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Item 1A. Risk Factors

2023-04-07 compared with 2022-03-23 · 300 added, 502 removed, 450 unchanged (64% of the section changed)

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The following is a summary of the principal risk factors described in this section:

Our financial condition and results of operations for 2020 and 2021 were, and our financial condition and results of operations for 2022 and beyond may be, adversely affected by the ongoing COVID-19 (coronavirus) pandemic.

We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.

Our level of indebtedness and the terms of the Financing Agreement, as amended (the “Financing Agreement”), dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, or the Administrative Agent or Sixth Street, various lenders from time to time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors, which matures in June 2022, raises substantial doubt about our ability to continue as a going concern.

We may not recognize the anticipated benefits of the proposed disposition of vitaCare or any other divestitures we may pursue in the future.

We may not be able to realize the expected savings from our cost savings initiatives.

We currently derive all of our revenues from royalties related to sales of our products, and the failure of our licensees to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects.

We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future.

There is substantial doubt about our ability to continue as a going concern.

We could be affected by transitions in our senior management team.

Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products and our pharmaceutical product candidates may cause delays in, or prevent us from, successfully developing, commercializing, and marketing our products.

We currently derive all of our revenue from sales or licenses of our women’s healthcare products, and our failure to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects.

The commercial success of our existing products and other pharmaceutical products that we may develop, if approved in the future, will depend upon gaining and retaining significant market acceptance of these products among physicians and payers.

We may not be able to complete the commercialization of our pharmaceutical products and development of future product candidates if we fail to obtain additional financing.

Coverage and reimbursement may not be available for our products, which could make it difficult for us to sell our products profitably, or if available, government mandated rebates may be too high and may adversely affect our profitability.

The dependence upon third parties for the manufacture and supply of our women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing and marketing our products.

The commercial success of our products will depend upon gaining and retaining significant market acceptance of these products among physicians and payers.

Coverage and reimbursement may not be available for our products, which could make it difficult for our licensees to sell our products profitably.

Time and costs associated with winding down our general and administrative, commercial, and research and development activities may be significant.

Our future success depends on our ability to attract and retain qualified personnel.

Our financial condition and results of operations for 2021 and 2022 were, and our financial condition and results of operations for 2023 and beyond may be, adversely affected by the ongoing COVID-19 (coronavirus) pandemic and any future pandemics or epidemics.

Licensing of intellectual property involves complex legal, business and scientific issues, and disputes could jeopardize our rights under such agreements.

Additionally, our current licensing agreements contain limitations and restrictions that could limit or adversely affect our ability to develop and commercialize other products in the future.

Our products and our licensees are subject to extensive government regulation.

We must rely on Mayne Pharma to prosecute, file lawsuits or take other actions to protect or enforce our intellectual property and there can be no assurance they will be take such actions or be successful.

If our efforts to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market.

Our products face significant competition from branded and generic products, and our operating results will suffer if we fail to compete effectively.

Our success is tied to our distribution channels.

We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

Our success is tied to the distribution channels of our licensees.

Any failure of our licensees to adequately maintain a sales force will impede our growth.

Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock.

Risks related to our business

Our business has been, and we anticipate that it will continue to be, impacted by the COVID-19 pandemic.

During the fourth quarter of 2021, all of our products remained affected by the COVID-19 pandemic, primarily due to our sales force having limited access to healthcare professionals and our patients’ deferring visits to healthcare professionals in certain areas.

While we have developed a comprehensive COVID-19 contingency plan designed to preserve the value of our investments in our sales and marketing infrastructure, protect our balance sheet during this period of market disruption, and meet the needs of our patients and prescribers, the severity of the impact of the COVID-19 pandemic on our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted.

Stay at home, quarantine and social distancing orders and closures and restrictions on travel have negatively affected the ability of our sales force to access healthcare providers to promote our products and the ability of patients to visit their healthcare professionals for non-emergent matters.

Our sales force is continuing to use a hybrid model of office visits when necessary and digital engagement tools and tactics and virtual detailing, which may be less effective than our ordinary course sales and marketing programs.

Increases in unemployment could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, which could lead to increased use of our co-pay assistance programs and negatively affect our results of operations.

Our future results of operations and liquidity could be adversely affected by, and we may require an increased level of working capital as a result of extended billing and collection cycles at our company, payers, revenue cycle management contractors, or otherwise;

delays in payments of outstanding receivable amounts beyond normal payment terms;

supply chain disruptions;

uncertain demand;

and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face.

Disruptions have occurred and may occur in the future that affect our ability to obtain supplies or other components for our products, manufacture additional products or deliver inventory in a timely manner.

This would result in lost sales, additional costs, or penalties, or damage to our reputation.

Our business may also be affected by negative impacts of the COVID-19 pandemic on capital markets and economies worldwide, and it is possible that the pandemic could cause a local and/or global economic recession.

While policymakers globally have responded with fiscal policy actions to support the healthcare industry and economy as a whole, the magnitude and overall effectiveness of these actions remains uncertain.

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

Accordingly, disruptions to our business as a result of COVID-19 could continue to result in an adverse effect on our business, results of operations, financial condition and prospects in the near-term and beyond 2022.

We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.

We have incurred recurring net losses, including net losses of $172.4 million, $183.5 million and $176.1 million for 2021, 2020 and 2019, respectively.

As of December 31, 2021, we had an accumulated deficit of $1.1 billion.

We currently derive all revenue from royalties related to sales of our women’s healthcare products, and the failure of our licensees to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects.

Following the Mayne Transaction, we derive all revenue from royalties related to sales of our women’s healthcare products, including patient-controlled, long-acting contraceptive, hormone therapy pharmaceutical products, prenatal and women’s multi-vitamins, and iron supplements.

We cannot assure you that our licensees will be able to sustain such sales or that such sales will grow.

In addition to other risks described herein, the ability of our licensees to maintain or increase existing product sales is subject to several risks and uncertainties, including the following:

the presence of new or existing competing products, including non-authorized generic copies of our products;

supply or distribution problems arising with any of their manufacturing and distribution partners;

changed or increased regulatory restrictions or regulatory actions by the FDA;

changes in healthcare laws and policy, including changes in requirements for drug pricing, rebates, reimbursement, and coverage by federal healthcare programs and commercial payers;

the impact or efficacy of any price increases our licensees may implement in the future;

changes to the licensed products’ labels and labeling, including new safety warnings or changes to boxed warnings, that further restrict how our licensees market and sell our products;

acceptance of our products as safe and effective by physicians and patients.

If revenue from royalties related to sales of our products does not increase, we may be required to seek to raise additional funds, which could have an adverse effect on our business, financial condition, results of operations, and growth prospects.

We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future.

In 2022, we recognized a net income of $112.0 million due to the net proceeds from the Mayne Pharma Transaction and vitaCare divestiture exceeding our costs and expenses.

We utilized a significant portion of net proceeds to repay borrowings and redeem our preferred stock.

In the past, we have incurred recurring net losses, including net losses of $172.4 million and $183.5 million for 2021 and 2020, respectively.

As of December 31, 2022, our stockholders’ equity was $35.1 million.

We have funded our operations to date primarily from public and private sales of equity and private sales of debt securities.

We may incur substantial additional losses over the next few years because of our commercialization, research, development, and clinical trial activities.

As a result, we may never achieve or maintain profitability, even if we successfully commercialize all of our pharmaceutical products.

If we continue to incur substantial losses and are unable to secure additional financing, we could be forced to discontinue or curtail our business operations, sell assets at unfavorable prices, refinance then-existing debt obligations on terms unfavorable to us, or merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us.

Our level of indebtedness and the terms of the Financing Agreement, which matures in June 2022, raises substantial doubt about our ability to continue as a going concern.

Under the Financing Agreement, we have incurred a substantial amount of debt, which could adversely affect our business.

In April 2019, we drew down the first tranche of $200.0 million under the Financing Agreement and in February 2020 we drew down the second tranche of $50.0 million under the Financing Agreement.

In March 2021, in connection with Amendment No.

8 to the Financing Agreement, we repaid $50.0 million in principal under the Financing Agreement plus a 5.0% prepayment fee.

Our high level of indebtedness could affect our business in the following ways, among other things:

make it more difficult for us to satisfy our contractual and commercial commitments;

require us to use a substantial portion of our cash flow from operations to pay interest and principal, which would reduce funds available for working capital, capital expenditures and other general corporate purposes;

limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other investments or general corporate purposes;

heighten our vulnerability to downturns in our business, our industry or in the general economy;

place us at a disadvantage compared to those of our competitors that may have proportionately less debt;

limit management’s discretion in operating our business;

and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy.

The Financing Agreement requires us to make certain payments of principal and interest over time and following the first quarter of 2022, will contains certain minimum quarterly net product revenue requirements and several other restrictive covenants.

Among other requirements of the Financing Agreement, we and our subsidiaries party to the Financing Agreement must maintain a minimum unrestricted cash balance less the amount of certain payables.

The Financing Agreement also contains covenants that limit, among other things, the ability of us and our subsidiaries party to the Financing Agreement to (i) incur indebtedness, (ii) incur liens on our property, (iii) pay dividends or make other distributions, (iv) sell our assets, (v) make certain loans or investments, (vi) merge or consolidate, and (vii) enter into transactions with affiliates, in each case subject to certain exceptions.

These and other terms in the Financing Agreement have to be monitored closely for compliance and could restrict our ability to grow our business or enter into transactions that we believe

would be beneficial to our business.

To maintain compliance with the minimum unrestricted cash balance requirement of the Financing Agreement, we anticipate that we may need to raise additional capital.

W e cannot guarantee that future financing sufficient to maintain or exceed the minimum unrestricted cash balance will be available in sufficient amounts, in a timely fashion, or on terms acceptable to us, if at all.

If we are unable to maintain the minimum unrestricted cash balance, achieve any of the total minimum net revenue requirements or otherwise comply with any other covenant of the Financing Agreement, all or a portion of our obligations under the Financing Agreement may be declared immediately due and payable, which would have an adverse effect on our business, results of operations and financial condition.

In addition, in March 2022, we entered into Amendment No.

9 to the Financing Agreement (“Amendment No.

Pursuant to Amendment No.

9, the Financing Agreement matures on June 1, 2022, and the entire principal balance under the Financing Agreement is due and payable as of such date.

Our current cash on hand is not sufficient to pay the amounts due under the Financing Agreement.

This raises substantial doubt about our ability to continue as a going concern.

We agreed to use the first $120.0 million of net proceeds from the divestiture of vitaCare and all net proceeds of the divestiture of vitaCare in excess of $135.0 million to prepay the loans under the Financing Agreement.

However, we will need to raise additional capital to repay the entire principal balance of the Financing Agreement in June 2022.

The report of our independent registered public accounting firm on our audited financial statements contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.

Our audited financial statements do not include any adjustments that might result from the outcome of the uncertainty regarding our ability to continue as a going concern.

This going concern opinion could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise.

Additionally, we are currently not in compliance with the continued listing requirements of the Nasdaq Global Select Market (“Nasdaq”), and in the event we are delisted from Nasdaq, our ability to raise additional funds through the issuance of equity or debt securities could be significantly affected.

See “Our failure to maintain compliance with the continued listing requirements of could result in the delisting of our common stock” below for further information on our compliance with Nasdaq’s continuing listing requirements.

If we cannot continue as a going concern, our investors may lose their entire investment in our securities.

Until we can generate significant cash flows, we expect to satisfy our future cash needs through debt or equity financing;

however, there can be no assurance that such capital will be available, or if available, that it will be on terms acceptable to us.

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

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

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

We may not recognize any anticipated benefits of the proposed disposition of vitaCare or any other divestitures we may pursue in the future.

We have signed a definitive agreement for the vitaCare Divestiture of vitaCare.

Additionally, we may evaluate other potential divestiture opportunities with respect to portions of our business from time to time, and may determine to proceed with a divestiture opportunity if and when we believe such opportunity is consistent with our business strategy and we would be able to realize value for our stockholders in so doing.

There can be no assurance that we will be able to close the vitaCare Divestiture.

Any divestiture or disposition, including the vitaCare Divestiture, could expose us to significant risks, including, without limitation, fees for legal and transaction-related services, diversion of management resources, transaction execution risks (including risks resulting from buyer financing and due diligence contingencies and other closing conditions), loss of key personnel and reduction in revenue.

Further, we may be (and will be upon the closing of the vitaCare Divestiture) required to retain or indemnify a buyer against certain liabilities and obligations in connection with any such divestiture, and we may also become subject to third-party claims arising out of such divestiture.

In addition, we may not achieve the expected price in a divestiture transaction.

Additionally, there can be no assurances that we will obtain any necessary consents of governmental authorities or other third parties that might be required for the vitaCare Divestiture or effectuate any other divesture.

If we are unable to consummate the vitaCare Divestiture or do not realize the expected strategic, economic, or other benefits of that or any other divestiture transaction, it could adversely affect our business and financial position.

We may not be able to realize the expected savings from our cost savings initiatives.

We have implemented a significant cost savings initiative that is designed to reduce our annual costs in 2022 by at least $40.0 million, excluding the estimated annualized cost savings of approximately $20.0 million, or any costs associated with, the vitaCare Divestiture.

There can be no assurance that the anticipated cost saving initiatives will be achieved, or that they will not be significantly and materially less than anticipated, or that the completion of such cost savings initiatives will be effectively accomplished.

In addition, our ability to realize the anticipated cost savings are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, such as changes to government regulation governing or otherwise impacting drug products, operating

difficulties, supply chain issues or other issues related to third-parties and general economic or industry condition.

If we fail to realize the anticipated cost savings it could have a negative impact on our financial position.

We may incur substantial additional losses over the next few years because of costs associated with the wind down of our historical business as well as the ongoing costs of being a public company.

As a result, we may not maintain or increase profitability.

If we continue to incur substantial losses and are unable to secure additional financing, we could be forced to discontinue or curtail our business operations, merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us.

There is s ubstantial doubt about our ability to continue as a going concern.

Our current liquidity position raises substantial doubt about our ability to continue as a going concern and Grant Thornton LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2022, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2022, indicating such.

Our ability to continue as a going concern may depend on our ability to obtain additional capital as well as our ability to minimize operational expenses, including any potential net working capital adjustments relating to the Mayne Transaction.

As substantial doubt about our ability to continue as a going concern exists, our ability to finance our operations through the sale and issuance of debt or equity securities or through bank or other financing could be impaired.

Our ability to obtain financing on reasonable terms is subject to factors beyond the Company’s control, including general economic, political, and financial market conditions.

