UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 20172019

For transition period from to

Commission file number 1-32302

ANTARES PHARMA, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (609) 359-3020

Securities registered pursuant to sectionSection 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐    

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒

Aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2017,2019, was $459,300,000$527.9 million (based upon the last reported sale price of $3.22$3.29 per share on June 30, 2017,28, 2019, on the NASDAQ Capital Market).

There were 156,788,986165,560,401 shares of common stock outstanding as of March 1, 2018.February 28, 2020.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the registrant’s 20182020 annual meeting of stockholders to be filed within 120 days after the end of the period covered by this annual report on Form 10-K are incorporated by reference into Part III of this annual report on Form 10-K.

ANTARES PHARMA, INC.

FORM 10-K

TABLE OF CONTENTS

Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and product development. In particular, these forward-looking statements include, among others, statements about:

These forward-looking statements are based on assumptions that we have made in light of our industry experience as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this annual report, you should understand that these statements are not guarantees of performance results. Forward-looking statements involve known and unknown risks, uncertainties and assumptions, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.  While we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain.  Many factors may affect our ability to achieve our objectives, including:

Forward-looking statements made by us in this annual report speak only as of the date of this annual report. Actual results could differ materially from those currently anticipated as a result of a number of risk factors, including, but not limited to, the risks and uncertainties discussed under the caption “Risk Factors.”  New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We do not undertake to update or revise the forward-looking statements in this annual report after the date of this annual report, except as required by law. In light of these risks and significant uncertainties, you should not regard the forward-looking statements in this annual report as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, if at all.

PART I

Company Overview

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a specialty pharmaceutical technology company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies.  Our strategy is to identify new or existing approved drug formulations and apply our patented drug delivery technology to enhance the drug delivery methods.  We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to improveprovide commercial or functional advantages, such as improved safety and efficacy, reducereduced side effects, and enhanceenhanced patient comfort and adherence. Our subcutaneous injection technology platforms include the VIBEX^® and VIBEX^® QuickShot^® pressure-assisted auto injector systems suitable for branded and generic injectable drugs in unit dose containers as well as disposable multi-dose pen injectors. We have a portfolio of proprietary and partnered commercial products and severalongoing product candidatesdevelopment programs in advancedvarious stages of development.  We have formed significant strategic alliances and partnership arrangements with industry leading pharmaceutical companies including Teva, AMAG, Pfizer and AMAG.  Idorsia.

2019 Highlights

Antares Pharma, Inc. achieved several significant operating and financial milestones in 2019:

In addition to these significant achievements in 2019, we continued to market and sell our proprietary product OTREXUP^® (methotrexate) injection which isand achieve growth in prescriptions and sales of OTREXUP^®. We further developed our commercial organization and our sales and marketing capabilities, met the first FDA-approved subcutaneous methotrexate for once weekly self-administration with an easy-to-use, single dose, disposable auto injector, indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis.  

Through our commercialization partner Teva, we sell Sumatriptan Injection USP indicated in the U.S. for the acute treatment of migraine and cluster headache in adults.  We received FDA approvalsupply demands of our Abbreviated New Drug Application (“ANDA”) for 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors, a generic equivalentpartners, devoted significant resources to Imitrex^® STATdose Pen^®.  Sumatriptan Injection USP is the Company’s first ANDA approval of a complex generic and second product approved using the VIBEX^® auto injector platform.

We developed and supply a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive licenseresearch and development agreement.  On February 14, 2018, the FDA approved AMAG’s supplemental New Drug Application (“sNDA”) for the Makena^® subcutaneous auto injector drug-device combination product, which isprograms to further our development pipeline and maintained a ready-to-administer treatment indicateddisciplined approach to reduce the risk of preterm birth in women pregnant with one babygrowth and who spontaneously delivered one preterm baby in the past. AMAG is preparing for a launch and expects the Makena^® subcutaneous auto injector to be available in the second half of March 2018. We have commenced manufacturing and supply of devices and commercial product in anticipation of the launch.  

We are developing XYOSTED^TM (testosterone enanthate) injection for testosterone replacement therapy, and submitted a 505 (b)(2) New Drug Application (“NDA”) to the FDA in December 2016. The NDA submission was accepted for standard review by the FDA and assigned a Prescription Drug User Fee Act (“PDUFA”) target date for completion of its review by October 20, 2017. On October 20, 2017, we received a Complete Response Letter (“CRL”) from the FDA regarding our NDA for XYOSTED^TM, which identified two deficiencies and indicated that the NDA cannot be approved in its current form. Based on findings in our clinical program, the FDA stated its concern that XYOSTED^TM could cause a clinically meaningful increase in blood pressure.  In addition, the FDA raised concern regarding the occurrence of depression and suicidality.  On February 21, 2018, we met with the FDA to discuss a potential path forward for submission of a response to the CRL for XYOSTED^TM. We intend to provide further information following the receipt of the official meeting minutes from the FDA, which is typically within 30 days of the meeting date.

We are collaborating with Teva on a VIBEX^® auto injector pen containing epinephrine used for the treatment of severe allergic reactions (anaphylaxis).  Teva submitted an amendment to the VIBEX^® epinephrine pen ANDA in December 2014 and received a CRL from the FDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies.  Teva has disclosed that they submitted a response to this CRL.  We continue to work with Teva toward a potential approval of the epinephrine auto injector pen.

Our other combination product development projects in collaboration with Teva include a multi-dose pen for a generic form of BYETTA^® (exenatide injection) for the treatment of diabetes, and another multi-dose pen for a generic form of Forteo^® (teriparatide [rDNA origin] injection) for the treatment of osteoporosis. Teva continues to work through the regulatory process with the FDA for exenatide and teriparatide using the ANDA pathway.  Teva and Eli Lilly and Company (“Lilly”) settled their Paragraph IV patent litigation related to Teva’s ANDA for teriparatide, the terms of which have not been disclosed. Teva also successfully completed a decentralized procedure registration process in 17 countries in Europe for teriparatide, and is awaiting patent clearance in the European Union (“EU”) prior to launch.expenditures.

We also make reusable, needle-free injection devices that administer injectable drugs, which are marketed through Ferring and JCR Pharmaceuticals Co., Ltd. (“JCR”) for use with human growth hormone (hGH). On October 10, 2017, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring (the “Ferring Transaction”) to sell the worldwide rights, including certain assets, related to the needle-free auto injector device product line for a total purchase price of $14.5 million.  

The purchase price is to be paid in four installments consisting of the following: a $2.0 million upfront payment received upon entry into the Asset Purchase Agreement and the transfer of certain assets; a second installment of $2.75 million received upon delivery of certain documentation and satisfaction of certain conditions primarily related to the needle-free product manufacturing, which occurred in February 2018; a third installment of $4.75 million payable to us upon satisfaction of certain conditions, including further document transfer, the successful completion of a regulatory audit by a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installment of $5.0 million upon Ferring’s receipt of the CE Mark needed to continue to commercialize the needle-free product in certain territories and the final transfer of certain product-related inventory, equipment and agreements to Ferring (the “Completion Date”), which is expected to occur by the end of 2018.

We will continue to manufacture and supply needle-free devices until the Completion Date and will receive payment for devices and a royalty on net product sales in accordance with the existing license and supply agreements.

Corporate Information

Antares is a Delaware corporation with principal executive offices located at 100 Princeton South Corporate Center, Suite 300, Ewing, New Jersey 08628.  We have two wholly owned subsidiaries in Switzerland (Antares Pharma AG and Antares Pharma IPL AG).  On January 31, 2001, we completed a business combination to acquire the operating subsidiaries of Permatec Holding AG, headquartered in Basel, Switzerland. Upon completion of the transaction, our name was changed from Medi Ject Corporation to Antares Pharma, Inc.

Segment and Geographic Information

We have a single reportable operating segment, drug delivery, which includes all of our self-administered parenteral pharmaceutical products and technologies.  See Note 2 to the Consolidated Financial Statements in Part II, Item 8 about segment financial information.

Our Product Portfolio Overview

The following table provides an overview and brief description of our proprietary and partnered commercial products and product opportunities:

For a detailed discussion of our proprietary and partnered approved and marketed products, and other products currently in development, see “Our Products” and “Research and Development” sections below.

