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Item 1A. Risk Factors

2025-02-25 compared with 2024-02-27 · 111 added, 100 removed, 570 unchanged (27% of the section changed)

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comparative effectiveness of therapies, technology assessments, and managed-care arrangements, could have a material adverse effect on the Company's business, financial condition or results of operations.

The FDA Reauthorization Act of 2017 (FDARA) amended the FDCA to revise and extend the user-fee programs for drugs, medical devices, generic drugs, and biosimilar biological products, and for other programs.

FDARA reauthorized the various user fees to facilitate the FDA's review and oversight relating to prescription drugs, generic drugs, medical devices, and biosimilars.

FDA's authority, including, among others, pediatric study requirements, orphan drug exclusivity, and the approval process for generic drugs.

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

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 increase costs during product development and regulatory review.

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

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 the Company to maintain or attain approval to develop and commercialize its products and technologies.

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.

The Company's products are dependent on 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 the Company develops a promising new product, there may be limited demand for the product unless appropriate reimbursement approval is obtained from private and governmental third-party payors.

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

and other countries that significantly reduce reimbursement for the Company's 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 the Company's business, financial condition or results of operations.

states have become increasingly active in enacting statutes 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, which creates additional compliance challenges for the Company.

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Title II of DQSA, the Drug Supply Chain Security Act (DSCSA) established requirements to facilitate improved tracking of prescription drug products through the supply chain with increased product identification requirements.

DSCSA requires such tracking to be done farther down the distribution chain, including (i) wholesalers' verification and tracking in November 2019, (ii) pharmacy verification and tracking in the Fall of 2020, and (iii) at the unit level throughout the entire supply chain during the fourth quarter of 2023.

DSCSA requires such tracking to be done farther down the distribution chain, including (i) wholesalers' verification and tracking, (ii) pharmacy verification and tracking, and (iii) at the unit level throughout the entire supply chain.

In August 2023, FDA announced final guidance pertaining to Title II, entitled “Enhanced Drug Distribution Security Requirements Under Section 582(g)(1) of the Federal Food, Drug, and Cosmetic Act--Compliance Policies.” This guidance describes FDA’s compliance policies for enforcement of requirements for the interoperable, electronic, package level product tracing (enhanced drug distribution security requirements) under the Federal Food, Drug, and Cosmetic Act (FDCA), effective November 27, 2023.

Specifically, the guidance described that, until November 27, 2024, the FDA did not intend to take action to enforce requirements for the interoperable, electronic, package level product tracing under section 582(g)(1) of the FDCA Act that went into effect on November 27, 2023.

The FDA issued an additional guidance document in October 2024 noting that companies in the pharmaceutical distribution supply chain who have initiated their systems and processes and established electronic DSCSA data connections with their trading partners may need additional time beyond November 27, 2024 to strengthen capabilities to mitigate data issues associated with electronic DSCSA transaction information and transaction statements to ensure uninterrupted product distribution.

The October 2024 guidance specifies that the FDA is responding to such

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need by issuing exemptions to accommodate the additional time needed by such trading partners beyond November 27, 2024, but such exemptions apply only to trading partners who have initiated their systems and processes and established electronic DSCSA data connections with their trading partners prior to November 27, 2024.

The guidance also provides that such exemptions will extend beyond November 27, 2024, for different lengths of time depending on the category of the trading partner (i.e., manufacturers and repackagers, wholesale distributors, dispensers with 26 or more full time employees).

As of January 31, 2025, the Trump Administration has not made any updates to, or rescinded, the October 2024 guidance document.

• In 2016, the 21st Century Cures Act (Cures Act) was enacted and authorized increased funding for the FDA to spend on innovation projects, amended the Public Health Service Act (PHSA) to reauthorize and expand funding for the National Institutes of Health (NIH), established the NIH Innovation Fund to pay for the cost of development and implementation of a strategic plan, early stage investigations, and research;

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(2) the amendment of the Civil Monetary Penalties Law (CMPL), authorizing HHS to impose CMPs, assessments, and exclusions upon individual and entities that engage in fraud and other misconduct related to HHS grants, contracts, and other agreements;

and (3) the increase in penalty amounts in the CMPL effected by the Bipartisan Budget Act of 2018 (BBA 2018).

and (3) the increase in penalty amounts in the CMPL effected by the Bipartisan Budget Act of 2018.

