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What changed in ZEVRA THERAPEUTICS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ZEVRA THERAPEUTICS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+586 added−662 removedSource: 10-K (2025-03-12) vs 10-K (2024-04-01)

Top changes in ZEVRA THERAPEUTICS, INC.'s 2024 10-K

586 paragraphs added · 662 removed · 398 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

111 edited+44 added−61 removed268 unchanged
Biggest changeIf the applicant does not challenge the listed patents or does not indicate that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired, or, if permissible, are carved out.
Biggest changeIf the applicant does not challenge the listed patents or does not indicate that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired, or, if permissible, are carved out. 22 Table of Contents If the ANDA or 505(b)(2) NDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the holder of the NDA for the reference listed drug and the patent owner once the application has been accepted for filing by the FDA.
A second product, WAKIX®, developed by Harmony Biosciences and originally approved for the treatment of EDS or cataplexy in adult patients with narcolepsy, but in October 2023, Harmony announced that the difference in outcome for EDS when comparing WAKIX and placebo in its Phase 3 trial with IH patients did not reach statistical significance.
A second product, WAKIX, developed by Harmony Biosciences ("Harmony") and originally approved for the treatment of EDS or cataplexy in adult patients with narcolepsy, but in October 2023, Harmony announced that the difference in outcome for EDS when comparing WAKIX and placebo in its Phase 3 trial with IH patients did not reach statistical significance.
Pursuant to the AZSTARYS License Agreement, Commave agreed to pay up to $63.0 million in milestone payments upon the occurrence of specified regulatory milestones related to the AZSTARYS, including FDA approval and specified conditions with respect to the final approval label.
Pursuant to the AZSTARYS License Agreement, Commave agreed to pay up to $63.0 million in milestone payments upon the occurrence of specified regulatory milestones related to AZSTARYS, including FDA approval and specified conditions with respect to the final approval label.
In April 2021, we entered into the AZSTARYS Amendment. Pursuant to the AZSTARYS Amendment, we and Commave agreed to modify the compensation terms of the AZSTARYS License Agreement. Commave paid us $10.0 million in connection with the execution of the AZSTARYS Amendment following the FDA approval of AZSTARYS in the United States.
In April 2021, we entered into the AZSTARYS Amendment ("AZSTARYS Amendment"). Pursuant to the AZSTARYS Amendment, we and Commave agreed to modify the compensation terms of the AZSTARYS License Agreement. Commave paid us $10.0 million in connection with the execution of the AZSTARYS Amendment following the FDA approval of AZSTARYS in the United States.
We have successfully recruited, on-boarded and trained our full commercial team and full launch for OLPRUVA began January 29, 2024. We also have arrangements with third parties to provide additional services such as distribution and specialty pharmacy offerings.
We have successfully recruited, on-boarded and trained our full commercial team and full launch for OLPRUVA began on January 29, 2024. We also have arrangements with third parties to provide additional services such as distribution and specialty pharmacy offerings.
Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. The timeline for the FDA to complete its review of a NDA may differ based on whether the application is a standard review or priority review application.
Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. The timeline for the FDA to complete its review of an NDA may differ based on whether the application is a standard review or priority review application.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following: ● non-clinical laboratory and animal tests that must be conducted in accordance with good laboratory practices ("GLP") requirements and other applicable regulations; ● submission of an IND, which must be received by the FDA and become effective before human clinical trials may begin; ● approval by an independent institutional review board ("IRB") or ethics committee at each clinical site or centrally before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidate for its intended use, performed in accordance with good clinical practice requirements ("GCPs"); ● preparation and submission of a NDA to the FDA; ● satisfactory completion of an FDA advisory committee review, if applicable; ● pre-approval inspection of manufacturing facilities at which the drug is produced to assess their compliance with cGMPs and of selected clinical investigation sites to assess compliance with GCPs; and ● FDA approval of an NDA to permit commercial marketing for particular indications for use.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following: ● certain non-clinical laboratory and animal tests that must be conducted in accordance with good laboratory practices ("GLP") requirements and other applicable regulations; ● submission of an IND, which must be received by the FDA and become effective before human clinical trials may begin; ● approval by an independent institutional review board ("IRB") or ethics committee at each clinical site or centrally before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidate for its intended use, performed in accordance with good clinical practice requirements ("GCPs"); ● preparation and submission of an NDA to the FDA; ● satisfactory completion of an FDA advisory committee review, if applicable; ● pre-approval inspection of manufacturing facilities at which the drug is produced to assess their compliance with cGMPs and of selected clinical investigation sites to assess compliance with GCPs; and ● FDA approval of an NDA to permit commercial marketing for particular indications for use.
Arimoclomol Pursuant to our acquisition of the assets of Orphazyme, we have received method of use and method of treatment patents, and have filed related patent applications, related to the arimoclomol families in various jurisdictions, including the U.S., European countries, Israel, Japan, South Korea, Canada, China, Brazil, Russia and Turkey, with anticipated patent expiration dates of 2029, excluding any potential patent term adjustments or extensions.
MIPLYFFA (arimoclomol) Pursuant to our acquisition of the assets of Orphazyme, we have received method of use and method of treatment patents, and have filed related patent applications, related to the arimoclomol families in various jurisdictions, including the U.S., European countries, Israel, Japan, South Korea, Canada, China, Brazil, Russia and Turkey, with anticipated patent expiration dates of 2029, excluding any potential patent term adjustments or extensions.
To support the launch of OLPRUVA, we have built in-house capabilities including rare disease sales specialists who are working with prescribing clinicians and healthcare providers, which include metabolic specialists and clinical geneticists, as well as marketing, patient reimbursement services, market access and contracting, patient advocacy, and medical affairs teams.
To support the launch of OLPRUVA and MIPLYFFA, we have built in-house capabilities including rare disease sales specialists who are working with prescribing clinicians and healthcare providers, which include metabolic specialists and clinical geneticists, as well as marketing, patient reimbursement services, market access and contracting, patient advocacy, and medical affairs teams.
Adopted Names Council of the American Medical Association (“USAN”), which means that there may be no generic equivalent product for KP1077 in most states, making drug-equivalent substitution potentially difficult at the pharmacy. ● Orphan drug designation. Because small size of the IH patient population, the FDA has granted KP1077 orphan drug designation for the treatment of IH.
Adopted Names Council of the American Medical Association (“USAN”), which means that there may be no generic equivalent product for KP1077 in most states, making drug-equivalent substitution potentially difficult at the pharmacy. ● Orphan drug designation. Because the size of the IH patient population is small, the FDA has granted KP1077 orphan drug designation for the treatment of IH.
Furthermore, we may qualify to receive an additional six months of pediatric exclusivity in the U.S., which runs consecutively to an existing exclusivity, if we conduct a successful pediatric study of OLPRUVA for the treatment of MSUD, approved by the FDA for this purpose. 15 Table of Contents AZSTARYS and Serdexmethylphenidate (SDX) We have received composition-of-matter patents and also additionally filed composition-of-matter and method of treatment patent applications related to the AZSTARYS and SDX families in the United States and in Argentina, Australia, Brazil, Canada, Chile, China, Egypt, Hong Kong, European Countries, India, Israel, Indonesia, Japan, South Korea, Kazakhstan, Mexico, Malaysia, New Zealand, Philippines, Russia, Singapore, South Africa, Thailand, Ukraine, and Vietnam.
Furthermore, we may qualify to receive an additional six months of pediatric exclusivity in the U.S., which runs consecutively to an existing exclusivity, if we conduct a successful pediatric study of OLPRUVA for the treatment of MSUD, approved by the FDA for this purpose. 14 Table of Contents AZSTARYS and Serdexmethylphenidate (SDX) We have received composition-of-matter patents and also additionally filed composition-of-matter and method of treatment patent applications related to the AZSTARYS and SDX families in the United States and in Argentina, Australia, Brazil, Canada, Chile, China, Egypt, Hong Kong, European Countries, India, Israel, Indonesia, Japan, South Korea, Kazakhstan, Mexico, Malaysia, New Zealand, Philippines, Russia, Singapore, South Africa, Thailand, Ukraine, and Vietnam.
The FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing controls are adequate to assure and preserve the product’s identity, strength, quality and purity. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured.
The FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing controls are adequate to assure and preserve the product’s identity, strength, quality and purity. Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on Good Clinical Practices (“GCP”) as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on Good Clinical Practices as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
We have established promotional programs to drive awareness and patient experience with OLPRUVA including Quick Start, a thirty-day free trial program designed to provide patient experience, and other patient co-pay programs, reflecting our commitment to ensure access to innovative treatments to those in need.
We have established promotional programs to drive awareness and patient experience with OLPRUVA and MIPLYFFA including Quick Start, a thirty-day free trial program designed to provide patient experience, and other patient co-pay programs, reflecting our commitment to ensure access to innovative treatments to those in need.
A CRL will describe all of the deficiencies that the FDA has identified in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.
A CRL will usually describe all of the deficiencies that the FDA has identified in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.
Any of these sanctions could result in adverse publicity, among other adverse consequences. 22 Table of Contents Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the U.S., or a patient population greater than 200,000 individuals in the U.S. and when there is no reasonable expectation that the cost of developing and making available the drug in the U.S. will be recovered from sales in the United States for that drug.
Any of these sanctions could result in adverse publicity, among other adverse consequences. 21 Table of Contents Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the U.S., or a patient population greater than 200,000 individuals in the U.S. and when there is no reasonable expectation that the cost of developing and making available the drug in the U.S. will be recovered from sales in the United States for that drug.
Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. 26 Table of Contents The Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (“FCPA”) prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.
Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. 25 Table of Contents The Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (“FCPA”) prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.
To support the efforts of our team members which are in the field engaging with HCPs, we are actively engaged in negotiations with the major commercial payers and state Medicaid organizations to seek access for OLPRUVA.
To support the efforts of our team members which are in the field engaging with HCPs, we are actively engaged in negotiations with the major commercial payers and state Medicaid organizations to seek access for OLPRUVA and MIPLYFFA.
We have established a small, targeted commercial team which is designed to fully service the patients and prescribers within the rare disease indications for which we are successful in gaining approval for our product candidates.
We have established a targeted commercial team which is designed to fully service the patients and prescribers within the rare disease indications for which we are successful in gaining approval for our product candidates.
To obtain regulatory approval of a product candidate under EU regulatory systems, we must submit a MA application (“MAA”). The process for doing this depends, among other things, on the nature of the medicinal product.
To obtain regulatory approval of a product candidate under EU regulatory systems, we must submit a MA application (“MAA”). The process for this depends, among other things, on the nature of the medicinal product.
An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. 21 Table of Contents The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product, or impose other conditions, including distribution restrictions or other risk management mechanisms.
An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. 20 Table of Contents The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product, or impose other conditions, including distribution restrictions or other risk management mechanisms.
As we get closer to potential approval of our product candidates, we will work to identify and implement the most appropriate commercialization strategies that we conclude are the most desirable with regard to each specific product candidate. 16 Table of Contents Competition Our industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.
As we get closer to potential approval of our product candidates, we will work to identify and implement the most appropriate commercialization strategies that we conclude are the most desirable with regard to each specific product candidate. 15 Table of Contents Competition Our industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.
Although there are several approved medications for narcolepsy, we believe a treatment option based on serdexmethylphenidate (“SDX"), our proprietary prodrug of d-methylphenidate (“d-MPH”) which has previously been classified as a Schedule IV controlled substance, with superior exposure/duration characteristics and low abuse potential may be beneficial.
Although there are several approved medications for narcolepsy, we believe a treatment option based on serdexmethylphenidate (“SDX”), our proprietary prodrug of d-methylphenidate (“d-MPH”) which has previously been classified as a Schedule IV controlled substance, with superior exposure/duration characteristics and low abuse potential may be beneficial.
For example, liver transplantation may be used in some cases to treat UCDs in pediatric patients who have developed acute liver failure. 17 Table of Contents Manufacturing Our manufacturing strategy is to rely on contract manufacturers to produce our approved products and product candidates for clinical trials and, if approved, drug product for commercial sale.
For example, liver transplantation may be used in some cases to treat UCDs in pediatric patients who have developed acute liver failure. 16 Table of Contents Manufacturing Our manufacturing strategy is to rely on contract manufacturers to produce our approved products and product candidates for clinical trials and, if approved, drug product for commercial sale.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (which began in 2025).
Other national and EU-wide regulatory requirements may also apply. 27 Table of Contents Marketing Authorization In order to market our product candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization (“MA”).
Other national and EU-wide regulatory requirements may also apply. 26 Table of Contents Marketing Authorization In order to market our product candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization (“MA”).
These clinical trials are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling. 20 Table of Contents In the case of a 505(b)(2) NDA, some of the above-described studies and preclinical studies may not be required or may be abbreviated.
These clinical trials are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling. 19 Table of Contents In the case of a 505(b)(2) NDA, some of the above-described studies and preclinical studies may not be required or may be abbreviated.
("Corium"), another affiliate of Gurnet Point Capital, L.P., to lead all commercialization activities for AZSTARYS in the U.S. Corium commercially launched AZSTARYS in the U.S. during the third quarter of 2021. In December 2021, Commave entered into a sublicense of commercialization rights for AZSTARYS in greater China to Shanghai Ark Biopharmaceutical Ltd.
Commave has tasked Corium, another affiliate of Gurnet Point Capital, L.P., to lead all commercialization activities for AZSTARYS in the U.S. Corium commercially launched AZSTARYS in the U.S. during the third quarter of 2021. In December 2021, Commave entered into a sublicense of commercialization rights for AZSTARYS in greater China to Shanghai Ark Biopharmaceutical Ltd.
After these five years, the authorization may be renewed on the basis of a reevaluation of the risk-benefit balance. Data and Marketing Exclusivity In the EU, new products authorized for marketing (i.e., reference products) generally receive eight years of data exclusivity and an additional two years of market exclusivity upon MA.
After these five years, the authorization may be renewed based on a reevaluation of the risk-benefit balance. Data and Marketing Exclusivity In the EU, new products authorized for marketing (i.e., reference products) generally receive eight years of data exclusivity and an additional two years of market exclusivity upon MA.
The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan (“PIP”). No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.
The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan (“PIP”). No extension to any supplementary protection certificate can be granted based on pediatric studies for orphan indications.
It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
It permits EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
Celiprolol is generally protected by U.S. patents that will expire, after utilizing all appropriate patent term adjustments but excluding possible term extensions, in 2038. 11 Table of Contents KP1077 KP1077 is being developed for the treatment of IH and narcolepsy. IH is a rare neurological sleep disorder affecting approximately 37,000 patients in the United States.
Celiprolol is generally protected by U.S. patents that will expire, after utilizing all appropriate patent term adjustments but excluding possible term extensions, in 2038. 10 Table of Contents KP1077 KP1077 is being developed and evaluated for the treatment of IH and narcolepsy. IH is a rare neurological sleep disorder affecting approximately 37,000 patients in the United States.
Additionally, MA may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product. 28 Table of Contents Pediatric Development In the EU, MAAs for new medicinal products have to include the results of studies conducted in the pediatric population, in compliance with a PIP agreed with the EMA’s Pediatric Committee (“PDCO”).
Additionally, MA may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product. 27 Table of Contents Pediatric Development In the EU, MAAs for new medicinal products must include the results of studies conducted in the pediatric population, in compliance with a PIP agreed with the EMA’s Pediatric Committee (“PDCO”).
Currently, there are no approved therapies anywhere in the world for vEDS. However, celiprolol, prescribed off label, has become the standard of care therapy for vEDS in some Europe an countries. Medical intervention for vEDS focuses on surgery, symptomatic treatment, genetic counseling, and prophylactic measures, such as avoiding intense physical activity, scuba diving, and violent sports.
Currently, there are no approved therapies anywhere in the world for VEDS. However, celiprolol, prescribed off label, has become the standard of care therapy for VEDS in some European countries. Medical intervention for VEDS focuses on surgery, symptomatic treatment, genetic counseling, and prophylactic measures, such as avoiding intense physical activity, scuba diving, and violent sports.
We currently have no manufacturing facilities and limited personnel with manufacturing experience. We have contracted with third parties for the manufacture, testing, and storage of our approved products and product candidates and intend to continue to do so in the future.
We currently have no manufacturing facilities and limited personnel in our manufacturing department. We have contracted with third parties for the manufacture, testing, and storage of our approved products and product candidates and intend to continue to do so in the future.
Arimoclomol is administered as an oral capsule that can be swallowed whole, opened and contents mixed with foods or liquids, or delivered through a feeding tube. ● Extensive clinical experience with favorable safety data.
MIPLYFFA is administered as an oral capsule that can be swallowed whole, opened and contents mixed with foods or liquids, or delivered through a feeding tube. ● Extensive clinical experience with favorable safety data.
Based on the data, in December 2022, we announced the initiation of a double-blind, placebo-controlled, randomized-withdrawal, dose-optimizing, multi-center Phase 2 clinical trial evaluating the efficacy and safety of KP1077 for the treatment of IH. The trial concluded in March 2024 and provided meaningful information of the optimal dose and dosing regimen to inform Phase 3 trial design.
Based on the data, in December 2022, we announced the initiation of a double-blind, placebo-controlled, randomized-withdrawal, dose-optimizing, multicenter Phase 2 clinical trial evaluating the efficacy and safety of KP1077 for the treatment of IH. The trial concluded in March 2024 and provided meaningful information of the optimal dose and dosing regimen to inform Phase 3 trial design.
Post-Approval Requirements Any products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including manufacturing, periodic reporting, product sampling and distribution, advertising, promotion, drug shortage reporting, compliance with any post-approval requirements imposed as a conditional of approval such as Phase 4 clinical trials, REMS and surveillance, recordkeeping and reporting requirements, including adverse experiences.
Post-Approval Requirements Any products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including manufacturing, periodic reporting, product sampling and distribution, advertising, promotion, drug shortage reporting, compliance with any post-approval requirements imposed as a conditional of approval such as post-marketing clinical trials, REMS and surveillance, recordkeeping and reporting requirements, including adverse experiences.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product 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.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price increase reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Mechanism of action in vEDS patients is thought to be through vascular dilatation and smooth muscle relaxation, the effect of which is to reduce the mechanical stress on collagen fibers in the arterial wall, and thereby potentially less incidence of vascular ruptures. ● Evidence of efficacy in the E.U and extensive clinical experience from multiple trials.
Mechanism of action in VEDS patients is thought to be through vascular dilatation and smooth muscle relaxation, the effect of which is to reduce the mechanical stress on collagen fibers in the arterial wall, and thereby potentially less incidence of vascular ruptures. ● Evidence of efficacy in the EU and extensive clinical experience from multiple trials.
As a result, coverage, reimbursement and placement determinations are complex and are often the subject of extensive negotiations between the payer and the owner of the drug. 18 Table of Contents Unless we enter into a strategic collaboration under which our collaborator assumes responsibility for seeking coverage and reimbursement for a given product (such as the AZSTARYS License Agreement), we will be responsible for negotiating coverage, reimbursement and placement decisions for our product candidates, if approved.
As a result, coverage, reimbursement and placement determinations are complex and are often the subject of extensive negotiations between the payer and the manufacturer of the drug. 17 Table of Contents Unless we enter into a strategic collaboration under which our collaborator assumes responsibility for seeking coverage and reimbursement for a given product (such as the AZSTARYS License Agreement), we will be responsible for negotiating coverage, reimbursement and placement decisions for our product candidates, if approved.
In 2022, the USPTO issued a Notice of Allowance for a patent application exclusively licensed from Assistance Publique—Hôpitaux de Paris (AP-HP), for claims related to certain methods of vEDS with celiprolol. This application, titled “Method of Providing Celiprolol Therapy to a Patient,” has now issued as a U.S. patent with an expiration date in November 2038.
In 2022, the USPTO issued a Notice of Allowance for a patent application exclusively licensed from Assistance Publique—Hôpitaux de Paris (AP-HP), for claims related to certain methods of VEDS with celiprolol. This application, titled “Method of Providing Celiprolol Therapy to a Patient,” has now issued as a U.S. patent (US 11,523,997) with an expiration date in November 2038.
In addition, the FDA may require Phase 4 post-marketing studies to monitor the effect of approved products and may limit further marketing of the product based on the results of these post-marketing studies.
In addition, the FDA may require post-marketing studies to monitor the effect of approved products and may limit further marketing of the product based on the results of these post-marketing studies.
Historically, products launched in the E.U. do not follow the price structures which prevail in the U.S., and generally, prices tend to be significantly lower. 19 Table of Contents Government Regulation The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products.
Historically, products launched in the EU do not follow the price structures which prevail in the U.S., and generally, prices tend to be significantly lower. 18 Table of Contents Government Regulation The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products.
For example, in the E.U., pricing and reimbursement schemes vary widely from country to country. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies.
For example, in the EU, pricing and reimbursement schemes vary widely from country to country. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies.
We furthermore have a variety of product candidates and compounds that are early-stage, pre-clinical and clinical-stage designed to address a variety of rare diseases and other indications.
We furthermore have a variety of product candidates and compounds that are clinical-stage and designed to address a variety of rare diseases and other indications.
We have not observed drug-to-drug interactions in clinical drug-drug interaction studies. ● Potential for reduced abuse potential as a Schedule IV controlled substance. All other methylphenidate-based products have been designated as Schedule II controlled substances, which indicates stricter control over the prescribing and use of such products.