Our Strategy and Market Opportunity

Our business strategy is to identify development and commercialization opportunities that apply our proprietarypatented drug delivery injection technology to new or existing approved drug formulations in order to enhance the drug delivery methods.methods and provide commercial and/or functional advantages.  Our strategy is to pursue these opportunities both on our own or with industry leading partners. We believe this strategy offers a distinct value to patients, physicians,healthcare providers, pharmaceutical partners and our shareholders. Our focus is primarily on the market for delivery of self-administered injectable drugs, comprised of non-biologic and small molecule drugs and biological products or biosimilars.drugs. Our patented drug delivery technologies, such as the VIBEX^® QuickShot^®, enable the delivery of highly viscous drug compounds through fine gauge needles.  We believe our technology platforms have potential in both the branded and generic marketplace, and that there are a large number of existing approved drugs that may benefit from an alternate route of delivery such as subcutaneous injection.

Injection is a common drug delivery pathway, and the delivery of pharmaceutical therapies through injection systems often improves the systemic bioavailability of those treatments by overcoming absorption barriers common with oral and, in some cases, transdermal delivery. Improved bioavailability is considered beneficial when consideringevaluating the role of route of administration on pharmaceutical efficacy. We believe that our business model of developing our own pharmaceuticaladvanced injection technology platforms provide drug delivery solutions that can result in improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence.  

We also believe that many injectable products currently offered in targeted therapeutic categories using our pressure-assistedvials and administered through needle and syringe could be replaced with user-friendly auto injectors promoting better compliance and pen injectors, combined with our strategy to partner with pharmaceuticalimprovement in dose accuracy.  Several manufacturers of injectable products outsidehave introduced convenient alternatives to vials, such as prefilled syringes and injector systems, and an increasing proportion of people who self-administer drugs are transitioning to prefilled syringes and other injector systems when offered. Additionally, major pharmaceutical companies market directly to consumers and encourage the use of innovative, user-friendly drug delivery systems, offering patients an ability to self-inject products at home. We believe the patient-friendly attributes of our therapeuticinjection technologies meet these market needs. Many pharmaceutical companies also focus offers us additional potential to profit fromon the development of important chronic care products and emergency rescue therapies that can be administered only by injection.  We believe our proprietary injector systems in multiple markets inadvanced injection technologies uniquely address these market needs and are well suited for both the future.branded and generic marketplace.

We and our partners have historically sought, and are in the process of seeking, FDA approval for certain product candidates primarily using the 505(b)(2) NDA (New Drug Application) or ANDA (Abbreviated New Drug Application) approval pathways, which are further described in the Government Regulation section below. Our technology platforms allowsallow for device customization, which can provide multiple opportunities in both the 505(b)(2) NDA and generic market spaces. There are a large number of injectable branded products losingthat have recently lost patent protection in the U.S. in the near term, whichthat will be or have been subject to the ANDA approval pathway. By way of example, threetwo of our potentialthe products in development with our partner Teva (epinephrine auto(disposable pen injector andproducts with teriparatide and exenatide in our pen technology)exenatide) are being developed as generic versions of the branded products.  Unlike branded products which need to be detailed to a physician by a sales force, a generic product with an AB rating may be substitutable at the pharmacy in lieu of the branded product affording a potentially low cost, high market penetration generic product.

Many pharmaceutical companies continue to focus on the development of important chronic care products and therapies that can be administered only by injection. We believe that many of these injectable drugs that are currently under development may eventually be administered by self-injection once they reach the market. Our belief is supported by the ongoing effort to reduce hospital and institutional costs by early patient release, and the gathering momentum of new classes of drugs that require injection. Additionally, major pharmaceutical companies market directly to consumers and encourage the use of innovative, user-friendly drug delivery systems, offering patients an ability to self-inject products at home. We believe the patient-friendly attributes of our injection technologies meet these market needs.

We believe that many injectable products currently offered in vials could be replaced with user-friendly auto injectors promoting better compliance and improvement in dose accuracy.  Several manufacturers of injectable products have introduced convenient alternatives to vials, such as prefilled syringes and injector systems, and an increasing proportion of people who self-administer drugs are transitioning to prefilled syringes and other injector systems when offered. We believe that our advanced drug delivery systems can result in improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence.

Cost containment pressure by managed care organizations, combined with patient preferences for convenience and comfort are driving a change in the treatment setting from the health care facility to patients’ homes.  This trend is creating a shift from the chronic care injections and even some acute care injections being administered by a doctor or nurse to self-administration by the patient, a family member, or other lay caregiver.   This shift has produced a transition in how injectable drugs are configured to facilitate use by consumers.  In many therapeutic categories, pre-filled syringes and other injection systems offering greater ease-of-use and security for patients now exceed vials in unit volume, often at substantial unit price premium.  

According to the February 2017a Market Research Engine report,Injectable Drug Delivery Market by MarketsandMarkets, it is estimated that the global injectable drug delivery market will grow to $624.5$775 billion by 2021,2024, representing a compounded annual growth rate of 11.5% from 2016 - 2021.in the forecast period.  This expected growth is attributable to several factors, including label expansion for approved products, increasing the patient pool for such products, a pipeline of injectable medications at various stages of clinical development, and the increasing incidence of certain diseases that will necessitate the utilization of injectable medications.

See also “Our Products” and “Research and Development” below for additional discussion of market size and opportunities relative to the current therapeutic areas associated with our existing portfolio of products and products in development.

Our Competitive Strengths

We have a proven business model of applying our patented drug delivery injection technology to new and existing therapeutic products. We believe our key competitive strengths are our proprietary injection technologies, and our ability to form significant strategic alliances with industry-leading pharmaceutical partners to develop and commercialize proprietary and partnered products. We believe our management team has unique knowledge of, and experience in the drug/device combination product space, and in identifying new product candidates that could potentially benefit from our device technology platforms.  We believeplatforms, which creates opportunities for us and potential pharmaceutical partners that look to us for our unique capabilities and know-how. Our business model for developing and commercializing proprietary and partnered products has been validated, we believe, by the successive FDA approvals of our NDANDAs for XYOSTED^® and OTREXUP^® and our ANDA for Sumatriptan Injection USP, and the commercialization of those products, as well as the FDA approval of AMAG’s sNDA forTeva’s AB-rated generic version of the MakenaEpiPen^® auto injectoralso utilizing our VIBEX^® QuickShot^® technology.  auto injector.

Intellectual Property, Patents, Trade Secrets and Proprietary Information

We strive to protect and enhance the proprietary technologies that we believe are important to our business and rely on know-how and continuing technological innovation to develop, strengthen, and maintain our competitive position. When appropriate, we have obtained, oractively seek protection for our products and proprietary information by means of U.S. and international patents and trademarks.  We currently hold a portfolio of patents with expirations ranging from 2020 to 2036, and numerous patent applications pending in the U.S. and other countries.  These patents consist primarily of design, formulation and method-of-use patents.Our intellectual property portfolio includes numerous patents and additional patent applications pending in the U.S. and other countries.  Our patents have expiration dates ranging from 2019 to 2035.

In addition to theour patents and patent applications, we rely on trade secrettrade secrets play an important role in protecting our products and technologies and provide protection in all of our technologiesbeyond patents and regulatory exclusivity.  We strive to preserve the confidentiality of thoseour trade secrets, proprietary know-how and inventions.inventions by maintaining physical security of our sites and electronic security of our information technology systems. We also require all employees, contractors and third-party consultants with access to proprietary information to execute confidentiality agreements prohibiting the disclosure of confidential information to anyone outside the Company. These agreements also require disclosure and assignment to us of discoveries and inventions made by such individuals while devoted to Company-sponsored activities. Partners with which we have entered into development agreements have the right to certain technology developed in connection with such agreements.

Our Technology and Product Platforms

We are leveraging our experience in device technologies to enhance the product performance of established drugs as well as new drugs in development. Our current portfolio includes the VIBEX^® andthe VIBEX^® QuickShot^® disposable pressure assisted auto injection systems, and disposable pen injection systems.  

Disposable VIBEX^® Injectors

A significant challenge beyond discovery of new molecules is how to effectively deliver them by means other than conventional needle and syringe. The majority of these molecules have not, to date, been amenable to oral administration due to a combination of several factors, including breakdown in the gastrointestinal tract, fundamentally poor absorption, or high first pass liver metabolism.

Pressure assisted auto injection is a form of parenteral drug delivery that continues to gain acceptance and demand among the medical and patient community. Encompassing a wide variety of sizes and designs, thisour technology operates by using pressure to force the drug, in solution or suspension, through the skin and deposits the drug into the subcutaneous or intramuscular tissue. We have designed disposable, pressure assisted auto injector devices to address acute and chronic medical needs, such as rheumatoid arthritis and psoriasis, allergic reactions, migraine headaches, testosterone deficiency and maternal health. Our current platforms include the VIBEX^® andthe VIBEX^® QuickShot^® disposable pressure assisted auto injection systems and disposable pen injection systems.  