The capital markets have in the past experienced, are currently experiencing, and may in the future experience, periods of upheaval that could impact the availability and cost of equity and debt financing and there can be no assurance that such financing will be available on terms commercially acceptable to the Company, or at all.

If we are unable to improve our liquidity position, we may not be able to continue as a going concern.

We have experienced significant turnover in our top executives, and our business could be adversely affected by these and other transitions in our senior management team.

We have experienced turnover in our top executives and the replacement of these positions with new officers.

During 2021, our Board of Directors appointed a new Chief Executive Officer, who had previously served as our President since August of 2021.

Our existing Chief Financial Officer has also resigned, effective of April 1, 2022.

In December 2022, following the Mayne Transaction, all of our top executives, except for our former General Counsel, were terminated, and our former General Counsel was appointed as Chief Executive Officer.

Management transition is often difficult and inherently causes some loss of institutional knowledge, which could negatively affect our results of operations and financial condition.

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Our senior management’s knowledge of our business and industry could be difficult to replace, and management turnover could negatively affect our business, growth, financial conditions, results of operations and cash flows.

Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing and marketing our products.

We do not currently have, nor do we currently plan to build or acquire, the infrastructure or capability to internally manufacture our existing women’s healthcare products, IMVEXXY, BIJUVA, and ANNOVERA.

We have relied, and will continue to rely, on third parties to manufacture these products in accordance with our specifications and in compliance with applicable regulatory requirements, including the FDA’s current Good Manufacturing Practice (“cGMPs”).

We have entered into long-term supply agreements with Catalent Pharma Solutions, LLC for the commercial supply of IMVEXXY and BIJUVA.

Under the terms of the agreements, we are obligated to purchase certain minimum annual amounts of each product.

We have also entered into a long-term supply contract with QPharma AB, now known as Sever Pharma Solutions, for ANNOVERA.

Under the terms of the QPharma AB agreement, we are obligated to purchase certain minimum annual amounts of ANNOVERA.

We depend on Lang, a full-service, private label and corporate brand manufacturer, to supply our vitaMedMD and BocaGreen products.

We do not have long-term contracts for the commercial supply of our vitaMedMD and BocaGreen products, however, in certain circumstances, including our failure to satisfy our production forecasts to Lang, we may be obligated to reimburse Lang for the costs of excess raw materials purchased by Lang that it cannot use in another product category that it then sells.

Regulatory requirements could pose barriers to the manufacture of our women’s healthcare products and our pharmaceutical product candidates.

Holders of NDAs, or other forms of FDA approvals or clearances, or those distributing a regulated product under their own name, are ultimately responsible for compliance with manufacturing obligations even if the manufacturing is conducted by a third-party contract manufacturing organization (“CMO”).

All of our existing products are manufactured by CMOs.

These CMOs are required by the terms of our contracts to manufacture our products in compliance with the applicable regulatory requirements.

We have relied, and will continue to rely, on third parties to manufacture these products in accordance with specifications and in compliance with applicable regulatory requirements, including the FDA’s current Good Manufacturing Practice (“cGMPs”).

We entered into long-term supply agreements with Catalent Pharma Solutions, LLC for the commercial supply of IMVEXXY and BIJUVA which have been assigned to Mayne Pharma.

We also entered into a long-term supply contract with QPharma AB, now known as Sever Pharma Solutions, for ANNOVERA, which contract was also assigned to Mayne Pharma.

We depended on Lang, a full-service, private label and corporate brand manufacturer, to supply our vitaMedMD and BocaGreen products.

We do not have long-term contracts for the commercial supply of our vitaMedMD and BocaGreen products.

Regulatory requirements could pose barriers to the manufacture of our women’s healthcare products.

All of our existing products are manufactured by third-party contract manufacturing organizations (“CMOs”).

These CMOs are required to manufacture our products in compliance with the applicable regulatory requirements.

The CMO that manufactures IMVEXXY and BIJUVA has previously been inspected by the FDA and received Form 483 observations with respect to its softgel manufacturing plant that is used for the manufacture of the commercial supply of IMVEXXY and BIJUVA.

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however, the FDA has not yet reinspected the CMOs to confirm that the corrective actions were implemented as described to the agency in the respective Form 483 responses.

If our manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, our regulatory submissions may be delayed or disapproved, and our marketed products may be affected.

If these facilities are not in compliance for the manufacture of our products, we may need to find alternative manufacturing facilities, which would result in substantial disruptions of our sales of existing products and significant delays of up to several years in obtaining approval for our pharmaceutical product candidates.

In addition, our manufacturers will be subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatory requirements.

After generally suspending in-person inspections due to COVID-19, the FDA announced it would resume domestic facility inspections, although the agency continues its general suspension of foreign facility inspections (although “mission-critical” inspections may be considered on a case-by-case basis).

If the manufacturers of our product cannot successfully manufacture material that conforms to specifications and the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, regulatory submissions related to our products may be delayed or disapproved, and our marketed products may be affected.

If these facilities are not in compliance for the manufacture of our products, our licensees may need to find alternative manufacturing facilities, which would result in substantial disruptions of sales of our products.

In addition, manufacturers of our products will be subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatory requirements.

After generally suspending in-person inspections due to COVID-19, the FDA announced it would resume domestic facility inspections, although the agency continues its

general suspension of foreign facility inspections (although “mission-critical” inspections may be considered on a case-by-case basis).

Because of the global pandemic, decision-making around facility inspections by the FDA (including preapproval inspections) continues to evolve.

Failure by any of our manufacturers to comply with applicable cGMP regulations or other applicable requirements could result in sanctions being imposed on us, including fines,

injunctions, civil penalties, violation letters, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply, recalls, withdrawals, issuance of safety alerts, and criminal prosecutions, any of which could have an adverse impact on our business, financial condition, results of operations, and prospects.

We do not currently have alternative manufacturers, and we may not be able to enter into a long-term agreement with alternative manufacturers, or do so on commercially reasonable terms, and if we do enter into agreements with alternative manufacturers, those alternative manufacturers may not be approved by the FDA, any of which could have an adverse impact on our business.

We also could experience manufacturing delays if our CMOs give greater priority to the supply of other products over our products and proposed products to the delay or other detriment of our products and proposed products, or otherwise do not satisfactorily perform according to the terms of their agreements with us.

Failure by any of the manufacturers of our products to comply with applicable cGMP regulations or other applicable requirements could result in sanctions being imposed on us or our licensees, including fines, injunctions, civil penalties, violation letters, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply, recalls, withdrawals, issuance of safety alerts, and criminal prosecutions, any of which could have an adverse impact on our business, financial condition, results of operations, and prospects.

Our licensees may be able to enter into long-term agreements with alternative manufacturers, or do so on commercially reasonable terms, and if they do enter into agreements with alternative manufacturers, those alternative manufacturers may not be approved by the FDA, any of which could have an adverse impact on our business.

We also could experience manufacturing delays if our CMOs give greater priority to the supply of other products over our products to the delay or other detriment of our products, or otherwise do not satisfactorily perform according to the terms of their agreements.

Finally, we could experience manufacturing delays or interruptions because of the ongoing COVID-19 pandemic.

One of our third-party contract manufacturers has recently experienced an increase in difficulties with manufacturing of ANNOVERA, resulting in intermittent supply of ANNOVERA for commercial distribution.

The challenges are multifactorial and include variability in raw material supply and normal manufacturing variation due to a semi-manual process.

This has recently resulted in challenges to supply ANNOVERA consistently within the approved specification at a rate that meets the projected demand for ANNOVERA.

To mitigate the manufacturing challenges, in August 2021 we filed a supplemental NDA with the FDA to modify the testing specifications for ANNOVERA to allow for increased consistency of manufacturing and supply of ANNOVERA.

In December 2021, FDA determined that it could not approve supplemental NDA without additional information.

In its complete response letter, the FDA provided recommendations and requested additional information that could support approval of revisions to certain testing specifications.

In January 2022, we responded to the CRL, and provided the requested additional information to the FDA and modified the request for the manufacturing testing limits based on the FDA recommendations.

We expect a response from the FDA by the end of second quarter of 2022.

We will continue to manufacture and supply ANNOVERA under the existing specifications.

In the meantime, our third-party contract manufacturer may not be able to supply us with sufficient ANNOVERA to adequately supply the market , which would have an adverse effect on our business, results of operations and financial condition.

Additionally, we may incur increased write-offs of ANNOVERA products manufactured in 2022 that do not meet existing specifications.

We have also experienced a greater than expected amount of raw materials for ANNOVERA being out of specification.

If any of our third-party CMOs or any suppliers of raw materials or API experience further difficulties, do not comply with the terms of an agreement between us, or do not devote sufficient time, energy, and care to providing our manufacturing needs, or if the manufacturing specification modifications that we have requested are not approved by the FDA, we could experience additional interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations and financial position.

We also do not have long-term contracts for the supply of all the API used in BIJUVA, and ANNOVERA.

If any supplier of the API or other products used in our products or pharmaceutical product candidates experiences any significant difficulties in its respective manufacturing processes, does not comply with the terms of an agreement between us, or does not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our products or pharmaceutical product candidates, which could impair our ability to supply our products or pharmaceutical product candidates at the levels required for commercialization and prevent or delay their successful commercialization.

We currently derive all revenue from sales or licenses of our women’s healthcare products, and our failure to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects.

We derived all revenue from sales or licenses of our women’s healthcare products, including patient-controlled, long-acting contraceptive, hormone therapy pharmaceutical products, prenatal and women’s multi-vitamins, and iron supplements.

We cannot assure you that we will be able to sustain such sales or that such sales will grow.

In addition to other risks described herein, our ability to maintain or increase existing product sales is subject to several risks and uncertainties, including the following:

the presence of new or existing competing products, including non-authorized generic copies of our products;

supply or distribution problems arising with any of our manufacturing and distribution partners;

changed or increased regulatory restrictions or regulatory actions by the FDA;

changes in healthcare laws and policy, including changes in requirements for drug pricing, rebates, reimbursement, and coverage by federal healthcare programs and commercial payers;

the impact or efficacy of any price increases we may implement in the future;

changes to our labels and labeling, including new safety warnings or changes to our boxed warnings, that further restrict how we market and sell our products;

acceptance of our products as safe and effective by physicians and patients.

If revenue from sales of our products does not increase, we may be required to reduce our operating expenses or to seek to raise additional funds, which could have an adverse effect on our business, financial condition, results of operations, and growth prospects, or we may not be able to commercialize all of our pharmaceutical products or commence or continue clinical trials to seek approval for any other products we may choose to develop in the future.

If any of the third-party CMOs of our products or any suppliers of raw materials or API experience further difficulties, do not comply with the terms of their agreements, or do not devote sufficient time, energy, and care to providing our manufacturing needs, or if any manufacturing specification modifications that we or Mayne Pharma have requested are not approved by the FDA, we could experience additional interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations and financial position.

Our licensees also do not have long-term contracts for the supply of all the API used in BIJUVA, and ANNOVERA.

If any supplier of the API or other products used in our products experiences any significant difficulties in its respective manufacturing processes, does not comply with the terms of their agreement between, or does not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our products, which could impair our licensee’s ability to supply our products at the levels required for commercialization and prevent or delay their successful commercialization.

The commercial success of our existing products will depend upon gaining and retaining significant market acceptance of these products among physicians and payers.

Physicians may not prescribe our products, which would prevent us from generating revenue or becoming profitable.

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the availability and efficacy of competitive drugs and devices;

the effectiveness of our sales force and marketing efforts;

the effectiveness of our licensee’s sales force and marketing efforts;

the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations, including any access barriers such as prior authorizations and step-edits;

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Even if the medical community accepts that our products are safe and effective for their approved indications, physicians may not immediately be receptive to their use or may be slow to adopt our products as an accepted treatment for the symptoms for which they are intended.

Labeling approved by the FDA may not permit us to promote our products as being superior to competing products, because the FDA applies a heightened level of scrutiny to comparative claims when applying its statutory standards for advertising and promotion, including with regard to its requirements for supporting data and that promotional labeling be truthful and not misleading, and there is potential for differing interpretations of whether certain communications are consistent with a product’s FDA-required labeling.

If our products do not achieve an adequate level of acceptance by physicians and payers, we may not generate sufficient or any revenue from these products and we may not become profitable.

In addition, our efforts to educate the medical community and third-party payers on the benefits of our products may require significant resources and may never be successful.

We may not be able to complete the commercialization of our pharmaceutical products and development of future product candidates if we fail to obtain additional financing.

We need substantial amounts of cash to complete the commercialization of IMVEXXY, BIJUVA, and ANNOVERA and the clinical development and commercialization of future pharmaceutical product candidates.

Our existing cash may not be sufficient to fund these requirements.

In addition, changing circumstances may cause us to consume funds significantly faster than we currently anticipate, and we may need to spend more money than currently expected on these programs.

We may attempt to raise additional capital from the issuance of equity securities, collaborations with third parties, licensing of rights to our products, the issuance of debt securities and the incurrence of debt, in each case to the extent permitted under the Financing Agreement, or other means, or a combination of any of the foregoing.

Securing additional financing will require a substantial amount of time and attention from our management and may divert a disproportionate amount of management’s attention away from our day-to-day activities, which may adversely affect our ability to conduct our day-to-day operations.

We cannot guarantee that future debt or equity financing will be available in sufficient amounts or on terms acceptable to us, if at all.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to significantly delay, scale back, or discontinue our commercialization and product development efforts.

The Financing Agreement does, and any agreements governing future debt financing, if available, may, include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders.

If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or proposed products or grant licenses on terms that may not be favorable to us.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing commercialization and development efforts, and our ability to generate revenue and achieve or sustain profitability will be substantially harmed.

Labeling approved by the FDA may not permit our licensees to promote our products as being superior to competing products, because the FDA applies a heightened level of scrutiny to comparative claims when applying its statutory standards for advertising and promotion, including with regard to its requirements for supporting data and that promotional labeling be truthful and not misleading, and there is potential for differing interpretations of whether certain communications are consistent with a product’s

FDA-required labeling.

If our products do not achieve an adequate level of acceptance by physicians and payers, we may not generate sufficient or any revenue from royalties related to sales of these products.

In addition, the efforts of our licensees to educate the medical community and third-party payers on the benefits of our products may require significant resources and may never be successful.

Coverage and reimbursement may not be available for our products, which could make it difficult for our licensees to sell our products profitably.