KP1077 Summary: ● No drug-to-drug interactions observed to date. We have not observed drug-to-drug interactions in clinical drug-drug interaction studies. ● Potential for reduced abuse potential as a Schedule IV controlled substance. All other methylphenidate-based products have been designated as Schedule II controlled substances, which indicates stricter control over the prescribing and use of such products.
In July 2022, Acer initiated enrollment in a phase 3 clinical trial designed based on the discussions from the May 2021 Type B meeting with the FDA, also known as the DiSCOVER trial. The DiSCOVER trial intends to enroll 150 vEDS patients, with 100 patients receiving celiprolol and 50 patients receiving placebo.
In July 2022, Acer initiated enrollment in a Phase 3 long-term event-driven clinical trial designed based on the discussions from the May 2021 Type B meeting with the FDA, also known as the DiSCOVER trial. The DiSCOVER trial intends to enroll 150 VEDS patients, with 100 patients receiving celiprolol and 50 patients receiving placebo.
During the first quarter of 2022, we initiated a Phase 1 clinical trial comparing the cardiovascular safety of SDX to immediate-release and long-acting formulations of RITALIN ® , a commonly prescribed CNS stimulant.
During the first quarter of 2022, we initiated a Phase 1 clinical trial comparing the cardiovascular safety of SDX to immediate-release and long-acting formulations of RITALIN, a commonly prescribed central nervous system ("CNS") stimulant.
These so-called Phase 4, or post-market, studies may be used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.
These clinical trials, sometimes referred to as Phase 4, or post-market, studies may be used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.
Acquisition and distribution transactions must also be reported for Schedule I and II controlled substances, as well as Schedule III narcotic substances. The DEA typically inspects a facility to review its security measures prior to issuing a registration and on a periodic basis.
Acquisition and distribution transactions must also be reported for Schedule I and II controlled substances, as well as Schedule III narcotic substances. 23 Table of Contents The DEA typically inspects a facility to review its security measures prior to issuing a registration and on a periodic basis.
In May 2022, we purchased all of the assets and operations of Orphazyme A/S related to arimoclomol, settled all of Orphazyme’s actual outstanding liabilities to its creditors with a cash payment of $12.8 million, and agreed to assume an estimated reserve liability of $5.2 million related to revenue generated from Orphazyme’s Expanded Access Program in France (the "Arimoclomol EAP").
In May 2022, we purchased all of the assets and operations of Orphazyme A/S (“Orphazyme”) related to arimoclomol, settled all of Orphazyme’s actual outstanding liabilities to its creditors with a cash payment of $12.8 million, and agreed to assume an estimated reserve clawback liability of $5.2 million related to revenue generated from Orphazyme’s EAP in France.
We believe KP1077 may potentially be eligible for fast-track and breakthrough therapy designation, which may provide various regulatory benefits for the development program. 13 Table of Contents AZSTARYS (Partnered product) AZSTARYS contains dexmethylphenidate (d-MPH) and our prodrug of dexmethylphenidate, serdexmethylphenidate (SDX).
We believe KP1077 may potentially be eligible for fast-track and breakthrough therapy designation, which may provide various regulatory benefits for the development program. 12 Table of Contents AZSTARYS (Partnered product) AZSTARYS contains d-MPH and our prodrug of d-MPH, SDX.
For example, we have employed our proprietary Ligand Activated Technology ("LAT") platform to develop approved products (e.g., AZSTARYS), and clinical development candidates (KP1077IH and KP1077N). Through our business development efforts, we have added a commercial product (OLPRUVA), and clinical development candidates (arimoclomol, celiprolol).
For example, we have employed our proprietary Ligand Activated Technology ("LAT") platform to develop approved products (e.g., AZSTARYS), and clinical development candidates (KP1077IH and KP1077N). Through our business development efforts, we have added commercial products (OLPRUVA and MIPLYFFA), and a clinical development candidate (celiprolol).
We are executing on this balanced approach by building a culture that is patient-focused and driven by our commitment to developing and making available therapies which address the myriad unmet needs within the rare disease community. As part of our commitment to serving the rare disease community, in February 2023, we changed our name to Zevra Therapeutics, Inc.
We are executing on this balanced approach by building a high-performing culture that is patient-focused and driven by our commitment to developing and commercializing therapies to address the myriad unmet needs within the rare disease community. As part of our commitment to serving the rare disease community, in February 2023, we changed our name to Zevra Therapeutics, Inc.
The exploratory endpoints of sleep inertia and brain fog performed in-line with expectations and were stable when compared across a variety of other endpoints. Symptom improvements in patients receiving KP1077 were similar after both once-per-day, and twice-per-day dosing.
Clinically meaningful improvements were observed across all studied endpoints. The exploratory endpoints of sleep inertia and brain fog performed in-line with expectations and were stable when compared across a variety of other endpoints. Symptom improvements in patients receiving KP1077 were similar after both once-per-day, and twice-per-day dosing.
Corporate Information We were incorporated under the laws of the State of Iowa in October 2006, and were reincorporated under the laws of the State of Delaware in May 2014. We changed our name from KemPharm, Inc. to Zevra Therapeutics, Inc. effective as of February 21, 2023.
Corporate Information We were incorporated under the laws of the State of Iowa in October 2006 and were reincorporated under the laws of the State of Delaware in May 2014. We changed our name from KemPharm, Inc. to Zevra Therapeutics, Inc. effective as of February 21, 2023. Our website address is www.zevra.com .
Food and Drug Administration (“FDA”), the Company determined to focus its expertise on rare disease indications, as well as seeking value-creating opportunities by building and directly commercializing product candidates in lieu of an out-licensing model.
Food and Drug Administration (“FDA”), we determined to focus our expertise on rare disease indications, as well as seeking value-creating opportunities by building and directly commercializing product candidates in lieu of an out-licensing model.
On November 17, 2023, Zevra completed the acquisition of Acer. Pursuant to the Merger Agreement, Acer continues as a wholly-owned subsidiary of Zevra. The Merger included the acquisition of OLPRUVA ® (sodium phenylbutyrate) for oral suspension, which was approved by the U.S. Food and Drug Administration (FDA) on December 27, 2022, for the treatment of urea cycle disorders ("UCDs").
On November 17, 2023, we completed the acquisition of Acer. Pursuant to the Merger Agreement, Acer continues as a wholly-owned subsidiary of Zevra. The Merger included the acquisition of OLPRUVA® (sodium phenylbutyrate) for oral suspension, which was approved by the FDA on December 27, 2022, for the treatment of certain urea cycle disorders ("UCDs").
These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties. 29 Table of Contents Employees As of December 31, 2023, we employed 69 employees, of which 65 were full-time employees.
These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties. 28 Table of Contents Employees As of December 31, 2024, we employed 59 full-time employees .
OLPRUVA is an adjunctive therapy for long-term management of adults and children weighing 20kg or greater with UCD from deficiencies of CPS, OTC, or AS. ● OLPRUVA is differentiated from currently available forms of phenylbutyrate.
OLPRUVA summary: ● OLPRUVA is available in the U.S for the treatment of UCD. OLPRUVA is an adjunctive therapy for long-term management of adults and children weighing 20kg or greater with UCD from deficiencies of CPS, OTC, or AS. ● OLPRUVA is differentiated from currently available forms of phenylbutyrate.
Any increase in ammonia over time is serious. Therefore, it is important to adhere to any dietary protein restrictions and have alternative medication options to help control ammonia levels. Approximately 1 in 100,000 people have UCD, and there are an estimated 800 patients who are actively treated in the U.S.
Therefore, it is important to adhere to any dietary protein restrictions and have alternative medication options to help control ammonia levels. Approximately 1 in 100,000 people have UCD, and there are an estimated 800 patients who are actively treated with nitrogen scavenging therapy in the U.S.
As of December 31, 2023, we have been granted and maintain 62 active patents within the United States, and an additional 241 active foreign patents covering our selected prodrugs and product candidates. The terms of the 62 issued U.S. patents extend to various dates ranging, for example, between 2029 and 2040.
As of December 31, 2024, we have been granted and maintain 89 active patents within the United States, and an additional 375 active foreign patents covering our selected prodrugs and product candidates. The terms of the 89 issued U.S. patents extend to various dates ranging, for example, between 2029 and 2042.
We will face competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, drug delivery companies and academic and research institutions.
We will face competition and potential competition from any number of pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, drug delivery companies and academic and research institutions.
As of December 31, 2023, we had 19 pending patent applications under active prosecution in the United States, and an additional 117 pending foreign patent applications potentially covering our selected prodrugs and product candidates.
As of December 31, 2024, we had 25 pending patent applications under active prosecution in the United States, and an additional 109 pending foreign patent applications potentially covering our selected prodrugs and product candidates.
These results are consistent with data from the Phase 1 trial with serdexmethylphenidate (SDX) that indicated no greater cardiovascular safety risk despite higher overall exposure levels when compared to both immediate and long-acting methylphenidate products currently used off-label for the treatment of IH.
These results are consistent with data from the Phase 1 trial with SDX that indicated no greater cardiovascular safety risk despite higher overall exposure levels when compared to both immediate and long-acting methylphenidate products currently used off-label for the treatment of IH. On June 3, 2024, we announced final results from the Phase 2 Clinical Trial of KP1077 for IH.
Currently active commercial products and development assets are summarized in the table below: Active Zevra Commercial and Development Assets Parent Drug Indication Product / Candidate Development Status Next Milestone(s) Sodium phenylbutyrate Urea Cycle Disorders (UCD) OLPRUVA FDA Approved Tracking Commercial Progress Arimoclomol Niemann Pick disease type C (NPC) Arimoclomol Pending FDA Review PDUFA target date September 21, 2024 Celiprolol Vascular Ehlers Danlos Syndrome (vEDS) Celiprolol Clinical - Phase 1/2 Phase 3 ongoing Serdexmethylphenidate Idiopathic Hypersomnia (IH) KP1077IH Clinical - Phase 2 Evaluation of potential Phase 3 Trial Serdexmethylphenidate Narcolepsy KP1077N Clinical - Phase 1/2 Evaluation of potential Phase 3 Trial Serdexmethylphenidate and dexmethylphenidate Attention Deficit and Hyperactivity Disorder (ADHD) AZSTARYS FDA Approved and Partnered Collecting royalties and milestones These anticipated milestones are based on information currently available to us.
Currently active commercial products and development assets are summarized in the table below: Active Zevra Commercial and Development Assets Parent Drug Indication Product / Candidate Development Status Next Milestone(s) Arimoclomol Niemann Pick disease type C (NPC) MIPLYFFA FDA Approved European EAP Tracking Commercial Progress Target MAA Submission in H2 2025 Sodium phenylbutyrate Urea Cycle Disorders (UCD) OLPRUVA FDA Approved Tracking Commercial Progress Celiprolol Vascular Ehlers Danlos Syndrome (VEDS) Celiprolol Clinical - Phase 3 Phase 3 ongoing Serdexmethylphenidate Idiopathic Hypersomnia (IH) KP1077IH Clinical - Phase 2 Seeking Strategic Alternatives Serdexmethylphenidate Narcolepsy KP1077N Clinical - Phase 1/2 Seeking Strategic Alternatives Serdexmethylphenidate and dexmethylphenidate Attention Deficit and Hyperactivity Disorder (ADHD) AZSTARYS FDA Approved and Partnered Collecting royalties and milestones These anticipated milestones are based on information currently available to us.
Acer also had a pipeline of investigational product candidates, including celiprolol for the treatment of vascular Ehlers-Danlos syndrome ("vEDS") in, patients with a confirmed type III collagen (COL3A1) mutation.
In addition, we acquired Acer's pipeline of investigational product candidates, including celiprolol for the treatment of Vascular Ehlers-Danlos syndrome ("VEDS") in, patients with a confirmed type III collagen (COL3A1) mutation.
During the second half of 2023, annual net sales of AZSTARYS surpassed $50 million, triggering the second milestone payment of $10.0 million under the AZSTARYS License Agreement, which was earned and recognized in the fourth quarter of 2023, and received in February 2024. APADAZ (Withdrawn product) The FDA approved APADAZ in February 2018.
During the second half of 2023, annual net sales of AZSTARYS surpassed $50 million, triggering the second net sales milestone payment of $10.0 million under the AZSTARYS License Agreement, which was earned and recognized in the fourth quarter of 2023.
We are also aware that there are drug candidates in clinical development for the potential treatment of UCDs. In addition, there is the potential entrance of authorized generics for RAVICTI which could enter the market as early as July 2025.
We are also aware that there are drug candidates in clinical development for the potential treatment of UCDs. In addition, there is the potential entrance of authorized generics for RAVICTI which could enter the market as early as July 2025. MIPLYFFA There is another treatment for NPC, AQNEURSA (IntraBio) that was recently approved in the U.S.
Hatch-Waxman Act Section 505 of the FFDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy.
After September 30, 2026, FDA may not award any Rare Pediatric Disease Priority Review Voucher. Hatch-Waxman Act Section 505 of the FFDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy.
Increased wakefulness, alertness, hypervigilance, and insomnia effects were reported by study participants, which we believe suggests that SDX produced targeted pharmacodynamic effects that have the potential to benefit patients with IH and other sleep disorders.
We reported final data for the Phase 1 proof-of-concept study of SDX in the first quarter of 2022. Increased wakefulness, alertness, hypervigilance, and insomnia effects were reported by study participants, which we believe suggests that SDX produced targeted pharmacodynamic effects that have the potential to benefit patients with IH and other sleep disorders.
Under the AZSTARYS License Agreement, we granted to Commave an exclusive, worldwide license, to develop, manufacture, and commercialize AZSTARYS and any of our product candidates containing SDX and used to treat ADHD or any other central nervous system ("CNS") disease. Commave has tasked Corium, Inc.
Under the AZSTARYS License Agreement, we granted Commave an exclusive, worldwide license, to develop, manufacture, and commercialize AZSTARYS and any of our product candidates containing SDX and used to treat ADHD or any other CNS disease. In July 2020, we entered into the consulting agreement with Corium, Inc.
Depending on the circumstances, failure to comply with these laws can result in significant penalties, including criminal, civil and/or administrative penalties, damages, fines, disgorgement, debarment from government contracts, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion from government programs, refusal to allow us to enter into supply contracts, including government contracts, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our business.
Depending on the circumstances, failure to comply with these laws can result in significant penalties, including criminal, civil and/or administrative penalties, damages, fines, disgorgement, debarment from government contracts, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion from government programs, refusal to allow us to enter into supply contracts, including government contracts, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our business. 24 Table of Contents Data Privacy and Security Laws We may be subject to data privacy and security laws, regulations, and standards by foreign, federal, state and local governments that govern the collection, use, access to, confidentiality and security of health-related and other personal information.
We estimate that there are approximately 1,800 individuals with NPC in the US and Europe, of these, approximately 300 have been diagnosed in the U.S. However, diagnostic challenges may affect the number of potential patients, and we believe that the availability of treatment options could increase awareness of the disease and assist in more accurately identifying patients.
Of these, approximately 300 to 350 people have been diagnosed in the U.S. However, diagnostic challenges may affect the number of potential patients, and we believe that the availability of treatment options in the U.S. could increase awareness of the disease and assist in more accurately identifying patients.
In November 2022, we announced that the FDA has granted the orphan drug designation to SDX for the treatment of IH. 12 Table of Contents In January 2022, we announced that we had selected KP1077 for the treatment of IH and narcolepsy as our lead clinical development candidate. KP1077 utilizes SDX, our prodrug of d-MPH, as its API.
In November 2022, we announced that the FDA has granted the orphan drug designation to SDX for the treatment of IH. KP1077 utilizes SDX, our prodrug of d-MPH, as its API.
In December 2021, Commave Therapeutics, S.A. sublicensed to Shanghai Ark Biopharmaceutical Co., Ltd. the commercialization rights Greater China, including mainland China, Hong Kong, Macau and Taiwan.
Corium is leading the commercialization of AZSTARYS in the U.S. under the AZSTARYS License Agreement. Corium commercially launched AZSTARYS in the U.S. in July 2021. In December 2021, Commave Therapeutics, S.A. sublicensed to Shanghai Ark Biopharmaceutical Co., Ltd. the commercialization rights Greater China, including mainland China, Hong Kong, Macau and Taiwan.
Our team has specialized expertise and a track record of success in advancing promising therapies that face complex clinical and regulatory challenges with an approach that balances science and data with patient need.
We have a diverse portfolio of products and product candidates, which includes pre-clinical, clinical, and commercial stage assets. Our team has specialized expertise and a track record of success in advancing promising therapies that face complex clinical, regulatory, and commercial challenges with an approach that balances science with patient need.
OLPRUVA offers benefits over other UCD treatments by eliminating issues with palatability, offering improved portability with its single-dose envelopes, and it comes in a dosage that personalized to the patient based on weight.
OLPRUVA offers benefits over other UCD treatments by eliminating issues with palatability, offering improved portability with its single-dose envelopes, and it comes in a dosage personalized to the patient based on weight. During the quarter ended December 31, 2023, we began generating revenue from the sale of OLPRUVA in the U.S.
Five years of exclusivity are available to new chemical entities ("NCEs"). An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA.
An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur future capital requirements will depend on many factors, including: ● the progress and results of our preclinical studies, clinical trials, chemistry, manufacturing and controls (“CMC ”), and other product development and commercialization activities; ● the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates; ● the ability to obtain differentiating claims in the labels for our product candidates; ● the number and development requirements of other product candidates that we may pursue; ● the costs, timing and outcome of regulatory review of our product candidates; ● the efforts necessary to institute post-approval regulatory compliance requirements; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● the commercial revenue received from commercial sales of our approved products, or any of our product candidates subject to the terms of the AZSTARYS License Agreement, or sales of our product candidates for which we receive marketing approval in the future, which may be affected by market conditions, including obtaining coverage and adequate reimbursement of our approved products, or any of our product candidates, from third-party payors, including government programs and managed care organizations, and competition within the therapeutic class to which our approved products, or any our product candidates are assigned; ● the success in commercializing our approved products; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and ● the extent to which we acquire or in-license other product candidates and technologies. 44 Table of Contents Risks Related to Our Dependence on Third Parties We rely on and expect to continue to rely on third parties to conduct our clinical trials for our product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.
Biggest changeOur future capital requirements will depend on many factors, including: ● the success in commercializing our approved products; ● the commercial revenue received from commercial sales of our approved products, MIPLYFFA and OLPRUVA, or any of our product candidates subject to the terms of the AZSTARYS License Agreement, or sales of our product candidates for which we receive marketing approval in the future, which may be affected by market conditions, including obtaining coverage and adequate reimbursement of our approved products, or any of our product candidates, from third-party payors, including government programs and managed care organizations, and competition within the therapeutic class to which our approved products, or any our product candidates are assigned; ● the progress and results of our preclinical studies, clinical trials, chemistry, manufacturing and controls, and other product development and commercialization activities; ● the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates; ● the ability to obtain differentiating claims in the labels for our product candidates; ● the number and development requirements of other product candidates that we may pursue; ● the costs, timing and outcome of regulatory review of our product candidates; ● the efforts necessary to institute post-approval regulatory compliance requirements; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and ● the extent to which we acquire or in-license other product candidates and technologies. 45 Table of Contents Risks Related to Our Dependence on Third Parties We rely on and expect to continue to rely on third parties to conduct our clinical trials for our product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.
Five years of exclusivity are available to NCEs following the approval of an NDA by the FDA. An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA. If a product is not eligible for the NCE exclusivity, it may be eligible for three years of exclusivity.
Five years of exclusivity are available to NCEs following the approval of an NDA by the FDA. An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA. If a product is not eligible for NCE exclusivity, it may be eligible for three years of exclusivity.
Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s independent choice of treatment within the practice of medicine.
Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s independent choice of treatment within the practice of medicine.
We may also be subject to actions by other governmental entities or private parties, such as the False Claims Act, civil whistleblower or “qui tam” actions.
We may also be subject to actions by other governmental entities or private parties, such as the False Claims Act, civil whistleblower or “qui tam” actions.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
In that event, our reputation could be damaged and adoption of the products could be impaired. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us and harm our reputation.
In that event, our reputation could be damaged and adoption of the products could be impaired. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us and harm our reputation.
There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages if we fail to comply with applicable data protection laws, privacy policies or data protection obligations related to information security or security breaches.