VIBEX^® Auto Injectors

Our proprietary VIBEX^® disposable auto injector systems combine a spring-based power source with a shielded needle, which delivers the needed drug solution subcutaneously or intramuscularly.

In order to minimize the anxiety and perceived pain associated with injection-based technologies, the VIBEX^® system features a triggering collar that shields the needle from view. The patented retracting collar springs back and locks in place as a protective needle guard after the injection, making the device safe for general disposal. In clinical studies, this device has outperformed other delivery methods in terms of completeness of injection and user preference, while limiting pain and bleeding. We believe the key competitive advantages of the VIBEX^® system include:

The primary goal of the VIBEX^® disposable pressure assisted auto injector is to provide a fast, safe, and time-efficient method of self-injection. This device is designed around conventional single dose pre-filled syringes, which is a primary drug container, offering ease of transition for potential pharmaceutical partners.  Our proprietary product OTREXUP^® uses the VIBEX^® auto injector system for delivery of methotrexate. We also have two license agreements with Teva for our VIBEX^® system, one for anTeva’s generic epinephrine auto injector and the other for our Sumatriptan Injection USP.  Our proprietary product OTREXUP^® also uses the VIBEX^® auto injector system for delivery of methotrexate.  

VIBEX^® QuickShot^® Auto Injectors

Our latestAn advancement inof our proprietary line of VIBEX^® auto injectors is the VIBEX^® QuickShot^® auto injector system, which offers a dose capacity of 1 mL or greater in a compact design. VIBEX^® QuickShot^® is designed to enhance performance on the attributes we believe most critical to patient acceptance, which are speed, comfort and discretion. VIBEX^® QuickShot^® achieves these advancements by incorporating a novel triggering mechanism and space-saving spring configuration. The unique design also accommodates fast injection of highly viscous drug products that less-powerful conventional auto injectors are typically unable to deliver.  Many self-injectable drugs that are currently marketed andor in clinical development are of higher viscosity and are formulated to be administered in a 1 mL dose volume. We are developing products based on the VIBEXOur proprietary product XYOSTED^® QuickShot^® system, including XYSOSTED^TM for delivery of testosterone as replacement therapy in men who have testosterone deficiency. Ourwas developed using the VIBEX^® QuickShot^® auto injector platform, which is also used in the FDA-approved Makena^® Auto Injector.subcutaneous auto injector that we developed with our partner AMAG.  We also have a license agreement with Pfizer to develop a rescue pen utilizing our VIBEX^® QuickShot^® auto injector system with an undisclosed Pfizer drug, and a license and development agreement with Idorsia for a drug device combination product utilizing a  variation of our VIBEX^® QuickShot^® auto injector device with a new chemical entity Selatogrel, being developed for the treatment of acute myocardial infarction.

Disposable Auto-Insert Injection Technology

We have recently developed a new and versatile auto injector system to meet evolving market needs. The Auto-Insert device builds off the capabilities of our VIBEX^® platform adding automatic needle insertion, subcutaneous or intra-muscular (“IM”) injections of up to 1 inch and delivered volumes of up to 2 mL. This new device can accommodate 1 mL standard, 1 mL long, and 2.25 mL syringes. The auto-insert technology is intended to improve compliance for drug products requiring deep IM injections.  This new device is easily convertible to different fill volumes and needle lengths and was designed specifically to meet the reliability requirements for emergency use applications while maintaining the simple and intuitive two-step process of administration of the VIBEX^® device.

Pen Injector System

Our multi-dose, disposable pen injector technology complements our portfolio of single-use pressure assisted auto injector devices.  The disposable pen injector device is designed to deliver drugs by injection through needles from multi-dose cartridges.  Our disposable pen injector is designed for chronic conditions such as diabetes, which require daily injection of a product.  Depending on dosage, our pens can deliver up to thirty days of drug.  We have licensed our pen injector device technology to Teva for two potential products: an exenatidea multi-dose pen with teriparatide for the treatment of osteoporosis (a generic form of Forteo^®) and a multi-dose pen with exenatide for the treatment of diabetes (a generic version of BYETTA^®) and a multi-dose pen for the treatment of osteoporosis (a generic form of Forteo^®.)

Needle-Free Injectors

Needle-free devices administer injectable drugs by using a spring to push the active ingredient in solution or suspension through a micro-fine opening in the needle-free syringe. A fine liquid stream then penetrates the skin, and the dose is dispersed into the layer

Our Products

The following is a discussion of fatty,our approved and marketed commercial products, including proprietary and partnered products.  For a discussion of other product candidates currently in development, see the “Research and Development” section below.

XYOSTED^® (testosterone enanthate) injection

XYOSTED^® (testosterone enanthate) injection is our proprietary product for subcutaneous tissue. Needle-free injection combines proven delivery technologyadministration of testosterone replacement therapy (“TRT”) in adult males for molecules that require parenteral administrationconditions associated with a device that eliminatesdeficiency or absence of endogenous testosterone. XYOSTED^® is the partonly FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration and is approved and marketed in three dosage strengths, 50 mg, 75 mg and 100 mg.

According to IQVIA National Sales Perspectives^® (“NSP”) reporting of nationally projected sales activities, the overall U.S. TRT market was approximately $1.7 billion in 2019 based on wholesale acquisition costs (“WAC”). Total prescriptions in the U.S. TRT market grew by 6.6% in 2019 as compared to 2018, entirely driven by an increase in prescriptions of injectables, which increased by 11.0%. The injectable TRT market grew from $361.7 million in 2018 to $408.4 million in 2019, an increase of 12.9% based on WAC. In September 2019, XYOSTED^® became the most prescribed Branded TRT among Urologists, and as of December 2019, XYOSTED^® commanded approximately 43% of the injectionBranded TRT market among Urologists. In October 2019, XYOSTED^® became the most prescribed Branded TRT among Endocrinologists, and as of December 2019, XYOSTED^® commanded approximately 37% share of the Branded TRT market among Endocrinologists.

We believe that patients dislike –XYOSTED^® provides several potential benefits over other TRT treatments such as topical gels and other forms of injectable testosterone administered via needle and syringe in healthcare settings.  These benefits include easy and virtually pain-free administration, low risk of transfer as compared to topical gels and the needle.  Improving patient comfort through needle-free injection may increase complianceability to achieve and mitigatemaintain steady levels of testosterone.

Topical formulations of TRT are frequently prescribed in the problemU.S. However, not all men are able to adequately absorb the gel formulations or otherwise find them unacceptable for reasons including risks of daily injections. However, needle-free devices may be commercially limitedtransferring the gel to spouses or children, dissatisfaction with the application process, or suboptimal clinical results due to variability in exposure and compliance.  Injectable testosterone is an option for men with an inadequate response to transdermal therapies. Oral formulations of testosterone had previously been linked in studies with liver toxicity and fluctuations in testosterone levels, however, the high costFDA recently approved Jatenzo^®, an oral formulation of testosterone undecanoate, which was developed by Clarus Therapeutics (“Clarus”) and launched for commercial sale in February 2020.  

Competition in the product U.S. testosterone replacement market includes topical solutions such as Abbvie’s Androgel^® and Androgel^® 1.62%, Perrigo’s generic 1.62% testosterone topical gel, Lilly’s Axiron^®, Endo’s Fortesta^® and Testim^® (and the need for consumable disposables.  authorized generic) and Allergan plc (“Allergan’s”) Androderm^®. Other forms of TRT include injectables, such as Endo’s Aveed^®, Pfizer’s Depo^®-Testosterone, and several generic testosterones in oil products sold by Actavis, Sandoz, Mylan, Teva and others, as well as Testopel^® pellets by Endo. Clarus recently launched Jatenzo^®,an oral formulation of testosterone undecanoate, and Lipocine, Inc. (“Lipocine”) is also developing an oral formulation of testosterone undecanoate, Tlando^®. Acerus Pharmaceuticals markets Natesto^™, an intra-nasal testosterone.

On October 10, 2017, we entered into an asset purchase agreement with Ferring to sell the worldwide rights and transfer certain assets, including intellectual property, related to our needle-free injector device product line. We will continue to manufacture and supply needle-free injector devices until the completion of the transaction, which is expected to occur by the end of 2018.

Our Products and Products in Development

Approved and Marketed Products

OTREXUP^® (methotrexate) injection

OTREXUP^® is our proprietary combination product comprised of a pre-filled methotrexate syringe and our VIBEX^® self-injection system designed to enable rheumatoid arthritis and psoriasis patients to self-inject methotrexate reliably, accurately, comfortably and conveniently at home. OTREXUP^® (methotrexate) injection is the first FDA-approved subcutaneous methotrexate for once weekly self-administration with an easy-to-use, single dose, disposable auto injector.  Our initial NDA, approved in October 2013, covered the 10 mg, 15 mg, 20 mg and 25 mg dosage strengths.  To date, we have received FDA approval for eightWe currently market seven dosage strengths including 7.5 mg, 10 mg, 12.5 mg, 15 mg, 17.5 mg, 20 mg, 22.5 mg and 25 mg of OTREXUP^®.in the U.S.