Market acceptance and sales of our products, including IMVEXXY, BIJUVA, and ANNOVERA, and our prescription vitamins, will depend on coverage and reimbursement policies and may be affected by healthcare reform measures.

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Factors considered by these payers include product efficacy, cost effectiveness, and safety, as well as the availability of other treatments including generic prescription drugs.

Our ability to commercialize IMVEXXY, BIJUVA, and ANNOVERA successfully depends on coverage and reimbursement levels set by government healthcare programs and third-party private payers.

Obtaining and maintaining favorable reimbursement can be a time-consuming and expensive process, and we may not be able to negotiate or continue to negotiate reimbursement or pricing terms for our products with payers at levels that are profitable to us, or at all.

The ability to commercialize IMVEXXY, BIJUVA, and ANNOVERA successfully depends on coverage and reimbursement levels set by government healthcare programs and third-party private payers.

Obtaining and maintaining favorable reimbursement can be a time-consuming and expensive process, and our licensees may not be able to negotiate or continue to negotiate reimbursement or pricing terms for our products with payers at levels that are profitable to them, or at all.

In both the U.S.

and some foreign jurisdictions, there have been several legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably.

and some foreign jurisdictions, there have been several legislative and regulatory proposals to change the healthcare system in ways that could affect our licensees’ ability to sell our products profitably.

Payment or reimbursement of prescription drugs by Medicaid or Medicare requires manufacturers of the drugs to submit pricing information to CMS.

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Our results of operations could be adversely affected by current and future healthcare reforms.

While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, any such cost-reduction initiatives could decrease the coverage and price that we receive for our products from Medicare, if any, including IMVEXXY, BIJUVA, and ANNOVERA, and could significantly harm our business.

While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, any such cost-reduction initiatives could decrease the coverage and price that our licensees receive for our products from Medicare, if any, including IMVEXXY, BIJUVA, and ANNOVERA, and could significantly harm our business.

It was historically unclear whether products approved to treat moderate-to-severe dyspareunia, a symptom of vulvar and vaginal atrophy due to menopause, such as IMVEXXY, were excluded under Medicare Part D, which resulted in limited Medicare coverage for such products.

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CMS’s clarification, however, is no guarantee that such coverage will be obtained or maintained for IMVEXXY and obtaining Medicare or other government healthcare program reimbursement for any new pharmaceutical products may take up to several years following FDA approval.

Our ability to commercialize ANNOVERA depends on coverage and reimbursement levels set by government healthcare programs and third-party private payers.

The ability of our licensees to commercialize ANNOVERA depends on coverage and reimbursement levels set by government healthcare programs and third-party private payers.

The ACA mandates that private health plans provide coverage for women’s preventative services, without imposing patient cost-sharing requirements, as recommended by HRSA.

HRSA Guidelines require private health plans to cover, with no patient out-of-pocket costs, at least one form of treatment (e.g., one product) in each of the methods (e.g., classes of contraception) identified by the FDA for women in its Birth Control Guide.

To the extent ANNOVERA is deemed a new class of contraception by the

FDA, such a designation could allow for coverage by private health plans with no patient out-of-pocket costs.

To the extent ANNOVERA is deemed a new class of contraception by the FDA, such a designation could allow for coverage by private health plans with no patient out-of-pocket costs.

However, there is no guarantee that such coverage will be obtained, and it is possible that other FDA-approved products could also be included in this new class.

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To the extent ANNOVERA is not the only FDA-approved product in a designated class of contraception, private payers may choose not to cover our one-year vaginal contraceptive system or may require patient cost-sharing obligations.

Some states have amended and expanded requirements to match the standard set in the ACA mandate, specifically requiring coverage for the full range of contraceptive methods, counseling and services used by women and eliminating out-of-pocket costs and limiting other health plan restrictions.

Some states have amended and

expanded requirements to match the standard set in the ACA mandate, specifically requiring coverage for the full range of contraceptive methods, counseling and services used by women and eliminating out-of-pocket costs and limiting other health plan restrictions.

The prior administration implemented policies that permit certain employers to claim a religious or moral objection to the birth control coverage mandate under the ACA.

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that health plans sponsored by certain exempt religious employers and non-profit religious organizations that certify they have religious objections do not need to offer contraception coverage through their health benefit plans.

This exemption could be overturned by the new Biden administration through an Executive Order or other policy or regulatory action.

Further, despite our progress with commercial payers, there is no guarantee that we will be able to retain our agreements or obtain new agreements or that we will be able to negotiate favorable reimbursement or pricing terms for our products in the future.

Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may affect our reimbursement or impose additional coverage limitations and/or cost-sharing obligations on patients, any of which could have an adverse effect on coverage and reimbursement of our products, and our business, financial condition, results of operations, and prospects could be harmed.

To the extent we obtain coverage for our products by state Medicaid programs, we may be required to pay a rebate to each state Medicaid program for any covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program, and to comply with all Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Healthcare Act of 1992.

Moreover, federal law requires that any company participating in the Medicaid Drug Rebate program also participate in the Public Health Service’s 340B Program, which impose additional reporting requirements and price concessions.

Manufacturer compliance with 340B Program requirements can be costly.

In addition, if our products are made available to authorized users of the Federal Supply Schedule of the General Services Administration or to low-income patients of certain hospitals, additional laws and requirements may apply.

We expect to experience pricing pressures in connection with the sale of our products generally due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.

This exemption could be overturned by the Biden administration through an Executive Order or other policy or regulatory action.

Further, despite our progress with commercial payers, there is no guarantee that our licensees will be able to retain our agreements or obtain new agreements or that they will be able to negotiate favorable reimbursement or pricing terms for our products in the future.

Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may affect our licensees’ reimbursement or impose additional coverage limitations and/or cost-sharing obligations on patients, any of which could have an adverse effect on coverage and reimbursement of our products, and our business, financial condition, results of operations, and prospects could be harmed.

We expect that our licensees will experience pricing pressures in connection with the sale of our products generally due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.

We cannot predict whether new proposals will be made or adopted, when they may be adopted, or what impact they may have on us if they are adopted.

The availability of generic products at lower prices than branded products may substantially reduce the likelihood of reimbursement for branded products, such as IMVEXXY, BIJUVA, and ANNOVERA.

If we fail to successfully secure and maintain adequate coverage and reimbursement for our products or are significantly delayed in doing so, we could have difficulty achieving market acceptance of our products and our business, financial condition, results of operations, and prospects could be harmed.

We are subject to extensive and costly government regulation.

The products we are currently commercializing, including IMVEXXY, BIJUVA, and ANNOVERA and our prenatal vitamins, and the pharmaceutical products we are developing and planning to develop in the future, are subject to extensive and rigorous domestic government regulation, including regulation by the FDA, the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.

Department of Health and Human Services, including its Office of Inspector General, the U.S.

Department of Justice, the Departments of Defense and Veterans Affairs, to the extent our products are paid for directly or indirectly by those departments, state and local governments, and their respective foreign equivalents.

If our licensees fail to successfully secure and maintain adequate coverage and reimbursement for our products or are significantly delayed in doing so, they could have difficulty achieving market acceptance of our products and our business, financial condition, results of operations, and prospects could be harmed.

Time and costs associated with winding down our general and administrative, commercial, and research and development activities may be significant.

There are significant costs associated with winding down our normal historic operations, such as separation of employees, termination of contracts and engagement of external consultants, all of which have and may in the future reduce our cash resources and take up large portions of our employees’ and consultants’ time.

Our future success depends on our ability to attract and retain qualified personnel.

We have one employee and use a limited number of external consultants for the operation of our company, any of whom may terminate their consultancy with us at any time.

We may not be able to attract and retain consultants on acceptable terms given the competition for similar personnel.

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

We do not maintain “key person” insurance.

If we are unable to continue to use our current consultants, or if we are unable to recruit new consultants, then our ability to operate our business will be negatively impacted and it could interfere with our ability to receive any potential royalties.

Our business has been, and we anticipate that it will continue to be, impacted by the COVID-19 pandemic and any future pandemics or epidemics.

The severity of the impact of the COVID-19 pandemic on our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted.

Stay at home, quarantine, and social distancing orders and closures and restrictions on travel negatively affected the ability of our sales force to access healthcare providers to promote our products and the ability of patients to visit their healthcare professionals for non-emergent matters.

The sales force of our licensees may continue to use a hybrid model of office visits when necessary and digital engagement tools and tactics and virtual detailing, which may be less effective than their ordinary course sales and marketing programs.

Our future results of operations and liquidity could be adversely affected by extended billing and collection cycles at our company, our licensees, or otherwise;

delays in payments of outstanding receivable amounts beyond normal payment terms, including royalty payments;

supply chain disruptions;

and uncertain demand.

Disruptions have occurred and may occur in the future that affect our licensees’ ability to obtain supplies or other components for our products, manufacture additional products, or deliver inventory in a timely manner.

This would result in lost sales (and royalties) and damage to our reputation.

Our business may also be affected by negative impacts of the COVID-19 pandemic and any future pandemic or epidemic on capital markets and economies worldwide, and it is possible that the pandemic could cause a local and/or global economic recession.

We may also experience other unknown impacts from COVID-19 or any future pandemics or epidemics that cannot be predicted.

Accordingly, disruptions to our business as a result of COVID-19 and other pandemics or epidemics could continue to result in an adverse effect on our business, results of operations, financial condition and prospects in the near-term and beyond 2023.

Unfavorable global economic conditions could harm our business, financial condition or results of operations.

Our results of operations could be harmed by general conditions in the global economy and in the global financial markets.

A severe or prolonged economic downturn, including the impact of increased interest rates and inflation (such as the recent rise in inflation in the United States), could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.

The foregoing could harm our business and we cannot anticipate all of the ways in which unfavorable economic conditions and financial market conditions could harm our business.

We maintain our cash at financial institutions, often in balances that exceed federally insured limits.

The majority of our cash is held in accounts at U.S.

banking institutions that we believe are of high quality.

Cash held in depository accounts may exceed the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

If such banking institutions were to fail, such as Silicon Valley Bank when the FDIC took control in March 2023, we could lose all or a portion of those amounts held in excess of such insurance limitations.

In the future, our access to our cash in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures.

Any material loss that we may experience in the future could have a material adverse effect on our financial condition and could materially impact our ability to pay our operational expenses or make other payments.

Our products and our licensees are subject to extensive and costly government regulation.

Our products are subject to extensive and rigorous domestic government regulation, including regulation by the FDA, the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.

Department of Health and Human Services, including its Office of Inspector General (“OIG”), the U.S.

Department of Justice (“DOJ”), the Departments of Defense and Veterans Affairs, to the extent our products are paid for directly or indirectly by those departments, state and local governments, and their respective foreign equivalents.

The FDA regulates dietary supplements, cosmetics, and drugs under different regulatory schemes.

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The FDA also regulates the research, development, pre-clinical and clinical testing, manufacture, safety, effectiveness, record keeping, reporting, labeling, storage, approval, advertising, promotion, sale, distribution, import, and export of pharmaceutical products under various regulatory provisions.

If any pharmaceutical products we develop are tested or marketed abroad, they will also be subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses.

If any of our products are marketed abroad, they will also be subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses.

Such foreign regulation may be equally or more demanding than corresponding U.S.

We are also subject to additional healthcare regulation and enforcement by the federal government and the states in which we conduct our business.

We and our licensees are also subject to additional healthcare regulation and enforcement by the federal government and the states in which we conduct our business.

Applicable federal and state healthcare laws and regulations include the following:

The federal Anti-Kickback Statute (“AKS”) prohibits, among other things, persons and entities, including pharmaceutical manufacturers, from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of, or arrangement for the referral of, an individual for, or the purchase, lease, order, or recommendation of, any good or service reimbursable, in whole or in part, by federal healthcare programs, such as Medicare, Medicaid, TRICARE, and the State Children’s Health Insurance Program.

• The federal Anti-Kickback Statute (“AKS”) is a criminal statute that prohibits anyone from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of, or arrangement for the referral of, an individual for, or the purchase, lease, order, or recommendation of, any good or service reimbursable, in whole or in part, by government healthcare programs, such as Medicare, Medicaid, TRICARE, and the State Children’s Health Insurance Program.

This statute has been interpreted broadly to apply to, among other things, arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand.

The term “remuneration” includes kickbacks, bribes or rebates and also has been broadly interpreted to include anything of value, including, for example, gifts, discounts, waivers of payment, ownership interest and providing anything at less than its fair market value.

There are several statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, however, the exceptions and safe harbors are drawn narrowly, and practices that do not fit squarely within an exception or safe harbor may be subject to scrutiny.

The term “remuneration” has been broadly interpreted to include anything of value, including, for example, kickbacks, bribes, gifts, discounts, rebates, waivers of payment, ownership interest and providing anything at less than its fair market value.

There are several statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution under the AKS, however, the exceptions and safe harbors are drawn narrowly, and practices that do not fit squarely within an exception or safe harbor may be subject to scrutiny.

The safe harbors are subject to change through legislative and regulatory action, and we may decide to adjust our business practices or be subject to heightened scrutiny as a result.

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Liability under the AKS may be established without proving actual knowledge of the statute or specific intent to violate it.

In addition, federal law provides that the government may assert that a claim including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act (“FCA”), described below.

In addition, federal law provides that claims for items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act (“FCA”), described

Violations of the AKS carry potentially significant civil, criminal, and administrative penalties, including imprisonment, fines, civil monetary penalties, and exclusion from participation in government healthcare programs.

The compliance and enforcement landscape, and related risk, is informed by government precedent, Advisory Opinions, and Special Fraud Alerts.

For example, on November 16, 2020, the OIG published a Special Fraud Alert addressing manufacturer speaker programs signaling that such programs will be subject to an even higher degree of government scrutiny for potential AKS compliance concerns.

Our approach to compliance may evolve over time considering these types of developments.

For example, we are currently evaluating the impact of the November 16, 2020 Special Fraud Alert on our speaker programs;

if we are required to materially change our speaker programs to comply with the Special Fraud Alert, our speaker programs may be less effective, which may have an adverse effect on our business, financial condition, results of operations, and growth prospects.

The FCA prohibits entities and individuals from intentionally (or with reckless disregard or deliberate ignorance) presenting or causing to be presented false or fraudulent claims or the making of false statements material to a claim to Medicare, Medicaid, and other federal healthcare programs, or improperly retaining known overpayments;

Violations of the FCA carry penalties of up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim.

The compliance and enforcement landscape, and related risk, is informed by government precedent, Advisory Opinions, and OIG Special Fraud Alerts.