• The IRA includes measures intended to lower the cost of prescription drugs and related healthcare reforms, such as limits on price increases and subjecting an escalating number of drugs to annual price negotiations with CMS.

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 announced on August 29, 2023.

The negotiated maximum fair prices for such drugs is scheduled to be announced by September 1, 2024, with the first year of maximum price applicability to begin in calendar year 2026.

The IRA also 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.

In February 2023, HHS released guidance on the implementation of the new Medicare Prescription Drug Inflation Rebate Program, and in June 2023, HHS and CMS announced a list of 43 prescription drugs for which Part B beneficiary coinsurances may be lower between July 1, 2023 and September 30, 2023.

The IRA also creates significant changes to the Medicare Part D benefit design by capping Part D beneficiaries’ annual out-of-pocket spending.

In May 2023, CMS released a draft guidance and request for comment regarding the new Part D Manufacturer Discount Program, set to begin in calendar year 2025.

The negotiated maximum fair prices for such drugs was announced on August 14, 2024, with the first year of maximum price applicability to begin in calendar year 2026.

There are currently ten drugs subject to government pricing under the IRA.

The IRA also 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 and creates significant changes to the Medicare Part D benefit design by capping Part D beneficiaries’ annual out-of-pocket spending.

On November 17, 2023, CMS released final program guidance to pharmaceutical manufacturers and Part D plan sponsors for implementing the Medicare Part D Manufacturer Discount Program.

HHS and CMS are continuing to announce drugs for price negotiation, produce draft guidance, and finalize regulations in an effort to implement to IRA.

Beginning in 2025, all Medicare prescription drug plans (Medicare Part D plans) — including both standalone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage — will be required to offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments instead of all at once at the pharmacy.

The Company 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 the Company's products.

There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement

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levels for the Company's products, and we cannot predict the scope of any future changes or the impact that those changes may have on its business.

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

Future healthcare reform measures may result in more rigorous coverage criteria and lower reimbursement, and additional downward pressure on the price that the Company receives for any approved product.

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

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As a supplier of pharmaceuticals, certain U.S.

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

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• The HHS OIG Special Fraud Alert published on November 16, 2020, which addresses the manufacturer Speaker Programs, and signals both a narrower government view of AKS compliance with respect to such programs as well as the potential for increased enforcement in the space by government oversight agencies such as OIG and the Department of Justice;

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• Federal price reporting laws, which require the Company 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 the Company's commercial products;

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• The FDCA, which among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use, and regulates the distribution of drug samples;

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• The Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which prohibits a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.

Similar to the federal AKS, a person or entity does not need to have actual knowledge or specific intent to violate HIPAA in order to have committed a

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Similar to the federal AKS, a person or entity does not need to have actual knowledge or specific intent to violate HIPAA in order to have committed a violation.

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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Publication of the Final Rule has not yet occurred;

• Effective April 26, 2024, HHS modified certain provisions of the HIPAA Privacy Rule to prohibit the use or disclosure of protected health information by a covered health care provider, health plan, or health care clearing house, or their business associate, to:

(i) conduct a criminal, civil, or administrative investigation into or impose criminal, civil, or administrative liability on any person for the mere act of seeking, obtaining, providing, or facilitating reproductive health care, where such health care is lawful under the circumstances in which it is provided;

or (ii) identify any person for the purpose of conducting such investigation or imposing such liability;

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

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Efforts to ensure that the Company's business arrangements will comply with applicable healthcare laws and regulations could be costly.