There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages if we fail to comply with applicable data protection laws, privacy policies or data protection obligations related to information security or security breaches.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● regulators, IRBs, or other ethics committees may not authorize us or our investigators to commence a clinical trial, conduct a clinical trial at a prospective trial site or amend clinical trial protocols as needed; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and CROs; ● clinical trials of our product candidates may produce negative or inconclusive results, including failure to demonstrate statistical significance in cases where that is required, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon prodrug development programs; ● we may be unable to obtain sufficient or adequate supply or quality of product candidates or other materials necessary for use in clinical trials, or experience delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; ● we may experience delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; ● the number of subjects required for clinical trials of our product candidates may be larger than we anticipate enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate tha n we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or trial protocols, or meet their contractual obligations to us in a timely manner, or at all; ● regulators, IRBs, or other ethics committees may require t hat we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical tria ls of our product candidates may be greater than we anticipate, including if we are not able to pursue the 505(b)(2) NDA pathway for approval of our product candidates; ● we will need to pay substantial application user fees, which we may not be able to afford; ● we may be required to transfer manufacturing processes to larger-scale facilities operated by a contract manufacturing organization, and we may experience delays or failures by our contract manufacturers to make any necessary changes to such manufacturing process; ● we may abandon our development program or programs based on the changing regulatory or commercial environment; ● regulatory authorities may not agree with our trial design or implementation; and ● our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials. 34 Table of Contents If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: ● be delayed in obtaining marketing ap proval for our product candidates; ● not obtain marketing approval at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval but without the claims necessary for us to successfully commercialize our product candidates; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing, surveillance, or other requiremen ts, such as REMS; or ● have the product removed from the market after obtaining marketing approval.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● regulators, IRBs, or other ethics committees may not authorize us or our investigators to commence a clinical trial, conduct a clinical trial at a prospective trial site or amend clinical trial protocols as needed; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and CROs; ● clinical trials of our product candidates may produce negative or inconclusive results, including failure to demonstrate statistical significance in cases where that is required, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon prodrug development programs; ● we may be unable to obtain sufficient or adequate supply or quality of product candidates or other materials necessary for use in clinical trials, or experience delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; ● we may experience delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; ● the number of subjects required for clinical trials of our product candidates may be larger than we anticipate enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate tha n we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or trial protocols, or meet their contractual obligations to us in a timely manner, or at all; ● regulators, IRBs, or other ethics committees may require t hat we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical tria ls of our product candidates may be greater than we anticipate, including if we are not able to pursue the 505(b)(2) NDA pathway for approval of our product candidates; ● we will need to pay substantial application user fees, which we may not be able to afford; ● we may be required to transfer manufacturing processes to larger-scale facilities operated by a contract manufacturing organization, and we may experience delays or failures by our contract manufacturers to make any necessary changes to such manufacturing process; ● we may abandon our development program or programs based on the changing regulatory or commercial environment; ● regulatory authorities may not agree with our trial design or implementation; and ● our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials. 36 Table of Contents If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: ● be delayed in obtaining marketing ap proval for our product candidates; ● not obtain marketing approval at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval but without the claims necessary for us to successfully commercialize our product candidates; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing, surveillance, or other requiremen ts, such as REMS; or ● have the product removed from the market after obtaining marketing approval.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. 50 Table of Contents Our patent position is subject to numerous additional risks, including the following: ● we may fail to seek patent protection for inventions that are important to our success; ● our pending patent applications may not result in issued patents; ● we cannot be certain that we are the first to invent the inventions covered by pending patent applications or that we are the first to file such applications and, if we are not, we may be subject to priority disputes or lose rights; ● we may be required to disclaim part or all of the term of certain patents or all of the term of certain patent applications; ● we may not be able to acquire patent term extensions or supplemental certificates of certain patents, domestic or foreign, due to regulatory delays, among others, which may affect the term of enforceability of such patents over time; ● we may file patent applications but have claims restricted or we may not be able to supply sufficient data to support our claims and, as a result, may not obtain the original claims desired or we may receive restricted claims; alternatively, it is possible that we may not receive any patent protection from an application; ● even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, and may not be of sufficient scope or strength to provide us with any commercial advantage; ● our competitors may be able to design around our owned or licensed patents by developing similar or alternative technologies or drugs without infringing on our intellectual property rights; ● we could inadvertently abandon a patent or patent application, resulting in the loss of protection of intellectual property rights in a particular country, and we, our collaborators or our patent counsel may take action resulting in a patent or patent application becoming abandoned which may not be able to be reinstated or if reinstated, may suffer patent term adjustments or loss; ● the claims of our issued patents or patent applications when issued may not cover our product candidates; ● no assurance can be given that our patents would be declared by a court or tribunal, domestic or foreign, to be valid or enforceable or that a competitor’s technology or product would be found by a court or tribunal, domestic or foreign, to infringe our patents and our patents or patent applications may be challenged by third parties in patent litigation, domestic or foreign, or in proceedings before the United States Patent and Trademark Office, or the USPTO, or its foreign counterparts, and may ultimately be declared invalid or unenforceable or narrowed in scope; ● there may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim and there may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim; ● third parties may develop products that have the same or similar effect as our products without infringing our patents; ● third parties may intentionally circumvent our patents by means of alternate designs or processes or file applications or be granted patents that would block or hurt our efforts; ● there may be dominating or intervening patents relevant to our product candidates of which we are not aware; ● obtaining regulatory approval for pharmaceutical products is a lengthy and complex process, and as a result, any patents covering our product candidates may expire before or shortly after such product candidates are approved and commercialized; ● the patent and patent enforcement laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as laws in the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions; and ● we may not develop additional proprietary technologies that are patentable. 51 Table of Contents Any of these factors could hurt our ability to gain full patent protection for our products.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. 51 Table of Contents Our patent position is subject to numerous additional risks, including the following: ● we may fail to seek patent protection for inventions that are important to our success; ● our pending patent applications may not result in issued patents; ● we cannot be certain that we are the first to invent the inventions covered by pending patent applications or that we are the first to file such applications and, if we are not, we may be subject to priority disputes or lose rights; ● we may be required to disclaim part or all of the term of certain patents or all of the term of certain patent applications; ● we may not be able to acquire patent term extensions or supplemental certificates of certain patents, domestic or foreign, due to regulatory delays, among others, which may affect the term of enforceability of such patents over time; ● we may file patent applications but have claims restricted or we may not be able to supply sufficient data to support our claims and, as a result, may not obtain the original claims desired or we may receive restricted claims; alternatively, it is possible that we may not receive any patent protection from an application; ● even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, and may not be of sufficient scope or strength to provide us with any commercial advantage; ● our competitors may be able to design around our owned or licensed patents by developing similar or alternative technologies or drugs without infringing on our intellectual property rights; ● we could inadvertently abandon a patent or patent application, resulting in the loss of protection of intellectual property rights in a particular country, and we, our collaborators or our patent counsel may take action resulting in a patent or patent application becoming abandoned which may not be able to be reinstated or if reinstated, may suffer patent term adjustments or loss; ● the claims of our issued patents or patent applications when issued may not cover our product candidates; ● no assurance can be given that our patents would be declared by a court or tribunal, domestic or foreign, to be valid or enforceable or that a competitor’s technology or product would be found by a court or tribunal, domestic or foreign, to infringe our patents and our patents or patent applications may be challenged by third parties in patent litigation, domestic or foreign, or in proceedings before the United States Patent and Trademark Office, or the USPTO, or its foreign counterparts, and may ultimately be declared invalid or unenforceable or narrowed in scope; ● there may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim and there may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim; ● third parties may develop products that have the same or similar effect as our products without infringing our patents; ● third parties may intentionally circumvent our patents by means of alternate designs or processes or file applications or be granted patents that would block or hurt our efforts; ● there may be dominating or intervening patents relevant to our product candidates of which we are not aware; ● obtaining regulatory approval for pharmaceutical products is a lengthy and complex process, and as a result, any patents covering our product candidates may expire before or shortly after such product candidates are approved and commercialized; ● the patent and patent enforcement laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as laws in the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions; and ● we may not develop additional proprietary technologies that are patentable. 52 Table of Contents Any of these factors could hurt our ability to gain full patent protection for our products.
Even if we are able to maintain our existing third-party relationships or establish any such agreements with other third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ● reliance on the third party for FDA and DEA and comparable foreign authorities regulatory compliance and quality assurance; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● disruption and costs associated with changing suppliers, including additional regulatory filings; ● the possible breach, termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; ● a delay or inability to procure or expand sufficient manufacturing capacity; ● manufacturing and product quality issues related to scale-up of manufacturing; ● costs and validation of new equipment and facilities required for scale-up; ● the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; ● termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; ● the reliance on a limited number of sources , and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our product candidates in a timely fashion, in sufficient quantities or under acceptable terms; and ● carrier disruptions or increased costs that are beyond our control.
Even if we are able to maintain our existing third-party relationships or establish any such agreements with other third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ● reliance on the third party for FDA, DEA, EMA and comparable foreign authorities, regulatory compliance and quality assurance; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● disruption and costs associated with changing suppliers, including additional regulatory filings; ● the possible breach, termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; ● a delay or inability to procure or expand sufficient manufacturing capacity; ● manufacturing and product quality issues related to scale-up of manufacturing; ● costs and validation of new equipment and facilities required for scale-up; ● the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; ● termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; ● the reliance on a limited number of sources , and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our product candidates in a timely fashion, in sufficient quantities or under acceptable terms; and ● carrier disruptions or increased costs that are beyond our control.
The market price for our common stock may be influenced by many factors, includi ng: ● actual or anticipated variations in our operating results; ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● conditions or trends in our industry, including without limitation changes in the structure of healthcare payment systems; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the pharmaceutical industry; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● adverse regulatory announcements or determinations regarding our product candidates; ● capital commitments; ● investors’ general perception of us and our business; ● global macroeconomic conditions, including inflation, labor shortages, supply chain shortages, or other economic, political or legal uncertainties or adverse developments; ● political unrest, terrorism and wars, such as the current situation with Ukraine and Russia or Israel and Hamas, which could delay or disrupt our business, and if such political unrest escalates or spills over to or otherwise impacts additional regions it could heighten many of the other risk factors included in this Item 1A; ● other events or factors, including those resulting from system failures and disruptions, earthquakes, hurricanes, other natural disasters, pandemics, or responses to these events; ● recruitment or departure of key personnel; and ● sales of our common stock, including sales by our directors and officers or specific stockholders.
The market price for our common stock may be influenced by many factors, includi ng: ● actual or anticipated variations in our operating results; ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● conditions or trends in our industry, including without limitation changes in the structure of healthcare payment systems; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the pharmaceutical industry; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● adverse regulatory announcements or determinations regarding our product candidates; ● capital commitments; ● investors’ general perception of us and our business; ● global macroeconomic conditions, including inflation, tariffs, labor shortages, supply chain shortages, or other economic, political or legal changes, uncertainties or adverse developments; ● political unrest, terrorism and wars, such as the current situation with Ukraine and Russia or Israel and Hamas, which could delay or disrupt our business, and if such political unrest escalates or spills over to or otherwise impacts additional regions it could heighten many of the other risk factors included in this Item 1A; ● other events or factors, including those resulting from system failures and disruptions, earthquakes, hurricanes, other natural disasters, pandemics, or responses to these events; ● recruitment, retention, or departure of key personnel; and ● sales of our common stock, including sales by our directors and officers or specific stockholders.
The successful commercialization of our approved products, and any of our product candidates for which marketing approval is obtained will depend, in part, on the extent to which coverage and adequate reimbursement for AZSTARYS, OLPRUVA, or any of our product candidates for which marketing approval is obtained, will be available from government payor programs at the federal and state levels, including Medicare and Medicaid, private health insurers and managed care plans and other third-party payors.
The successful commercialization of our approved products, and any of our product candidates for which marketing approval is obtained will depend, in part, on the extent to which coverage and adequate reimbursement for AZSTARYS, OLPRUVA, MIPLYFFA or any of our product candidates for which marketing approval is obtained, will be available from government payor programs at the federal and state levels, including Medicare and Medicaid, private health insurers and managed care plans and other third-party payors.
If any such actions are instituted against us, those actions could have a significant impact on our business, including the imposition of warning letters, untitled letters, cyber letters, seizure or recall of products, injunctions, withdrawal of product approval or other permits, clinical holds and termination of clinical trials, FDA or foreign regulatory authorities refusal to approve pending applications, product detentions, FDA or DEA consent decrees, restriction or suspension of manufacturing and distribution, debarment, refusal to allow product import or export, adverse publicity, refusal of government contracts or future orders under existing contracts, dear-health-care-provider letters or other warnings or corrective information, recalls, delays, significant civil, criminal and administrative penalties including False Claims Act liability, damages, monetary fines, disgorgement, restitution, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, corporate integrity agreements, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of our operations, among other consequences, any of which could adversely affect our ability to operate. 66 Table of Contents Our current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, and other healthcare laws and regulations, which could expose us to penalties.
If any such actions are instituted against us, those actions could have a significant impact on our business, including the imposition of warning letters, untitled letters, cyber letters, seizure or recall of products, injunctions, withdrawal of product approval or other permits, clinical holds and termination of clinical trials, FDA or foreign regulatory authorities refusal to approve pending applications, product detentions, FDA, DEA, or comparable foreign regulatory authorities consent decrees, restriction or suspension of manufacturing and distribution, debarment, refusal to allow product import or export, adverse publicity, refusal of government contracts or future orders under existing contracts, dear-health-care-provider letters or other warnings or corrective information, recalls, delays, significant civil, criminal and administrative penalties including False Claims Act liability, damages, monetary fines, disgorgement, restitution, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, corporate integrity agreements, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of our operations, among other consequences, any of which could adversely affect our ability to operate. 61 Table of Contents Our current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, and other healthcare laws and regulations, which could expose us to penalties.
The ability of the FDA and foreign regulatory authorities to review and or approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s and foreign regulatory authorities' ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
The ability of the FDA and foreign regulatory authorities to review and or approve new products can be affected by a variety of factors, including government priorities, budget and funding levels, statutory, regulatory, and policy changes, the FDA’s and foreign regulatory authorities' ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
Such misconduct could include failures to comply with FDA or comparable foreign regulations, to provide accurate information to the FDA, or comparable foreign authorities, to comply with manufacturing standards that we have established or that are established by regulation, to comply with federal and state contracting and healthcare fraud and abuse laws, to report drug pricing, financial information or data accurately or to disclose unauthorized activities to us.
Such misconduct could include failures to comply with FDA, the EMA, or comparable foreign regulations, to provide accurate information to the FDA, the EMA, or comparable foreign authorities, to comply with manufacturing standards that we have established or that are established by regulation, to comply with federal and state contracting and healthcare fraud and abuse laws, to report drug pricing, financial information or data accurately or to disclose unauthorized activities to us.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Cuts and Jobs Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Cuts and Jobs Act or subsequent or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
Our ability to generate revenue from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. 47 Table of Contents Our collaboration with Commave, or Collaborator, pose the following risks to us: ● the Collaborator has significant discretion in determining the efforts and resources that they wil l apply to these collaborations; ● the Collaborator may not perform their obligations as expected; ● the Collaborator may not pursue commercialization of AZSTARYS, any of our product candidates covered under the AZSTARYS License Agreement, if approved, or may elect not to continue or renew commercialization programs based on post-approval clinical trial results, changes in a Collaborator's strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● the Collaborator could independently develop, or develop with third parties, products that compete directly or indirectly with AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, as applicable, if the Collaborator believes that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ● AZSTARYS, any of our other products covered under the AZSTARYS License Agreement, if approved, may be viewed by the Collaborator as competitive with their own product candidates or products, which may cause the Collaborator to cease to devote resources to the commercialization of AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, if approved; ● the Collaborator may not commit sufficient resources to the development, marketing and distribution of AZSTARYS and any of our other products covered under the AZSTARYS License Agreement, as applicable; ● disagreements with the Collaborator, including disagreements over proprietary rights, contract interpretation or the preferred course of development or commercialization, might cause delays or termination of the development or commercialization of AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, as applicable, might lead to additional responsibilities for us with respect to AZSTARYS or any of our other products covered under the AZSTARYS License Agreement, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● the Collaborator may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectu al property or proprietary information or expose us to potential litigation; ● the Collaborator may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● the license agreements may be terminated by the Collaborator under specified circumstances and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of AZSTARYS or any of our other products covered under the AZSTARYS License Agreement.
Our ability to generate revenue from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. 48 Table of Contents Our collaboration with Commave, or Collaborator, poses the following risks to us: ● the Collaborator has significant discretion in determining the efforts and resources that they wil l apply to these collaborations; ● the Collaborator may not perform their obligations as expected; ● the Collaborator may not pursue commercialization of AZSTARYS, any of our product candidates covered under the AZSTARYS License Agreement, if approved, or may elect not to continue or renew commercialization programs based on post-approval clinical trial results, changes in a Collaborator's strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● the Collaborator could independently develop, or develop with third parties, products that compete directly or indirectly with AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, as applicable, if the Collaborator believes that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ● AZSTARYS, any of our other products covered under the AZSTARYS License Agreement, if approved, may be viewed by the Collaborator as competitive with their own product candidates or products, which may cause the Collaborator to cease to devote resources to the commercialization of AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, if approved; ● the Collaborator may not commit sufficient resources to the development, marketing and distribution of AZSTARYS and any of our other products covered under the AZSTARYS License Agreement, as applicable; ● disagreements with the Collaborator, including disagreements over proprietary rights, contract interpretation or the preferred course of development or commercialization, might cause delays or termination of the development or commercialization of AZSTARYS, or any of our other products covered under the AZSTARYS License Agreement, as applicable, might lead to additional responsibilities for us with respect to AZSTARYS or any of our other products covered under the AZSTARYS License Agreement, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● the Collaborator may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectu al property or proprietary information or expose us to potential litigation; ● the Collaborator may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● the license agreements may be terminated by the Collaborator under specified circumstances and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of AZSTARYS or any of our other products covered under the AZSTARYS License Agreement.
Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
We cannot guarantee that we or Corium will be able to successfully commercialize OLPRUVA or AZSTARYS to any certain level, or any of the product candidates subject to the AZSTARYS License Agreement, even if approved, or that we will ever receive any additional payments under the AZSTARYS License Agreement from the commercial sales of AZSTARYS or any future payments under the AZSTARYS License Agreement.
We cannot guarantee that we or Corium will be able to successfully commercialize OLPRUVA, MIPLYFFA, or AZSTARYS to any certain level, or any of the product candidates subject to the AZSTARYS License Agreement, even if approved, or that we will ever receive any additional payments under the AZSTARYS License Agreement from the commercial sales of AZSTARYS or any future payments under the AZSTARYS License Agreement.
In addition, we cannot be sure that our existing coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. 71 Table of Contents Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, policies, standards and other obligations related to data privacy or security could lead to government enforcement actions (which could include civil or criminal fines or penalties), a disruption of our clinical trials or commercialization of our products, private litigation, other liabilities, and/or adverse publicity.
In addition, we cannot be sure that our existing coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. 66 Table of Contents Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, policies, standards and other obligations related to data privacy or security could lead to government enforcement actions (which could include civil or criminal fines or penalties), a disruption of our clinical trials or commercialization of our products, private litigation, other liabilities, and/or adverse publicity.
Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and ethics committees or IRBs at the medical institutions where the clinical trials are conducted.
Clinical trials must be conducted in accordance with the FDA, the EMA and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and ethics committees or IRBs at the medical institutions where the clinical trials are conducted.
If any of the physicians or other healthcare providers or entities with whom we currently, or expect to, do business, including future collaborators, is found not to be in compliance with applicable laws, they and we may be subject to significant penalties and potential exclusion from participation in healthcare programs as a result of their non-compliance. 67 Table of Contents Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of our product candidates and increase the cost to commercialize our approved products, and any of our product candidates that may be approved in the future and affect the prices thereof.
If any of the physicians or other healthcare providers or entities with whom we currently, or expect to, do business, including future collaborators, is found not to be in compliance with applicable laws, they and we may be subject to significant penalties and potential exclusion from participation in healthcare programs as a result of their non-compliance. 62 Table of Contents Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of our product candidates and increase the cost to commercialize our approved products, and any of our product candidates that may be approved in the future and affect the prices thereof.
Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law or any term of our contracts that has the effect of discouraging, delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 77 Table of Contents If we engage in acquisitions to grow our business, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations and cause our stock price to decline.
Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law or any term of our contracts that has the effect of discouraging, delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 72 Table of Contents If we engage in acquisitions to grow our business, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations and cause our stock price to decline.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA, the EMA, or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
We cannot guarantee that we, Corium, or any other collaborators will be able to successfully develop, manufacture or commercialize our approved products, or product candidates, if approved, or that we will ever receive any future payments under the AZSTARYS License Agreement.
We cannot guarantee that we or any other collaborators will be able to successfully develop, manufacture or commercialize our approved products, or product candidates, if approved, or that we will ever receive any future payments under the AZSTARYS License Agreement.
In order to develop and commercialize our products in the EU, we would need to comply with the national requirements related to controlled substances which is costly and may affect our development plans in the EU. 38 Table of Contents Our products and product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.
In order to develop and commercialize our products in the EU, we would need to comply with the national requirements related to controlled substances which is costly and may affect our development plans in the EU. 40 Table of Contents Our products and product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.
Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which could cause our value to decline and limit our ability to obtain additional financing. 36 Table of Contents Interim, topline, or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which could cause our value to decline and limit our ability to obtain additional financing. 38 Table of Contents Interim, topline, or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our approved products, or any of our product candidates, if approved. 57 Table of Contents Our approved products, or any of our product candidates that may receive marketing approval, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our approved products, or any of our product candidates, if approved. 30 Table of Contents Our approved products, or any of our product candidates that may receive marketing approval, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
The FDA or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.
The FDA, the EMA, or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.
Despite the implementation of security measures, our information technology systems and data, and those of our CROs and other third parties on which we rely, are vulnerable to system failure, interruption, compromise, attack or damage from several sources, such as data corruption; breakdown; malicious human acts; malware (such as ransomware); malicious code (such as computer viruses or worms); fraudulent activity; employee misconduct, theft or error; denial-of-service attacks; public health epidemics; cyber-attacks by sophisticated nation-state and nation-state supported actors; natural disasters; terrorism; war (such as the current situation with Ukraine and Russia); and telecommunication and electrical failures.
Despite the implementation of security measures, our information technology systems and data, and those of our CROs and other third parties on which we rely, are vulnerable to system failure, interruption, compromise, attack or damage from several sources, such as data corruption; breakdown; malicious human acts; malware (such as ransomware); misconfigurations, “bugs” or other vulnerabilities,; malicious code (such as computer viruses or worms); fraudulent activity; employee misconduct, theft or error; denial-of-service attacks; public health epidemics; cyber-attacks by sophisticated nation-state and nation-state supported actors; natural disasters; terrorism; war (such as the current situation with Ukraine and Russia); and telecommunication and electrical failures.