For example, on November 16, 2020, the OIG published a Special Fraud Alert addressing manufacturer speaker programs, signaling that such programs will be subject to an even higher degree of government scrutiny under the AKS.

• The FCA prohibits entities and individuals from knowing and willfully (or with reckless disregard or deliberate ignorance) presenting or causing to be presented false or fraudulent claims or the making of false statements material to a claim for payment by Medicare, Medicaid, and other government healthcare programs, or improperly retaining known overpayments from government healthcare programs;

o Violations of the FCA carry penalties of up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim.

Suits filed under the federal FCA can be brought directly by the government or be brought by an individual (known as a “relator” or, more commonly, as a “whistleblower”) on behalf of the government, known as “qui tam” actions.

Relators bringing qui tam actions under the FCA receive a share of any amounts paid by the entity to the government in fines or settlement.

Relators bringing qui tam actions under the FCA receive a share of any amounts paid by the entity to the government whether through judgment or settlement.

Qui tam actions have increased significantly in recent years, causing greater numbers of entities, including manufacturers, to have to defend a false claim action, even before the validity of the claim is established and even if the government decides not to intervene in the lawsuit.

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In addition to the FCA, many states have enacted their own false claims act statutes that address similar conduct and that may apply to claims for items or services submitted to any payor source, not just government-funded programs.

Although we do not submit claims directly to payers, manufacturers can be held liable under the FCA if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers, promoting a product off-label, marketing products of sub-standard quality, or, as noted above, paying a kickback that results in a claim for items or services.

o Although we do not submit claims directly to payers, manufacturers can be held liable under the FCA if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers, promoting a product off-label, marketing products of sub-standard quality, or, as noted above, paying a kickback that results in a claim for items or services.

In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under the FCA.

For example, several pharmaceutical and other healthcare companies have faced enforcement actions under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

• The Civil Monetary Penalties Law (“CMPL”) imposes substantial civil monetary penalties against an entity that engages in prohibited activities, including but not limited to violations of the AKS, knowing submission of a false or fraudulent claim, employment of an excluded individual and the provision or offer of anything of value to a Medicare or Medicaid beneficiary that the transferring party knows or should know is likely to influence beneficiary selection of a particular provider or supplier for the provision of items or service for which payment may be made in whole or in part by Medicare or Medicaid;

“Remuneration” is defined under the CMPL as any transfer of items or services for free or for less than fair market value.

o “Remuneration” is defined under the CMPL as any transfer of items or services for free or for less than fair market value.

There are certain exceptions to the definition of remuneration for offerings that meet the Financial Need, Preventative Care, or Promoting Access to Care exceptions.

Sanctions for violations of the CMPL include civil monetary penalties and administrative penalties up to and including exclusion from participation in federal health care programs.

Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal and civil liability for knowingly and willfully executing or attempting to execute a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including third-party private payers, knowingly and willfully falsifying, concealing, or covering up by trick, scheme, or device, a material fact or making any materially false, fictitious, or fraudulent statements in connection with the delivery of or payment for healthcare benefits, items, or services.

Sanctions for violations of the CMPL include civil monetary penalties and administrative penalties up to and including exclusion from participation in government health care programs.

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal and civil liability for knowingly and willfully executing or attempting to execute a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including third-party private payers, knowingly and willfully falsifying, concealing, or covering up by trick, scheme, or device, a material fact or making any materially false, fictitious, or fraudulent statements in connection with the delivery of or payment for healthcare benefits, items, or services.

Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.

State laws may also govern the privacy and security of health information or other personal information in certain circumstances.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, also imposes obligations, including mandatory contractual terms, on certain covered entities and their business associates with respect to safeguarding the privacy, security, and transmission of individually identifiable health information.

Our vitaCare subsidiary is a covered entity under HIPAA.

HITECH also gave state attorneys general new authority to file civil actions for damages or injunctions in federal court to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

The Department of Health and Human Services Office of Civil Rights (the “OCR”) has increased its focus on compliance and continues to train state attorneys general for enforcement purposes.

State laws may also govern the privacy and security of health information or other personal information in certain circumstances.

According to the FTC failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or deceptive practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

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Medical data is considered sensitive data that merits stronger safeguards.

The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule.

Federal laws require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs.

The Physician Payments Sunshine Act imposes annual reporting requirements to CMS for certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under certain government healthcare programs (with certain exceptions) of information related to certain payments or other “transfers of value” made or provided to HCPs and teaching hospitals, or to other entities or individuals at the request of, or designated on behalf of, the HCPs and teaching hospitals.

Numerous state laws may also require disclosure of transfers of value to HCPs, pharmaceutical pricing information and marketing expenditures.

Analogous state laws and regulations, such as state anti-kickback and false claims laws, and other state laws addressing the pharmaceutical and healthcare industries, may apply to interactions between pharmaceutical manufacturers and healthcare providers, sales or marketing arrangements, and claims involving healthcare items or services reimbursed by commercial third-party payers, including private healthcare insurers and health maintenance organizations, and in some cases that may apply regardless of payer, i.e., even if reimbursement is not available;

further, some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance program guidelines (the PhRMA Code) and the relevant compliance guidance promulgated by the federal government (HHS-OIG) in addition to requiring drug manufacturers to report pricing and marketing information, including, among other things, information related to gifts, payments, or other remuneration to physicians and other healthcare providers or marketing expenditures, state and local laws that require the registration of pharmaceutical sales representatives, and state laws governing the privacy and security of health information and the use of prescriber-identifiable data in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

For example, California enacted legislation – the California Consumer Privacy Act (“CCPA”) – which went into effect January 1, 2020 and, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information, and creates a private right of action with statutory damages for certain data breaches,

thereby potentially increasing risks associated with a data breach.

The CCPA was recently amended by the California Privacy Rights Act, expanding certain consumer rights such as the right to know.

It remains unclear what, if any, additional modifications will be made to these laws by the California legislature or how these laws will be interpreted and enforced.

It remains unclear what, if any, additional modifications will be made to these laws by the California legislature or through ballot referendum, how these laws will be interpreted and enforced.

The potential effects of the CCPA and CPRA are significant and may cause us to incur substantial costs and expenses to comply.

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Some of these investigations have resulted in significant civil and criminal settlements.

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

In connection with the commercial launches of IMVEXXY, BIJUVA, and ANNOVERA, we have grown our compliance program and are developing a program based on industry best practices and tailored to evolving risks as we launch additional products, identify new distribution channels, and target new patient types.

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

Although effective compliance programs can help mitigate the risk of investigation, regulatory and enforcement actions, and prosecution for violations of these laws, the risks cannot be entirely eliminated.

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There have been efforts by government officials and legislators to implement measures to regulate prices or payment for pharmaceutical products, including legislation on drug importation.

For example, in November 2021, the Biden Administration announced several prescription drug pricing proposals as part of the Build Back Better legislation.

In particular, the plan would allow for Medicare to negotiate prices for high-cost prescription drugs, including for both Part D and Part B drugs, after the drugs have been on the market for a fixed number of years:

9 years for small molecule drugs and 12 years for biologics.

Medicare will negotiate up to 10 drugs per year during 2023, with the negotiated prices taking effect in 2025, increasing up to 20 drugs per year.

Further, the plan imposes a tax penalty if drug manufacturers increase their prices faster than inflation.

Finally, the plan places a $2,000 per year cap on out-of-pocket drug costs under Medicare Part D.

For example, President Biden signed the Inflation Reduction Act of 2022 into law on August 16, 2022, which among other things, seeks to lower prescription drug costs for Medicare beneficiaries and reduce drug spending by the federal government.

Specifically, the prescription drug provisions under the Inflation Reduction Act:

Require that the federal government negotiate prices for certain drugs covered under Medicare Part B and Part D with the highest total spending, beginning in 2026;

Require drug manufacturers to pay rebates to Medicare if prices rise faster than inflation for drugs used by Medicare beneficiaries, beginning in 2023;

Cap out of pocket spending for Medicare Part D enrollees and make other Part D benefit design changes, beginning in 2024;

Expand eligibility for full benefits under the Medicare Part D Low-Income Subsidy Program, beginning in 2024;

Delay implementation of the Trump Administration’s drug rebate rule, beginning in 2027.

The law that established the Part D benefit included a provision known as the “noninterference clause”, which stipulates that the HHS Secretary “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP prescription drug plan sponsors, and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.” Further, the Secretary does not currently negotiate prices for Part B drugs, rather, Medicare reimburses providers based on 106% of the average sales price (ASP), which is the average price paid to all non-federal buyers in the U.S., inclusive of rebates (other than Medicaid rebates).

The Inflation Reduction Act amends the non-interference clause by adding an exception that requires the Secretary of HHS to negotiate prices with drug manufacturers for a small number of single-source brand-name drugs or biologics without generic or biosimilar competitors that are covered under Medicare Part D (starting in 2026) and Part B (starting in 2028).

Under the new Drug Price Negotiation Program, the number of drugs subject to price negotiation will be 10 Part D drugs for 2026, another 15 Part D drugs for 2027, another 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and later years.

These drugs will be selected from among the 50 drugs with the highest total Medicare Part D spending and the 50 drugs with the highest total Medicare Part B spending.

The total number of drugs with negotiated prices will increase over time.

Part D drugs with negotiated maximum fair prices are required to be covered by all Part D plans.

Additionally, an excise tax will be levied on drug manufacturers that do not comply with the negotiation process.

The excise tax starts at 65% of a drug’s sales in the U.S.

and increases by 10% every quarter to a maximum of 95%.

As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid.

In addition, manufacturers that refuse to offer an agreed-upon negotiated price for a selected drug to Medicare beneficiaries enrolled in Part B and/or Part D or to a provider of services to such individuals (such as a physician or hospital) will pay a civil monetary penalty equal to 10 times the difference between the price charged and the maximum fair price of the drug.

Following passage of the Inflation Reduction Act, President Biden issued an Executive Order on October 14, 2022 titled “Lowering Prescription Drug Costs for Americans”, calling for additional measures to complement the Inflation Reduction Act and further drive down prescription drug costs.

Under the Executive Order, the HHS Secretary is directed to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for Medicare and Medicaid beneficiaries, including cost-sharing models and value-based payments.

It is unclear what additional payment and delivery models the Innovation Center may propose and how those models may impact drug pricing, including the pricing and access to our products.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We are unable to predict the future course of federal or state healthcare legislation in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare.

The ACA and any further changes in the law or regulatory

framework that reduce our revenue or increase our costs could also have an adverse effect on our business, financial condition , and results of operations.

The Patient Protection and Affordable Care Act (“ACA”) and any further changes in the law or regulatory framework could also have an adverse effect on our business, financial condition, and results of operations.

Further, if a federal government shutdown were to occur for a prolonged period, federal government payment obligations, including its obligations under Medicaid and Medicare, may be delayed.

Similarly, if state government shutdowns were to occur, state payment obligations may be delayed.

If the federal or state governments fail to make payments under these programs on a timely basis, our ability to sell our products to government payers may be limited and/or our ability to establish acceptable pricing levels may be impaired, thereby reducing anticipated revenues and profitability.

Even after the approval of IMVEXXY, BIJUVA, and ANNOVERA, and even if we obtain regulatory approval for other pharmaceutical product candidates, we will still face extensive, ongoing regulatory requirements and review, and our products may face future development and regulatory difficulties.

Similarly, if state government shutdowns were to occur, state payment

obligations may be delayed.

If the federal or state governments fail to make payments under these programs on a timely basis, the ability of our licensees to sell our products to government payers may be limited, thereby reducing anticipated revenues and profitability.

Even after the approval of IMVEXXY, BIJUVA, and ANNOVERA, the products and the holder of the marketing authorizations will still face extensive, ongoing regulatory requirements and review, and the products may face future development and regulatory difficulties.

With respect to IMVEXXY, BIJUVA, and ANNOVERA, the FDA may still impose significant restrictions on a product’s indicated uses or marketing or to the conditions for approval or impose ongoing requirements for potentially costly post-approval studies, including phase 4 clinical trials or post-market surveillance.

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For example, the labeling for IMVEXXY, BIJUVA, and ANNOVERA contains restrictions on use and warnings.

The Food and Drug Administration Amendments Act of 2007 (“FDAAA) gives the FDA enhanced post-market authority, including the imposition of a Risk Evaluation and Mitigation Strategy (“REMS”) as well as explicit authority to require post-market studies and clinical trials, labeling changes based on new safety information, and compliance with FDA-approved REMS programs.

The Food and Drug Administration Amendments Act of 2007 gives the FDA enhanced post-market authority, including the imposition of a Risk Evaluation and Mitigation Strategy (“REMS”) as well as explicit authority to require post-market studies and clinical trials, labeling changes based on new safety information, and compliance with FDA-approved REMS programs.

IMVEXXY, BIJUVA, and ANNOVERA will also be subject to ongoing FDA requirements governing the manufacturing, labeling, packaging, storage, distribution, safety surveillance and reporting, advertising, promotion, record keeping, and reporting of safety and other post-market information.

The FDA’s exercise of its authority could result in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply with additional post-approval regulatory requirements, and potential restrictions on sales of approved products.

Foreign regulatory agencies often have similar authority and may impose comparable requirement.

As part of the FDA’s approval of IMVEXXY, we have committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen such as IMVEXXY.

Foreign regulatory agencies often have similar authority and may impose comparable requirements.

As part of the FDA’s approval of IMVEXXY, we committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen such as IMVEXXY, which study was assumed by Mayne Pharma as the holder of the new drug application (“NDA”).

As part of the FDA’s approval of ANNOVERA, the FDA has required four non-closed post-marketing studies, including both post-marketing reviews and post-marketing commitments.

Each study has a timeline for completion and submission of a final report to the FDA.

If a post-approval study is not fulfilled according to FDA requirements, the FDA may impose certain further requirements and/or penalties against the holder of the new drug application (“NDA”).

For ANNOVERA, certain of the studies are being performed by the Population Council.

To the extent that the Population Council does not fulfil these studies to the FDA’s satisfaction, FDA may impose additional requirements and penalties against us, as we hold the NDA for ANNOVERA.

If a post-approval study is not fulfilled according to FDA requirements, the FDA may impose certain further requirements and penalties against the holder of the NDA, which could include withdrawal of the NDA approval and withdrawal of the product from the market.

For ANNOVERA, post marketing studies are being performed by the Population Council and Mayne Pharma as the NDA holder.

