into the Credit Line, an uncommitted demand secured credit line with a financial institution for up to $150.0 million.

The Credit Line is secured primarily by our portfolio of marketable securities, which is primarily comprised of corporate and U.S.

government agency and municipal debt securities and may fluctuate in value.

To the extent the value of the collateral decreases below the required collateral maintenance requirements we may be required to promptly post additional collateral.

If we are unable to promptly post additional collateral, or reduce the level of borrowings pursuant to the credit line, the lender has the right, in its discretion, to liquidate, transfer, withdraw or sell all or any part of the collateral and apply the proceeds to the repay the borrowings.

The prices realized by the lender in a liquidation may be lower than the prices that would be realized if such securities were sold under ordinary circumstances.

Our Credit Line is an uncommitted debt facility that may be terminated by the lender at any time.

Our Credit Line is an uncommitted debt facility and, accordingly, the lender may not provide funding to us when we request a borrowing thereunder.

Additionally, the terms of the Credit Line permit the lender to terminate the Credit Line and demand full or partial payment of amounts borrowed thereunder at any time.

Although we believe that our existing financing sources, including the Credit Line, are adequate for our current operations, reductions in our available credit, or the inability to draw on the Credit Line, could have an adverse effect on our business, financial condition and results of operations.

Changes in interest rates could adversely affect the profitability of the Company.

Borrowings pursuant to the Credit Line may be at variable or fixed rates.

Although as of the March 1, 2023 the Company has not drawn from the Credit Line, it expects to do so in the future.

To the extent the Company borrows funds pursuant to the Credit Line on a variable rate basis, the Company’s debt obligation thereunder would be subject to changes in short-term interest rates.

If interest rates were to increase, it would increase the Company’s borrowing cost and it could reduce the Company’s overall profitability.

The convertible note hedge transactions and the warrant transactions may affect the value of the notes and our common stock.

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We also entered into separate, privately negotiated warrant transactions with the hedge counterparties relating to the same number of shares of our common stock, subject to customary anti-dilution adjustments.

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In connection with establishing their initial hedge positions with respect to the convertible note hedge transactions and the warrant transactions, we believe that the hedge counterparties and/or their affiliates entered into various cash-settled, over-the-counter derivative transactions with respect to our common stock and/or purchased shares of our common stock concurrently.

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addition, we expect that the hedge counterparties and/or their affiliates will modify their hedge positions with respect to the convertible note hedge transactions and the warrant transactions from time to time, and are likely to do so during any observation period (as defined in the indenture) for the 2023 Notes, by purchasing and/or selling shares of our common stock and/or other securities of ours, including the 2023 Notes, in privately negotiated transactions and/or open-market transactions, or by entering into and/or unwinding various over-the-counter derivative transactions with respect to our common stock.

In addition, we expect that the hedge counterparties and/or their affiliates will modify their hedge positions with respect to the convertible note hedge transactions and the warrant transactions from time to time, and are likely to do so during any observation period (as defined in the indenture) for the 2023 Notes, by purchasing and/or selling shares of our common stock and/or other securities of ours, including the 2023 Notes, in privately negotiated transactions and/or open-market transactions, or by entering into and/or unwinding various over-the-counter derivative transactions with respect to our common stock.

The effect, if any, of these activities on the market price of our common stock and the trading price of the 2023 Notes will depend on a variety of factors, including market conditions, and cannot be ascertained at this time.

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Our exposure to the credit risk of the hedge counterparties will not be secured by any collateral.

Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions, including the bankruptcy filing by Lehman Brothers Holdings Inc.

and its various affiliates, as well as by Bear Stearns.

Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions.

If a hedge counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transactions with that hedge counterparty.

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We cannot assure that our insurance will be sufficient to cover our losses.

Further, due to rising insurance costs and changes in the insurance markets, we cannot provide assurance that insurance coverage will continue to be

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available on terms similar to those presently available to us or available at all.

Further, due to rising

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insurance costs and changes in the insurance markets, we cannot provide assurance that insurance coverage will continue to be available on terms similar to those presently available to us or available at all.

Any such losses not covered by insurance could have a material adverse effect on our financial condition, results of operations, and cash flows.

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Any failure to manage, expand, or update our information technology infrastructure, or any failure in the operation of this infrastructure, could harm our business.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we or our vendors collect and store sensitive data in our or their data centers and on our networks, including:

intellectual property;

proprietary business information;

proprietary information of our customers, suppliers, and business partners;

and personally identifiable information of our employees and patients in our clinical trials.

In addition, hardware, software, or applications we procure from third parties or through open source solutions may contain defects in design or other problems that could unexpectedly compromise information security.

The continued occurrence of high-profile data breaches provides evidence of an external environment which is increasingly hostile to information security and to the secure

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processing, maintenance, and transmission of information critical to our operations and business strategy.

Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions.

Despite our efforts to improve our information security controls, it is possible that the security controls we have implemented to safeguard personal data and our networks, train our employees and vendors on data security, and implement security requirements and other practices, we may not prevent the compromise of our networks or the improper disclosure of data that we or our vendors store and manage.

Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our employees, contractors, and vendors.

Improper disclosure could also harm our reputation, create risks for customers, or subject us to liability under laws that protect personal information.

This could adversely affect our business, revenues, and competitive position.

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

Developing or acquiring product candidates, conducting clinical trials, establishing manufacturing relationships and marketing drugs are expensive and uncertain processes.

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In addition, unforeseen circumstances may arise, or our strategic imperatives could change, causing us to consume capital significantly faster than we currently anticipate, requiring us to raise additional funds.

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As a public company, we are subject to Section 404 of SOX relating to internal control over financial reporting.

We have and expect to continue to incur significant expense and to devote substantial management effort toward ensuring compliance with

RISK FACTORS.

We currently do not have an internal audit group.

We have and expect to continue to incur significant expense and to devote substantial management effort toward ensuring compliance with Section 404.

We have hired additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

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We do not anticipate paying cash dividends on our common stock in the foreseeable future.

As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

As a result, capital appreciation, if any, of our common stock will be your sole source of gain for

RI S K FACTORS.

the foreseeable future.

There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

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Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock or may impair our ability to enter into strategic partnerships or acquire companies or products, product candidates, or technologies by using our shares of common stock as consideration.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

As a result of the ongoing COVID-19 pandemic, economic conditions and other geopolitical events, the global credit and financial markets have experienced extreme volatility and disruptions, which has included severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and increases in inflation and uncertainty about economic stability.

The financial markets, global economy and supply chains have and may continue to be adversely affected by the pandemic, economic conditions and current or anticipated geopolitical events, including the impact of military conflicts, sanctions imposed in response to such conflicts, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.

There can be no assurance that further deterioration in supply chains, credit and financial markets and confidence in economic conditions will not occur.

Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, inflationary economic environment or continued unpredictable and unstable market conditions, including disruption to enrollment within our ongoing clinical trials and our ability to purchase necessary supplies on acceptable terms, if at all, and increased costs in compensation levels to recruit and retain qualified personnel and to carry out ongoing and future clinical trials.

If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans.

In addition, there is a risk that one or more of our current service providers, suppliers or other partners may not survive an economic downturn or rising inflation, which could directly affect our ability to attain our operating goals on schedule and on budget.

UNRESOLVED STAFF COMMENTS.

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

What changed 10-K

Item 1A. Risk Factors