Any of these events could prevent us from achieving or maintaining market acceptance of our products or any of our product candidates, if approved, and could seriously harm our business. 39 Table of Contents We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Any of these events could prevent us from achieving or maintaining market acceptance of our products or any of our product candidates, if approved, and could seriously harm our business. 41 Table of Contents We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Violations of the FFDCA relating to the promotion of prescription drugs may lead to a number of actions and penalties, including warning letters, cyber letters, or untitled letters, adverse publicity, the requirement for dear-health-care-provider letters or other corrective information, fines and other monetary penalties, civil or criminal prosecution, including False Claims Act liability, restrictions on our operations and other operating requirements through consent decrees or corporate integrity agreements, debarment, exclusion from participation in federal health care programs and refusal of government contracts or future orders under existing contracts, among other consequences. 64 Table of Contents In addition, later discovery of previously unknown adverse events or other problems with our prodrug products, including those related to manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may have negative consequences, including: ● adverse inspectional findings; ● restrictions on such prodrug products, distribution, manufacturers or manufacturing processes; ● restrictions on the labeling or mark eting of a drug; ● additional warnings or other restrictions on the product ’s indicated use, label, or marketing; ● issuance of safety alerts, dear-healthcare-provider letters, press releases or other communications containing warnings regarding the product; ● requirement to establish or modify a REMS or similar risk management programs; ● requirement to conduct post-marketing studies or surveillance; ● restrictions on drug distribution or use; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters; ● recall or withdrawal of the prodrug products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit and other delays; ● clinical holds, or the suspension or termination of ongoing clinical trials; ● fines, restitution or disgorgement of profits or revenue; ● suspension or withdrawal of marketing approvals or other permits or voluntary suspension of marketing; ● refusal to permit the import or export of our prodrug products; ● reputational harm; ● refusal of government contracts or future orders under existing contracts, exclusion from participation in federal health care programs, and corporate integrity agreements; ● product seizure or detention; or ● injunctions or the imposition of civil or criminal penalties, including False Claims Act liability. 65 Table of Contents Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance, and with requi rements related to the development of drugs for the pediatric population, can also result in significant financial penalties.
Violations of the FFDCA relating to the promotion of prescription drugs may lead to a number of actions and penalties, including warning letters, cyber letters, or untitled letters, adverse publicity, the requirement for dear-health-care-provider letters or other corrective information, fines and other monetary penalties, civil or criminal prosecution, including False Claims Act liability, restrictions on our operations and other operating requirements through consent decrees or corporate integrity agreements, debarment, exclusion from participation in federal health care programs and refusal of government contracts or future orders under existing contracts, among other consequences. 59 Table of Contents In addition, later discovery of previously unknown adverse events or other problems with our products, including those related to manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may have negative consequences, including: ● adverse inspectional findings; ● restrictions on such products, distribution, manufacturers or manufacturing processes; ● restrictions on the labeling or mark eting of a drug; ● additional warnings or other restrictions on the product ’s indicated use, label, or marketing; ● issuance of safety alerts, dear-healthcare-provider letters, press releases or other communications containing warnings regarding the product; ● requirement to establish or modify a REMS or similar risk management programs; ● requirement to conduct post-marketing studies or surveillance; ● restrictions on drug distribution or use; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters; ● recall or withdrawal of the prodrug products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit and other delays; ● clinical holds, or the suspension or termination of ongoing clinical trials; ● fines, restitution or disgorgement of profits or revenue; ● suspension or withdrawal of marketing approvals or other permits or voluntary suspension of marketing; ● refusal to permit the import or export of our products; ● reputational harm; ● refusal of government contracts or future orders under existing contracts, exclusion from participation in federal health care programs, and corporate integrity agreements; ● product seizure or detention; or ● injunctions or the imposition of civil or criminal penalties, including False Claims Act liability. 60 Table of Contents Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requi rements related to the development of drugs for the pediatric population, can also result in significant financial penalties.
The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.
The FDA, the EMA, or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. 37 Table of Contents Our approved products and certain of our product candidates contain controlled substances, the manufacture, use, sale, importation, exportation, prescribing and distribution of which are subject to regulation by the DEA and other regulatory agencies.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. 39 Table of Contents Certain of our approved products and product candidates contain controlled substances, the manufacture, use, sale, importation, exportation, prescribing and distribution of which are subject to regulation by the DEA and other regulatory agencies.
Acquisitions involve many and diverse risks and uncertainties, including problems integrating the purchased operations or assets as well as unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries, and we may fail to successfully integrate acquired companies, such as Orphazyme, or retain key personnel from the acquired company.
Acquisitions involve many and diverse risks and uncertainties, including problems integrating the purchased operations or assets as well as unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries, and we may fail to successfully integrate acquired companies, such as Acer, or retain key personnel from the acquired company.
If we determine that an ownership change has occurred and our ability to use our historical net operating loss carryforwards is materially limited, it would harm our future operating results by increasing our future tax obligations. As of December 31, 2023, we maintain a full valuation allowance over our deferred tax assets for financial reporting purposes.
If we determine that an ownership change has occurred and our ability to use our historical net operating loss carryforwards is materially limited, it would harm our future operating results by increasing our future tax obligations. As of December 31, 2024, we maintain a full valuation allowance over our deferred tax assets for financial reporting purposes.
In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our owned and licensed patents and/or patent applications. 52 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our owned and licensed patents and/or patent applications. 53 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
Similarly, some countries, notably in Europe, also have post-grant opposition proceedings or nullity proceedings that can result in changes in scope or cancellation of patent claims. 54 Table of Contents We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.
Similarly, some countries, notably in Europe, also have post-grant opposition proceedings or nullity proceedings that can result in changes in scope or cancellation of patent claims. 55 Table of Contents We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.
In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to streamlined product development or earlier approval. 33 Table of Contents Clinical drug development involves a lengthy and expensive process, with an uncertain outcome.
In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to streamlined product development or earlier approval. 32 Table of Contents Clinical drug development involves a lengthy and expensive process, with an uncertain outcome.
The revisions may however have a significant impact on the pharmaceutical industry and our business in the long term. 69 Table of Contents We cannot be sure whether additional legislative changes will be enacted, or whether the FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be.
The revisions may, however, have a significant impact on the pharmaceutical industry and our business in the long term. 64 Table of Contents We cannot be sure whether additional legislative changes will be enacted, or whether the FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. 74 Table of Contents Risks Related to Ownership of Our Common Stock and Our Status as a Public Company The trading price of the shares of our common stock is likely to be volatile, and purchasers of our common stock could incur substantial losses.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. 69 Table of Contents Risks Related to Ownership of Our Common Stock and Our Status as a Public Company The trading price of the shares of our common stock is likely to be volatile, and purchasers of our common stock could incur substantial losses.
ITEM 1A. RISK FACTORS. You should carefully consider all the risk factors and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock.
You should carefully consider all the risk factors and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock.
Our ability to generate revenue from our approved products and any of our product candidates, if approved, will depend heavily on their successful development and eventual commercialization.
Our ability to generate revenue from our approved products and any of our product candidates, if approved, will depend heavily on their successful development and commercialization.
If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted. 80 Table of Contents Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations .
If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted. 75 Table of Contents Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations .
There has been increasing public focus by investors, patients, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability.
There has been increasing public focus by investors, patients, environmental activists, the media and governmental and non-governmental organizations on a variety of environmental, social and other sustainability matters. We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability.
Among the provisions of the ACA of importance to our potential product candidates are the following: ● an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in c ertain government healthcare programs; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded drugs and generic drugs, respectively; ● expansion of healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for non-compliance; ● establishment of a new and distinct metho dology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● a new Medicare Part D coverage gap discount program, in which manufacturers mu st agree to offer 70% point-of-sale discounts off negotiated prices (generally as negotiated between the Medicare Part D plan and the pharmacy) of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● extension of manufacturers ’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations and extension of the inflation percentage applicable to existing branded drugs to new formulations for purposes of computing the inflation penalty component of Medicaid rebates; ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● the new req uirements under the federal Open Payments program and its implementing regulations; ● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. 68 Table of Contents Since its enactment, there have been executive, judicial and congressional challenges to certain aspects of the ACA.
Among the provisions of the ACA of importance to our potential product candidates are the following: ● an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in c ertain government healthcare programs; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded drugs and generic drugs, respectively; ● expansion of healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for non-compliance; ● establishment of a new and distinct metho dology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● a new Medicare Part D coverage gap discount program (which was replaced in 2025), in which manufacturers were required to offer 70% point-of-sale discounts off negotiated prices (generally as negotiated between the Medicare Part D plan and the pharmacy) of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● extension of manufacturers ’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations and extension of the inflation percentage applicable to existing branded drugs to new formulations for purposes of computing the inflation penalty component of Medicaid rebates; ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● the new req uirements under the federal Open Payments program and its implementing regulations; ● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. 63 Table of Contents Since its enactment, there have been executive, judicial and congressional challenges to certain aspects of the ACA.
Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities.
Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authority.
Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans. 35 Table of Contents If we experience delays or difficulties in the enrollment of subjects in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans. 37 Table of Contents If we experience delays or difficulties in the enrollment of subjects in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
This reliance on third-party manufacturers increases the risk that we will not have sufficient quantities of SDX, sodium phenylbutyrate and arimoclomol, or such quantities at an acceptable cost, which could delay, prevent or impair commercialization or development efforts. 45 Table of Contents We do not have any manufacturing facilities.
This reliance on third-party manufacturers increases the risk that we will not have sufficient quantities of SDX, sodium phenylbutyrate and arimoclomol, or such quantities at an acceptable cost, which could delay, prevent or impair commercialization or development efforts. 46 Table of Contents We do not have any manufacturing facilities.
We will also face competition in recruiting and retaining qualified personnel and establishing clinical trial sites and subject enrollment in clinical trials. 59 Table of Contents We may not be able to obtain either five-year FDA regulatory exclusivity as a new chemical entity or three-year FDA regulatory exclusivity.
We will also face competition in recruiting and retaining qualified personnel and establishing clinical trial sites and subject enrollment in clinical trials. 32 Table of Contents We may not be able to obtain either three-year FDA regulatory exclusivity or five-year FDA regulatory exclusivity as a new chemical entity.
These and other risks associated with our international operations may compromise our ability to achieve or maintain profitability. 63 Table of Contents Our approved products are, and any of our product candidates for which we obtain marketing approval will remain subject to significant post-marketing regulatory requirements and oversight.
These and other risks associated with our international operations may compromise our ability to achieve or maintain profitability. 58 Table of Contents Our approved products are, and any of our product candidates for which we obtain marketing approval will remain subject to significant post-marketing regulatory requirements and oversight.
These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. These federal net operating loss carryforwards are fully reserved under a valuation allowance in the consolidated balance sheet as of December 31, 2023.
These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. These federal net operating loss carryforwards are fully reserved under a valuation allowance in the consolidated balance sheet as of December 31, 2024.
The success of our approved products and any of our product candidates will depend on several factors, including: ● successful completion of preclinical studies and requisite clinical trials; ● successful completion and achievement of endpoints in our clinical trials; ● demonstration that the risks involved with our approved products and any of our product candidates are outweighed by the benefits; ● successful development of our manufacturing processes for our approved products and for any of our product candidates, including entering into and maintaining arrangements with third-party manufacturers; ● successful completion of an FDA preapproval inspection of the facilities used to manufacture any of our product candidates for which we may submit an NDA; ● receipt of timely marketing approvals from applicable regulatory authorities, including, if applicable, the determination by the DEA of the controlled substance schedule for a product candidate, taking into account the recommendation of the FDA; ● obtaining differentiating claims in the labels for our product candidates; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our approved products and any of our product candidates and otherwise protecting our rights in our intellectual property portfolio; ● maintaining compliance with regulatory requirements, including cGMPs; ● launching commercial sales of our approved products, and any of our product candidates, if and when approved, whether alone or in collaboration with Corium or others; ● acceptance of our approved products and any of our product candidates, if approved, by patients, the medical community and third-party payors; ● competing effectively with other therapies; ● obtaining and maintaining healthcare coverage and adequate reimbursement; and ● maintaining a continued acceptable safety and efficacy profile of any of our products following approval. 30 Table of Contents Whether regulatory approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
The success of our approved products and any of our product candidates will depend on several factors, including: ● successful completion of preclinical studies and requisite clinical trials; ● successful completion and achievement of endpoints in our clinical trials; ● demonstration that the risks involved with our approved products and any of our product candidates are outweighed by the benefits; ● successful development of our manufacturing processes for our approved products and for any of our product candidates, including entering into and maintaining arrangements with third-party manufacturers; ● successful completion of an FDA or European pre-approval inspection of the facilities used to manufacture any of our product candidates for which we may submit an NDA or an MAA; ● receipt of timely marketing approvals from applicable regulatory authorities, including, if applicable, the determination by the DEA of the controlled substance schedule for a product candidate, taking into account the recommendation of the FDA; ● obtaining differentiating claims in the labels for our product candidates; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our approved products and any of our product candidates and otherwise protecting our rights in our intellectual property portfolio; ● maintaining compliance with regulatory requirements, including cGMPs; ● launching commercial sales of our approved products, and any of our product candidates, if and when approved, whether alone or in collaboration with others; ● acceptance of our approved products and any of our product candidates, if approved, by patients, the medical community and third-party payors; ● competing effectively with other therapies; ● obtaining and maintaining healthcare coverage and adequate reimbursement; and ● maintaining a continued acceptable safety and efficacy profile of any of our products following approval. 33 Table of Contents Whether regulatory approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
Our approved products and certain of our product candidates are regulated as controlled substances, which are subject to state, federal, and foreign laws and regulations regarding their manufacture, use, sale, importation, exportation, and distribution. Among other things, controlled substances are regulated under the federal Controlled Substances Act of 1970, or CSA, and regulations of the DEA.
Certain of our approved products and certain of our product candidates are regulated as controlled substances, which are subject to state, federal, and foreign laws and regulations regarding their manufacture, use, sale, importation, exportation, and distribution. Among other things, controlled substances are regulated under the Controlled Substances Act of 1970 and regulations of the DEA.
In addition, the provisions of our termination agreement with Aquestive may delay or prevent a change in control of our company.
In addition, the provisions of our termination agreement with Aquestive Therapeutics ("Aquestive") may delay or prevent a change in control of our company.
Failure to obtain regulatory marketing approval of our product candidates in any indication will prevent us from commercializing those product candidates for that indication, and our ability to generate revenue will be impaired. 32 Table of Contents Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Failure to obtain regulatory marketing approval of our product candidates in any indication will prevent us from commercializing those product candidates for that indication, and our ability to generate revenue will be impaired. 35 Table of Contents Disruptions at the FDA, the EMA and other government agencies, including those caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of several factors.
As a result, our ability to grow our business and compete in the market may be harmed. 53 Table of Contents Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
As a result, our ability to grow our business and compete in the market may be harmed. 54 Table of Contents Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 55 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 56 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
If we do not successfully manage these transitions, it could be viewed negatively by our customers, employees, investors, and other third-party partners, and could have an adverse impact on our business and results of operations.
If we do not successfully manage executive transitions, it could be viewed negatively by our customers, employees, investors, and other third-party partners, and could have an adverse impact on our business and results of operations.
Some of these events could be the basis for FDA or foreign regulatory authorities action, including injunction, recall, seizure or total or partial suspension of production. 46 Table of Contents The facilities used by our contract manufacturers to manufacture our approved products, and any of our product candidates are subject to review by the FDA pursuant to inspections that will be conducted after we submit our marketing application to the FDA, and such inspections could result in findings that lead to failure to obtain FDA approval of such marketing applications.
Some of these events could be the basis for FDA or foreign regulatory authorities action, including injunction, recall, seizure or total or partial suspension of production. 47 Table of Contents The facilities used by our contract manufacturers to manufacture our approved products, and any of our product candidates are subject to review by the FDA or comparable foreign regulatory authorities pursuant to inspections that will be conducted after we submit our marketing application to the FDA or the EMA, and such inspections could result in findings that lead to failure to obtain FDA or comparable foreign approval of such marketing applications.
If our development efforts for our product candidates, including our efforts to obtain regulatory approval, are not successful for their planned indications or are delayed, or if adequate demand for our product candidates that are approved for marketing, if any, is not generated, our business will be harmed. 31 Table of Contents The success of our product candidates will depend on the receipt and maintenance of regulatory approval and the issuance and maintenance of such approval is uncertain and subject to a number of risks, including the following: ● the FDA or comparable foreign regulatory authorities, institutional review boards, or IRBs, or ethics committees may disagree with the design or conduct of our clinical trials; ● the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing app roval or for us to receive approval for claims that are necessary for commercialization ; ● the dosing in a particular clinical trial may not be at an optimal level; ● patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; ● the data collected from clinical trials may not be sufficient to support submissions to regulatory authorities or to obtain regulatory approval in the United States or elsewhere; ● th e FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies or may later suspend or withdraw such approval; ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval; and ● even if we obtain marketing approval in one or more countries, future safety or other issues could result in the suspension or withdrawal of regulatory approval in such countries.
If our development efforts for our product candidates, including our efforts to obtain regulatory approval, are not successful for their planned indications or are delayed, or if adequate demand for our product candidates that are approved for marketing, if any, is not generated, our business will be harmed. 34 Table of Contents The success of our product candidates will depend on the receipt and maintenance of regulatory approval and the issuance and maintenance of such approval is uncertain and subject to a number of risks, including the following: ● the FDA, the EMA, or comparable foreign regulatory authorities, institutional review boards, or IRBs, or ethics committees may disagree with the design or conduct of our clinical trials; ● the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA, the EMA, or other regulatory agencies for marketing approval or for us to receive approval for claims that are necessary for commercialization; ● the dosing in a particular clinical trial may not be at an optimal level; ● patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; ● the data collected from clinical trials may not be sufficient to support submissions to regulatory authorities or to obtain regulatory approval in the United States or elsewhere; ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies or may later suspend or withdraw such approval; ● the approval policies or regulations of the FDA, the EMA and other EU institutions, or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval; and ● even if we obtain marketing approval in one or more countries, future safety or other issues could result in the suspension or withdrawal of regulatory approval in such countries.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product 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.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price increase reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions. The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate revenue, and could require us to expend significant time and resources in response and could generate negative publicity.
Similarly, failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions. The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate revenue, and could require us to expend significant time and resources in response and could generate negative publicity.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new manufacturer discounting program (which began in 2025).
In order to market and sell our products in the European Union and any other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval.
In order to market and sell our products in the EU and any other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval.
The issuance of additional shares of our common stock or equity securities convertible into shares of our common stock may cause your ownership interest to be diluted, and the market price of our common stock may fall or be materially and adversely effected.
The issuance of additional shares of our common stock or equity securities convertible into shares of our common stock may cause your ownership interest to be diluted, and the market price of our common stock may fall or be materially and adversely affected.
If we are not able to obtain required regulatory approvals for any of our product candidates, or the approved labels are not sufficiently differentiated from other competing products, we will not be able to commercialize them and our ability to generate revenue or profits or to raise future capital could be limited.
Risks Related to the Development of Our Product Candidates If we are not able to obtain required regulatory approvals for any of our product candidates, or the approved labels are not sufficiently differentiated from other competing products, we will not be able to commercialize them and our ability to generate revenue or profits or to raise future capital could be limited.
We currently generate minimal commercial revenue from the sale of our approved products and we may never be able to successfully commercialize a product candidate.
We currently generate minimal commercial revenue from the sale of our approved products, OLPRUVA and MIPLYFFA, and we may never be able to successfully commercialize a product candidate.
These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.
These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol because of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.
Furthermore, it is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act or any newly enacted federal tax legislation.
Furthermore, it is uncertain if and to what extent various states will conform or continue to conform to the Tax Cuts and Jobs Act or any subsequent or newly enacted federal tax legislation.
Under the EU Patent Package as currently proposed, we will have the right to opt our patents out of the UPC over the first seven years of the court’s existence, but doing so may preclude us from realizing the benefits of the new unified court.
Under the EU Patent Package, we will have the right to opt our patents out of the UPC over the first seven years of the court’s existence, but doing so may preclude us from realizing the benefits of the new unified court.
If Corium or a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our drug development or commercialization program could be delayed, diminished or terminated. 48 Table of Contents If we are not able to establish collaborations for our product candidates, we may have to alter our development and commercialization plans.
If Commave or a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our drug development or commercialization program could be delayed, diminished or terminated. 49 Table of Contents If we are not able to establish collaborations for our product candidates, we may have to alter our development and commercialization plans.
Since shares of our common stock were sold in our initial public offering in April 2015 at a price of $176.00 per share (adjusted to give effect to the 1-for-16 reverse stock split), our stock price has ranged from a low of $1.94 to a high of $418.40 through April 1, 2024.
Since shares of our common stock were sold in our initial public offering in April 2015 at a price of $176.00 per share (adjusted to give effect to the 1-for-16 reverse stock split), our stock price has ranged from a low of $1.94 to a high of $418.40 through March 12, 2025.
For OLPRUVA for oral suspension in the U.S. for the treatment of certain patients with UCDs, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements.
For OLPRUVA for oral suspension in the U.S. for the treatment of certain patients with UCDs, and for MIPLYFFA for orally-delivered treatment for NPC, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements.