In July 2021, we received a letter from the FDA indicating that the post-marketing commitment study being conducted by the Population Council for ANNOVERA to characterize the in vivo release rate of ANNOVERA was not fulfilled to FDA’s satisfaction.

In addition, the final reports for the two post-marketing requirement studies being performed by the Population Council for ANNOVERA were not submitted by the initial listed submission deadline, which deadlines have since been extended by FDA.

We are working with Population Council to complete the post-marketing commitment study to the FDA’s satisfaction and reduce the delay in submitting the post-marketing requirement final reports.

To the extent that the Population Council does not fulfil these studies to the FDA’s satisfaction, the FDA may impose additional requirements and penalties against us, as we hold the NDA for ANNOVERA.

To the extent that Mayne Pharma or the Population Council, as applicable, does not fulfil these studies to the FDA’s satisfaction, the ability of our licensees to sell the applicable product may be limited and there may be an adverse impact on our revenue and results of operations.

Post-marketing studies, whether conducted by us or by others and whether mandated by regulatory agencies or voluntary, and other emerging data about marketed products, such as adverse event reports, may also adversely affect sales of our pharmaceutical product candidates once approved, and potentially our other marketed products.

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Such guidelines or recommendations may lead to lower sales of our products.

The holder of an approved NDA also is subject to obligations to monitor and report adverse events and instances of the failure of a product to meet the specifications in the NDA.

Application holders must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process.

Application holders must also submit

advertising and other promotional material to the FDA and report on ongoing clinical trials.

Legal requirements have also been enacted to require disclosure of certain clinical trial results on a publicly available database.

Manufacturers of pharmaceutical products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with the FDA’s cGMP regulations and other regulatory requirements, such as adverse event reporting.

If we or a regulatory agency discovers problems with a product, such as adverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility, or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing, requiring new warnings or other labeling changes to limit use of the drug, requiring that we conduct additional clinical trials, imposing new monitoring requirements, or requiring that we establish a REMS program.

Facilities for the manufacturer of pharmaceutical products also undergo internal audits as well as external audits by third parties.

If our licensees or a regulatory agency discovers problems with a product, such as adverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility, or our licensees, including requiring recall or withdrawal of the product from the market or suspension of manufacturing, requiring new warnings or other labeling changes to limit use of the drug, requiring that additional clinical trials be conducted, imposing new monitoring requirements, or requiring the establishment of a REMS program.

Advertising and promotional materials must comply with FDA rules in addition to other potentially applicable federal and state laws and are subject to review by FDA.

If the FDA raises concerns regarding our promotional materials or messages, we may be required to modify or discontinue using them and may be required to provide corrective information.

Should we fail to comply with these requirements, we may be subject to significant liability including civil and administrative actions as well as criminal sanctions.

If the FDA raises concerns regarding our licensees’ promotional materials or messages, they may be required to modify or discontinue using them and may be required to provide corrective information.

Commercial products must now meet the requirements of the Drug Supply Chain Security Act (“DSCSA”) which imposes obligations on manufacturers of prescription pharmaceutical products for commercial distribution, regulating the distribution of the products at the federal level, and sets certain standards for federal or state registration and compliance of entities in the supply chain (manufacturers and re-packagers, wholesale distributors, third-party logistics providers, and dispensers).

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The distribution of product samples continues to be regulated under the PDMA, and some states also impose regulations on drug sample distribution.

Our activities are also potentially subject to federal and state consumer protection and unfair competition laws.

If we or our third-party suppliers fail to comply with applicable regulatory requirements, a regulatory agency may take any of the following actions:

conduct an investigation into our practices and any alleged violation of law;

issue warning letters or untitled letters asserting that we are in violation of the law;

Our activities and the activities of our licensees are also potentially subject to federal and state consumer protection and unfair competition laws.

If we, our licensees or our third-party suppliers fail to comply with applicable regulatory requirements, a regulatory agency may take any of the following actions:

• conduct an investigation into our or our licensees’ practices and any alleged violation of law;

• seek an injunction or impose civil or criminal penalties or monetary fines;

• suspend or withdraw regulatory approval;

require that we suspend or terminate any ongoing clinical trials;

refuse to approve pending applications or supplements to applications filed by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements;

seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall;

exclude us from providing our products to those participating in government healthcare programs, such as Medicare and Medicaid, and refuse to allow us to enter into supply contracts, including government contracts.

• suspend or impose restrictions on our licensees’ operations, including costly new manufacturing requirements;

• seize or detain products, refuse to permit the import or export of products, or require our licensees to initiate a product recall;

• exclude our licensees from providing our products to those participating in government healthcare programs, such as Medicare and Medicaid, and refuse to allow our licensees to enter into supply contracts, including government contracts.

Recent government enforcement has targeted pharmaceutical companies for violations of fraud, abuse and other laws.

The AKS has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, pharmacies, and formulary managers on the other.

Although there are several statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution, the exceptions and safe harbors are drawn narrowly and practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical products, including certain discounts, or engagement of speakers or consultants, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor.

The federal government has pursued actions against pharmaceutical companies for violations of the AKS, including relating to remuneration paid to physicians for attendance at speaker programs, consulting arrangements, and marketing, among others.

As noted above, the OIG released a Special Fraud Alert in 2020 regarding manufacturer speaker programs and announced several settlements with manufacturers relating thereto.

As noted above, violations of the AKS are also per se false claims for purposes of the FCA and as a result, have resulted in large settlements between manufacturers and the government.

Separately, the government has pursued actions against manufacturers under the FCA for causing the submission of false claims arising from manufacturer off-label marketing.

These and other enforcement efforts have resulted in large civil settlements and corporate integrity agreements between manufacturers and the government.

We have adopted comprehensive compliance guidance and endeavor to structure our business arrangements and marketing efforts in compliance with all applicable law, including the AKS and the FCA;

however, we cannot guarantee that the government, whistleblower or court will agree with our interpretations.

Our practices with respect to interactions with HCPs, including but not limited to consultant relationships, speaker programs, advisory boards, and scientific/educational grant programs, as well as our arrangements with pharmacies, may not in all cases meet all the criteria for safe harbor protection from AKS liability.

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The safe harbors are subject to change through legislative and regulatory action, and we may decide to adjust our business practices or be subject to heightened scrutiny as a result.

In addition, several states have recently enacted legislation requiring pharmaceutical companies to establish marketing and promotional compliance programs or codes of conduct and/or to file periodic reports with the state or make periodic public disclosures on sales,

marketing, pricing, clinical trials, and other activities.

Several states have also adopted laws that prohibit or limit certain marketing-related activities, including the provision of gifts, meals, or other items to certain healthcare providers.

The FDA also strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market.

The FDA also strictly regulates marketing, labeling, advertising, and promotion of prescription drug products that are placed into interstate commerce in the United States.

A company can make only those claims relating to safety and efficacy, purity, and potency that are approved by the FDA.

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Pharmaceutical companies, however, are required to promote their pharmaceutical products only for the approved indications and consistent with the FDA-required, approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off label uses may be subject to significant liability, including, but not limited to, criminal and civil penalties under the FDCA and the FCA, exclusion from participation in federal healthcare programs, mandatory compliance programs under corporate integrity agreements, debarment, and refusal of government contracts.

We cannot ensure that our compliance controls, policies, and procedures will be sufficient to protect against acts of our employees, business partners or vendors that may violate federal or state fraud and abuse laws or other applicable requirements.

The FDA and other agencies actively monitoring promotional activities and enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off label uses may be subject to significant liability, including, but not limited to, criminal and civil penalties under the FDCA and the FCA, exclusion from participation in federal healthcare programs, mandatory compliance programs under corporate integrity agreements, debarment, and refusal of government contracts.

We cannot ensure that ours or our licensee’s compliance controls, policies, and procedures will be sufficient to protect against acts of ours or their employees, business partners, licenses, or vendors that may violate federal or state fraud and abuse laws or other applicable requirements.

Federal enforcement agencies and private whistleblowers have shown and continue to show interest in pharmaceutical companies’ product and patient assistance programs (PAPs), including reimbursement support, co-pay support, nursing, adherence and educational services, referrals to other providers, donations to independent patient assistance charities, and relationships with specialty pharmacies.

Co-pay assistance programs are intended to assist qualified patients with private insurance with any out-of-pocket financial obligations but must exclude any government healthcare program beneficiaries.

We believe that Mayne Pharma offers co-pay assistance for our vitamin products and IMVEXXY and BIJUVA, including co-pay assistance and free drug sample packs for IMVEXXY and BIJUVA, and potentially will enter into similar programs for ANNOVERA.

Our co-pay assistance programs are intended to assist qualified patients with private insurance with any out-of-pocket financial obligations but exclude any government healthcare program beneficiaries.

Several investigations into patient assistance practices have resulted in significant civil and criminal settlements.

We offer co-pay assistance for our vitamin products and IMVEXXY and BIJUVA, including co-pay assistance and free drug sample packs for IMVEXXY and BIJUVA, and potentially will enter into similar programs for ANNOVERA.

While the OIG has approved certain independent charitable PAPs that help financially needy beneficiaries, advisory opinions on this issue have primarily focused on charities that provide assistance to patients who cannot afford cost-sharing obligations for prescription drugs.

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PAPs have also been the subject of Congressional review.

If we fail to structure our patient assistance and support programs to comply with applicable law, we risk becoming subject to government investigations, and potentially, facing penalties or consequences for violations under fraud and abuse laws.

Although we believe that our business practices are structured to be compliant with applicable laws, it is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations.

If our past or present operations, including activities conducted by our sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of our operations.

If patient assistance programs are structure incorrectly or support programs fail to comply with applicable law, Mayne Pharma risks becoming subject to government investigations, and potentially, facing penalties or other consequences for violations under fraud and abuse laws, which may inhibit revenues through royalties due to reduced sales volume.

Although we believe that ours and our licensees business practices are structured to be compliant with applicable laws, it is possible that governmental authorities will conclude that ours or our licensees business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations.

If our past operations and our licensees current operations, including activities conducted by our former sales team or agents or our licensees current sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that

may apply to us, we or our licensees may be subject to significant civil, criminal, and administrative penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of ours or their operations.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, and damage our reputation.

In addition, even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could also have an adverse effect on our business, financial condition, and results of operations.

In addition, to the extent we, our subsidiary, vitaCare, or our other contractors or agents receive or obtain individually identifiable health information from patients, healthcare professionals, pharmacies, or other individuals or entities, we could be subject to criminal penalties if we mishandle individually identifiable health information in a manner that is not authorized or permitted by HIPAA.

In addition, to the extent we, our licensees, or our other contractors or agents receive or obtain individually identifiable health information from patients, healthcare professionals, pharmacies, or other individuals or entities, we or they could be subject to criminal penalties if we mishandle individually identifiable health information in a manner that is not authorized or permitted by HIPAA or other applicable privacy and security laws.

Claims that we have violated individuals’ privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

In addition, vitaCare’s activities could be subject to regulation and enforcement by the federal government and the states in which vitaCare conducts its business, including state licensing of pharmacies and pharmacists and as a result of potential increased scrutiny of innovation in hub services.

The occurrence of any of the foregoing events or penalties may force us to expend significant amounts of time and money and may significantly inhibit our ability to bring to market or continue to market our products and generate revenue.

Following the closing of the

vitaCare Divestiture, we may still be required to indemnify the buyer of vitaCare in the event any enforcement related to activities prior to the vitaCare Divestiture.

The occurrence of any of the foregoing events or penalties may force us to expend significant amounts of time and money and may significantly inhibit our licensee’s ability to continue to market our products and generate revenue.

Following the closing of the vitaCare Divestiture, we may still be required to indemnify the buyer of vitaCare in the event any enforcement related to activities prior to the vitaCare Divestiture.

Similar regulations apply in foreign jurisdictions.

Some of our products can be prescribed to patients via a virtual health platform, such as PlushCare, a direct-to-consumer telehealth platform offering primary care medical services, subject to state telehealth and prescribing laws.

Some of our products can be prescribed to patients via a virtual health or telehealth platform, subject to state telehealth and prescribing laws.

The federal Ryan Haight Act substantially limits the ability of prescribers to prescribe controlled substances via telehealth.

While this federal law applies only to federally controlled substances, the permissibility of prescribing other non-controlled substances via a telehealth encounter is addressed at the state level.

Constant changes to the telehealth laws and regulations as well as state pharmacy and prescribing laws and emerging enforcement priorities by state legislatures, licensing bodies, and attorney generals’ offices, make it difficult to predict our ability to effectively provide patient access to our products via virtual care offerings.

Constant changes to the telehealth laws and regulations as well as state pharmacy and prescribing laws and emerging enforcement priorities by state legislatures, licensing bodies, and attorney generals’ offices, make it difficult to predict our licensees’ ability to effectively provide patient access to our products via virtual care offerings.

There have been recent waivers of telehealth restrictions, including many of those pertaining to electronic prescribing based on a telehealth encounter, to assist in expanding access to care during the COVID-19 pandemic.

Many of these waivers are tied to the federal public health emergency declaration but some state laws have different expiration dates.

Following the expiration of the COVID-19 public health emergency on May 11, 2023, prescribing of controlled substances via a virtual encounter will be more limited.

We cannot guarantee that prescribers will be able, or willing, to prescribe our products to patients via a telehealth encounter and any limitations on such remote prescribing at the state level may impede our ability to expand access to our products.

Licensing of intellectual property involves complex legal, business, and scientific issues, and disputes could jeopardize our rights under such agreements.

Additionally, our current licensing agreements contain limitations and restrictions that could limit or adversely affect our ability to develop and commercialize other products in the future.

We are currently and may in the future be a party to license agreements of importance to our business and to our products and product candidates.

We are currently and may in the future be a party to license agreements of importance to our business and to our products.

Disputes may arise between us and any of these counterparties regarding intellectual property subject to and each parties’ obligations under such agreements, including:

our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product and product candidates, and what activities satisfy those diligence obligations;

the scope of rights granted under the agreement and other interpretation-related issues;

our obligations to make milestone, royalty, or other payments under those agreements;

whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement;

our right to sublicense patent and other rights to third parties:

the ownership of inventions and know-how arising under the agreement or resulting from the joint creation or use of intellectual property by our licensors and us and our partners;

our right to transfer or assign the license;

our or our licensees’ obligations to make milestone, royalty, or other payments under those agreements;

our or our licensees’ obligations to prosecute existing and new patent applications;

our or our licensees’ obligations to enforce infringement of our intellectual property;

whether and the extent to which the ANNOVERA technology and processes infringe on intellectual property of the Population Council that is not subject to the ANNOVERA license agreement;

the ownership of inventions and know-how arising under the agreement or resulting from the joint creation or use of intellectual property by our licensees and us and our partners;

our right, or the right of our licensees, to transfer or assign the license;

the effects of termination.