OTREXUP^® is indicated for use in adults with severe, active rheumatoid arthritis (“RA”) or children with active polyarticular juvenile arthritis (“pJIA”) who are intolerant of or had an inadequate response to first‑line therapy, including full dose non‑steroidal anti‑inflammatory agents, and adults with severe recalcitrant psoriasis. RA is a chronic autoimmune disease, resulting in pain, stiffness, swelling, joint damage, and loss of function of the joints. According to the Arthritis Foundation, RA affects approximately 1.5 million Americans, which is almost 0.5% of the U.S. population.  The disease onset generally occurs between the ages of 30 to 60 years in women.  In men, it often occurs later in life.  pJIA is the most common rheumatic disease in childhood, and according to the Arthritis Foundation, juvenile arthritis affects nearly 300,000 children in the U.S. Methotrexate is also used to treat psoriasis, which is believed to be an autoimmune disease characterized by thick patches of inflamed, scaly skin, created by abnormal, rapid, and excessive proliferation of skin cells.  According to the American Academy of Dermatology, as many as 7.5 million Americans, or approximately 2.2% of the population suffer from psoriasis.  

Methotrexate is considered the first-line disease modifying anti-rheumatic drug (“DMARD”) prescribed to patients with RA according to the Johns Hopkins Arthritis Center.  Methotrexate is usually started at 7.512.5 mg, 10 mg orto 15 mg given orally, once-a-week, and titrated up for greater therapeutic effect, or until the patient incurs side effects.  The maximum oral dose given is generally 20 mg to 25 mg per week (8 to 10,(10, 2.5 mg tablets given in one dose).  Studies have reported as many as 30% to 60% of patients experience gastrointestinal side effects with oral methotrexate, preventing further dose escalation or requiring discontinuation in some patients.  Also, the extent of oral absorption of methotrexate varies considerably between patients.  

We believe that OTREXUP^® offers physicians and patients an important alternative to oral methotrexate tablets and vials of the injectable form of the drug administered with a needle and syringe. OTREXUP^® provides physicians and patients a convenient, practical and virtually painless option for administering parenteral methotrexate as an alternative to proceeding directly from oral methotrexate to biologics.  Additionally, OTREXUP^® is a self-contained injection device designed to minimize accidental contact with methotrexate, a hazardous drug agent. Since its launch in February 2014, OTREXUP^® has been prescribed by over 3,000 physicians. Our marketing data reveals that some physicians regularly use OTREXUP^® in RA patients who have experienced an inadequate response to oral methotrexate therapy for reasons of tolerability and/or efficacy.

MedacMedexus Pharma Inc. (“Medac Pharma”), a privately held pharmaceutical company, markets and sells Rasuvo^®, a subcutaneous injectable methotrexate, which is a direct competitor to OTREXUP^®. Cumberland Pharmaceuticals, Inc. has also recently received regulatory approval for two methotrexate product lines in the U.S.  Competition in the methotrexate market also includes tablets and parenteral forms that are currently marketed in the U.S. by several generic manufacturers, including Teva, Pfizer, Inc. (“Pfizer”), Mylan, Inc. (“Mylan”), Hospira and Accord Healthcare.  In several European countries, Canada, and South Korea, Medac International or its licensees market methotrexate in prefilled syringes (Metoject^®) and have also launched an auto injector with methotrexate in those territories.  Other commonly used pharmaceutical treatments for rheumatoid arthritis include analgesics, non-steroidal anti-inflammatory drugs (NSAIDs), corticosteroids, DMARDs and biologic response modifiers.  In addition to methotrexate, the DMARDs include azathioprine (Imuran^®), cyclosporine (Neoral^®), hydroxychloroquine (Plaquenil^®), auranofin (Ridura^®), leflunomide (Arava^®) and sulfasalazine (Azulfidine^®).  The biologic response modifiers include etanercept (Enbrel^®), adalimumab (Humira^®), golimumab (Simponi^®), tocilizumab (Actemra^®), certolizumab (Cimzia^®), infliximab (Remicaid^®), abatacept (Orencia^®), and rituximab (Rituxan^®). They are often prescribed in combination with DMARDs such as methotrexate.

Sumatriptan Injection USP

We, through our partner Teva, sell Sumatriptan Injection USP, indicated in the U.S. for the acute treatment of migraine headaches and cluster headache in adults.  We received FDA approval of our ANDA for the 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors, a generic equivalent to Imitrex^® STATdose Pen^®, in December 2015.  We have a license, supply and distribution agreement with Teva, under which Teva is responsible for the manufacture and supply of the drug, and we manufacture the device and complete assembly and packaging of the finished product. Teva is responsible for commercialization and distribution.  

According to a survey commissioned by the National Headache Foundation, migraine affects nearly 37 million Americans.  Migraine headaches are often characterized by a headache of moderate or severe intensity, nausea (the most common characteristic), one-sided and/or pulsating quality, aggravated by routine physical activity, duration of hours to 2-3 days; and an attack frequency anywhere between once a year and once a week.  Healthcare professionals frequently prescribe triptans to stop migraine attacks.

The total U.S. retail anti-migraine market was $4.3 billion in 2019 according to IQVIA’s National Prescription Audit^® (“NPA”) report based on TRx Pharmacy Dollars. The majority of patients who use triptans take oral tablets.  Oral drugs accounted for $3.8 billion of the total, and injectable products accounted for approximately $283 million of the total market, measured in terms of TRx Pharmacy Dollars. While oral triptans have benefited many migraine sufferers, they are most consistently effective when taken at a relatively early stage in the migraine attack. Studies have shown that injectable sumatriptan is more effective and rapid-acting in the treatment of migraine headache that has reached the moderate to severe level of intensity.

According to IQVIA’s NPA, about 3% of triptan prescriptions are currently for injectable triptans. Sumatriptan is the only injectable triptan approved for use in the U.S.  Sumatriptan is currently available in an oral formulation, a nasal spray (Imitrex, GSK and generic) and a needleless injector (Sumavel, Astellas/Zogenix). There is extensive competition in the sumatriptan marketplace and several manufacturers offer versions of injectable sumatriptan with a delivery device, including GSK (Imitrex STATdose Pen^®), Pfizer (Alsuma), ENDO Pharmaceuticals (Sumavel DosePro), Sun Pharma (generic sumatriptan autoinjector) and Upsher-Smith (Zembrace SymTouch). One company, Sandoz, Inc. (“Sandoz”) markets an authorized generic version of GSK’s Imitrex STATdose Pen^®. At least three companies, including Teva, and Fresenius Kabi have FDA approval to market injection sumatriptan in prefilled syringes, although we are not aware of any that presently market this product configuration. Additionally, several generics manufacturers offer injectable sumatriptan in vials.

Epinephrine Injection USP

We developed and are the exclusive supplier of the device for Teva’s generic Epinephrine Injection USP products, indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients. Teva’s Epinephrine Injection, utilizing our patented VIBEX^® injection technology, was approved by the FDA in August 2018 as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to Mylan, Inc.’s branded products EpiPen^® and EpiPen Jr^® and therefore, subject to state law, substitutable at the pharmacy. Teva announced a limited commercial launch of its generic epinephrine product in late fourth quarter of 2018 with full commercial availability in 2019. We supply the device and Teva is responsible for the drug, assembly and packaging, distribution and commercialization of the finished product, for which we also receive royalties on Teva’s net sales.

Epinephrine is utilized for the treatment of severe allergic reactions (anaphylaxis) to insect venom, foods, drugs and other allergens as well as anaphylaxis to unknown substances or exercise-induced anaphylaxis. Mylan’s EpiPen^®, along with its own authorized generic of the product, continues to be the global market leader in the epinephrine auto injector market.  In December 2016, Mylan announced the availability of its lower-priced authorized generic to EpiPen^®, intended to address pricing concerns of the branded version. In the U.S., sales of epinephrine injection products were approximately $1.3 billion in 2019 based on WAC, according to the IQVIA NSP report. There are other companies and alternative products competing in the market. For example, in January 2017, CVS announced that a low-cost epinephrine auto injector option, the authorized generic for Adrenaclick® manufactured by Impax Laboratories, is available at all CVS Pharmacy locations. Kaléo announced the availability of AUVI-Q® (Epinephrine Injection, USP) Auto-Injector in the U.S. beginning in February 2017, and Adamis Pharmaceuticals announced FDA approval of SYMJEPI™, an epinephrine pre-filled syringe, which is marketed and distributed in the U.S. by Sandoz Inc.