In June 2021, at the annual meeting of stockholders, the stockholders approved the Amended and Restated 2014 Equity Incentive Plan, which, among other things, added 4,900,000 shares to the equity plan pool, and the employee stock purchase plan, or the 2021 ESPP, which allows for employees to purchase up to 1,500,000 million shares of stock through the plan.
In June 2021, at the annual meeting of stockholders, the stockholders approved the Amended and Restated 2014 Equity Incentive Plan, which, among other things, added 4,900,000 shares to the equity plan pool, and the employee stock purchase plan, or the 2021 ESPP, which allows eligible employees to purchase up to an aggregate of 1,500,000 shares of stock through the plan.
In the future, we may identify additional material weaknesses or significant deficiencies, and we may not be able to remediate them in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404.
If we identify material weaknesses or significant deficiencies, we may not be able to remediate them in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404.
Our competitors may develop or market drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products or product candidates and these competitors may also have significantly more resources than us and be more successful than us in manufacturing and marketing their products.
Our competitors may develop or market drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products or product candidates and these competitors may also have significantly more resources than us and be more successful than us in manufacturing and marketing their products. See Part I. Item 1.
The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product.
In addition, the FDA or the EMA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product.
In addition, on and effective July 15, 2020, we amended and restated our amended and restated bylaws, or the Bylaws, pursuant to which: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (A) any derivative action or proceeding brought on behalf of us; (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees, to us or our stockholders; (C) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees, arising out of or pursuant to any provision of the DGCL our amended and restated certificate of incorporation or our Bylaws (as each may be amended from time to time); (D) any action or proceeding to interpret, apply, enforce or determine 78 Table of Contents the validity of our amended and restated certificate of incorporation or our Bylaws (including any right, obligation, or remedy thereunder); (E) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (F) any action or proceeding asserting a claim against us or any of our directors, officers or other employees, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, provided that this provision shall not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction; (ii) unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; and (iii) any person or entity holding, owning or otherwise acquiring any interest in any security of us shall be deemed to have notice of and consented to the provisions of the Bylaws.
In addition, our amended and restated bylaws, or the Bylaws, provide that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (A) any derivative action or proceeding brought on behalf of us; (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees, to us or our stockholders; (C) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees, arising out of or pursuant to any provision of the DGCL our amended and restated certificate of incorporation or our Bylaws (as each may be amended from time to time); (D) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our Bylaws (including any right, obligation, or remedy thereunder); (E) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (F) any action or proceeding asserting a claim against us or any of our directors, officers or other employees, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, provided that this provision shall not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction; (ii) unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; and (iii) any person or entity holding, owning or otherwise acquiring any interest in any security of us shall be deemed to have notice of and consented to the provisions of the Bylaws. 73 Table of Contents These choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
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Item 1C. Cybersecurity Item 2. Properties 77 Item 3. Legal Proceedings 77 Item 4. Mine Safety Disclosures 77 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 81 Item 6. [Reserved] 81 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 82 Item 7A.
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We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF"). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
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Quantitative and Qualitative Disclosures About Market Risk 94 Item 8. Financial Statements and Supplementary Data 94 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 94 Item 9A. Controls an d Procedures 94
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Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
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Our cybersecurity risk management program includes: ● risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; ● a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; ● the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; ● cybersecurity awareness training of our employees, incident response personnel, and senior management; ● a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and ● a third-party risk management process for service providers, suppliers, and vendors.
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We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. 81 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee ("Committee") oversight of cybersecurity and other information technology risks.
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The Committee oversees management’s implementation of our cybersecurity risk management program. The Committee receives periodic reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Committee reports to the full Board regarding its activities, including those related to cybersecurity.
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The full Board also receives briefings from management on our cyber risk management program. Board members receive presentations on cybersecurity topics from our internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies. Our management team, including R.
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LaDuane Clifto n, Chief Financial Officer, Secretary and Treasurer, i s responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our r etained external cybersecurity consultants.
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Our management team includes IT staff with more than 40 years of combined experience in various roles involving managing information security, managing privacy and data protection, evaluating cybersecurity risks, developing cybersecurity strategy, and implementing cybersecurity programs.
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Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we occupy leased office space in Newton, Massachusetts and Copenhagen, Denmark, as well as leased laboratory space in Coralville, Iowa and Blacksburg, Virginia.We believe that our facilities are adequate for our current needs.
Biggest changeWe believe that our facilities are adequate for our current needs.
ITEM 2. PROPERTIES As of December 31, 2023, we have leased approximately 17,000 square feet of headquarters office space in Celebration, Florida, comprised of two contiguous office suites, under a non-cancelable lease agreement that expires in August 2025 and February 2026, respectively.
ITEM 2. PROPERTIES As of December 31, 2024, we have leased approximately 17,000 square feet of headquarters office space in Celebration, Florida, comprised of two contiguous office suites, under non-cancelable lease agreements that expire in August 2025 and February 2026, respectively.
One such office suite, which is approximately 6,300 square feet and has an expiration date of February 2026, is subleased to a third party. We have the right to extend the term of the lease for two successive five-year terms upon expiration.
One such office suite, which is approximately 6,300 square feet and has an expiration date of February 2026, is subleased to a third party. We have the right to extend the term of the lease for two successive five-year terms upon expiration. In addition, we occupy leased office space in Newton, Massachusetts and Copenhagen, Denmark.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business. Following the Merger, we are now a party to certain legal proceedings to which Acer had previously been named as a party.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business.
Other than as disclosed in Note H of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe there is no litigation pending that would reasonably be expected to, individually or in the aggregate, have a material adverse effect on our results of operations or financial condition.
Other than as disclosed in Note K of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe there is no litigation pending that would reasonably be expected to, individually or in the aggregate, have a material adverse effect on our results of operations or financial condition.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeClifton served in a variety of positions with The LGL Group, Inc., a publicly-traded producer of industrial and commercial products and services, from August 2009 to February 2015, including chief financial officer, secretary and treasurer from December 2012 to February 2015, chief accounting officer and secretary from March 2010 to December 2012, and corporate controller from August 2009 to March 2010.
Biggest changePreviously, he served as our Vice President of Finance and Corporate Controller from April 2015 to June 2015. From August 2009 to February 2015, Mr. Clifton served in a variety of positions, including chief financial officer, secretary and treasurer, with The LGL Group, Inc., a public holding engaged in services, merchant investment and manufacturing business activities.
Schafer served as vice president and oncology therapeutic area head, global marketing and strategy at Astellas Pharmaceuticals, where he was responsible for building the company's global oncology franchise, and also held senior roles at Takeda Pharmaceuticals, Accenture (formerly Anderson Consulting), G. D. Searle & Co. (later acquired by Pfizer) and Cognia Corporation.
Schafer served as vice president and oncology therapeutic area head, global marketing and strategy at Astellas Pharmaceuticals, where he was responsible for building the company’s global oncology franchise, and also held senior roles at Takeda Pharmaceuticals, Accenture (formerly Anderson Consulting), G. D. Searle & Co. (later acquired by Pfizer) and Cognia Corporation. Mr.
She received an MBA, emphasis in Finance, from Georgia State University, and a BBA, emphasis in Accounting, from Valdosta State University. Our Board believes that Ms. Favorito's deep experience in corporate management, finance and life science as chief financial officer of multiple public companies provides her with the qualifications and skills to serve as a director of our Company.
She received an MBA, emphasis in Finance, from Georgia State University, and a BBA, emphasis in Accounting, from Valdosta State University. Our Board believes that Ms. Favorito's extensive experience in corporate management, finance and life science as chief financial officer of multiple public companies provides her with the qualifications and skills to serve as a director of our Company.
From April 2009 through July 2019, he served as the chief financial officer of Home Instead Senior Health Care, a global leader in in-home health care, where he oversaw finance, subsidiary companies and the financial arm of an international subsidiary. He previously was a partner of Lutz & Company, a regional accounting firm from 1996 to 2009. Mr.
From April 2009 through July 2019, he served as the chief financial officer of Home Instead Senior Health Care, a global leader in in-home health care, where he oversaw finance, subsidiary companies and the financial arm of an international subsidiary. He previously was an equity member of Lutz & Company, a regional accounting firm, from 1996 to 2009. Mr.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report on Form 10-K. Name Age Position Executive Officers Neil F. McFarlane, M.S. 51 President, Chief Executive Officer, and Director R.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report on Form 10-K. Name Age Position Executive Officers Neil F. McFarlane 52 President, Chief Executive Officer, and Director R.
Prior to that at Mallinckrodt Pharmaceuticals, he served as chief strategy and business officer from September 2019 to December 2020 and senior vice president of business development and general manager from January 2018 to September 2019. Prior to Mallinckrodt, Mr.
Prior to that, he served as Mallinckrodt’s chief strategy and business officer from September 2019 to December 2020 and senior vice president of business development and general manager from January 2018 to September 2019. Prior to Mallinckrodt, Mr.
Quartel served as the group vice president of global medical affairs at BioMarin Pharmaceuticals Inc., where he spearheaded the launch of six treatments for rare diseases or genetic disorders, including KUVAN, VIMIZIM, and BRINEURA. Before his tenure at BioMarin, Dr.
Quartel served as the group vice president of global medical affairs at BioMarin Pharmaceuticals Inc., where he spearheaded the launch of six treatments for rare diseases or genetic disorders. Before his tenure at BioMarin, Dr.
Quartel oversaw clinical development and held senior medical leadership positions at Astellas Pharma, Inc. from January 2004 until September 2006, at Chiltern, a specialist contract research organization, from September 2006 to July 2007, and ICON Clinical Research from August 2001 to January 2004. In addition, Dr.
Quartel oversaw clinical development and held senior medical leadership positions at Chiltern, a specialist contract research organization, from September 2006 to July 2007, at Astellas Pharma, Inc., a global life sciences company, from January 2004 until September 2006, and at ICON Clinical Research., a healthcare intelligence and clinical research organization, from August 2001 to January 2004. In addition, Dr.
From August 2008 to August 2009, Mr. Clifton served as the chief financial officer of a21, Inc., a publicly-traded holding company with businesses in stock photography and the online retail and manufacturer of framed art, and as its corporate controller from March 2007 to August 2008. Mr.
From August 2008 to August 2009, Mr. Clifton served as the chief financial officer of a21, Inc., a public holding company with businesses in stock photography and the online retail and manufacturer of framed art, and as its corporate controller from March 2007 to August 2008. From August 2004 to March 2007, Mr. Clifton served as an auditor with KPMG.
Bode’s past corporate experience includes many years serving as a key executive and/or financial officer for leading public companies Prior to the founding of Aerie Investments, LLC, Mr. Bode was the chief financial officer of the Tribune Publishing Company from October 2013 to January 2015. From January 2011 to September 2013, Mr.
Bode’s past corporate experience includes many years serving as a key executive and/or financial officer for leading public companies. He was the chief financial officer of the Tribune Publishing Company from October 2013 to January 2015.
Bode has been the owner and managing director of Aerie Investments, LLC, an investment company focused on assisting legacy media companies and digital media start-ups with business development, strategic initiatives, and raising capital. Mr.
Since February 2015, Mr. Bode has been the owner and managing director of Aerie Investments, LLC, a management consulting and investment company focused on assisting legacy media companies and digital media start-ups with business development and strategic initiatives. Mr.
Mr. Anderson has served as chief executive officer and director of SwanBio Therapeutics since September 2019 until semi-retirement in October 2023, and subsequently resigned his board directorship in March 2024. Prior to that, he served as the chief commercial strategy officer of Sage Therapeutics, Inc. from 2014 to 2018. Between 2004 and 2014, Mr.
Anderson served as chief executive officer and director of SwanBio Therapeutics, a clinical-stage gene therapy company, from September 2019 until his semi-retirement in October 2023; subsequently, he resigned his board directorship in March 2024. Prior to that, he served as the chief commercial strategy officer of Sage Therapeutics, Inc., a biopharmaceutical company, from 2014 to 2018.
Clifton received his B.B.A. and M.B.A. degrees from the University of North Florida and is a certified public accountant in the state of Florida. Joshua Schafer, M.S., MBA Joshua Schafer, M.S., MBA, has served as our chief commercial officer and executive vice president, business development since January 2023. Mr.
Clifton is a certified public accountant in the state of Florida and received his BBA in Accounting and MBA from the University of North Florida, as well as a Graduate Certificate in Corporate Finance from Harvard University. Joshua Schafer Joshua Schafer has served as our Chief Commercial Officer and Executive Vice President, Business Development, since January 2023. Mr.
Schafer brings to Zevra over 25 years of pharmaceutical commercial, new product development and merger and acquisition (“M&A”) experience. Mr. Schafer previously served as senior vice president and general manager of the Autoimmune and Rare Disease business at Mallinckrodt Pharmaceuticals from December 2020 to November 2022.
Schafer has over 25 years of pharmaceutical commercial, new product development and M&A experience. From December 2020 to November 2022, he served as senior vice president and general manager of the Autoimmune and Rare Disease business at Mallinckrodt Pharmaceuticals.
Prior to his current role, from July 2019 to December 2020 he served as the chief executive officer of Disarm Therapeutics, a biotechnology company that developed therapeutics for neurodegenerative diseases and that was acquired by Eli Lilly in October 2020. Before that, Dr.
From July 2019 to December 2020, he served as the chief executive officer of Disarm Therapeutics, a biotechnology company that developed therapeutics for both rare and prevalent neurodegenerative diseases, which was acquired by Eli Lilly in October 2020. From November 2016 to February 2019, Dr.
Shih was chief executive officer of Enzyvant Therapeutics from November 2016 to February 2019, where he led the company's cell/tissue-based therapy development for treating a rare immunological disease. He was also the executive vice president and head of research at Retrophin, Inc. where he worked on therapies for multiple disease indications. Dr.
Shih was chief executive officer of Enzyvant Therapeutics, where he led the company’s cell/tissue-based therapy development for treating a rare immunological disease. He was also the executive vice president and head of research at Retrophin, Inc., where he worked on therapies for multiple disease indications. Dr. Shih previously worked in management consulting at McKinsey & Company and L.E.K. Consulting, LLC.
Prior to that, he was the chief medical officer at Adamas Pharmaceuticals, a company focused on drug development for neurological diseases, from September 2020 until February 2022. From June 2017 until September 2020, Dr.
At Acer, Dr. Quartel played a key role in guiding clinical development, clinical operations, medical affairs and regulatory compliance. Prior to that, he was the chief medical officer at Adamas Pharmaceuticals, a company focused on drug development for neurological diseases, from September 2020 until February 2022. From June 2017 until September 2020, Dr.
Bode 49 Director Douglas W. Calder 57 Director Wendy Dixon, Ph.D. 68 Director Tamara A. Favorito 65 Director Alvin Shih, M.D. 47 Director Corey Watton 54 Director 82 Table of Contents Executive Officers Neil F. McFarlane Neil F. McFarlane has served as our president, chief executive officer, and a director of our Company since October 2023. Mr.
Calder 58 Director Wendy Dixon, Ph.D. 69 Director Tamara A. Favorito 66 Director Alvin Shih, M.D. 48 Director Corey Watton 55 Director 77 Table of Contents Executive Officers Neil F. McFarlane Neil F. McFarlane has served as our president and Chief Executive Officer, and as a director of our Company, since October 2023. Mr.
LaDuane Clifton, MBA, CPA, has served as our chief financial officer since June 2015 and as our secretary and treasurer since February 2016. He is responsible for the company’s financial, operating and compliance activities. Previously, Mr. Clifton served as our vice president of finance and corporate controller from April 2015 to June 2015. Prior to joining our company, Mr.
LaDuane Clifton, MBA, CPA, has served as our Chief Financial Officer since June 2015 and as our Treasurer since February 2016; he also served as our Secretary from February 2016 to June 2024. Mr. Clifton is responsible for the Company’s financial and operating activities.
Bode currently serves as the chief financial officer and chief transformation officer of Postmedia Network Canada Corp., a publishing company whose shares are traded on the Toronto Stock Exchange. Since September 2022, he has served as the interim chief executive officer of Fision Holdings, Inc. and as a member of its board of directors since March 2018. Mr.
Bode currently serves as the chief financial officer and chief transformation officer of Postmedia Network Canada Corp., a publishing company whose shares are traded on the Toronto Stock Exchange. Since September 2022, Mr.
Dixon has served on the boards of directors of Alkermes plc from January 2011 to May 2022, bluebird bio, Inc. from May 2013 to June 2021, Incyte from May 2010 to May 2022, Sesen Bio, Inc.
Dixon served on the boards of directors of Alkermes plc from January 2011 to May 2022, bluebird bio, Inc. from May 2013 to June 2021, Incyte from May 2010 to May 2022, Sesen Bio, Inc. (formerly Eleven Biotherapeutics, Inc.) from October 2014 to February 2020, and Voyager Therapeutics, Inc. from January 2017 to January 2021.
Bode served as the chief financial officer of Source Interlink Companies, one of the largest enthusiast media companies in the United States and a leading distributor of periodicals, after serving in other accounting and finance roles with Source Interlink since 2002. Mr.
He served as the chief financial officer of Source Interlink Companies, one of the largest enthusiast media companies in the United States and a leading distributor of periodicals, from January 2011 to September 2013, after serving in other accounting and finance roles with Source Interlink since 2002. He was previously employed as a certified public accountant for BDO Seidman. Mr.
Shih’s significant leadership experience in the biotechnology industry and his experience in rare disease qualifies him to serve on the Board. Corey Watton Corey Watton has served as a director of our Company since April 2023. Mr. Watton currently serves as president and chief executive officer of Fusion Medical Staffing, LLC, since September 2023. Prior to his CEO role, Mr.
Shih’s significant leadership experience in the biotechnology industry and his experience in rare disease qualifies him to serve as a director of our Company. Corey Watton Corey Watton has served as a director of our Company since April 2023. Mr.
Clifton served in a variety of finance and medical cost analysis roles with Aetna, Inc., a publicly-traded provider of healthcare benefits, from August 1991 to August 2004. Mr. Clifton was an auditor with KPMG, LLP from August 2004 to March 2007. Mr.
From August 1991 to August 2004, he served in a variety of finance, medical cost analysis and managed care provider contracting roles with Aetna, Inc., a publicly-held provider of healthcare benefits. Mr.
He received his B.A. in Biology and German at the University of Notre Dame, and both an M.S. in Biotechnology and an M.B.A. from Northwestern University 83 Table of Contents Adrian Quartel, M.D., FFPM Adrian Quartel, M.D., FFPM, has served as our chief medical officer since January 2023, and previously served as the chief medical officer of Acer Therapeutics from February 2022 until January 2023, where he played a key role in guiding clinical development, medical affairs and regulatory compliance.
He received his BA in Biology and German at the University of Notre Dame, and both an MS in Biotechnology and an MBA from Northwestern University. 78 Table of Contents Adrian Quartel, M.D., FFPM Adrian Quartel, M.D., FFPM, has served as our Chief Medical Officer since January 2024, and previously served as the chief medical officer of Acer Therapeutics from February 2022 until it was acquired by Zevra at the end of 2023.
Mr. Calder received a BA from Florida State University. Wendy Dixon, Ph.D. Wendy Dixon, Ph.D. has served as a director of our Company since April 2023. Dr. Dixon has more than 40 years of biopharmaceutical industry experience in drug development with leadership roles in regulatory affairs and commercial capabilities.
Wendy Dixon, Ph.D. has served as a director of our Company since April 2023. Dr. Dixon has more than 40 years of biopharmaceutical industry experience in drug development, with leadership roles in regulatory affairs and commercial capabilities. Dr. Dixon was chief marketing officer and president of global marketing at Bristol Myers Squibb from December 2001 to May 2009.
Shih previously worked in management consulting at McKinsey & Company and L.E.K. Consulting, LLC. He received his medical degree from the University of Alabama and completed his residency training at Massachusetts General Hospital. Dr. Shih received his M.B.A. from the Kellogg School of Management at Northwestern University. The Board believes that Dr.
Shih received his medical degree from the University of Alabama School of Medicine and completed his residency training at Massachusetts General Hospital. Dr. Shih received his MBA from the Kellogg School of Management at Northwestern University and his BA from Vanderbilt University. Our Board believes that Dr.
He has also served as a member of the board of directors for NextGenNK since June 2019; member of the board of directors of BioFlorida since January 2019, and a member of the Society for Natural Immunity since July 2018. Mr.
He also has been a member of the Society for Natural Immunity since July 2018. Mr.
LaDuane Clifton, MBA, CPA 51 Chief Financial Officer, Secretary and Treasurer Sven Guenther, Ph.D. 52 Chief Scientific Officer Christal M.M. Mickle, M.A. 45 Chief Development Officer; Co-Founder Joshua Schafer, MBA 53 Chief Commercial Officer and Executive Vice President of Business Development Adrian Quartel, M.D., FFPM 63 Chief Medical Officer Non-Employee Directors Thomas D. Anderson 68 Director John B.
LaDuane Clifton, MBA, CPA 52 Chief Financial Officer and Treasurer Joshua Schafer 54 Chief Commercial Officer and Executive Vice President of Business Development Adrian Quartel, M.D., FFPM 58 Chief Medical Officer Rahsaan W. Thompson 54 Chief Legal Officer, Secretary and Compliance Officer Non-Employee Directors Thomas D. Anderson 69 Director John B. Bode 50 Director Douglas W.