If the Company's operations are found to be in violation of any of the laws described above or in violation of any governmental regulations that apply to us, then it may be subject to penalties, including civil and criminal penalties, damages, fines, and the curtailment, or restructuring of its operations.

If the Company's operations are found to be in violation of any of the laws described above or in violation of any

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governmental regulations that apply to us, then it may be subject to penalties, including civil and criminal penalties, damages, fines, and the curtailment, or restructuring of its operations.

Any penalties, damages, fines, curtailment or restructuring of the Company's operations could adversely affect its ability to operate its business and could impair its financial results.

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Recommendations or guidelines suggesting the reduced use of our products, or the use of competitive or alternative products which are subsequently followed by patients and health care providers, could result in decreased use of our products.

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

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

Competitors may infringe our patents.

To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming.

To counter infringement or unauthorized use, in the past we have been, and in the future we may again be, required to file infringement claims, which can be expensive and time consuming.

For example, we are involved in several matters related to Paragraph IV Certification Notice Letters that we received in connection with our products and our collaborators' products.

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Even if successful, litigation may result in substantial costs and distract our management and other employees.

We may not be able to

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prevent, alone or with our collaborators, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as they are protected in the U.S.

We may not be able to prevent, alone or with our collaborators, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as they are protected in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

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

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There may be issued patents of third parties that we are currently unaware of and that may be infringed by our products or our collaborators' approved products.

These patents could prevent us from being able to

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maximize revenue generated by our products or our product candidates.

These patents could prevent us from being able to maximize revenue generated by our products or our product candidates.

Because patent applications can take many years to issue, there may be pending patent applications, which may later result in issued patents.

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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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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.

While we strive to conduct our business in accordance with applicable laws, we nevertheless remain exposed to litigation risk.

We could be sued by many different parties, including, for example, consumers, healthcare providers, or others selling or otherwise coming into contact with our products and product candidates.

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• Costs related to litigation;

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• Distraction of management's attention from our primary business;

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On occasion, large judgments have been awarded in class action lawsuits for drugs that had unanticipated side effects.

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.

In the future, the potential inability to obtain sufficient product liability insurance at an acceptable cost,

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or at all, to protect against potential product liability claims could prevent or inhibit the development and commercialization of the pharmaceutical products we develop.

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

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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

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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.

Additionally, cyberattacks or security breaches, such as 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, security breaches, or other disruptions that manipulate or improperly use our systems, compromise sensitive information, destroy or corrupt data, or otherwise disrupt our operations.

The occurrence of such events, including additional breaches of our security measures or those of our third-party service providers, could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business due to disruption of operations, and/or reputational damage, potential liability and increased remediation and protection costs, any of which could have a material adverse effect on our financial condition and results of operations.

Any future attacks or other security breaches could also cause us to incur remediation costs with respect to our information technology systems, as occurred following the 2021 ransomware attack.

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

Any future attacks or other security breaches

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could also cause us to incur remediation costs with respect to our information technology systems, as occurred following the 2021 ransomware attack.

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

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.

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.

We have incurred costs 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.

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

As of January 1, 2023, we have cyber insurance in addition to our business insurance coverage, however, prior to that time we self-insured by assuming the full risk of costs related to cybersecurity incidents.

Such cyber insurance does not provide coverage for incidents that occurred before January 1, 2023.

Since 2023, we have cyber insurance in addition to our business insurance coverage, however, prior to that time we self-insured by assuming the full risk of costs related to cybersecurity incidents.

Such cyber insurance does not provide coverage for incidents that occurred before 2023.

There can be no assurance that our insurance coverage will be sufficient to cover the full impact of a cyberattack or that it can be renewed in the future at favorable terms, or at all.

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Our failure to do so could have an adverse impact on our future performance.

We are highly dependent upon skilled personnel in key parts of our organization, and we invest heavily in recruiting, training, and retaining qualified individuals, which includes significant efforts to enhance the diversity of our workforce.

We are highly dependent upon skilled personnel in key parts of our organization, and we invest heavily in recruiting, training, and retaining qualified individuals.