Makena® (hydroxyprogesterone caproate injection) Subcutaneous Auto Injector

We developed a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive license and development agreement. The Makena^® subcutaneous auto injector drug-device combination product is a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered one preterm baby in the past. The product was approved by the FDA in February 2018. We are the exclusive supplier of the devices and the final assembled and packaged commercial product to AMAG.  

Makena^® is a progestin that belongs to a class of drugs called progestogens. Progestogens have been studied to reduce preterm birth and have shown varying results depending upon the subjects enrolled. The active ingredient in Makena^®, 17α hydroxyprogesterone caproate (often referred to as 17P), is the only FDA-approved treatment for pregnant women who have had a prior spontaneous preterm birth (which is a substantial risk factor for recurrent preterm birth) and has been and used for more than a decade by healthcare providers to treat patients with a history of spontaneous preterm birth.The approval of Makena^® was based on the landmark Meis trial, conducted by the National Institute of Child Health and Human Development and the Maternal-Fetal Medicine Units Network and published in the New England Journal of Medicine in 2003. The Society for Maternal Fetal Medicine Publications Committee published clinical guidelines for the use of progestogens to reduce the risk of preterm birth in the American Journal of Obstetrics and Gynecology in May 2012, which were affirmed in 2014. Preterm birth is defined as a birth prior to 37 weeks of pregnancy. According to the March of Dimes, preterm births affected nearly 380,000 babies, or one of every ten infants born in the U.S.

In October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial. Among the clinicians on the advisory committee, five of the six who practice obstetrics voted to keep Makena^® on the market and generate more data. The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. AMAG has stated that it remains committed to working with the FDA to maintain patient access to Makena^®. According to preliminary results reported by AMAG, net revenue from sales of Makena^® was estimated to be $120 to $123 million for the year ended December 31, 2019 and was $322.3 million in 2018.

Research and Development

We are committed to a strong research and development program, recognizing that the development of new product offerings is important to our future success. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug/device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.

Our research and development programs consist primarily of clinical, regulatory, formulation development, engineering and device development activities for our current products, next generation versions of current products, product extensions, and new proprietary and partnered products and technologies in development. Our internal research and development team works with external consultants, industry experts, physicians and other medical personnel in an effort to drive a robust product development pipeline. We also have a business development team that actively seeks and evaluates product opportunities and new business alliances. The following is a discussion of our significant research and development activities.

ATRS-1701

We previously disclosed a program to develop a proprietary drug device combination product for the neurology market, identified as ATRS-1701.  We completed design of a new device platform and development of a prototype. Following a careful review of our strategic plan and our pipeline, we re-prioritized our resources to focus our development efforts on potential products that better align with our current commercial infrastructure and have decided to cease further development of this program.  We intend to seek to out-license this program.    

ATRS - 1901

In 2019, we initiated development of a proprietary drug device combination product for the urology oncology market, identified as ATRS-1901. We conducted formulation development work and non-clinical studies to help advance this program and are targeting a pre-IND (Investigational New Drug) submission to the FDA by the second half of 2020.

ATRS -1902

In 2019, we identified a program to develop a proprietary drug device combination product for the endocrinology market, identified as ATRS-1902.  We are currently conducting initial formulation work and evaluating the regulatory and clinical strategies and anticipate advancing this program in 2020.    

Partnered Development Projects – We, in collaboration with our pharmaceutical partners, are engaged in research and development activities utilizing our auto injectors and disposable pen injectors. The development programs typically consist of determination of the device design, development of prototype tooling, production of prototype devices for testing and clinical studies, and development of commercial tooling and assembly. We expect development related to these products to continue, however, the development timelines are generally controlled by our partners and the extent of near-term and future development will be dependent on decisions made by our partners. The following is a summary of the development stages for each of the partnered products in development.

Pen Injector with Teriparatide

We are developing with Teva, under a license, development and supply agreement, a multi-dose disposable pen injector device with teriparatide for the treatment of osteoporosis. Teva is actively working toward a regulatory approval with the FDA for a generic version of Forteo^® (teriparatide [rDNA origin] injection) using the ANDA pathway and has indicated it is awaiting a potential FDA approval in late 2020 or early 2021.  Teva and Eli Lilly and Company (“Lilly”) settled their Paragraph IV patent litigation, the terms of which have not been disclosed. Teva also successfully completed a decentralized procedure registration process for teriparatide in 17 countries in Europe.

Teriparatide is used for the treatment of osteoporosis in postmenopausal women and men at increased risk of fracture and for glucocorticoid induced osteoporosis in men and women. According to Lilly’s 2019 annual report on Form 10-K, 2019 global sales of Forteo^® was $1.4 billion, of which $645.5 million was recorded in the U.S. and $759.1 million in the rest of the world.

Pen Injector with Exenatide

We are also developing with Teva a multi-dose pen injector device for use with a generic form of BYETTA^® (exenatide injection) for the treatment of diabetes.  Teva is working through the U.S. regulatory approval process for its exenatide pen using the ANDA pathway.

Exenatide, marketed as BYETTA^®, is used along with diet and exercise to treat type 2 diabetes, a condition in which the body does not use insulin normally and therefore cannot control the amount of sugar in the blood.  Exenatide works by stimulating the pancreas to secrete insulin when blood sugar levels are high. Insulin helps move sugar from the blood into other body tissues where it is used for energy. Exenatide also slows the emptying of the stomach and causes a decrease in appetite. Exenatide is not used to treat type 1 diabetes, a condition in which the body does not produce insulin and therefore cannot control the amount of sugar in the blood.  Exenatide is not used instead of insulin to treat people with diabetes who need insulin.  Total gross U.S. sales of BYETTA^® (exenatide) by AstraZeneca in 2019 were approximately $165 million according to IQVIA NSP. BYDUREON^®, a long acting form of the medication BYETTA^®, had approximately $1.2 billion in gross sales in the U.S. in 2019 based on WAC, according to IQVIA NSP.

Rescue Pen (drug undisclosed)

In August 2018, we entered into a collaboration agreement with Pfizer and began developing a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot^® auto injector and an undisclosed Pfizer drug. We will develop the product and Pfizer will be responsible for obtaining FDA approval of the combination product. We intend to enter into a separate supply agreement with Pfizer pursuant to which we will provide fully packaged commercial ready finished product to Pfizer and Pfizer will then be responsible for commercializing the product in the U.S., pending FDA approval, for which the Company will receive royalties on net sales.  We have begun design work, feasibility testing and Human Factor studies.

Rescue Device with Selatogrel

In November 2019, we entered into a new global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. Selatogrel,anewchemicalentity,isbeingdevelopedforthetreatmentofasuspectedacutemyocardialinfarction(AMI)inadultpatientswithahistoryofAMI.Idorsiawillpayforthedevelopmentofthecombinationproductandwillberesponsibleforapplyingforandobtainingglobalregulatoryapprovalsfortheproduct.ThepartiesintendtoenterintoaseparatecommerciallicenseandsupplyagreementpursuanttowhichAntareswillprovidefullyassembledandlabelledproducttoIdorsiaatcostplusmargin.Idorsiawillthenberesponsibleforglobalcommercializationoftheproduct,pendingFDAorforeignapproval.Antareswillbeentitledtoreceiveroyalties on net sales of the commercial product. The product is going to be tested through usability and reliability studies tailored for emergency use to ensure safe and effective use can be demonstrated ahead of the Phase 3 study.

According to publications by Idorsia, two Phase 2 studies in patients with stable coronary artery disease and acute myocardial infarction, respectively, have met their pharmacodynamic objectives of significantly inhibiting platelet aggregation. Subcutaneous administration of selatogrel 8 mg and 16 mg has demonstrated a rapid onset of action, within 15 minutes, with the height of its effect extending over 4-8 hours, depending on the dose. Selatogrel was safe and well tolerated in both studies and there were no treatment-emergent serious bleeds.

Idorsia, in consultation with health authorities, is preparing a large, international, multi-center, Phase 3 study to investigate the efficacy and safety of subcutaneous self-administration of selatogrel for the treatment of a suspected AMI in patients with a history of AMI. Participating patients will be trained on when to inject and instructed on how to self-administer treatment.