Bode currently serves as on the board of The McClatchy Company, a leading privately-held publisher of newspapers, as well as of SPAR Group, Inc., a leading global provider of merchandising, marketing and distribution services that is listed on the Nasdaq. He was previously employed as a certified public accountant for BDO Seidman. Mr.
Bode has served on the board of directors of SPAR Group, Inc., a leading global provider of merchandising, marketing and distribution services that is listed on the Nasdaq, since October 2023, and of The McClatchy Company, a leading privately-held publisher of newspapers, since September 2020. Mr.
Shih has broad experience in drug development, spanning multiple indications with a focus on rare diseases, including as the chief operating officer and founding member of Pfizer Inc.'s rare disease research unit from May 2010 to May 2014. Most recently, he has served as president and chief executive officer of Catamaran Bio, Inc. since February 2021.
Alvin Shih, M.D. Alvin Shih, M.D. has served as a director of our Company since January 2024. Dr. Shih has broad experience in drug development, spanning multiple therapeutic areas and with a focus on rare diseases, including as the former chief operating officer and a founding member of Pfizer Inc.’s rare disease research unit.
Quartel is board certified by the General Medical Council (GMC) in pharmaceutical medicine in the United Kingdom. Directors Thomas D. Anderson Thomas D. Anderson has served as a director of our Company since August 2023. Mr. Anderson is a 35-year veteran of the biopharma industry and has led and been a part of high-growth organizations for much of his career.
Anderson has served as a director of our Company since August 2023 and as chair of the compensation committee since February 2024. Mr. Anderson is a 35-year veteran of the biopharma industry, playing a leading role in high-growth organizations for much of his career. Mr.
Earlier in her career, she held executive management positions at West Pharmaceuticals, Osteotech and Centocor, as well as roles at SmithKline and French (now GlaxoSmithKline) in marketing, regulatory affairs, project management and as a biochemist. Dr. Dixon holds a Ph.D. in biochemistry and an M.Sc. and B.Sc. in Natural Science from the University of Cambridge. Tamara A. Favorito Tamara A.
From 1996 to 2001, she served as a senior vice president of marketing at Merck. Earlier in her career, she held executive management positions at West Pharmaceuticals, Osteotech and Centocor, as well as marketing, regulatory affairs, project management and biochemist roles at SmithKline and French (now GlaxoSmithKline). Since leaving Bristol Myers Squibb, Dr.
Bode John B. Bode has served as a director of our Company since April 2023, and as the chair of the nominating and corporate governance committee since May 2023. Since February 2015, Mr.
Anderson’s extensive experience in the biopharma industry, including as senior executive and director of multiple biopharmaceutical companies, qualifies him to serve on the Board as a director of our Company. John B. Bode John B. Bode has served as a director of our Company since April 2023 and as chair of the nominating and corporate governance committee since May 2023.
Anderson earned his MBA from the University of Notre Dame’s Mendoza College of Business Administration. He received his BS in civil engineering from the P.C. Rossin College of Engineering at Lehigh University. Our Board believes that Mr. Anderson’s significant leadership experience in the biotechnology industry and his experience in rare disease qualifies him to serve on the Board. John B.
Anderson also served as a director of private companies, ExpressCells Inc., from 2019 to 2023, and CEO Trust, from 2018 to 2021. Mr. Anderson received his MBA from the University of Notre Dame’s Mendoza College of Business Administration. He received his BS in civil engineering from the P.C. Rossin College of Engineering at Lehigh University. Our Board believes that Mr.
McFarlane has served as a member of the board of directors of Collegium Pharmaceutical Inc. since April 2022. Previously, Mr. McFarlane served as the chief executive officer and a member of the board of directors of Adamas Pharmaceuticals, Inc. from September 2019 until its acquisition by Supernus Pharmaceuticals, Inc. in November 2021. Mr.
McFarlane served as the chief executive officer and a member of the board of directors of Adamas Pharmaceuticals, Inc. from September 2019 until November 2021, when Adamas was acquired by Supernus Pharmaceuticals, Inc. From August 2016 to May 2019, Mr. McFarlane served as the chief operating officer of Retrophin, Inc. (now Travere Therapeutics, Inc.), a public biopharmaceutical company.
Anderson was a senior operating executive with Shire Pharmaceuticals Group in a number of operational and strategic roles in both rare diseases and specialty pharmaceuticals. Prior to Shire, he spent 17 years at Johnson & Johnson's pharmaceutical companies, McNeil and Janssen, in various business capacities. Mr. Anderson is also an investor partner at Robin Hood Ventures in Philadelphia, Pennsylvania. Mr.
From 2004 to 2014, Mr. Anderson was a senior executive with Shire Pharmaceuticals Group in a number of operational and strategic roles in both rare diseases and specialty pharmaceuticals. Earlier in his career, Mr. Anderson was with Johnson & Johnson companies, Janssen and McNeil Pharmaceutical, in a number of leadership, sales, marketing and business information roles. Mr.
Her extensive experience includes leading multiple private and public financings and M&A transactions as well as leading the finance, investor relations, human resources, administration and managed care functions. Alvin Shih, M.D. Alvin Shih, M.D. has served as a director of our Company since January 2024. Dr.
Her extensive experience includes leading multiple private and public financings and M&A transactions as well as leading public companies’ finance, investor relations, human resources, administration and managed care functions. She currently serves as a board member and audit committee chair of Artelo Biosciences, Inc., a publicly-traded clinical development stage company, since March 2021. Ms.
She currently serves on the board of directors of Arivinas, Inc. since June 2020, Black Diamond Therapeutics, Inc. since April 2022, and Iovance Biotherapeutics, Inc. since June 2022. Previously, Dr.
Dixon has served on the boards of directors of numerous biopharmaceutical companies, including Arvinas, Inc. from June 2020 to May 2024, Black Diamond Therapeutics, Inc. from April 2022 to April 2024, and Iovance Biotherapeutics, Inc. from June 2022 to June 2023. Previously, Dr.
McFarlane’s over 20 years of global biopharmaceutical and life sciences experience provide him with the qualifications and skills to serve as a director. Christal M.M. Mickle, M.A. Christal M.M. Mickle, M.A. has served as our chief development officer since January 2023. Ms.
He received his BS and MS in Nursing from the University of Florida. Our Board believes that Mr. McFarlane’s over 20 years of global biopharmaceutical and life sciences experience provide him with the qualifications and skills to serve as a director of our Company. R. LaDuane Clifton, MBA, CPA R.
During his professional career, he has successfully led over $16 billion in aggregate M&A transactions. Mr. Schafer currently serves as a board member of Pharnext SA and Shuttle Pharmaceuticals.
Schafer currently serves as a member of the board of Pharnext SA and Shuttle Pharmaceuticals.
She currently serves as a board member and audit committee chair of Artelo Biosciences, Inc. since March 2021 and Kintara Therapeutics, Inc. since April 2021, both publicly-traded clinical-development stage companies. Ms. Favorito served on the board of directors of Beacon Discovery, Inc. from 2018 until their acquisition in March 2021. Ms.
Favorito served on the board of directors of Kintara Therapeutics, Inc. from 2021 until its merger with TuHURA Biosciences, Inc. in October 2024, and on the board of directors of Beacon Discovery, Inc. from 2018 until its acquisition by Eurofins Scientific in March 2021. Ms.
Watton is a certified public accountant and received a BS in Finance and Accounting from University of Nebraska-Lincoln. 85 Table of Contents 86 Table of Contents PART II
Watton is a certified public accountant and received a BS in Finance and Accounting from University of Nebraska-Lincoln. Our Board believes that Mr. Watton’s senior leadership roles in the medical services industry combined with his expertise in accounting make him well qualified to serve as a director of our Company. 80 Table of Contents PART II
Watton served as chief financial officer from August 2019 until September 2023. In that role he oversaw finance, project management, operations, facilities and legal, and previously oversaw human resources as well.
Watton has served as president and chief executive officer of Fusion Medical Staffing, LLC, a private company among the fifteen largest medical staffing companies in the US, since September 2023. Prior to his CEO role, Mr. Watton served as chief financial officer of Fusion from August 2019 until September 2023, overseeing finance, project management, operations, facilities and legal operations.
Bode received a BS in accounting from Notre Dame University. 84 Table of Contents Douglas W. Calder Douglas W. Calder has served as a director of our Company since April 2023. Since 2015, Mr. Calder has served as president and a director of Vycellix, Inc and its subsidiaries and affiliates.
Calder has served as a director of our Company since April 2023. Since August 2016, he has served as president and a director of Vycellix, Inc. (including its subsidiaries and affiliates), a private company engineering immune-privileged, T cell and natural killer (“NK”) cell-based cancer therapeutics. Mr.
Removed
McFarlane worked as an independent consultant between June 2019 and August 2019 and again between December 2021 and September 2023 providing consulting services for biotechnology, pharmaceutical, and financial services companies. From August 2016 to May 2019, Mr. McFarlane served as the chief operating officer of Retrophin, Inc., now known as Travere Therapeutics, Inc., where he was responsible for overseeing operations.
Added
From 2011 to 2016, he held positions of increasing responsibility with UCB, Inc., Genzyme Corporation (now Sanofi) and Sangstat Medical Corporation (acquired by Genzyme). Mr.
Removed
From 2011 to 2016 Mr. McFarlane served as vice president and general manager of UCB, Inc.'s U.S. Immunology Business Unit and as vice president for its Global Bone Business Unit in collaboration with Amgen Inc. Prior to his positions at UCB, Mr.
Added
McFarlane currently serves as a member of the board of directors of HCRx Holdings, a private company that invests in biopharmaceutical product royalties, and previously he served as a member of the board of directors of Collegium Pharmaceutical Inc., a public biopharmaceutical company. Mr. McFarlane proudly served as an officer and enlisted soldier in the United States Army Reserves.
Removed
McFarlane held positions of increasing responsibility with Genzyme Corporation (“Genzyme”) and Sangstat Medical Corporation prior to its acquisition by Genzyme. Mr. McFarlane previously served as an officer and enlisted soldier in the United States Army Reserves. He received his B.S. degree and M.S. degree in Nursing from the University of Florida. Our Board believes that Mr.
Added
Quartel is board certified by the General Medical Council (GMC) in pharmaceutical medicine in the United Kingdom. Rahsaan W. Thompson Rahsaan W. Thompson has served as our Chief Legal Officer, Secretary and Compliance Officer since June 2024. Mr. Thompson has more than 25 years of experience as a business leader and attorney in the biotech industry.
Removed
Mickle, who co-founded and has held a variety of positions at Zevra, also served as interim president and chief executive officer from June 2023 to October 2023. She previously served as senior vice president, operations and product development from June 2022 to January 2023.
Added
He previously served as the chief legal officer at Lyell Immunopharma, a publicly-traded and clinical-stage biotech corporation. Prior to his role at Lyell, he was the executive vice president, general counsel, corporate secretary and chief compliance officer at Gritstone bio, a publicly-traded, clinical-stage biotech company. Before that, he served as general counsel at Opiant Pharmaceuticals and Actelion Pharmaceuticals US.
Removed
In this role, she managed the development of each of Zevra's products through strategic collaborations across the various drug development disciplines including clinical, regulatory, nonclinical, and manufacturing, enabling efficient use of funds and the ability to meet timelines and milestones. From January 2018 through June 2022, Ms. Mickle served as Zevra's vice president, product development and operations.
Added
Earlier in his career, Mr. Thompson worked in general and corporate counsel roles at Quarles & Brady, Abraxis Bioscience and McKesson Corporation, as well as being Assistant District Attorney in the Philadelphia District Attorney’s Office. Mr.
Removed
Before co-founding Zevra in 2006, Ms. Mickle started her career as a research associate for New River Pharmaceuticals, preparing compounds in ADHD, pain, and thyroid dysfunctions for further study. Throughout her more than 20 years in the pharmaceutical industry, Ms.
Added
Thompson currently serves on the board of trustees for the Oakland Museum of California and previously served on the board of the American Kidney Fund. He received his JD from Hofstra University School of Law and his B.Sc. from Southern Methodist University. He has bar admissions in the States of Illinois and Pennsylvania. Directors Thomas D. Anderson Thomas D.
Removed
Mickle has been involved in early discovery as a medicinal chemist, starting and helping build a pharmaceutical company, and interacting with the FDA. In addition, her efforts managing a team of talented scientists has led to the approval of three NDAs. Ms.
Added
Bode has served as the interim chief executive officer of FISION Corporation, a provider of cloud-based digital asset management, sales enablement and agile marketing technologies; and, he has served as a member of its board of directors since March 2018. Mr.
Removed
Mickle received her M.A. degree in Medicinal Chemistry from the University of Virginia and her B.A. and B.S. degrees in Chemistry and Biochemistry, respectively, from Virginia Polytechnic Institute and State University. She is also listed as an inventor on several patents. Sven Guenther, Ph.D. Sven Guenther, Ph.D. has served as our chief scientific officer since January 2023. Dr.
Added
Bode received a BS in Accounting from Notre Dame University. Our Board believes that Mr.
Removed
Guenther was one of the first members of Zevra, he joined our Company as our group leader of research in 2007, and served as our executive vice president, research and development, from May 2014 to January 2023.
Added
Bode’s experience as an executive and manager of public and private companies, as well as his experience leading commercial and marketing operations for such companies, offers the Board valuable perspective and insight and provides him with the qualifications and skills to serve as a director of our Company. 79 Table of Contents Douglas W. Calder Douglas W.
Removed
In this role, he was a key contributor to the strategy and execution of all of Zevra’s early discovery work, as well as, the development and approval of three NDAs. As chief scientific officer, he continues to lead Zevra’s research team and play a central role in the advancement of the Company’s pipeline. Dr.
Added
Calder has also served as a member of the board of directors of Renovaro, a public biotechnology company (Nasdaq: RENB), since October 2024, of NextGenNK, Sweden’s NK cell competence center, since June 2019, and of BioFlorida, a private company supporting Florida’s life sciences industry, since September 2018.
Removed
Guenther previously served as a research scientist for New River Pharmaceuticals, where he was part of the development team for VYVANSE. He earned his Ph.D. from the University of Iowa and is listed as an inventor on numerous patents, as well as an author of several research papers. R. LaDuane Clifton, MBA, CPA R.
Added
Mr. Calder received a BA from Florida State University. Our Board believes that Mr. Calder’s experience in biotechnology and life science industries, including as an executive and as director, provide him with the qualifications and skills to serve as a director of our Company. Wendy Dixon, Ph.D.
Removed
(formerly Eleven Biotherapeutics, Inc.) from October 2014 to February 2020, Voyager Therapeutics, Inc. from January 2017 to January 2021, and and was formerly on the boards of Ardea Biosciences from 2011 until 2012 when Ardea was acquired by AstraZeneca plc, Furiex Pharmaceuticals from 2010 until 2014 when Furiex was acquired by Actavis plc, Dentsply International from July 2005 to July 2010, and Orexigen Therapeutics, Inc. from April 2010 until January 2016.
Added
She also served on the boards of Ardea Biosciences from 2011 until 2012 when Ardea was acquired by AstraZeneca plc, and Furiex Pharmaceuticals from 2010 until 2014 when Furiex was acquired by Actavis plc. Dr. Dixon holds a Ph.D. in biochemistry and an M.Sc. and B.Sc. in Natural Science from the University of Cambridge. Our Board believes that Dr.
Removed
From December 2001 to May 2009, Dr. Dixon was chief marketing officer and president of global marketing at Bristol Myers Squibb, and served as a senior vice president of marketing at Merck from 1996 to 2001.
Added
Dixon’s extensive experience in corporate management, including as a director of multiple public companies, as well as her academic and professional expertise, provides her with the qualifications and skills to serve as a director of our Company. Tamara A. Favorito Tamara A.
Added
Since February 2021, he has served as president and chief executive officer of Catamaran Bio, Inc., a private biotechnology company developing off-the-shelf natural killer (NK) cell therapies to treat cancer.
Added
Dr. Shih also serves on the board of directors of Oaktree Acquisition Corp. III Life Sciences, a blank check company focused on the healthcare sector, and the private companies, Catamaran Bio, Inc., Imbria Pharmaceuticals, Inc. and Tenza bio. Dr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−2 removed1 unchanged
Biggest changeHolders of our Common Stock As of December 31, 2023, there were approximat ely 96 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Biggest changeThe actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.
Dividend Policy We have never declared or paid any cash dividends on our common stock. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Listing On March 1, 2023, our common stock began trading on The Nasdaq Global Select Market under the ticker symbol "ZVRA".
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Listing Our common stock trades on The Nasdaq Global Select Market under the ticker symbol "ZVRA". Holders of our Common Stock As of December 31, 2024, there were approximat ely 80 holders of record of our common stock.
Removed
Prior to that, on October 19, 2021, our common stock began trading on The Nasdaq Global Select Market under the ticker symbol "KMPH". Prior to that date, our common stock was listed on the Nasdaq Capital Market under the ticker symbol "KMPH".
Removed
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid any cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

80 edited+35 added−75 removed71 unchanged
Biggest changeComparison of the Years Ended December 31, 2023, and 2022 (in thousands): Year Ended December 31, Period-to 2023 2022 Period Change (As Restated) Revenue, net $ 27,461 $ 10,161 $ 17,300 Operating expenses: Cost of revenue 2,945 222 2,723 Research and development 39,806 19,803 20,003 Selling, general and administrative 34,314 15,038 19,276 Acquired in-process research and development — 17,663 (17,663 ) Total operating expenses 77,065 52,726 24,339 Loss from operations (49,604 ) (42,565 ) (7,039 ) Other (expense) income: Interest expense (1,501 ) (335 ) (1,166 ) Fair value adjustment related to derivative and warrant liability and CVR liability (98 ) 15,159 (15,257 ) Fair value adjustment related to investments 613 (577 ) 1,190 Interest and other income, net 4,541 1,513 3,028 Total other income 3,555 15,760 (12,205 ) Loss before income taxes (46,049 ) (26,805 ) (19,244 ) Income tax (expense) benefit — 33 (33 ) Net loss $ (46,049 ) $ (26,772 ) $ (19,277 ) Net Loss Net loss for the year ended December 31, 2023, wa s $46.0 m illion compared to net loss of $26.8 million for the year ended December 31, 2022.
Biggest changeComparison of the Years Ended December 31, 2024, and 2023 (in thousands): Year Ended December 31, Period-to 2024 2023 Period Change Revenue, net $ 23,612 $ 27,461 $ (3,849 ) Cost of product revenue (excluding $6,235 and $772 in intangible asset amortization for the years ended December 31, 2024, and 2023, respectively, shown separately below) 7,417 2,173 5,244 Intangible asset amortization 6,235 772 5,463 Operating expenses: Research and development 42,095 39,806 2,289 Selling, general and administrative 54,868 34,314 20,554 Total operating expenses 96,963 74,120 22,843 Loss from operations (87,003 ) (49,604 ) (37,399 ) Other (expense) income: Interest expense (7,351 ) (1,501 ) (5,850 ) Fair value adjustment related to warrant and CVR liability 2,057 (98 ) 2,155 Fair value adjustment related to investments (18 ) 613 (631 ) Interest and other income, net 2,175 4,541 (2,366 ) Total other (expense) income (3,137 ) 3,555 (6,692 ) Loss before income taxes (90,140 ) (46,049 ) (44,091 ) Income tax expense (15,371 ) - (15,371 ) Net loss $ (105,511 ) $ (46,049 ) $ (59,462 ) Net Loss Net loss for the year ended December 31, 2024, wa s $105.5 m illion compared to net loss of $46.0 million for the year ended December 31, 2023.
Stockholders Agreement In connection with of the Merger, a certain stockholder of Acer entered into, and Acer agreed to use its reasonable best efforts to cause certain other stockholders to enter into joinders to, a stockholders agreement with Zevra (the “Stockholders Agreement”).
Stockholders Agreement In connection with the Merger, a certain stockholder of Acer entered into, and Acer agreed to use its reasonable best efforts to cause certain other stockholders to enter into joinders to, a stockholders agreement with Zevra (the “Stockholders Agreement”).
Investing Activities For the year ended December 31, 2023, net cash used in investing activities was $17.4 million, which was attributable to $30.4 million attributable to the acquisition of Acer, purchases of investments of $45.8 million, and $0.3 million in purchases of property and equipment, partially offset by maturities of investments of $59.1 million.
For the year ended December 31, 2023, net cash used in investing activities was $17.4 million, which was attributable to $30.4 million attributable to the acquisition of Acer, purchases of investments of $45.8 million, and $0.3 million in purchases of property and equipment, partially offset by maturities of investments of $59.1 million.
In May 2022, we purchased all of the assets and operations of Orphazyme A/S related to arimoclomol, settled all of Orphazyme’s actual outstanding liabilities to its creditors with a cash payment of $12.8 million, and agreed to assume an estimated reserve liability of $5.2 million related to revenue generated from Orphazyme’s Expanded Access Program in France (the "Arimoclomol EAP").
In May 2022, we purchased all of the assets and operations of Orphazyme A/S ("Orphazyme") related to arimoclomol, settled all of Orphazyme’s actual outstanding liabilities to its creditors with a cash payment of $12.8 million, and agreed to assume an estimated reserve clawback liability of $5.2 million related to revenue generated from Orphazyme’s Expanded Access Program in France (the "EAP").