The loss of the service of key members of our organization, including senior members of our scientific and management teams, high-quality researchers, development specialists, and skilled personnel, could delay or prevent the achievement of major business objectives.

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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.

Our industry has

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

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

If we are not able to attract and motivate key personnel to accomplish our business objectives, we may experience constraints that may significantly impede the achievement of our objectives.

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In addition, our failure to adequately plan for succession of senior management and for other key management roles, or the failure of key employees to successfully transition into new roles, could have a material adverse effect on our business and results of operations.

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We are highly dependent on the development, regulatory, commercial, and financial expertise of our management, particularly Jack A.

Khattar, our President and Chief Executive Officer.

Khattar has an employment agreement.

Other members of the senior management team have executive retention agreements, but these agreements do not guarantee the services of these executives will continue to be available to us.

Khattar has an employment agreement with us.

Other members of the senior management team have executive retention agreements with us, but these agreements do not guarantee the services of these executives will continue to be available to us.

If we lose key members of our management team, we may not be able to find suitable replacements in a timely fashion, if at all.

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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.

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The Company’s financial condition and results of operations may be materially and adversely affected by health pandemics.

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.

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.

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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 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.

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during a pandemic, 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 a pandemic that cannot be predicted.

For example, in its CRL related to SPN-830, the FDA noted 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.

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We expect that any revenue we generate will fluctuate from quarter to quarter and year to year as a result of the revenue generated from approved products, license agreements, development milestones, and collaboration license agreements.

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Our net earnings and other operating results will be affected by numerous factors, including:

• The level of market acceptance for any approved product candidate, underlying demand for that product, and wholesalers' buying patterns;

• The level of market acceptance for any approved product candidate, underlying demand for our products, and wholesalers' buying patterns;

• Variations in the level of expenses related to our development programs;

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

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• Potential side effects of our products and our future products that could delay or prevent commercialization, cause an approved drug to be taken off the market, or result in litigation;

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• Our ability to maintain an effective sales and marketing infrastructure;

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

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

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

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• Changes in reimbursement environment and regulatory changes;

• Changes in the size of our investment portfolio and interest rates.

• Changes in the size of our investment portfolio, borrowings and interest rates.

Due to the various factors mentioned above, and others, the results of any prior quarterly period should not be relied upon as an indication of our future operating performance.

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federal and state income tax may be subject to limitations, which could potentially result in increased future cash tax liability to us.

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In the past, we have 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.

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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 disclosures.

Although as of December 31, 2023 remediation has been completed, in the past we identified material weaknesses in our internal control over financial reporting as of December 31, 2021 which persisted, on a narrower basis, as of December 31, 2022.

In the past we identified material weaknesses in our internal control over financial reporting.

We successfully implemented measures designed to ensure that the control deficiencies contributing to the material weaknesses were remediated.

However, if we are unable to maintain 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, financial condition and the trading price of our Common Stock.

However, if we are unable to maintain effective internal control over financial reporting in the future, our ability to report financial information timely and accurately could be adversely affected.

As a result, we could lose investor confidence and

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become subject to litigation or investigations, which could adversely affect our business, operations, financial condition and the trading price of our Common Stock.

In addition, any testing conducted by us in connection with Section 404(a) of the Sarbanes-Oxley Act of 2002 (SOX), or the subsequent testing by our independent registered public accounting firm in connection with Section 404(b) of SOX, may in the future reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.

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However, we cannot be certain that these measures will ensure that we design, implement, and maintain adequate control over our financial processes and reporting in the future.

The integration of acquired businesses, such as the acquisition of Adamas in November 2021, may result in our systems and controls becoming increasingly complex and more difficult to manage, regardless of whether such acquired business was previously privately or publicly held.

The integration of acquired businesses may result in our systems and controls becoming increasingly complex and more difficult to manage, regardless of whether such acquired business was previously privately or publicly held.

The integration of acquired businesses may also result in material challenges to the Company’s control environment, including:

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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.