These or other disputes over our obligations or intellectual property that we have licensed may prevent or impair our ability to maintain our current arrangements on acceptable terms, or may impair the value of the arrangement to us.

These or other disputes over our obligations, our licensees’ obligations, or intellectual property that we have licensed may prevent or impair our ability to maintain our current arrangements on acceptable terms, or may impair the value of the arrangement to us.

Any such dispute could have an adverse effect on our business.

If we fail to meet our obligations under a license agreement in a material respect, the respective licensor could have the right to terminate the respective agreement and upon the effective date of such termination, have the right to re-obtain the related technology as well as, potentially, aspects of any intellectual property controlled by us and developed during the period the agreement was in force that relate to the applicable technology.

This means that the licensor to each of these agreements could effectively take control of the development and commercialization of the applicable product or product candidate after an uncured, material breach of the agreement by us.

This may also be the case if we voluntarily terminate the relevant agreement.

Any uncured, material breach under a license agreement could result in our loss of exclusive rights and may lead to a complete termination of our product development and any commercialization efforts for the applicable product or product candidates.

If we, or, with respect to the ANNOVERA license agreement that we have assigned to Mayne Pharma, Mayne Pharma, fail to meet obligations under that license agreement in a material respect, the respective licensor could have the right to terminate the respective agreement and upon the effective date of such termination, have the right to re-obtain the related technology as well as, potentially, aspects of any intellectual property controlled by us or Mayne Pharma and developed during the period the agreement was in force that relate to the applicable technology.

This means that the licensor to each of these agreements could effectively take control of the

development and commercialization of the applicable product after an uncured, material breach of the agreement by us.

Any uncured, material breach under a license agreement could result in our loss of exclusive rights and may lead to a complete termination of any commercialization efforts for the applicable product.

In July 2018, we entered into the Population Council License Agreement to obtain exclusive U.S.

rights to commercialize ANNOVERA.

The agreement requires us to commercialize this product and enter into certain manufacturing agreements, make timely milestone and other payments, provide certain information regarding our activities under the agreement, and indemnify the other party with respect to our development and commercialization activities under the terms of the agreements.

In addition, our current licensing agreement with the Population Council contains limitations and restrictions, including limitations that could limit or adversely affect our ability to develop and commercialize this or other product candidates including the following:

we cannot sublicense the rights licensed to us without the consent of the Population Council;

neither we nor the Population Council may develop a competitive product (as defined with respect to each party in the agreement) for six years from the date of the agreement;

the Population Council owns any program improvements, as defined in the agreement.

The agreement required us to commercialize this product and enter into certain manufacturing agreements, make timely milestone and other payments, provide certain information regarding our activities under the agreement, and indemnify the other party with respect to our development and commercialization activities under the terms of the agreements.

The Company’s license under the Population Council License Agreement was sold to Mayne Pharma as part of the Mayne Transaction.

In connection with the Mayne Transaction, we granted a license to Mayne Pharma (i) to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

Any disputes arising under the agreements governing the Mayne Transaction may have a material adverse impact on our revenue, results of operations and financial position.

We have also entered into licensing and supply agreements with Knight pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel and with Theramex pursuant to which we granted Theramex an exclusive license to commercialize BIJUVA, and IMVEXXY outside of the U.S., except for Canada and Israel.

Sales of our products in the U.S.

and our rights to receive royalties with respect to our products sold outside the U.S.

could be adversely affected if products manufactured outside of the U.S.

and our rights to receive royalties with respect to such sales could be adversely affected if products manufactured outside of the U.S.

or for sale outside of the U.S.

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Furthermore, there can be no assurance that any of the products, even when used as directed, will have the effects intended or will not have harmful side effects in an unforeseen way or on an unforeseen cohort.

If any of our products or products we develop or commercialize in the future are shown to be harmful or generate negative publicity from perceived harmful effects, our business, financial condition, results of operations, and prospects could be harmed significantly.

If any of our are shown to be harmful or generate negative publicity from perceived harmful effects, our business, financial condition, results of operations, and prospects could be harmed significantly.

Our products face significant competition from branded and generic products, and our operating results will suffer if we fail to compete effectively.

Development and awareness of our brand will depend largely upon our success in increasing our consumer base and maintaining adequate pricing through our exclusivities.

Development and awareness of our products will depend largely upon our licensee’s success in increasing the consumer base for our products.

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

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

If we are unable to economically promote or maintain our brand, our business, results of operations and financial condition could be severely harmed.

In addition, our efforts to provide an alternative to the non-FDA-approved compound bioidentical market for estradiol and progesterone products sold by compounding pharmacies may not be successful.

Finally, loss of exclusivity may provide opportunity for competing products, particularly generics, to erode pricing and siphon off our consumers.

If our licensees are unable to economically promote or maintain our brand, our business, results of operations and financial condition could be severely harmed.

In addition, loss of exclusivity may provide opportunity for competing products, particularly generics, to erode siphon off our consumers.

In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to the FDA by Teva Pharmaceuticals USA, Inc.

See “If our efforts to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market” below for more information regarding the IMVEXXY Notice Letter.

Additionally, on March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal Pharmaceuticals.

See “If the efforts of our licensees to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market” below for more information regarding the IMVEXXY Notice Letter.

Additionally, on March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal

Pharmaceuticals .

Business – Pharmaceutical Regulation – Regulatory Exclusivity for more information on the BIJUVA Notice Letter.

In addition, we cannot predict what additional ANDAs could be filed by Teva or other potential generic competitors requesting approval to market generic forms of our products, which could require us to incur significant additional expense and result in distraction for our management team, and if approved, result in significant decreases in the revenue derived from sales of our marketed products and thereby harm our business and financial condition.

In addition, we cannot predict what additional ANDAs could be filed by Teva or other potential generic competitors requesting approval to market generic forms of our products, which if approved, could result in significant decreases in the revenue derived from royalties sales of our marketed products and thereby harm our business and financial condition.

Failure to obtain regulatory approval outside the U.S.

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In addition, by seeking to obtain approval to market IMVEXXY and BIJUVA in one or more non-U.S.

markets, we and/or our licensees will be subject to rules and regulations in those markets relating to our products.

markets, we or our licensees will be subject to rules and regulations in those markets relating to our products.

In some countries, particularly countries of the European Union, each of which has developed its own rules and regulations, pricing is subject to governmental control.

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If our licensees obtain approval to market IMVEXXY or BIJUVA in one or more non-U.S.

markets, we will have additional pharmacovigilance reporting requirements for our products.

markets, there will be additional pharmacovigilance reporting requirements for our products.

To the extent that the non-U.S.

markets in which our licensees distribute our products have different pharmacovigilance reporting requirements than the U.S., there is a risk that the marketing of our drugs in those countries may increase the number of adverse events reported for our products.

Our success is tied to our distribution channels.

We sell our products to wholesale distributors and retail pharmacy distributors.

In 2021, four customers each generated more than 10% of our total revenues;

the combined revenue generated from these four customers aggregated to 55% of our total revenue.

Our business would be harmed if any of these customers refused to distribute our products or refused to purchase our products on commercially favorable terms to us.

We rely on third parties to conduct our R&D activities, including our clinical trials, and we may experience delays in obtaining or may be unsuccessful in obtaining regulatory approval for, or in commercializing, our pharmaceutical product candidates if these third parties do not successfully carry out their contractual duties or meet expected deadlines.

We do not have the resources to independently conduct R&D activities.

Therefore, we have relied, and plan to continue to rely, on various third-party contract research organizations (“CROs”) to conduct our R&D activities and to recruit patients and monitor and manage data for our on-going clinical programs for our pharmaceutical product candidates, as well as for the execution of clinical studies.

Although we only have oversight of certain aspects of our CROs’ activities, we are ultimately responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards.

Our reliance on the CROs does not relieve us of our regulatory responsibilities as sponsor.

We cannot assure you that the CROs will conduct the research properly or in a timely manner, or that the results will be reproducible.

We and our CROs are required to comply with the FDA’s cGCP regulations and guidelines enforced by the FDA for all of our products in clinical development.

The FDA enforces these cGCPs through periodic and pre-approval inspections of trial sponsors, principal investigators, CROs, and clinical trial sites.

If we or our CROs fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable or invalid, and the FDA may require us to perform additional clinical trials before approving our proposed products.

We cannot assure you that, upon inspection, the FDA will determine that any of our clinical trials comply with cGCPs.

In addition, to evaluate the safety and effectiveness compared to placebo of our pharmaceutical product candidates to a statistically significant degree, our clinical trials will require an adequately large number of test subjects.

Any clinical trial that a CRO conducts abroad on our behalf is subject to similar regulation.

Accordingly, if our CROs fail to comply with these regulations or recruit enough patients, we may be required to repeat clinical trials, which would delay the regulatory approval process.

In addition, we do not employ the personnel of our CROs, and, except for remedies available to us under our agreements with such organizations, we cannot control whether or not they will devote sufficient time and resources to our on-going clinical and pre-clinical programs.

Our CROs may also have relationships with other commercial entities, including one or more of our competitors, for which they may also be conducting clinical studies or other drug development activities, which could impede their ability to devote appropriate time to our clinical programs.

If our CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised because of the failure to adhere to our clinical protocols or regulatory requirements, or for other reasons, our clinical trials may be extended, delayed, or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our pharmaceutical product candidates that we seek to develop.

As a result, our financial results and the commercial prospects for our pharmaceutical product candidates that we seek to develop could be harmed, our costs could increase, and our ability to generate revenue could be delayed or end.

We typically engage one or more CROs on a project-by-project basis for each study or trial.

While we have developed and plan to maintain our relationships with CROs that we have previously engaged, we also expect to enter into agreements with other CROs to obtain additional resources and expertise to accelerate our progress with regard to on-going clinical programs and, specifically, the compilation of clinical trial data for submission with an NDA for each of our pharmaceutical product candidates.

If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms.

Switching or entering new relationships with CROs involves substantial cost and requires extensive management time and focus.

In addition, there is a natural transition period when a new CRO commences work.

As a result, delays occur, which can affect our ability to meet our desired clinical development timelines and can increase our costs significantly.

Although we try to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial condition, results of operations, or prospects.

Our success is tied to our licensees’ distribution channels.

Our revenue is dependent on our licensees’ distribution through wholesale distributors and retail pharmacy distributors.

Our business would be harmed if our licensees’ customers refused to distribute our products and if our licensees were not able to replace such customers through their distribution channels.

Our ability to utilize net operating loss carryforwards may be limited.

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The 2017 Tax Act reduced the corporate tax rate to 21 percent, effective January 1, 2018.

Management assessed the valuation allowance analyses with respect to our NOL carryforwards as affected by various aspects of the 2017 Tax Act and determined that a full valuation allowance continues to be appropriate.

Management assessed the valuation allowance analyses with respect to our NOL carryforwards as affected by various aspects of the 2017 Tax Act and determined

that a full valuation allowance continues to be appropriate.

Additionally, to address the impact of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was enacted into law in March 2020.

The CARES Act includes several significant business tax provisions that, among other things, includes further statutory amendments to the rules governing NOL carryforwards , as amended by the 2017 Tax Act.

The CARES Act limits the NOL deduction in taxable years beginning in 2021 to the lesser of the NOL carryforwards or 80% of the taxpayer's taxable income (after considering the deduction for NOL arising in tax years beginning before January 1, 2018), which may restrict our ability to offset future taxable income with NOL carryforwards and increase our future federal income taxes otherwise payable.

Our operations are concentrated in Boca Raton, Florida and interruptions affecting us or our suppliers due to natural disasters, the COVID-19 pandemic, or other unforeseen events could adversely affect our operations.

Our current operations are concentrated in Boca Raton, Florida.

A hurricane, the COVID-19 pandemic, or other disaster or unforeseen event resulting in significant damage to our facilities, or causing illness in the personnel operating our facilities, could significantly disrupt or curtail or require us to cease our operations.

It would be difficult, costly and time-consuming to transfer resources from one

facility to another or to repair or replace our facility if it is significantly damaged, or engage or hire new personnel due to the COVID-19 pandemic.

In addition, our insurance may be insufficient to cover all of our losses and may not continue to be available to us on acceptable terms, or at all.

In addition, if one of our suppliers, such as Catalent at its manufacturing facility in St.

Petersburg, Florida, experiences a similar disaster or is otherwise impacted by the COVID-19 pandemic or unforeseen event, we could face significant delays in obtaining our products.

Any significant uninsured loss, prolonged or repeated disruption to operations or inability to operate, experienced by us or by our suppliers, could adversely affect our business, financial condition , and results of operations.

Any failure to adequately maintain a sales force will impede our growth.

We are substantially dependent on a sales force to attract new business and to manage existing customer relationships.

The CARES Act limits the NOL deduction in taxable years beginning in 2021 to the lesser of the NOL carryforward s or 80 % of the taxpayer's taxable income (after considering the deduction for NOL arising in tax years beginning before January 1, 2018), which may restrict our ability to offset future taxable income with NOL carryforwards and increase our future federal income taxes otherwise payable.

Any failure of our licensees to adequately maintain a sales force or adequately promote our products will impede our growth.

We are substantially dependent on the sales forces of our licensees to attract new business and to manage existing customer relationships.

There is significant competition for qualified, productive direct sales personnel with advanced sales skills and technical knowledge.

Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training, and retaining direct sales personnel.

New and future sales personnel may not become as productive as expected, and we may be unable to hire or engage enough qualified individuals in the future in the markets in which we do business.

If we are unable to hire, engage and develop enough productive sales personnel or are required to hire or engage more sales personnel than we expect our business prospects could suffer.

Other pharmaceutical companies with which we compete for qualified personnel may have greater financial and other resources, different risk profiles, and longer histories than we do.

They also may provide more diverse opportunities and better chances for career advancement.

Some of these characteristics may be more appealing to high-quality candidates than what we offer.

If we are unable to continue to attract and retain high-quality personnel, our ability to commercialize IMVEXXY, BIJUVA, and ANNOVERA may be limited.

We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

As our development and commercialization plans and strategies evolve, we may expand our employee base for managerial, operational, financial, sales and marketing, and other resources.

Future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, motivate, and integrate additional employees.