In connection with the closing of the Merger on November 17, 2023, each share of common stock of Acer was converted into the right to receive (i) 0.1210 fully paid and non-assessable shares of common stock of Zevra, par value $0.0001 per share , and (ii) one non-transferable contingent value right (“CVR”) to be issued by Zevra, which will represent the right to receive one or more contingent payments up to an additional $76 million upon the achievement, if any, of certain commercial and regulatory milestones for Acer’s OLPRUVA and celiprolol products within specified time periods.
In connection with the closing of the Merger on November 17, 2023, each share of common stock of Acer was converted into the right to receive (i) 0.1210 fully paid and non-assessable shares of common stock of Zevra, par value $0.0001 per share , and (ii) one non-transferable CVR to be issued by Zevra, which will represent the right to receive one or more contingent payments up to an additional $76.0 million upon the achievement, if any, of certain commercial and regulatory milestones for Acer’s OLPRUVA and celiprolol products within specified time periods.
If we determine that an ownership change has occurred and our ability to use our historical net operating loss carryforwards is materially limited, it would harm our future operating results by increasing our future tax obligations. 100 Table of Contents Warrants We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480) and FASB ASC Topic 815, Derivatives and Hedging (ASC 815).
If we determine that an ownership change has occurred and our ability to use our historical net operating loss carryforwards is materially limited, it would harm our future operating results by increasing our future tax obligations. 92 Table of Contents Warrants We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480) and FASB ASC Topic 815, Derivatives and Hedging (ASC 815).
Net loss was primarily attributable to our spending on research and development programs and operating costs, partially offset by revenue received under the AZSTARYS License Agreement, Arimoclomol EAP and the Corium Consulting Agreement.
Net loss was primarily attributable to our spending on research and development programs and operating costs, partially offset by revenue received under the AZSTARYS License Agreement, EAP and the Corium Consulting Agreement.
We also expect to continue to incur costs to comply with corporate governance, internal control, investor relations, disclosure and similar requirements applicable to public reporting companies. 92 Table of Contents Other (Expense) Income Other (expense) income consists primarily of non-cash costs associated with fair value adjustments to our derivative and warrant liability and amortization of debt issuance costs and debt discount to interest expense.
We also expect to continue to incur costs to comply with corporate governance, internal control, investor relations, disclosure and similar requirements applicable to public reporting companies. 84 Table of Contents Other (Expense) Income Other (expense) income consists primarily of non-cash costs associated with fair value adjustments to our derivative and warrant liability and amortization of debt issuance costs and debt discount to interest expense.
We allocate expenses associated with our facilities, information technology costs and depreciation and amortization between research and development expenses and general and administrative expenses based on employee headcount and the nature of work performed by each employee. 91 Table of Contents Research and Development Expense Research and development expense consists of expenses incurred while performing research and development activities to discover and develop potential product candidates.
We allocate expenses associated with our facilities, information technology costs and depreciation and amortization between research and development expenses and general and administrative expenses based on employee headcount and the nature of work performed by each employee. 83 Table of Contents Research and Development Expense Research and development expense consists of expenses incurred while performing research and development activities to discover and develop potential product candidates.
These were recorded as receivables form Acer and were treated as a settlement of a preexisting relationship in connection with the closing of the transaction and recorded as a component of purchase consideration. ● Purchase of Acer ’ s Convertible Notes (“Marathon Convertible Notes”)- Under the Note Purchase Agreement with the Nantahala Holders, Zevra purchased the Marathon Convertible Notes that Nantahala had acquired on June 16, 2023.
These were recorded as receivables from Acer and were treated as a settlement of a preexisting relationship in connection with the closing of the transaction and recorded as a component of purchase consideration. ● Purchase of Acer ’ s Convertible Notes (“Marathon Convertible Notes”) - Under the Note Purchase Agreement with the Nantahala Holders, Zevra purchased the Marathon Convertible Notes that Nantahala had acquired on June 16, 2023.
If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of these costs, our actual expenses could differ from our estimates. 99 Table of Contents Stock-Based Compensation We record the fair value of stock options issued as of the grant date as compensation expense.
If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of these costs, our actual expenses could differ from our estimates. 91 Table of Contents Stock-Based Compensation We record the fair value of stock options issued as of the grant date as compensation expense.
On October 31, 2023, the Company and Acer entered into an amendment to the Bridge Loan Agreement, which increased the aggregate principal amount available under the loan from $16.5 million to $17.8 million. ● Purchase of Acer ’ s Term Loans - Zevra purchased certain indebtedness of Acer held by Nantahala Capital Management, LLC ("Nantahala).
On October 31, 2023, the Company and Acer entered into an amendment to the Bridge Loan Agreement, which increased the aggregate principal amount available under the loan from $16.5 million to $17.8 million. ● Purchase of Acer ’ s Term Loans - Zevra purchased certain indebtedness of Acer held by Nantahala.
The Company recorded refundable research and development tax credit as other income and not income tax under ASC 740 in the consolidated statement of operations for the year ended December 31, 2023.
The Company recorded refundable research and development tax credit as other income and not income tax under ASC 740 in the consolidated statement of operations for the year ended December 31, 2024.
Under the loan purchase with Nantahala, certain of its affiliates and certain other parties (collectively with Nantahala, "Nantahala Holders") Zevra purchased (i) an original senior secured term loan facility made available to Acer in an aggregate amount of $6.5 million and funded on March 14, 2022, and (ii) an additional senior secured term loan made to Acer in an aggregate amount of $7.0 million in a single borrowing which funded on January 31, 2023 for (1) $12.0 million in cash; (2) 98,683 shares of Zevra Common Stock; and (3) a secured Promissory Note payable by Zevra to Nantahala in the original principal amount $5.0 million.
Under the loan purchase with Nantahala, certain of its affiliates and certain other parties (collectively with Nantahala, "Nantahala Holders") Zevra purchased (i) an original senior secured term loan facility made available to Acer in an aggregate amount of $6.5 million and funded on March 14, 2022, and (ii) an additional senior secured term loan made to Acer in an aggregate amount of $7.0 million in a single borrowing which funded on January 31, 2023 for (1) $12.0 million in cash; (2) 98,683 shares of Zevra Common Stock; and (3) a secured Promissory Note payable by Zevra to Nantahala in the original principal amount $5.0 million, which was repaid in full and terminated in April 2024.
We anticipate that our expenses will fluctuate substantially as we: ● continue to integrate the operations of Acer following the recent Merger; ● continue building and maintaining our ongoing commercial capabilities to support the launch of our approved product OLPRUVA® and, if approved, the commercial launch of arimoclomol in the U.S. ● continue our ongoing preclinical studies, clinical trials and our product development activities for our pipeline of product candidates; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● continue research and preclinical development and initiate clinical trials of our product candidates; ● seek to discover and develop additional product candidates either internally or in partnership with other pharmaceutical companies; ● adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products; ● maintain, expand and protect our intellectual property portfolio; ● incur additional legal, accounting and other expenses in operating as a public company; and ● add operational systems and personnel, if needed, to support any future commercialization efforts.
We anticipate that our expenses will fluctuate substantially as we: ● continue building and maintaining our ongoing commercial capabilities to support the launch of our approved product OLPRUVA® and MIPLYFFA in the U.S. ● continue our ongoing preclinical studies, clinical trials and our product development activities for our pipeline of product candidates; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● continue research and preclinical development and initiate clinical trials of our product candidates; ● seek to discover and develop additional product candidates either internally or in partnership with other pharmaceutical companies; ● adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products; ● maintain, expand and protect our intellectual property portfolio; ● incur additional legal, accounting and other expenses in operating as a public company; and ● add operational systems and personnel, if needed, to support any future commercialization efforts.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in other expense, net, on the consolidated statement of operations. The fair value of the warrants was estimated using the Black-Scholes option pricing model.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in other expense, net, on the consolidated statement of operations. The fair value of the warrants was estimated using the Black-Scholes option pricing model. 93 Table of Contents
We have based our estimates of our cash needs and cash runway on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect and we cannot guarantee that we will be able to generate sufficient proceeds from the AZSTARYS License Agreement, product reimbursements under the Arimoclomol EAP, product sales of OLPRUVA, potential consulting arrangements or other funding transactions to fund our operating expenses.
We have based our estimates of our cash needs and cash runway on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect and we cannot guarantee that we will be able to generate sufficient proceeds from product sales of OLPRUVA and MIPLYFFA, the AZSTARYS License Agreement, product reimbursements under the EAP, or other funding transactions to fund our operating expenses.
These refundable tax credits are a result of increased qualified research and development spending in certain jurisdictions which allow for a refundable credit even when the Company has no current period income tax expense.
These refundable tax credits are a result of increased q ualified research and development spending in certain jurisdictions which allow for a refundable credit even when the Company has no current period income tax expense.
Zevra acquired the Marathon Convertible Notes in exchange for the issuance of 2,171,038 shares of Zevra Common Stock at $5.0667 per share for a total purchase price of $11.0 million. ● Amendment to IP License Agreement and IP Termination Agreement: As a condition to entering into the Merger Agreement, Acer and Relief Therapeutics Holding AG ("Relief") entered into the Exclusive License Agreement and the Termination Agreement terminating the collaboration and license agreement, dated March 19, 2021, by and between Acer and Relief.
Zevra acquired the Marathon Convertible Notes in exchange for the issuance of 2,171,038 shares of Zevra Common Stock at $5.0667 per share for a total purchase price of $11.0 million. 87 Table of Contents ● Amendment to IP License Agreement and IP Termination Agreement: As a condition to entering into the Merger Agreement, Acer and Relief entered into the Exclusive License Agreement and the Termination Agreement terminating the collaboration and license agreement, dated March 19, 2021, by and between Acer and Relief.
We expect that, for the foreseeable future, our only sources of revenues will be through payments arising from the AZSTARYS License Agreement, product sales of OLPRUVA. through potential consulting arrangements and any other future arrangements related to one of our product candidates and product sales under the Arimoclomol EAP.
We expect that, for the foreseeable future, our only sources of revenues will be through product sales of OLPRUVA and MIPLYFFA, payments arising from the AZSTARYS License Agreement, and any other future arrangements related to one of our product candidates and product sales under the EAP.
We also have certain state net operating loss carryforwards totaling $340 million, which, if not utilized, will begin to expire in 2027. We also have Denmark net operating loss carryforwards totaling $4.7 million which have an indefinite carryforward period in Denmark.
We also have certain state net operating loss carryforwards totaling $428.6 million, which, if not utilized, will begin to expire in 2027. We also have Denmark net operating loss carryforwards totaling $7.7 million which have an indefinite carryforward period in Denmark.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. This Part II, Item 7 includes restated financial data.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Equity Distribution Agreement On July 2, 2021, we entered into an Equity Distribution Agreement with JMP and RBCCM, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $75.0 million through JMP and RBCCM as our sales agents.
Termination of 2021 ATM Agreement On July 2, 2021, we entered into an equity distribution agreement (the "2021 ATM Agreement") with JMP Securities LLC ("JMP") and RBC Capital Markets, LLC ("RBCCM") under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $75.0 million through JMP and RBCCM as its sales agents.
Food and Drug Administration (“FDA)”, the Company determined to focus its expertise on rare disease indications, as well as seeking value-creating opportunities by building and directly commercializing product candidates in lieu of an out-licensing model.
Food and Drug Administration ("FDA"), we determined to focus our expertise on rare disease indications, as well as seeking value-creating opportunities by building and directly commercializing product candidates in lieu of an out-licensing model.
Stock-based compensation expense has been reported in our statements of operations as follows (in thousands): Year Ended December 31, 2023 2022 Research and development $ 2,664 $ 1,443 General and administrative 3,290 2,851 Total stock-based compensation $ 5,954 $ 4,294 Determination of the Fair Value of Stock-Based Compensation Grants We calculate the fair value of stock-based compensation arrangements using the Black-Scholes option-pricing model.
Stock-based compensation expense has been reported in our statements of operations as follows (in thousands): Year Ended December 31, 2024 2023 Research and development $ 5,819 $ 2,664 General and administrative 9,087 3,290 Total stock-based compensation $ 14,906 $ 5,954 Determination of the Fair Value of Stock-Based Compensation Grants We calculate the fair value of stock-based compensation arrangements using the Black-Scholes option-pricing model.
This period-to-period decrease in income was primarily attributable to a decrease in the fair value adjustment related to derivative and warrant liability and CVR liability of $15.3 million and an increase in interest expense of $1.1 million, partially offset by an increase in net interest and other income of $3 .0 million and an increase in the change in fair value related to investments of $1.2 million.
This period-to-period change in other (expense) income was primarily attributable to an increase in interest expense of $5.9 million, a decrease in the change in fair value related to investments of $0.6 million, a nd a decrease in net interest and other income of $2.4 million, partially offset by a decrease in the fair value adjustment related to derivative and warrant liability and CVR liability o f $2.2 million.
This includes personnel in executive, finance, human resources and administrative support functions. Other general and administrative expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for auditing, tax and legal services, expenses associated with obtaining and maintaining patents, consulting costs and costs of our information systems.
Other general and administrative expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for auditing, tax and legal services, expenses associated with obtaining and maintaining patents, consulting costs and costs of our information systems.
As of December 31, 2023, we had cash, cash equivalents and investments o f $67.7 milli on. To date, we have generated revenue from the Arimoclomol EAP, AZSTARYS License Agreement, reimbursement of out-of-pocket third-party costs, the performance of consulting services, and sales of OLPRUVA.
As of December 31, 2024, we had cash, cash equivalents and investments o f $75.5 milli on. To date, we have generated revenue from product sales of OLPRUVA and MIPLYFFA, product reimbursements from the EAP, proceeds from the AZSTARYS License Agreement, reimbursement of out-of-pocket third-party costs and the performance of consulting services.
The following summarizes the assumptions used for estimating the fair value of stock options granted to employees for the periods indicated: Year Ended December 31, 2023 2022 Risk-free interest rate 3.34% - 4.79% 1.70% - 3.80% Expected term (in years) 5.50 - 10.00 5.50 - 7.00 Expected volatility 89.48% - 93.67% 91.28% - 98.91% Expected dividend yield 0 0 Utilization of Net Operating Loss Carryforwards and Research and Development Credits As of December 31, 2023, we had federal net operating loss, or NOL, carryforwards of approximately $350 million, $145.3 million of which, if not utilized, will begin to expire in 2027 and $204.7 milli on of which have no expiration date.
The following summarizes the assumptions used for estimating the fair value of stock options granted to employees for the periods indicated: Year Ended December 31, 2024 2023 Risk-free interest rate 3.82% - 4.50% 3.34% - 4.79% Expected term (in years) 5.50 - 6.25 5.50 - 10.00 Expected volatility 89.85% - 91.32% 89.48% - 93.67% Expected dividend yield 0 0 Utilization of Net Operating Loss Carryforwards and Research and Development Credits As of December 31, 2024, we had federal net operating loss, or NOL, carryforwards of approximatel y $381.3 million, $118.5 million of which, if not utilized, will begin to expire in 2027 and $262.8 million of which have no expiration date.
The Company's investments are used as collateral for the loan and the amount the Company is able to borrow is limited to 80-90% of its outstanding investment balance held with Wells Fargo.
The Company's investments are used as collateral for the loan and the amount the Company is able to borrow is limited to 80-90% of its outstanding investment balance held with Wells Fargo. As of December 31, 2023, $37.7 million was outstanding under the margin account.
Net loss was primarily attributable to our spending on research and development programs and operating costs, partially offset by revenue received under the AZSTARYS License Agreement, Arimoclomol EAP and the Corium Consulting Agreement.
Net loss was primarily attributable to our spending on research and development programs and operating costs, partially offset by revenue received from MIPLYFFA and OLPRUVA product sales, royalties under the AZSTARYS License Agreement, and reimbursements from the EAP.
The change was attributable to a decrease in the change in fair value adjustment related to derivative and warrant liability and CVR liability of $15.3 million, loss from operations of $7.0 mi llion, partially offset by an increase in net interest income and other income of $3.0 million .
The change was attributable to an increase in loss from operations of $37.4 million, a change in fair value adjustment related to investments of $0.6 million, an increase in interest expense of $5.9 million, a decrease in net interest income and other income of $2.4 million, and an increase in income tax expense of $15.4 million, partially offset by an increase in the change in fair value adjustment related to derivative and warrant liability and CVR liability of $2.2 million.
Financing Activities For the year ended December 31, 2023, net cash provided by financing activities was $28.5 million, which was primarily attributable to proceeds from the issuance of debt of $42.4 milli on, proceeds from insurance financing arrangements of $1.3 million and proceeds from sales of common stock under the Employee Stock Purchase Plan, or the ESPP, of $0.2 mi llion, proceeds from issuance of common stock of $6.0 million, partially offset by repayments of debt of $17.5 million, payments to repurchase shares as part of the Share Repurchase Program of $3.4 million, and payments of principal on insurance financing arrangements of $0.5 million.
For the year ended December 31, 2023, net cash provided by financing activities was $28.5 million, which was primarily attributable to proceeds from the issuance of debt of $42.4 milli on, proceeds from insurance financing arrangements of $1.3 million and proceeds from sales of common stock under the Employee Stock Purchase Plan, or the ESPP, of $0.2 mi llion, proceeds from issuance of common stock of $6.0 million, partially offset by repayments of debt of $17.5 million, payments to repurchase shares as part of the Share Repurchase Program of $3.4 million, and payments of principal on insurance financing arrangements of $0.5 million. 89 Table of Contents Future Funding Requirements We believe that our existing cash, cash equivalents and investments will be sufficient to fund our operations into 2029, subject to continuing compliance with our debt covenants .
For the year ended December 31, 2022, net cash used in operating activities of $18.7 million consisted of a net loss of $41.5 million and $0.5 million in changes in working capital, partially offset by $23.3 million in adjustments for non-cash items.
For the year ended December 31, 2023, net cash used in operating activities of $33.5 million consisted of a net loss of $46.0 million, partially offset by $6.0 million in changes in working capital and $6.5 m illion in adjustments for non-cash items.
Potential near-term sources of additional funding include: ● any royalties or net sales milestone payments generated under the AZSTARYS License Agreement; ● any product sales under the Arimoclomol EAP; ● any product sales of OLPRUVA ● any product sales of arimoclomol, if approved; and ● any consulting services revenue generated under other potential consulting arrangements.
Potential near-term sources of additional funding include: ● any royalties or net sales milestone payments generated under the AZSTARYS License Agreement; ● any reimbursements received for arimoclomol under the EAP; ● any product sales of OLPRUVA, and ● any product sales of MIPLYFFA.
Our team has specialized expertise and a track record of success in advancing promising therapies that face complex clinical and regulatory challenges with an approach that balances science and data with patient need.
We have a diverse portfolio of products and product candidates, which includes a clinical stage pipeline and commercial stage assets. Our team has specialized expertise and a track record of success in advancing promising therapies that face complex clinical and regulatory challenges with an approach that balances science and data with patient need.
To date, we have generated revenue from the AZSTARYS License Agreement, sale of arimoclomol under the Arimoclomol EAP, reimbursement of out-of-pocket third-party costs, and the performance of consulting services.
To date, we have generated revenue from sales of our approved products, MIPLYFFA and OLPRUVA, to our specialty pharmacy, royalty, milestone and other reimbursement payments under the AZSTARYS License Agreement, sale of arimoclomol under the EAP, reimbursement of out-of-pocket third-party costs, and the performance of consulting services.
Cost of Revenue The components of our cost of revenue are royalties and expenses directly attributable to revenue. To date, we have generated revenue from the AZSTARYS License Agreement, sales of arimoclomol under the Arimoclomol EAP, reimbursement of out-of-pocket third-party costs and the performance of consulting services.
To date, we have generated revenue from product sales of MIPLYFFA and OLPRUVA to our specialty pharmacy, sales of arimoclomol under the EAP, royalties, milestones and other reimbursements under the AZSTARYS License Agreement, reimbursement of out-of-pocket third-party costs, and the performance of consulting services.
General and Administrative General and administrative expenses increased by $19.3 million, from $15.0 million for the year ended December 31, 2022, to $34.3 million for the year ended December 31, 2023.
General and Administrative General and administrative expenses increased by $20.6 million, from $34.3 million for the year-ended December 31, 2023, to $54.9 million for the year ended December 31, 2024.
The following table summarizes our research and development costs for the years ended December 31, 2023, and 2022 (in thousands): Year Ended December 31, 2023 2022 (As Restated) Outsourced development costs directly identified to programs: Arimoclomol $ 5,579 $ 2,940 KP1077 14,458 5,325 APADAZ (1) 2,446 145 Celiprolol 159 — Total outsourced development costs directly identified to programs 22,642 8,410 Research and development costs not directly identified to programs: Personnel costs including cash compensation, benefits and stock-based compensation 11,970 7,709 Facilities costs 775 575 Other costs 4,419 3,109 Total research and development costs not directly allocated to programs 17,164 11,393 Total research and development expenses $ 39,806 $ 19,803 (1) On May 31, 2023, Zevra and KVK-Tech, Inc.
The following table summarizes our research and development costs for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Outsourced development costs directly identified to programs: MIPLYFFA $ 5,784 $ 5,579 OLPRUVA 1,776 - KP1077 10,486 14,458 APADAZ (1) - 2,446 Celiprolol 2,133 159 Other costs 496 - Total outsourced development costs directly identified to programs 20,675 22,642 Research and development costs not directly identified to programs: Personnel costs including cash compensation, benefits and stock-based compensation 19,781 11,970 Facilities costs 51 775 Other costs 1,588 4,419 Total research and development costs not directly allocated to programs 21,420 17,164 Total research and development expenses $ 42,095 $ 39,806 (1) On May 31, 2023, Zevra and KVK-Tech, Inc.