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

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Our acquisition strategy entails numerous risks.

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

Our continued ability to grow through acquisitions will depend, in part, on the availability of suitable candidates at acceptable prices, terms, and conditions;

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

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:

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

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• Dilutive issuances of equity securities;

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• Reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs, which could, in turn, restrict our ability to access additional capital when needed, result in a decrease in our credit rating, or limit our ability to pursue other important elements of our business strategy;

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• Failure by acquired businesses or other business ventures to comply with applicable international, federal, and state product safety or other regulatory standards;

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

As ONAPGO (apomorphine hydrochloride) injection, formerly known as

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SPN-830, received FDA approval in February 2025, certain milestones related to the FDA approval of the SPN-830 NDA were paid in February 2025, and we expect certain of the remaining regulatory and commercial milestone activities to become due and paid in 2025.

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.

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

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 other intangibles.

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

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

We review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For example, during the year ended December 31, 2023, the Company recognized impairment charges of $20.2 million mainly due to the partial write-off of the carrying value of some of its acquired intangible assets, primarily XADAGO.

The primary factors that led to the impairment determinations were the following:

(1) the performance of the commercial products;

(2) forthcoming loss of exclusivity of XADAGO in December 2027, or earlier under certain circumstances, due to settlement agreements with third party generic companies;

and (3) the change in the Company's future outlook of the brands.

Factors that may lead to an impairment determination include:

(1) the performance of an acquired commercial products;

(2) anticipated loss of exclusivity of an acquired commercial product;

and (3) changes in the Company's future outlook of acquired products.

We test goodwill for impairment at least annually.

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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.

In addition, the Company also has an indefinite-lived intangible

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asset associated with SPN-830.

In addition, as of December 31, 2024, the Company also had an indefinite-lived intangible asset associated with SPN-830.

In February 2025, the FDA approved ONAPGO (apomorphine hydrochloride) injection, formerly known as SPN-830, as the first and only subcutaneous apomorphine infusion device for the treatment of motor fluctuations in adults with advanced PD.

The drug regulatory approval process is inherently uncertain, lengthy, and difficult.

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Further, the Tax Act enacted many significant changes to the U.S.

tax laws, some of which were further modified by the Coronavirus Aid, Relief, and Economic Security Act, and may be modified in the future by the current of a future presidential administration.

tax laws, some of

RISK FACTORS.

which were further modified by the Coronavirus Aid, Relief, and Economic Security Act, and may be modified in the future by the current or a future presidential administration.

Among other changes, the Tax Act amended the Code to require that certain research and experimental expenditures be capitalized and amortized over five years if incurred in the United States or fifteen years if incurred in foreign jurisdictions for tax years beginning after December 31, 2021.

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Changes in corporate tax rates, the realization of net operating losses, and other deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the value of our deferred tax assets and could increase our future tax expense.

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, if the Company borrows against it, will be 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 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 or held to maturity.

Changes in interest rates could adversely affect the profitability of the Company by increasing our interest expense.

Borrowings pursuant to the Credit Line may be at variable or fixed rates.

Although as of December 31, 2023 the Company does not have any borrowings from the Credit Line, it might 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.

Although we have been profitable from operations since the fourth quarter of 2014, there is no assurance that we will continue to generate net income in the future.

We may not be able to maintain or increase profitability.

In recent years, we have focused primarily on developing our current products and product candidates, with the goal of commercializing these products and supporting regulatory approval for our product candidates.

We have financed our operations through revenue generated from operations and various transactions.

In recent years, we have focused primarily on marketing our current products and developing our product candidates, with the goal of supporting regulatory approval for our product candidates.

We have financed our operations through revenue generated from operations and various financing transactions.

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 product candidates.

Future revenues will highly depend on our ability to maintain or grow demand for our products and defend against potential generic competition and successfully develop and commercialize our product candidates.

RISK FACTORS.

As of December 31, 2024, we had retained earnings of approximately $556.4 million.