Manufacturing

We use third parties to manufacture our products and product candidates.  To the extent that we are the sponsor of a drug/device combination product or product candidate or to the extent that we are responsible for drug and device operations with regard to products or product candidates sponsored by our partners, we must ensure that the product or product candidate is manufactured in accordance with FDA’s current Good Manufacturing Practices (“cGMPs”) for drug products and FDA’s current Quality System Regulations (“QSRs”) for medical devices and equivalent provisions in the EU and elsewhere which are required as part of the overall obligations necessary, in the EU for instance, to obtain a CE-mark. To the extent that we are only supplying the device component to one of our partners, we are responsible for compliance with QSRs. We believe that our third party manufacturers are currently in compliance with cGMPs and QSRs, to the extent applicable. Assembly and packaging of all of our products is performed by third-party service providers under our direction.  All manufacturers and suppliers are monitored and evaluated by our quality department to assess compliance with regulatory requirements and our internal quality standards and benchmarks.  We perform quality review and product release.  

We utilize a range of third-party manufacturers to manufacture and supply certain components, drugs, final assembly and finished product.  Below is a summary of our production, manufacturing, assembly and packaging arrangements with third parties:

We also have a highly experienced quality group that works with and regularly inspects or meets with our manufacturers and suppliers to review the manufacturing process for our products and to provide input on quality matters.

In addition to the above manufacturing capabilities, on July 1, 2019, we entered into a lease for approximately 75,000 square feet of office, laboratory, manufacturing and warehousing space in Minnetonka, Minnesota. The Company is performing the build-out of the premises and expects to occupy the facilities by the end of 2020 or early 2021.  The new space will support our administrative functions, product development and quality operations and provide additional manufacturing and warehousing capabilities.

Sales & Marketing

We have built a robust internal commercial organization, consisting of specialty sales representatives, management and support staff, to market and sell our proprietary products XYOSTED^® and OTREXUP^® in the U.S. We have entered into agreements with vendors for certain commercialization services such as third-party logistics, distribution, data analytics and claims processing. We may enter into licensing and or additional distribution arrangements for commercialization of our products outside the U.S.

Distribution – We have contracted with a third-party logistics provider, Cardinal Health 105, Inc., also known as Specialty Pharmaceutical Services (“Cardinal”), for key services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management and call center management. We also utilize a division of Cardinal for sample administration. In addition, we utilize third parties to perform various other services for us relating to sample accountability and regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services.

Sales and Marketing – We own the worldwide marketing rights for OTREXUP^® and commercialize OTREXUP^® on our own in the U.S. We have an internal commercial organization that includes approximately 50 employees directly involved in our sales efforts.  We have entered into agreements with vendors for certain commercialization services such as third-party contracting and distribution. We may enter into licensing and or additional distribution arrangements for commercialization of our products outside the U.S.

Trade – We have contracted with numerous wholesale distributors, including Cardinal, McKesson Corporation (“McKesson”) and Amerisource Bergen Corporation to distribute our XYOSTED^® and OTREXUP^® productproducts to the retail pharmacies as well as the Veterans Administration and other governmental agencies.  In addition to shipping our product, the majorthese distributors will provide inventory and sales reports as well as other services.  In exchange for these services, we pay fees to certain distributors based on a percentage of wholesale acquisition cost. We have also contracted with several specialty pharmacies to support fulfillment of certain prescriptions.  

Third Party Reimbursement and Pricing – In the U.S. and elsewhere, sales of pharmaceutical products to consumers depend to a significant degree on the availability of coverage and reimbursement by third-party payers, such as government and private insurance plans. Third-party payers increasingly are challenging the prices charged for medical products and services and implementing other cost containment mechanisms. This is especially true in markets where generic options exist.  It is, and will be, time consuming and expensive for us to go through the process of maintaining or seeking reimbursement for our products from Medicaid, Medicare and private payers. Our products and those of our partners may not be considered cost effective, and coverage and reimbursement may not be available or sufficient to allow us to sell our products on a competitive and profitable basis, potentially resulting in contract changes with these major payers.

Third-party payers often utilize a tiered reimbursement system, which may adversely affect demand for OTREXUP^®our products by placing itthem in a more expensive patient co-payment tier. Additionally, third party payers may require step edits or prior authorization. We cannot be certain that OTREXUP^®our products will successfully be placed on the list of drugs covered by particular health plan formularies or in a more preferential position on their formularies. Third-party payers are currently demanding, and will most likely continue to demand, more aggressive pricing and rebates from Antares for favorable formulary placement of OTREXUP^®.placement. Some states have also created Medicaid preferred drug lists and include drugs on those lists only when the manufacturers agree to pay a supplemental rebate. If OTREXUP^® isour products are not included on these preferred drug lists, itthey may be subject to prior authorization. Physicians may not be inclined to prescribe itOTREXUP^® or XYOSTED^® to their Medicaid patients, and even if they do prescribe it, Medicaid may not authorize payment, thereby diminishing the potential market for OTREXUP^®our products in this market segment.

We offer discount cardco-pay assistance programs in the form of co-pay coupons to patients for OTREXUPXYOSTED^® in and OTREXUP^® under which patients covered by commercial pharmacy benefit plans receive discounts on their prescriptions. Our XYOSTED^® STEADYCare Co-pay Assistance Program provides financial support to most commercially insured patients to assist with out-of-pocket costs of XYOSTED^®. In addition, certain commercially insured patients are eligible for our “first fill free” program for XYOSTED to assist the patient during the initial claims adjudication process. We utilize a contract service providerproviders to process and pay claims to patients for actual coupon usage.

Similarly, in order to ensure coverage by Medicare Part D and commercial pharmacy benefit plans, we participate in certain rebate programs, which provide discounted prescriptions to qualified insured patients.  Under these rebate programs, we pay a rebate to the third-party administrator of the program, generally two to three months after the quarter in which prescriptions subject to the rebate are filled.program. We also provide discounts to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs, including discounts mandated by the Veterans Health Care Act, discounted prescriptions to DoD’s Tricare retail pharmacy program, and discounts to federal grantees and safety net providers referred to as covered entities pursuant to our pharmaceutical pricing agreement with the Department of Health and Human Services and the 340B drug discount program, which is required as a condition of Medicaid coverage. Government agencies ordering under the FSS and covered entities purchase products from the wholesale distributors at the discounted price, and the wholesale distributors then charge back the difference between the current wholesale acquisition cost and the price the entity paid for the product.

SumatriptanSales, Marketing & Distribution of Partnered Products

Our partnered products may encounter some of the same reimbursement issues described above, and although we do not control the reimbursement rate or discounts contracted with third-party payers by our partners, it ultimately affects our royalty payments we receive on net sales. The industry has experienced an increasingly widening gap between gross sales and net sales after discounts.  

Epinephrine Injection USP

– We through our partnerare the exclusive supplier of the device used in Teva’s epinephrine injection product.  We receive payment for each device sold to Teva sell Sumatriptan Injection USP, indicated inand royalties on Teva’s commercial sales of the U.S. for the acute treatment of migraine headaches and cluster headache in adults.  We received FDA approval of our ANDA for the 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors,product.  Teva’s epinephrine injection was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to ImitrexMylan, Inc.’s branded products EpiPen^® STATdose Penand EpiPen Jr^®, in December 2015.  We have a license, supply and therefore, subject to state law, is substitutable at the pharmacy. Teva is solely responsible for commercialization and distribution agreementof the finished product.

Makena^® subcutaneous auto injector – Pursuant to our exclusive license, development and supply agreements with Teva, under which TevaAMAG, AMAG is responsible for the manufacturecommercialization and supplydistribution of the Makena^® subcutaneous auto injector. AMAG supplies the pre-filled syringe of the drug to Antares, and we

manufactureAntares manufactures the device and completeoversees the assembly and packaging of the finished product. Tevafinal product, which is responsible for commercialization and distribution.  

Accordingsold to a survey commissioned by the National Headache Foundation, migraine affects nearly 37 million Americans.  Migraine headaches are often characterized by a headache of moderate or severe intensity, nausea (the most common characteristic), one-sided and/or pulsating quality, aggravated by routine physical activity, duration of hoursAMAG at cost plus margin. Antares receives high single digit to 2-3 days; and an attack frequency anywhere between once a year and once a week.  Healthcare professionals frequently prescribe triptans to stop migraine attacks.

The total U.S. retail anti-migraine market was $5.5 billion in 2017 according to Symphony Health Solutions (“Symphony”), basedlow double-digit royalties on whole-sale acquisition costs (“WAC”). The majority of patients who use triptans take oral tablets.  Oral drugs accounted for $4.7 billionnet sales of the total,Makena^® subcutaneous auto injector as well as sales-based milestones. AMAG primarily sells Makena^® to specialty pharmacies, specialty distributors, home infusion companies and injectable products accounted for approximately $367 million of the total market, measuredpharmacies which, in terms of WAC. While oral triptans have benefited many migraine sufferers, they are most consistently effective when taken at a relatively early stage in the migraine attack. Studies have shown that injectable sumatriptan is more effectiveturn, sell Makena^®to healthcare providers, hospitals, government agencies and rapid-acting in the treatment of migraine headache that has reached the moderate to severe level of intensity.integrated delivery systems.