On December 31, 2023, the Share Repurchase Program ended, and we have repurchased 1,575,692 shares of its common stock for approximately $11.0 million. 94 Table of Contents Merger Transactions and Documents On August 30, 2023, in connection with the Merger Agreement with Acer, the following transactions occurred prior to Closing: ● Bridge Loan - Zevra and Acer entered into a bridge loan agreement (the “Bridge Loan Agreement”), providing for Zevra to make loans (collectively, the “Bridge Loan”) to Acer up to an aggregate principal amount of $16.5 million.
Merger Transactions and Documents On August 30, 2023, in connection with the Merger Agreement with Acer, the following transactions occurred prior to Closing: ● Bridge Loan - Zevra and Acer entered into a bridge loan agreement (the “Bridge Loan Agreement”), providing for Zevra to make loans (collectively, the “Bridge Loan”) to Acer up to an aggregate principal amount of $16.5 million.
Operating Expenses We classify our operating expenses into two categories: research and development expenses and selling general and administrative expenses. Salaries and personnel-related costs, including benefits, bonuses and stock-based compensation expense, comprise a significant component of each of these expense categories.
Salaries and personnel-related costs, including benefits, bonuses and stock-based compensation expense, comprise a significant component of each of these expense categories.
The changes in working capital consisted of $0.7 million related to a change in prepaid expenses and other assets, $6.8 million related to a change in accounts and other receivables, $0.4 million related to a change in operating lease liabilities and $0.4 million related to a change in other liabilities, partially offset by $3.1 million related to a change in accounts payable and accrued expenses, $0.1 million related to a change in inventories, $0.3 million related to a change in operating lease right-of-use assets, $0.4 million related to other long-term assets, and $3.8 million related to a change in discount and rebate liabilities.
The changes in working capital consisted of $3.6 mill ion related to a change in accounts payable and accrued expense s, $8.9 million related to a change in inventories, $2.2 million related to a change in prepaids and other assets, and $0.6 mi llion related to operating lease liabilities, partially offset by $0.4 million re lated to a change in discount and r ebate liabilities, $0.6 million related to a change in operating lease right of use assets, $0.8 million related to a change in other liabilities, and $6.9 million increase in accounts and other receivables .
This fair value measurement was based on significant inputs not observable in the market and thus represent Level 3 fair value measurement. Goodwill and Definite-lived Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the fair value assigned to the assets purchased and liabilities assumed.
Goodwill and Definite-Lived Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the fair value assigned to the assets purchased and liabilities assumed.
For instance, we received milestone payments under the AZSTARYS License Agreement, but we cannot guarantee that we will earn any additional milestone or royalty payments under this agreement in the future. We also cannot guarantee that we will continue to generate revenue under the Arimoclomol EAP or successfully commercialize OLPRUVA.
We cannot guarantee that our current commercialization strategies, or any strategy we adopt in the future, will be successful. For instance, we received milestone payments under the AZSTARYS License Agreement, but we cannot guarantee that we will earn any additional milestone or royalty payments under this agreement in the future.
On January 26, 2023, the Company and Wells Fargo, as lender, entered into a margin account agreement. The margin account bears interest at the Prime Rate minus 225 basis points.
The shares of common stock and warrants were offered and sold to the Investor in a registered direct offering without an underwriter or placement agent. Margin Account On January 26, 2023, the Company and Wells Fargo, as lender, entered into a margin account agreement. The margin account bears interest at the Prime Rate minus 225 basis points.
In addition to distribution agreements, we enter into arrangements with health care providers and payors that provide for government mandated and/or privately negotiated rebates with respect to the purchase of our products. 90 Table of Contents Components of our Results of Operations Revenue Our commercial revenue is, and will be, primarily derived from sales of our approved products or any of our product candidates for which we obtain regulatory approval, and sales of arimoclomol under the Arimoclomol EAP.
Components of our Results of Operations Revenue Our commercial revenue is, and will be, primarily derived from sales of our approved products or any of our product candidates for which we obtain regulatory approval, and sales of arimoclomol under the EAP.
This increase was attributable to an increase in third-party research and development costs of $14.5 mil lion, an increase in other research and development costs of $2.9 million and an increase in personnel-related costs of $2.6 million.
This increase was attributable to increases in personnel-related costs and share-based compensation expenses of $6.3 million and $0.9 million, respectively , partially offset by decreases in third-party research and development costs of $3.6 mil lion and other research and development costs of $1.3 million.
Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates and products, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the commercialization and development of our partnered product or product candidates, should they obtain regulatory approval. 98 Table of Contents Critical Accounting Estimates This management ’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States.
Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates and products, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the commercialization and development of our partnered product or product candidates, should they obtain regulatory approval.
The Merger included the acquisition of OLPRUVA ® (sodium phenylbutyrate) for oral suspension, which was approved by the FDA on December 27, 2022, for the treatment of urea cycle disorders, or UCDs.
On November 17, 2023, we completed the acquisition of Acer Therapeutics, Inc. ("Acer"). Pursuant to the Merger Agreement, Acer continues as a wholly-owned subsidiary of Zevra (the “Merger"). The Merger included the acquisition of OLPRUVA® (sodium phenylbutyrate) for oral suspension, which was approved by the FDA on December 27, 2022, for the treatment of certain urea cycle disorders ("UCDs").
We anticipate that our research and development expenses will fluctuate for the foreseeable future as we continue our efforts to advance the development of our product candidates, subject to the availability of additional funding.
We anticipate that our research and development expenses will fluctuate in accordance with our strategic plan as we continue our efforts to advance the development of our product candidates. The successful development of our product candidates is highly uncertain.
On February 5, 2024, Zevra filed a registration statement on Form S-3 (File No. 333-276856) registering an aggregate of 2,269,721 shares of Zevra’s common stock that were issued pursuant to the Loan and Note Purchase Agreements.
On February 5, 2024, we filed a registration statement on Form S-3 (File No. 333-276856) registering an aggregate of 2,269,721 shares of our common stock. On April 5, 2024, we filed an amendment to such registration statement, which was declared effective on April 8, 2024.
This is due to the numerous risks and uncertainties associated with the commercialization and development of our products and product candidates. Selling, General and Administrative Expense General and administrative expenses primarily consist of salaries and personnel-related costs, including employee benefits and any stock-based compensation, for employees performing functions other than research and development.
General and administrative expenses primarily consist of salaries and personnel-related costs, including employee benefits and any stock-based compensation, for employees performing functions other than research and development. This includes personnel in executive, finance, human resources and administrative support functions.
As of December 31, 2023, $37.7 million was outstanding under the margin account. 96 Table of Contents Cash Flows The following table summarizes our cash flows for the years ended December 31, 2023, and 2022 (in thousands): Year Ended December 31, Period-to 2023 2022 Period Change Net cash used in operating activities $ (33,535 ) $ (18,717 ) $ (14,818 ) Net cash used in investing activities (17,390 ) (36,719 ) 19,329 Net cash provided by financing activities 28,464 8,352 20,112 Effect of exchange rate changes on cash and cash equivalents 44 204 (160 ) Net decrease in cash and cash equivalents $ (22,417 ) $ (46,880 ) $ 24,463 Operating Activities For the year ended December 31, 2023, net cash used in operating activities of $33.5 million consisted of a net loss of $46.0 million, partially offset by $6.0 million in changes in working capital and $6.5 m illion in adjustments for non-cash items.
In April 2024, the Company repaid the outstanding balance under the margin account with Wells Fargo, and upon such repayment, the margin capabilities were removed from the account. 88 Table of Contents Cash Flows The following table summarizes our cash flows for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, Period-to 2024 2023 Period Change Net cash used in operating activities $ (69,665 ) $ (33,535 ) $ (36,130 ) Net cash used in investing activities (22,161 ) (17,390 ) (4,771 ) Net cash provided by financing activities 82,108 28,464 53,644 Effect of exchange rate changes on cash and cash equivalents 454 44 410 Net decrease in cash and cash equivalents $ (9,264 ) $ (22,417 ) $ 13,153 Operating Activities For the year ended December 31, 2024, net cash used in operating activities of $69.7 million consisted of a net loss of $105.5 million and $6.6 mill ion in changes in working capital, partially offset by $42.5 m illion in adjustments for non-cash items.
In order to accomplish our mission, we are seeking to further expand our pipeline through both internal development and through our business development activities to collaborate, partner, and potentially acquire additional assets.
To accomplish our mission, we are seeking to further expand our pipeline through both internal development and through our business development activities to collaborate, partner, and potentially acquire additional assets. We intend to target assets that will allow us to leverage the expertise and infrastructure that we have built to help mitigate risk and enhance our probability of success.
The increase was primarily attributable to an increase in revenue from the AZSTARYS License Agreement of approximately $ 18.5 milli on, an increase in sales under the Arimoclomol EAP of approximately $3.3 m illion, partially offset by a decrease in revenue from the Corium Consulting Agreement of approximately $4.5 mill ion.
The decrease was primarily attributable to a decrease in sales under the AZSTARYS License Agreement of $14.2 million and a decrease in consulting revenue of $0.2 million, partially offset by an increase of $10.1 million in MIPLYFFA product sales, an increase in sales under the EAP of approximately $0.4 million, and an increase of $0.1 million in OLPRUVA product sales.
The successful commercialization of AZSTARYS, OLPRUVA and any of our product candidates that may be approved and the development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to commercialize AZSTARYS, OLPRUVA or any of our product candidates, if approved, and complete the remaining development of any product candidates.
At this time, we cannot be certain regarding the nature, timing or costs required to commercialize MIPLYFFA, OLPRUVA, or any of our product candidates that may be approved in the future, due to the numerous risks and uncertainties associated with commercialization activities.
Cost of Revenue Cost of revenue for the year ended December 31, 2023, was $2.9 million, an increase of $2.7 mil lion compared to cost of revenue of $0.2 million for the year ended December 31, 2022.
Intangible asset amortization Intangible asset amortization for the year ended December 31, 2024, was $6.2 million an increase of approximately $5.5 million compared to intangible asset amortization of $0.8 million for the year ended December 31, 2023.
In connection with the AZSTARYS License Agreement, we paid Aquestive a royalty equal to 10% of the regulatory milestone and royalty payments we received in 2021 from AZSTARYS.
In connection with the AZSTARYS License Agreement, we paid Aquestive a royalty equal to 10% of the upfront license payment and all regulatory milestone and royalty payments. In addition, we paid a $6 million regulatory milestone payment earned by XOMA upon the approval of MIPLYFFA on September 20, 2024.
We intend to target assets that will allow us to leverage the expertise and infrastructure that we have built in order to mitigate risk and enhance our probability of success. In addition, we may consider external opportunities within neurology and neurodegenerative diseases, psychiatric disorders, and other rare diseases, along with adjacent or related therapeutic categories.
In addition, we may consider external opportunities within neurology and neurodegenerative diseases, psychiatric disorders, and other rare diseases, along with adjacent or related therapeutic categories.
We cannot guarantee that we will be able to generate sufficient proceeds from any of these potential sources to fund our operating expenses. To date, we have generated revenue from the AZSTARYS License Agreement, reimbursements of out-of-pocket third-party costs, the performance of consulting services, OLPRUVA product sales, and product sales under the Arimoclomol EAP.
T o date, w e have generated revenue from OLPRUVA and MIPLYFFA product sales, the AZSTARYS License Agreement, reimbursements of out-of-pocket third-party costs, the performance of consulting services, and product reimbursements under the EAP.
We also expect to continue to incur additional costs associated with operating as a public company.
We also cannot guarantee that we will continue to receive reimbursements under the EAP or successfully commercialize OLPRUVA or MIPLYFFA. We also expect to continue to incur significant additional costs associated with operating as a public company.
We cannot guarantee that either Corium will be able to successfully commercialize AZSTARYS or our product candidates covered under the AZSTARYS License Agreement, and we cannot guarantee that we will be able to successfully commercialize OLPRUVA. We also do not know when, if ever, any other product candidate will be commercially available.
We cannot guarantee that we will be able to successfully commercialize either MIPLYFFA or OLPRUVA, or that Corium will be able to successfully commercialize AZSTARYS or our product candidates covered under the AZSTARYS License Agreement, in addition, we cannot guarantee that we will continue to generate revenues from the sales of arimoclomol under the EAP.
The adjustments for non-cash items primarily consisted of stock-based compensation expense of $4.3 million, consulting fees paid in stock of $0.2 million, a change in the fair value adjustment related to investments of $0.6 million, $17.7 million related to acquired in-process research and development which was expensed as part of the transactions under the Arimoclomol Purchase Agreement and $0.9 million related to depreciation, amortization and other items partially offset by a change in the fair value adjustment related to derivative and warrant liabilities of $0.3 million.
The adjustments for non-cash items primarily consisted of income tax expense of $15.4 million, stock-based compensation expense of $14.9 m illion, consulting fees paid in stock of $0.5 mill ion, interest expense of $2.1 million, inventory obsolescence of $5.7 million and $5.7 mill ion related to depreciation, amortization and other items, and a loss on disposal of $0.2 million, partially offset by a change in fair value adjustment of warrants and CVR of $2.1 million.
The increase was primarily attributable to an increase in royalty payments related to revenue from the AZSTARYS License Agreement of approximately $1.9 million and an increase in amortization expense related to OLPRUVA of $0.8 million. 93 Table of Contents Research and Development Research and development expenses increased by $20.0 million, from $19.8 million for the year ended December 31, 2022, to $39.8 mi llion for the year ended December 31, 2023.
The increase was due to an increase of $5.5 million in amortization expense related to definite-lived intangible assets. 85 Table of Contents Research and Development Research and development expenses increased by $2.3 million, from $39.8 million for the year ended December 31, 2023, to $42.1 mil lion for the year ended December 31, 2024.
Other Income Other income decreased by $12.2 million, from $15.8 million expense for the year ended December 31, 2022, t o $3.6 m illion of income for the year ended December 31, 2023.
Acer transaction costs were $2.2 million and are included in general and administrative expenses for the year-ended December 31, 2023. Other (Expense) Income Other (expense) income changed from $3.6 m illion of income for the year ended December 31, 2023, t o $3.1 milli on of expense for the year ended December 31, 2024.
For the year ended December 31, 2022, net cash used in investing activities was $36.7 million, which was attributable to net acquisition costs of the transactions under the Arimoclomol Purchase Agreement of $14.1 million and purchases of investments of $23.8 million, partially offset by maturities of investments of $1.3 million.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $22.1 mi llion, which was attributable to purchases of investments of $ 41.1 million and a $6.0 million regulatory milestone payment to XOMA, partially offset by maturities of investme nts of $25.0 million.
Liquidity and Capital Resources Sources of Liquidity Through December 31, 2023, we have funded our research and development and operating activities primarily through the issuance of debt, private placements of redeemable convertible preferred stock and the sale of common stock in our initial public offering, at-the-market offering, underwritten public offerings, through our purchase agreements with Lincoln Park Capital LLC, or Lincoln Park, and from revenue received under the Arimoclomol EAP, AZSTARYS License Agreement, the Corium Consulting Agreement and other consulting arrangements.
Liquidity and Capital Resources Sources of Liquidity Through December 31, 2024, we have funded our research and development and operating activities primarily through the issuance of debt and equity and from revenue received from the EAP, AZSTARYS License Agreement, OLPRUVA product sales, MIPLYFFA product sales and consulting arrangements.
Revenue Revenue for the year ended December 31, 2023, was $27.5 m illion, an increase of $17.3 mi llion compared to revenue of $10.2 million for the year ended December 31, 2022.
Revenue Revenue for the year ended December 31, 2024, wa s $23.6 m illion, a decrease of approximately $3.8 mi llion compared to revenue o f $27.5 mill ion for the year ended December 31, 2023.
With unique, data-driven development and commercialization strategies, we are overcoming complex drug development challenges to make new therapies available to the rare disease community. We have a diverse portfolio of products and product candidates, which includes preclinical developmental programs, clinical stage pipeline and commercial stage assets.
Overview We are a commercial-stage company focused on addressing unmet needs for the treatment of rare diseases. Our mission is to bring life-changing therapeutics to people living with rare diseases. With unique, data-driven development and commercialization strategies, we are overcoming complex drug development challenges to make new therapies available to the rare disease community.
If we are successful, expanding our pipeline could be accretive to our value proposition and has the potential to create incremental long-term value for stockholders. On November 17, 2023, Zevra completed the acquisition of Acer. Pursuant to the Merger Agreement, Acer continues as a wholly-owned subsidiary of Zevra.
If we are successful, expanding our pipeline could be accretive to our value proposition and has the potential to create incremental long-term value for stockholders. 82 Table of Contents We have historically had minimal positive net cash flows from operations.
We have had recurring negative net operating cash flows and we anticipate that we may continue to incur minimal positive net cash flows from operations or negative net cash flows from operations for at least the next several years.
We have had recurring negative net operating cash flows throughout our operating history, and we cannot guarantee or predict when we may begin to consistently generate positive net cash flows from operations, or if at all.
Certain additional cash payments are also possible pursuant to the CVRs with respect to milestones involving Acer’s early-stage program ACER-2820 (emetine).
Certain additional cash payments are also possible pursuant to the CVRs with respect to milestones involving Acer’s early-stage program ACER-2820 (emetine). On September 20, 2024, the FDA approved the New Drug Application (“NDA") for MIPLYFFA™ (arimoclomol), an orally-delivered treatment for Niemann-Pick disease type C (“NPC"), which is an ultra-rare and progressive neurodegenerative disease.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or future commercialization efforts. 88 Table of Contents On September 16, 2020, the previous sponsor of the arimoclomol program, Orphazyme, submitted a new drug application, or NDA, seeking approval for arimoclomol to treat NPC.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or future commercialization efforts. 86 Table of Contents Registration Statements on Form S-3 In connection with the Merger, we and Nantahala Capital Management, LLC (“Nantahala”) concurrently entered into a registration rights agreement, pursuant to which we agreed to file a resale registration statement with respect to the resale of our common stock issuable to Nantahala.
This increase was attributable to an increase in professional fees of $8.7 million and an increase in personnel-related costs of $9.7 million and an increase in other expenses of $0.9 million. Acer transaction costs were $2.2 million and are included in general and administrative expenses.
This increase was attributable to increases in marketing costs of $10.1 million, share-based compensation expenses of $7.2 million, personnel-related costs of $1.6 million, and other expenses of $2.2 million, primarily made up of expenses related to facilities, insurance, and travel. These increases were partially offset by a decrease in professional fees of $0.5 million.
For the year ended December 31, 2022, net cash provided by financing activities was $8.3 million, which was primarily attributable to proceeds from the issuance of debt of $12.8 million, proceeds from insurance financing arrangements of $1.3 million and proceeds from sales of common stock under the Employee Stock Purchase Plan, or the ESPP, of $0.3 million, partially offset by payments to repurchase shares as part of the Share Repurchase Program of $4.7 million, and payments of principal on insurance financing arrangements of $1.3 million. 97 Table of Contents Future Funding Requirements The auditor's opinion on our audited financial statements for the year ended December 31, 2023, includes an explanatory paragraph stating that our recurring losses, negative operating cash flows and stockholders' deficit raise substantial doubt about our ability to continue as a going concern.
Financing Activities For the year ended December 31, 2024, net cash provided by financing activities wa s $82.1 m illion, which was primarily attributable to proceeds from the issuance of debt o f $58.9 million , proceeds from insurance financing arrangements o f $1.0 millio n and proceeds from sales of common stock under the Employee Stock Purchase Plan, or the ESPP, of $1.1 million, pr oceeds from issuance of common stock of $66.2 mill ion, partially offset by repayments of debt of $4 2.7 mill ion, payments of principal on insurance financing arrangemen ts of $0.4 mill ion, and payments of deferred offering costs of $2.0 million.
The issuance and sale, if any, of our common stock under the Equity Distribution Agreement will be made pursuant to a registration statement on Form S-3. Share Repurchase Program On December 20, 2021, we initiated the Share Repurchase Program pursuant to which we may repurchase up to $50 million of shares of its common stock through December 31, 2023.
The issuance and sale, if any, of common stock by us under the 2021 ATM Agreement was to be made pursuant to the registration statement on Form S-3 (File No. 333-257661) which was declared effective on July 12, 2021, the accompanying prospectus, and the related prospectus supplement dated July 12, 2021.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or commercialization efforts. Based on our current operating forecast, we believe that our existing cash, cash equivalents and long-term investments will be sufficient to fund our operations into, but not through, 2026.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs and/or commercialization efforts. 90 Table of Contents Critical Accounting Estimates This management ’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States.
Our cash flows used in operations for the years ended December 31, 2023, and 2022, were $33.0 million and $18.7 million, respectively. As described elsewhere in this Annual Report on Form 10-K, our recurring operating losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern.
Our cash flows used in operations for the years ended December 31, 2024, and 2023, were $69.7 mi llion and $33.5 million, respectively.
We expect that our sources of revenue will be through payments arising from our license agreement with Corium, or through our Corium Consulting Agreement, and other potential consulting arrangements and any other future arrangements related to one of our product candidates We filed a registration statement on Form S-3 covering the sale of the shares of our common stock up to $350.0 million, $75.0 million of which was allocated to the sales of the shares of common stock issuable under the Equity Distribution Agreement.
We expect that our sources of revenue will be from product sales of OLPRUVA and MIPLYFFA, product reimbursements from the EAP, proceeds from our license agreement with Commave, and any other future arrangements related to one of our product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all.

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