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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 2,086,766 and 686,105 shares of our common stock are reserved for future issuance under the 2021 Equity Incentive Plan and the 2012 Employee Stock Purchase Plan, respectively.

An aggregate of 4,609,727 and 584,192 shares of our common stock are reserved for future grant issuance under the 2021 Equity Incentive Plan and the 2012 Employee Stock Purchase Plan, respectively.

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 may significantly decrease.

In addition, our issuance of additional shares of common stock will dilute the ownership interests of our existing common stockholders.

RISK FACTORS.

The price of our common stock may fluctuate substantially.

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• Market conditions and regulatory changes in the pharmaceutical and biotechnology sectors;

RISK FACTORS.

• Fluctuations in stock market prices and trading volumes of similar companies;

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This staggered board structure prevents stockholders from replacing the entire board at a single stockholders' meeting;

RISK FACTORS.

• Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

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In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.

These and other

RISK FACTORS.

provisions in our certificate of incorporation, our bylaws, and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors.

These and other provisions in our certificate of incorporation, our bylaws, and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors.

To the extent outstanding stock options are exercised and restricted stock units and performance stock units vest there will be dilution to new investors.

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• Placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

RISK FACTORS.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves to pay amounts due under any indebtedness we incur.

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In such an event, competitors might be able to enter the market earlier than would otherwise have been the case, causing damage to our business.

RISK FACTORS.

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

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This could result in continuing uncertainty regarding compliance matters and on-going financial reporting requirements.

RISK FACTORS.

If our efforts to comply with new laws, regulations, and accounting standards differ from the intentions of regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

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This includes software and hardware that is licensed, leased, or purchased from third parties.

If our information technology, equipment, or systems fail to function properly due to internal errors or defects, implementation or integration issues, catastrophic events, or power outages, we may experience a material disruption in our ability to manage our business operations.

If our information technology, equipment, or systems fail to function properly due to internal errors or defects, implementation or integration issues, catastrophic events, cyberattacks, or power outages, we may experience a material disruption in our ability to manage our business operations.

Failure or disruption of these systems could have an adverse effect on our operating results and financial condition.

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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.

RISK FACTORS.

Developing or acquiring product candidates, conducting clinical trials, establishing manufacturing relationships and marketing drugs are expensive and uncertain processes.

Developing or acquiring products and product candidates, conducting clinical trials, establishing manufacturing relationships and marketing drugs are expensive and uncertain processes.

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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Compliance with Section 404 of SOX, the Dodd-Frank Act of 2010, as well as rules of the Securities and Exchange Commission and NASDAQ, for example, has resulted in significant initial costs to us as well as ongoing legal, audit and financial reporting costs.

As of the beginning of 2017, we transitioned from "accelerated filer" to "large accelerated filer" status, which led to further increases in our legal, audit, NASDAQ listing fees, and financial compliance costs.

As of the beginning of 2017, we transitioned from "accelerated filer" to "large accelerated filer" status, which led to further increases in our

RISK FACTORS.

legal, audit, NASDAQ listing fees, and financial compliance costs.

The Securities Exchange Act of 1934, as amended (the Exchange Act), requires, among other things, that we file annual, quarterly, and current reports with respect to our business and financial condition.

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We cannot give assurance that our internal control over financial reporting will prove to be effective.

We have never paid dividends on our capital stock.

We have never paid dividends.

Because we do not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, of our common stock will be your sole source of gain on an investment in our common stock.

We have paid no cash dividends on any of our classes of capital stock to date, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.

We have paid no cash dividends, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.

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

RISK FACTORS.

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.

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.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

As a result of the COVID-19 pandemic, economic conditions and other geopolitical events, in recent years the global credit and financial markets have experienced extreme volatility and disruptions, which has included periods of severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and increases in inflation and uncertainty about economic stability.

As a result of economic conditions and other geopolitical events, in recent years the global credit and financial markets have experienced extreme volatility and disruptions, which has included periods of 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 pandemics, 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.

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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