Also, our management may need to divert a disproportionate amount of its attention away from their day-to-day activities and devote a substantial amount of time to managing these growth activities.

We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.

Our growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional pharmaceutical product candidates.

If we are unable to effectively manage our expected growth, our expenses may increase more than expected, our ability to increase revenue could be reduced and we may not be able to implement our business strategy.

Our future financial performance and our ability to commercialize our pharmaceutical products and compete effectively will depend, in part, on our ability to effectively manage any future growth in our organization.

Our ability to achieve growth in revenue in the future will depend, in large part, on our licensees’ success in recruiting, training, and retaining direct sales personnel, and their decision to adequately promote our products.

If our licensees are unable to hire, engage, and develop enough productive sales personnel or fails to adequately promote our products, our business prospects could suffer.

Risks related to our intellectual property

Our commercial success will depend in part on our ability to obtain additional patents and protect our existing patent positions as well as our ability to maintain adequate protection of other intellectual property for our hormone therapy pharmaceutical products and other products.

Our commercial success will depend in part on ours and our licensees’ ability to obtain additional patents and protect our existing patent positions as well as our ability to maintain adequate protection of other intellectual property for our hormone therapy pharmaceutical products.

If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

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These risks include the possibility of the following:

the patent applications that we have filed may fail to result in issued patents in the U.S.

the patent applications that we have filed to that our licensees may fail to result in issued patents in the U.S.

or in foreign jurisdictions;

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the scope of any patent protection may be too narrow to exclude competitors from developing or designing around these patents;

we or our licensors were not the first to make the inventions covered by each of our issued patents and pending patent applications;

we or our licensors may not have been the first inventors to invent or file patent applications for these technologies in the U.S.

we, the Population Council, or our licensees were not the first to make the inventions covered by each of our issued patents and pending patent applications;

we, the Population Council, or our licensees may not have been the first inventors to invent or file patent applications for these technologies in the U.S.

or were not the first to file patent applications directed to these technologies abroad;

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delays in development, testing, clinical trials, and regulatory review may reduce the period during which we could market our pharmaceutical products under patent protection;

we may fail to timely apply for patents on our technologies or products.

we or our licensees may fail to timely apply for patents on our technologies or products.

While we apply for patents covering our technologies and products, as we deem appropriate, many third parties may already have filed patent applications or have received patents in our areas of product development.

These entities’ applications, patents, and other intellectual property rights may conflict with patent applications to which we have rights and could prevent us from obtaining patents or could call into question the validity of any of our patents, if issued, or could otherwise adversely affect our ability to develop, manufacture, or commercialize our pharmaceutical products.

These entities’ applications, patents, and other

intellectual property rights may conflict with patent applications to which we have rights and could prevent us from obtaining patents or could call into question the validity of any of our patents, if issued, or could otherwise adversely affect our ability to develop, manufacture, or commercialize our pharmaceutical products.

In addition, if third parties file patent applications in the technologies that also claim technology to which we have rights, we may have to participate in interference, derivation, or other proceedings with the USPTO or foreign patent regulatory authorities to determine our rights in the technologies, which may be time-consuming and expensive.

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These proceedings may result in loss of patent claims or adverse changes to the scope of the claims.

If we, our licensors, or our strategic partners fail to obtain and maintain patent protection for our products, or our proprietary technologies and their uses, companies may be dissuaded from collaborating with us.

If we, the Population Council, our licensees, or our strategic partners fail to obtain and maintain patent protection for our products, or our proprietary technologies and their uses, companies may be dissuaded from collaborating with us.

In such event, our ability to commercialize our pharmaceutical products may be threatened, we could lose our competitive advantage, and the competition we face could increase, all of which could adversely affect our business, financial condition, results of operations, and prospects.

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The length of the stay of the IMVEXXY litigation is dependent on further action by Teva.

We cannot assure you that any patent infringement lawsuit that we may file will prevent the introduction of a generic version of IMVEXXY for any particular length of time, or at all.

If Teva’s ANDA is approved, and a generic version of IMVEXXY is introduced,

our sales of IMVEXXY could be adversely affected.

We cannot assure you that any patent infringement lawsuit that we or our licensees may file will prevent the introduction of a generic version of IMVEXXY for any particular length of time, or at all.

If Teva’s ANDA is approved, and a generic version of IMVEXXY is introduced, the sales of IMVEXXY could be adversely affected and our license revenue could be significantly decreased.

In addition, we cannot predict what additional ANDAs could be filed by Teva, or other potential generic competitors requesting approval to market generic forms of our products, which could require us to incur significant additional expense and result in distraction for our management team, and if approved, result in significant decreases in the revenue derived from sales of our marketed products and thereby harm our business and financial condition.

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If the confidentiality of this intellectual property is breached, it could adversely impact our business.

We may be required to file lawsuits or take other actions to protect or enforce our patents or the patents of our licensors, which could be expensive and time-consuming.

Competitors may infringe our patents or the patents of our licensors.

To counter infringement or unauthorized use, we may be required to file infringement claims, including with respect to Teva’s IMVEXXY Notice Letter, which can be expensive and time-consuming.

Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded.

We must rely on Mayne Pharma to file lawsuits or take other actions to protect or enforce our patents and there can be no assurance they will be take such actions or be successful.

Competitors may infringe our patents or the patents of the ANNOVERA licensor.

Following the Mayne Transaction, we no longer have the express right to enforce our intellectual property.

To counter infringement or unauthorized use, we must rely on Mayne Pharma to file infringement claims, including with respect to Teva’s IMVEXXY Notice Letter.

There can be no assurance that Mayne Pharma will have sufficient financial or other resources to file and pursue such infringement claims in the United States, which typically last for years before they are concluded.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents, or those of our licensors, do not cover the technology in question or on other grounds.

An adverse result in any litigation or defense proceedings could put one or more of our patents, or those of our licensors, at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications, or those of our licensors, at risk of not issuing.

Moreover, we may not be able to prevent, alone or with our licensors, misappropriation of our proprietary rights, particularly in countries in which the laws may not protect those rights as fully as in the U.S.

In addition, in an infringement proceeding, a court may decide that a patent of ours or of the ANNOVERA licensor is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents, or those of the ANNOVERA licensor, do not cover the technology in question or on other grounds.

An adverse result in any litigation or defense proceedings could put one or more of our patents, or those of the ANNOVERA licensor, at risk of being invalidated, held unenforceable, or interpreted narrowly.

Moreover, we may not be able to prevent, alone or with our licensees, or the ANNOVERA licensor, misappropriation of our proprietary rights, particularly in countries in which the laws may not protect those rights as fully as in the U.S.

or in those countries in which we do not file national phase patent applications.

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Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock.

In September 2021, we received a deficiency letter (the “Notice”) from the staff of the Nasdaq Stock Market LLC (the “Nasdaq Staff”) notifying us that for the prior 30 consecutive business days, the bid price for our common stock had closed below $1.00 per share, which is the minimum closing price required to maintain continued listing on the Nasdaq under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”).

In January 2023, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that we were not in compliance with the rules for continued listing as set forth in Nasdaq Listing Rule 5620(a) (the “Annual Meeting Rule”) due to our failure to hold an annual meeting of stockholders within 12 months after our fiscal year ended December 31, 2021.

The Notice had no immediate effect on the listing of our Common Stock.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days to regain compliance (the “Compliance Period”) with the Minimum Bid Price Requirement.

In March 2022, we received a determination letter from the Nasdaq Staff stating that we have not regained compliance with the Minimum Bid Price Requirement because the closing bid price of our common stock had not been at least $1.00 per share for a minimum of ten consecutive trading days at any time during the Compliance Period.

We have requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Nasdaq Staff’s determination and present a plan to regain compliance with the Minimum Bid Price Requirement .

If we had not requested a hearing, our common stock would have been subject to delisting and removal of registration from Nasdaq.

W hile the appeal process is pending, the suspension of trading of our common stock on Nasdaq will be stayed and our common stock will continue to trade on Nasdaq until the hearing process concludes and the Panel issues its decision.

We intend to monitor the closing bid price of our common stock and intend to conduct a reverse stock split, if necessary, to regain compliance with the Minimum Bid Price Requirement.

There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement or that we will otherwise remain in compliance with the other listing standards for the Nasdaq listing requirements.

We did not hold an annual meeting of stockholders during 2022 due to our then ongoing strategic processes.

The Notice stated that, under Nasdaq Listing Rule 5810(c)(2)(G), we had 45 calendar days, or until February 20, 2023, to submit a plan to regain compliance with the Annual Meeting Rule.

We timely submitted such plan, and Nasdaq granted us an extension until June 29, 2023, to regain compliance.

It our intent to hold an annual meeting of stockholders in 2023 prior to such deadline and to fully regain compliance with all applicable Nasdaq listing standards.

However, there can be no assurance that we will be able to regain compliance with the Annual Meeting Rule or that we will otherwise remain in compliance with the other listing standards for the Nasdaq listing requirements.

If we are unable to comply with the Nasdaq listing requirements, our common stock could be delisted from Nasdaq, which could have material adverse effects on our ability to finance our operations and our stockholders’ ability to monetize the investment in our Company.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of December 31, 2021, our executive officers, directors, holders of 5% or more of our common stock, and their affiliates beneficially owned 13% of our common stock, inclusive of exercisable options to acquire shares of our common stock and vested restricted and performance stock units which have not yet been settled with our common stock.

These stockholders may be able to largely determine the outcome of all matters requiring stockholder approval.

For example, these stockholders may be able to largely control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

Our principal stockholder owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of December 31, 2022, Rubric Capital Management LP (“Rubric”) and its affiliates beneficially owned approximately 18.5% of our common stock.

Rubric may be able to largely determine the outcome of all matters requiring stockholder approval.

For example, Rubric may be able to largely control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

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

We currently anticipate that we will retain any future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

In addition, the terms of the Financing Agreement preclude us from paying dividends, and any future debt agreements may also preclude us from paying dividends.

We currently anticipate that we will retain any future earnings for the operation of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

In addition, the terms of any future debt agreements may also preclude us from paying dividends.

Any return to stockholders will be limited to the capital appreciation, if any, of their stock.

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A product may be received favorably, resulting in high sales associated with that product that may not be sustainable as consumer preferences change.

Future scientific research or publicity could be unfavorable to our industry or any of our products and may not be consistent with earlier

favorable research or publicity.

Future scientific research or publicity could be unfavorable to our industry or any of our products and may not be consistent with earlier favorable research or publicity.

A future research report or publicity that is perceived by consumers as less than favorable or that may question earlier favorable research or publicity could have an adverse effect on sales of our products and our ability to generate revenue.

Adverse publicity in the form of published scientific research, statements by regulatory authorities or otherwise, whether or not accurate, that associates use of our products or any other similar products with illness or other adverse effects, or that questions the benefits of our products or similar products, or that claims that such products do not have the effect intended, or that question the marketing of our products, could have an adverse effect on our business, reputation, financial condition, or results of operations.

Our success depends on how efficiently we respond to changing consumer preferences and demand.

Our success depends, in part, on our ability to anticipate and respond to changing consumer trends and preferences.

We may not be able to respond in a timely or commercially appropriate manner to these changes.

Our failure to accurately predict these trends could negatively impact our inventory levels, sales, and consumer opinion of us as a source for the latest product.

The success of our new product offerings depends upon several factors, including our ability to achieve the following:

accurately anticipate consumer needs;

innovate and develop new products;

successfully commercialize new products in a timely manner;

competitively price our products in the market;

procure and maintain products in sufficient volumes and in a timely manner;

differentiate our product offerings from those of our competitors.

If we do not introduce new products, make enhancements to existing products, or maintain the appropriate inventory levels of our existing products to meet consumers’ demand in a timely manner, our business, results of operations, and financial condition could be adversely affected.

We may initiate product recalls or withdrawals or may be subject to regulatory enforcement actions that could negatively affect our business.

We may be subject to product recalls, withdrawals, or seizures if any of the products we formulate, manufacture, or sell are believed to cause injury or illness or if we are alleged to have violated governmental regulations in the manufacture, labeling, promotion, sale, or distribution of any of our products.

A recall, withdrawal, or seizure of any of our products could adversely affect consumer confidence in our brands and lead to decreased demand for our products.

In addition, a recall, withdrawal, or seizure of any of our products would require significant management attention, would likely result in substantial and unexpected expenditures, and could adversely affect our business, financial condition, and results of operations.

Our licensees may initiate product recalls or withdrawals or may be subject to regulatory enforcement actions that could negatively affect our business.

Our products may be subject to product recalls, withdrawals, or seizures if any of our products are believed to cause injury or illness or if our licensees are alleged to have violated governmental regulations in the manufacture, labeling, promotion, sale, or distribution of any of our products.

A recall, withdrawal, or seizure of any of our products could adversely affect consumer confidence in our brands and lead to decreased demand for our products, which could adversely affect our business, financial condition and results of operations.

Product liability lawsuits could divert our resources, result in substantial liabilities, and reduce the commercial potential of our products.

We face an inherent risk of product liability claims because of the commercial availability of our current products and the clinical testing of our pharmaceutical product candidates despite obtaining appropriate informed consents from our clinical trial participants.

We face an inherent risk of product liability claims because of the commercial availability of our current products.

Additionally, considering the history of product liability claims related to other hormone therapy products and contraceptives, we will face an even greater risk through commercialization of our products.

For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing, or sale.

For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during manufacturing, marketing, or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, failures to warn of dangers associated with the use of the product, negligence, strict liability, or breaches of warranties.

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Regardless of the merits or eventual outcome, product liability claims may result in any of the following:

the inability to commercialize our products or pharmaceutical product candidates;

the inability to commercialize our products;

difficulty recruiting subjects for clinical trials or withdrawal of these subjects before a trial is completed;

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exhaustion of any available insurance and our capital resources;

the obligation to indemnify our licensees that would be a diversion of managements time and resources;

a decline in our stock price.

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In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the development and commercial production and sale of our products, which could adversely affect our business, financial condition, results of operations, and prospects.

If we use hazardous materials in a manner that causes injury or violates applicable law, we may be liable for damages.

Our manufacturing and R&D activities involve the controlled use of potentially hazardous substances, including chemical, biological, and radioactive materials.

In addition, our operations produce hazardous waste products.

Federal, state, and local laws and regulations in the U.S.

govern the use, manufacture, storage, handling, and disposal of hazardous materials.

Although we believe that our procedures for use, handling, storing, and disposing of these materials (all of which only occur at third-party sites operated by our contractors) comply with legally prescribed standards, we may incur significant additional costs to comply with applicable laws in the future.