According to Symphony, about 7% of triptan prescriptions are currently for injectable triptans.  Sumatriptan is the only injectable triptan approved for use in the U.S.  Sumatriptan is currently available in an oral formulation, a nasal spray (Imitrex, GSK and generic) and a needleless injector (Sumavel, Astellas/Zogenix). There is extensive competition in the sumatriptan marketplace and several manufacturers offer versions of injectable sumatriptan with a delivery device, including GSK (Imitrex STATdose Pen^®), Pfizer (Alsuma), ENDO Pharmaceuticals (Sumavel DosePro), and Sun Pharma (generic sumatriptan autoinjector) and Dr. Reddy’s Laboratories generic sumatriptan auto-injector (Zembrace SymTouch).  One company, Sandoz, Inc. (“Sandoz”) markets an authorized generic version of GSK’s Imitrex STATdose Pen^®.  At least three companies, including Teva, and Fresenius Kabi have FDA approval to market injection sumatriptan in prefilled syringes, although we are not aware of any that presently market this product configuration.  Additionally, several generics manufacturers offer injectable sumatriptan in vials.

Sales, Marketing & DistributionInjection USP – We haveUnder a license, supply and distribution agreement with Teva for the auto injector product containing sumatriptan.  Wesumatriptan, we manufacture the device and perform final assembly and packaging of the product. Teva manufactures and supplies the drug and distributes the finished combination product in the U.S.  Teva also has an option for distribution rights in other territories.  Under the agreement, we received an upfront payment and a milestone payment upon commercial launch and are compensated at cost for shipments of product to Teva.  In addition, net profits from sales of the product, after deduction of product sales allowances such as discounts, rebates and chargebacks, are split 50/50 between us and Teva.  The term of the agreement is seven years from commercial launch, with automatic one-year renewals unless terminated by either party after the initial term.

Makena^® (hydroxyprogesterone caproate injection) Auto Injector

Makena® (hydroxyprogesterone caproate) is the only FDA approved drug indicated to reduce the risk of preterm birth in women pregnant with a single baby who have a history of singleton spontaneous preterm birth. Makena^®was approved by the FDA in February 2011 as a weekly intramuscular injection, and was granted orphan drug exclusivity through February 3, 2018. Currently, Makena^® is administered weekly by a healthcare professional, intramuscularly through a large-gauge needle, with treatment beginning between 16 weeks and 20 weeks and six days of gestation and continuing until 36 weeks and six days of gestation or delivery, whichever happens first.  

Makena^® is a progestin whose active ingredient is hydroxyprogesterone caproate (“HPC”), which is a synthetic chemical structurally related to progesterone. Progestins, such as HPC, and progesterone belong to a class of drugs called progestogens. Progestogens have been studied to reduce preterm birth and have shown varying results depending upon the subjects enrolled. The Society for Maternal Fetal Medicine Publications Committee published clinical guidelines for the use of progestogens to reduce the risk of preterm birth in the American Journal of Obstetrics and Gynecology in May 2012, which were affirmed in 2014. Preterm birth is defined as a birth prior to 37 weeks of pregnancy. According to the National Center for Health Statistics Report, in 2015, preterm births affected nearly 400,000 babies, or one of every ten infants born in the U.S. According to AMAG, revenue from Makena^® grew to nearly $400 million in 2017, and the company estimates that approximately half of all eligible patients are currently treated with Makena^®. While the 7-year orphan drug exclusivity expired in February 2018, AMAG does not anticipate a generic version of the intramuscular formulation of Makena^® to enter the market until mid-2018.

The Makena^® subcutaneous auto injector we developed in collaboration with AMAG was designed to enhance performance on the attributes we believe are most critical to healthcare providers and patient acceptance, including decreased time to administer and use of a shorter, thinner nonvisible needle for subcutaneous injection, while potentially providing an alternative to the existing intramuscular methods of administration. The development of the subcutaneous auto-injector was part of AMAG’s broader next-generation program exploring alternative injection methods, sites and formulations.

On February 14, 2018, the FDA approved AMAG’s sNDA for the Makena^® subcutaneous auto injector drug-device combination product, which was designed as a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered one preterm baby in the past. AMAG is preparing for a launch and expects the Makena^® subcutaneous auto injector to be available in second half of March 2018. We have commenced manufacturing and supply of devices and commercial product in anticipation of AMAG’s launch of the Makena^® subcutaneous auto injector.

Sales, Marketing & Distribution – We have an exclusive license and development agreement with AMAG for the Makena^® subcutaneous auto injector. Pursuant to this arrangement, AMAG supplies the pre-filled syringe of the drug to Antares.  Antares manufactures the device and is responsible for the assembly and packaging of the final product, which is sold to AMAG at cost plus margin.  AMAG is also responsible for commercialization and distribution of the finished product.  The agreement provides for Antares to receive high single digit to low double digit royalties on net sales of the Makena^® subcutaneous auto injector as well as sales milestones. AMAG primarily sells Makena^® to specialty pharmacies, specialty distributors, home infusion companies and pharmacies which, in turn, sell Makena^®to healthcare providers, hospitals, government agencies and integrated delivery systems. AMAG plans to continue to offer the intramuscular formulation of Makena^® and that the Makena^® auto injector will be priced at parity to help ensure timely and affordable access.

Needle-Free Injectors

Our needle-free auto injector products, including the ZOMAJET™ and Twin-Jector® II, were designed to provide a needle-free means of administering human growth hormone to patients with growth retardation. We have historically sold needle-free injection devices to partners who manufacture and/or market human growth hormone directly. These partners then market our device together with their growth hormone. The device is reusable and designed to last for approximately 3,000 injections (or approximately two years) while the needle-free syringe included in the device is disposable after approximately one week when used by a patient for injecting from multi-dose vials.

On October 10, 2017 we entered into an asset purchase agreement with Ferring to sell the worldwide rights and transfer certain assets, including intellectual property, related to the needle-free injector device product line. We will continue to manufacture and supply needle-free devices until the completion of the transaction, which is expected to occur by the end of 2018.

Information about CustomerRevenues and ProductCustomer Concentrations

The Company derives 10% or more of its total revenue from the sale of its proprietary products XYOSTED^® and OTREXUP^® and from product sales of partnered products to our partners Teva and AMAG. Any disruption in sales or supply of these products could have a material adverse effect on our business. For more detail, please see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations. Significant customers, from which the Company derived 10% or more of its total revenue in each or any of the years in the three-year period ended December 31, 20172019 include: Teva, AMAG, McKesson, AmerisourceBergen Ferring, and LEO Pharma.Ferring.  For more detail, please refer to Note 11 – Significant Customers and Concentrations of Risk in the Notes to Consolidated Financial Statements in Part II, Item 8.

The Company derived 10% or more of its total revenue, in each or any of the years in the three-year period ended December 31, 2017, from the following products: OTREXUP^®, Sumatriptan Injection USP, auto injector and pen injector devices, and needle-free injector devices and components.  For more detail, please see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.

Products in Development

XYOSTED™ (testosterone) injection

XYOSTED™ (testosterone enanthate) injection is our investigational new drug in development for the treatment of testosterone deficiency in adult males. The product utilizes our next generation VIBEX^® QuickShot^® auto injector for self-administered weekly injections of testosterone enanthate in a preservative free formulation for clinically testosterone deficient men requiring testosterone replacement therapy (“TRT”).  The VIBEX^® QuickShot^® auto injector is designed specifically to provide a fast injection of highly viscous fluids such as testosterone in oil.

We submitted a 505(b)(2) New Drug Application (“NDA”) for XYOSTED^TM to the FDA in December 2016. The NDA submission was accepted for standard review by the FDA and assigned a PDUFA target date for completion of its review by October 20, 2017. On October 20, 2017, we received a CRL from the FDA regarding our NDA for XYOSTED^TM, which identified two deficiencies and indicated that the NDA cannot be approved in its current form. Based on findings in our clinical program, the FDA stated its concerns that XYOSTED^TM could cause a clinically meaningful increase in blood pressure.  In addition, the FDA raised concern regarding the occurrence of depression and suicidality.  On February 21, 2018, we met with the FDA to discuss a potential path forward for submission of a response to the CRL for XYOSTED^TM. We intend to provide further information following the receipt of the official meeting minutes from the FDA, which is typically within 30 days of the meeting date.