We also cannot predict the impact on our business of new or amended environmental laws or regulations or any changes in the way existing and future laws and regulations are interpreted or enforced.

Also, even if we are in compliance with applicable laws, we cannot completely eliminate the risk of contamination or injury resulting from hazardous materials, and we may incur liability as a result of any such contamination or injury.

In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources, and we do not carry liability insurance covering the use of hazardous materials.

If we fail to comply with applicable requirements, we could incur substantial costs, including civil or criminal fines and penalties, clean-up costs, or capital expenditures for control equipment or operational changes necessary to achieve or maintain compliance.

Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development, and production efforts, and may adversely affect our business, financial condition, results of operations, and prospects.

If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

Our ability to compete in the highly competitive pharmaceutical industry depends in large part on our ability to attract and retain highly qualified managerial, scientific, and medical personnel.

To induce valuable employees to remain with us, we have, among other things, provided stock-based compensation that vests over time.

The value to employees of stock-based compensation will be significantly affected by movements in our stock price that we cannot control and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management, scientific, and medical teams may terminate their employment with us on short notice.

Although we have employment agreements with several of our key employees, most employees are employed on an at-will basis, which means that any of these employees could leave our employment at any time, with or without notice, and may go to work for a competitor.

The loss of the services of any of our executive officers or other key employees could potentially harm our business, operating results, and financial condition.

Our success also depends on our ability to continue to attract, retain, and motivate highly skilled scientific and medical personnel.

A failure to maintain optimal inventory levels to meet commercial demand for our products could harm our reputation and subject us to financial losses.

Our ability to maintain optimal inventory levels to meet commercial demand depends on the performance of third-party contract manufacturers.

A failure to maintain optimal inventory levels to meet commercial demand for our products could harm our and out licensees’ reputation and subject us to financial losses.

Our licensees' ability to maintain optimal inventory levels to meet commercial demand depends on the performance of third-party contract manufacturers.

In some instances, our products have unique ingredients used under license arrangements.

See “Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in, or prevent us from, successfully commercializing, and marketing our products” above.

If our manufacturers are unsuccessful in obtaining raw materials, if we are unable to manufacture and release inventory on a timely and consistent basis, if we fail to maintain an adequate level of product inventory, if inventory is destroyed or damaged, or if our inventory reaches its expiration date, patients might not have access to our products, our reputation and brands could be harmed, and

physicians may be less likely to recommend our products in the future, each of which could have an adverse effect on our business, financial condition, results of operations, and cash flows.

Delays in clinical trials are common for many reasons, and any such delays could result in increased costs to us and jeopardize or delay our ability to obtain regulatory approval or commence or continue product sales.

We may experience delays in future clinical trials for our pharmaceutical product candidates or required post-approval clinical trials for our approved products.

Clinical trials might not begin on time;

may be interrupted, delayed, suspended, or terminated once commenced;

might need to be amended or redesigned;

might not enroll enough patients;

or might not be completed on schedule, if at all.

Clinical trials can be delayed for a variety of reasons, including the following:

delays in obtaining regulatory approval to commence a trial;

imposition of a clinical hold following an inspection of clinical trial operations or trial sites by the FDA, or other regulatory authorities;

imposition of a clinical hold because of safety or efficacy concerns by the DSMB, FDA, or IRB, or us;

delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites;

delays in obtaining required central or local IRB approval for each clinical site;

delays in identifying, recruiting, and training suitable clinical investigators;

delays in recruiting suitable patients to participate in a trial;

delays in having patients’ complete participation in a trial or return for post-treatment follow-up;

clinical sites dropping out of a trial to the detriment of enrollment or due to a lack of ability to enroll a certain number of patients in a trial;

time required to add new sites;

delays in obtaining sufficient supplies of clinical trial materials, including suitable API;

delays resulting from negative or equivocal findings of DSMB for a trial.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.

Any of these delays in completing future clinical trials could increase our costs, slow down our product development and approval process, and jeopardize our ability to commence product sales and generate revenue from our pharmaceutical product candidates, or continue to generate revenue from our approved products subject to post-approval clinical trials for our approved products, subject to the trial.

Clinical trials are lengthy and expensive with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results .

Clinical trials are expensive, can take many years to complete and have highly uncertain outcomes.

Failure can occur at any time during the clinical trial process because of inadequate performance of a drug, inadequate adherence by patients or investigators to clinical trial protocols, or other factors.

New drugs in later stages of clinical trials may fail to show the desired safety and efficacy data and results despite having progressed through earlier clinical trials.

Several companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials because of a lack of efficacy or adverse safety profiles, despite promising results in earlier trials.

Our future clinical trials may not be successful or may be more expensive or time-consuming than we currently expect.

Before approving a new drug, the FDA generally requires that the safety and efficacy of the drug be demonstrated in two adequate and well-controlled clinical trials.

In some situations, the FDA approves drugs based on a single well-controlled clinical trial.

If clinical trials for any of our pharmaceutical product candidates fail to demonstrate safety or efficacy to the satisfaction of the FDA, the FDA will not approve those product candidates and we will not be able to commercialize, which could have an adverse effect on our business, financial condition, results of operations, and prospects.

Future legislation, or the absence of such legislation, regulations, and policies adopted by the FDA or other regulatory authorities may increase the time and cost required for us to conduct and complete clinical trials for our pharmaceutical product candidates.

The FDA has established regulations, guidelines, and policies to govern the drug development and approval process, as have foreign regulatory authorities.

Any change in regulatory requirements resulting from the adoption of new legislation, regulations, or policies may require us to amend existing clinical trial protocols or add new clinical trials to comply with these changes.

Such amendments to existing protocols or clinical trial applications or the need for new ones, may significantly and adversely affect the cost, timing, and completion of the clinical trials for our pharmaceutical product candidates.

In addition, the FDA’s policies may change, and additional government regulations may be issued that could prevent, limit, or delay regulatory approval of our pharmaceutical product candidates, or impose more stringent product labeling and post-marketing testing and other requirements.

For example, in the past the FDA has indicated it would regulate prenatal vitamins containing greater than 0.8 mg of folic acid as a drug under the FDCA.

More recently the FDA indicated that there is no specified upper limit on the amount of folic acid permitted in a dietary supplement.

If the FDA were to seek to regulate products with higher amounts of folic acid as drugs, it may require us to stop selling certain of our dietary supplement products and otherwise adversely affect our business.

If we are slow or unable to adapt to any such changes, our business, prospects, and ability to achieve or sustain profitability could be adversely affected.

We may be required to suspend or discontinue clinical trials because of adverse side effects or other safety risks that could preclude approval of our pharmaceutical product candidates.

Clinical trials may be suspended or terminated at any time for many reasons.

A clinical trial may be suspended or terminated by us, our collaborators, the FDA, or other regulatory authorities because of a failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, presentation of unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the investigational drug, changes in governmental regulations or administrative actions, lack of adequate funding to continue the clinical trial, or negative or equivocal findings of the DSMB or the IRB for a clinical trial.

An IRB may also suspend or terminate our clinical trials for failure to protect patient safety or patient rights.

We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants.

In addition, regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if they believe the clinical trials are not being conducted in accordance with applicable regulatory requirements or present an unacceptable safety risk to participants.

If we elect or are forced to suspend or terminate any clinical trial of any proposed product that we develop, the commercial prospects of such proposed product will be harmed and our ability to generate product revenue from any of these proposed products will be delayed or eliminated.

Any of these occurrences may harm our business, financial condition, results of operations, and prospects significantly.

See “Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing, and marketing our products” above.

If the manufacturers of our products are unsuccessful in obtaining raw materials, if are licensees are unable to manufacture and release inventory on a timely and consistent basis, if our licensees fail to maintain an adequate level of product inventory, if inventory is destroyed or damaged, or if our licensees’ inventory reaches its expiration date, patients might not have access to our products, our reputation and brands could be harmed, and physicians may be less likely to recommend our products in the future, each of which could have an adverse effect on our business, financial condition, results of operations, and cash flows.

Our business may be impacted by new or changing tax laws or regulations and actions by federal, state, and/or local agencies, or how judicial authorities apply tax laws.

In connection with the products we sell and intend to sell, we calculate, collect, and remit various federal, state, and local taxes, surcharges and regulatory fees, or taxes, to numerous federal, state and local governmental authorities.

In connection with the products we previously sold and the royalties we receive, we calculate, collect, and remit various federal, state, and local taxes, surcharges and regulatory fees, or taxes, to numerous federal, state and local governmental authorities.

In addition, we incur and pay state and local taxes and fees on purchases of goods and services used in our business.

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During the COVID-19 pandemic, in particular, cyber-attacks increased as companies shifted to remote work environments, including several high-profile, sophisticated attacks impacting government agencies and security firms alike, the impacts of which are still being uncovered.

our layered security controls, experienced computer programmers and hackers may be able to penetrate our information systems and misappropriate or compromise sensitive patient or personnel information or proprietary or confidential information, create system disruptions or cause shutdowns.

Despite our layered security controls, experienced computer programmers and hackers may be able to penetrate our information systems and misappropriate or compromise sensitive patient or personnel information or proprietary or confidential information, create system disruptions or cause shutdowns.

They also may be able to develop and deploy viruses, worms and other malicious software programs that disable our systems or otherwise exploit any security vulnerabilities.

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These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements.

Employee misconduct could also involve the improper use of information obtained during clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

We have adopted a Code of Conduct and Ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with these laws or regulations.

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General risks related to our intellectual property

Another party could develop competing pharmaceutical products and obtain FDA regulatory exclusivity in the U.S.

before we do, potentially preventing our ability to commercialize our pharmaceutical products and other products in development.

We plan to seek to obtain market exclusivity for our pharmaceutical products and any other pharmaceutical product candidates we develop in the future.

To the extent that patent protection is not available or has expired, FDA exclusivity may be the only available form of exclusivity available for these proposed products.

These FDA exclusivities can delay the submission or the approval of certain drug applications.

Potentially competitive products may also be seeking FDA exclusivities and may be in various stages of development, including some more advanced than us.

We cannot predict with certainty the timing of FDA approval or whether FDA approval will be granted, nor can we predict with certainty the timing of FDA approval for competing products or whether such approval will be granted.

It is possible that competing products may obtain FDA approval with exclusivities before we do, which could delay our ability to submit an application or obtain necessary regulatory approvals, result in lost market opportunities with respect to our pharmaceutical product candidates, and adversely affect our business, financial condition, and results of operations.

If we are sued for infringing intellectual property rights of third parties, litigation will be costly and time consuming and could prevent or delay us from developing or commercializing our pharmaceutical product candidates.

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Therefore, we cannot ever know with certainty the nature or existence of every third-party patent filing.

We cannot provide assurances that we or our partners will be free to manufacture or market our product candidates as planned or that we or our licensors’ and partners’ patents will not be opposed or litigated by third parties.

If any third-party patent was held by a court of competent jurisdiction to cover aspects of our materials, formulations, methods of manufacture, or methods of treatment related to the use or manufacture of any of our product candidates, the holders of any such patent may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable.

We cannot provide assurances that our licensees or their partners will be free to manufacture or market our products as planned or that we or the ANNOVERA licensors’ and partners’ patents will not be opposed or litigated by third parties.

If any third-party patent was held by a court of competent jurisdiction to cover aspects of our materials, formulations, methods of manufacture, or methods of treatment related to the use or manufacture of any of our products, the holders of any such patent may be able to block our ability to commercialize the applicable product unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable.

There can be no assurances that we will be able to obtain a license to such patent on favorable terms or at all.

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We are party from time to time to legal proceedings relating to our intellectual property, and third parties in the future may file claims asserting that our technologies, processes, or products infringe on their intellectual property.

We cannot predict whether third parties will assert these claims against us or our strategic partners or against the licensors of technology licensed to us, or whether those claims will harm our business.

We cannot predict whether third parties will assert these claims against us or our strategic partners or against the licensors of technology licensed to us or our licensees, or whether those claims will harm our business.

In addition, the outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.

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If we are unable to protect the confidentiality of certain information, the value of our products and technology could be adversely affected.

We also rely on trade secrets, know-how, and continuing technological advancement to develop and maintain our competitive position.

We previously relied on trade secrets, know-how, and continuing technological advancement to develop and maintain our competitive position.

To protect this competitive position, we regularly enter into confidentiality and proprietary information agreements with third parties, including employees, independent contractors, suppliers, and collaborators.

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If any such events were to occur, they could adversely affect our business, financial condition, results of operations, and prospects.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers or of other third parties with whom we have obligations of confidentiality.

As is common in the pharmaceutical industry, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

We may be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.

We may be subject to claims that our former employees wrongfully used or disclosed alleged trade secrets of their former employers or of other third parties with whom we have obligations of confidentiality.

As is common in the pharmaceutical industry, prior to the Mayne Transaction we previously employed individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

We may be subject to claims that these former employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.

Litigation may be necessary to defend against these claims.

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Our stock price could be subject to wide fluctuations in response to a variety of factors, which include the following:

changes in laws or regulations applicable to our products or proposed products, including clinical trial requirements for approvals;

changes in laws or regulations applicable to our products;

unanticipated serious safety concerns related to the use of our products;

a decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial;

adverse results or delays in clinical trials;

the inability to obtain adequate supply for our products or the inability to do so at acceptable prices;

the inability for our licensees to obtain adequate supply for our products or the inability to do so at acceptable prices;

adverse regulatory decisions;

the introduction of new products or technologies offered by us or our competitors;

the effectiveness of our or our licensees’ commercialization efforts;

the introduction of new products or technologies offered by our competitors;

the effectiveness of our licensees’ commercialization efforts;

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

disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;

the inability to effectively manage our growth;

actual or anticipated variations in quarterly operating results;

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announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors;

additions or departures of key scientific or management personnel;

additions or departures of key management personnel;

adverse market reaction to any indebtedness we may incur or securities we may issue in the future;

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If we sell equity securities, convertible securities or other securities current investors may be materially diluted by subsequent sales.

We may also need our stockholders to authorize the issuance of additional shares of common stock under our articles of

incorporation if we do not have sufficient authorized shares to raise such additional capital or issue future awards under our stock option and equity incentive plans.

We may also need our stockholders to authorize the issuance of additional shares of common stock under our articles of incorporation if we do not have sufficient authorized shares to raise such additional capital or issue future awards under our stock option and equity incentive plans.

New investors could also gain rights, preferences, and privileges senior to those of holders of our existing equity securities.

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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