The U.S. TRT market in 2017 was approximately $2.2 billion, based on WAC, according to a Symphony report.  Injectable TRT grew from $264.0 million in 2016 to $304.0 million in 2017, an increase of 15.6%. There is significant competition within the TRT market among many pharmaceutical companies including Abbvie, Inc. (formerly Abbott), Lilly, Endo, Pfizer, Sandoz, Mylan and Teva.

Topical formulation of TRT are frequently prescribed in the United States.  Not all men are able to adequately absorb the gel formulations or otherwise find them unacceptable for reasons including risks of transferring the gel to spouses or children, dissatisfaction with the application process, or suboptimal clinical results due to variability in exposure and compliance.  Injectable testosterone is an option for men with an inadequate response to transdermal therapies.

Currently, injectable testosterone is available and represents a majority of all TRT prescriptions. These injections, prescribed as a combination of a vial, needle, and syringe, are usually given deep into the muscle tissue of the buttocks with large bore needles (typically 19 gauge needles).  Injection testosterone is an esterified formulation in oil that is absorbed slowly from the muscle tissue, producing a sustained increase in serum testosterone over time, requiring repeated injections typically administered in the physician’s office every two to four weeks.  The higher doses given to facilitate less frequent injections are sometimes associated with supra-physiologic levels.  Such high levels may lead to polycythemia, a proliferation of red blood cells, which places the patient at increased risk of thrombus or clot formation leading to strokes, heart attacks, pulmonary embolism, and possibly death.   Excessive variability between peak testosterone levels occurring shortly after the injection to the lowest levels immediately preceding a dose are also associated with mood swings.

We are developing XYOSTED™, a once-weekly subcutaneous injectable testosterone product that could be conveniently self-administered at potentially lower dosages given more frequently than is generally practical with repeated visits to the physician’s office.  XYOSTED™ utilizes a small gauge needle for patient comfort.  See Research and Development below and Part II Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of research and development for XYOSTED™ and the details of our clinical studies and results.

Competition in the U.S. testosterone replacement market includes topical solutions such as Abbvie’s Androgel^® and Androgel^® 1.62%,  Lilly’s Axiron^®, Endo’s Fortesta^® and  Testim^®(and the authorized generic) and Allergan plc (“Allergan”) Androderm^®.  Other forms of TRT include injectibles, such as Endo’s Aveed^®, Pfizer’s Depo^®-Testosterone, and several generic testosterone in oil products sold by Actavis, Sandoz, Mylan, Teva and others, as well as Testopel^® pellets by Endo.  In addition, two additional oral treatments for low testosterone levels are in development. Clarus is developing an oral formulation of testosterone undecanoate, Rextoro^™ and Lipocine, Inc. (“Lipocine”) is also developing an oral formulation of testosterone undecanoate, Tlando^®.  Acerus Pharmaceuticals markets Natesto^™, an intra-nasal testosterone.

VIBEX^® with Epinephrine

We have a license, development and supply agreement with Teva for a VIBEX^® injector we designed for a product containing epinephrine.  Epinephrine is utilized for the treatment of severe allergic reactions (anaphylaxis) to insect venom, foods, drugs and other allergens as well as anaphylaxis to unknown substances or exercise-induced anaphylaxis. Our partner Teva filed an ANDA seeking FDA approval of the product as a generic substitute of Mylan’s branded product EpiPen^®. Teva submitted an amendment to the VIBEX^® epinephrine pen ANDA in December 2014 and received a CRL from the FDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies.  Teva has disclosed that they submitted a response to this CRL.  We continue to work with Teva toward a potential approval of the epinephrine auto injector pen.

Mylan’s EpiPen^®, along with its own authorized generic of the product, continues to be the global market leader in the epinephrine auto injector market.  In December 2016, Mylan announced the availability of its lower-priced authorized generic to EpiPen^®, intended to address pricing concerns of the branded version. In the U.S., according to Symphony, sales of epinephrine injection products were approximately $2.0 billion in 2017, based on WAC. There are other companies and alternative products competing in or poised to enter the market.  For example, in January 2017, CVS announced that a low-cost epinephrine auto injector option, the authorized generic for Adrenaclick^® manufactured by Impax Laboratories, is available at all CVS Pharmacy locations. Kaléo announced the availability of AUVI-Q^® (Epinephrine Injection, USP) Auto-Injector in the U.S. beginning in February 2017, and Adamis Pharmaceuticals announced FDA approval of its epinephrine pre-filled syringe NDA.

Disposable Pen Injector with Exenatide

We have a license, development and supply agreement with Teva for a multi-dose pen injector device for use with a generic form of BYETTA^® (exenatide injection) for the treatment of diabetes.  Teva is working through the U.S. regulatory approval process for its exenatide pen using the ANDA pathway.

Exenatide, marketed as BYETTA^®, is used along with diet and exercise to treat type 2 diabetes, a condition in which the body does not use insulin normally and therefore cannot control the amount of sugar in the blood.  Exenatide works by stimulating the pancreas to secrete insulin when blood sugar levels are high. Insulin helps move sugar from the blood into other body tissues where it is used for energy. Exenatide also slows the emptying of the stomach and causes a decrease in appetite. Exenatide is not used to treat type 1 diabetes, a condition in which the body does not produce insulin and therefore cannot control the amount of sugar in the blood.  Exenatide is not used instead of insulin to treat people with diabetes who need insulin.  Total gross U.S. sales of BYETTA^® (exenatide) by AstraZeneca in 2017 were approximately $259 million according to Symphony. BYDUREON^®, a long acting form of the medication BYETTA^®, had approximately $1.04 billion in gross sales in the U.S. in 2017 based on WAC, according to Symphony.

Disposable Pen Injector with Teriparatide

We are also developing with Teva, under a license, development and supply agreement, a multi-dose disposable pen injector device with teriparatide for the treatment of osteoporosis. Teva is working toward a regulatory approval with the FDA for a generic version of Forteo^® (teriparatide [rDNA origin] injection) using the ANDA pathway.  Teva and Eli Lilly and Company (“Lilly”) settled their Paragraph IV patent litigation, the terms of which have not been disclosed. Teva also successfully completed a decentralized procedure registration process in 17 countries in Europe for teriparatide, and is awaiting patent clearance in the EU prior to launch.

Teriparatide is used for the treatment of osteoporosis in postmenopausal women and men at increased risk of fracture and for glucocorticoid induced osteoporosis in men and women. According to Lilly’s 2017 annual report on Form 10-K, 2017 global sales of Forteo^® grew to $1.75 billion, of which $965 million was recorded in the U.S. and $784 million in the rest of the world.

Research and Development

We are committed to a strong research and development program, recognizing that the development of new product offerings is critical to our future success. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug/device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.

Our research and development programs consists primarily of clinical, regulatory, formulation development, engineering, device development and commercial development activities for our current products, next generation versions of current products, and new proprietary and partnered products and technologies in development.  Our internal research and development team works with external consultants, industry experts, physicians and other medical personnel in an effort to drive a robust product development pipeline. We also have a business development team that actively seeks and evaluates product opportunities and business alliances. In addition, our clinical, quality and regulatory teams are committed to verifying and maintaining the safety and efficacy of our products according to regulatory standards enforced by the FDA and other international regulatory bodies.

We have several products at various stages of development as highlighted in our “Products in Development” section above.  For a discussion of amounts we have spent on research and development activities, see Research and Development in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following is a discussion of our significant research and development programs.

XYOSTED™ (testosterone) injection.  We are developing XYOSTED™ for self-administered weekly injections of testosterone enanthate in a preservative-free formulation indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone: primary hypogonadism (congenital or acquired) and hypogonadotropic hypogonadism (congenital or acquired.)

In December 2012, we conducted a pre-IND (Investigational New Drug application) meeting with the FDA as part of preparing to initiate clinical development of XYOSTED^TM, establishing a path forward.  In September 2013, we announced that the first patients were dosed in a clinical study evaluating the pharmacokinetic (“PK”) profile of testosterone enanthate administered weekly by subcutaneous injection at doses of 50 mg and 100 mg via the XYOSTED^TM auto injector device in adult males with testosterone deficiencies associated with hypogonadism and hypogonadotropic hypogonadism. The study enrolled 39 patients at nine investigative sites in the U.S.  In this study, we showed that either dose of XYOSTED^TM resulted in most patients achieving average levels of testosterone within the normal range from the first dose onward. Patients on the 100 mg dose often had maximum serum concentrations above the FDA recommended range, whereas patients dosed with 50 mg often had levels returning to baseline between doses.  

In November 2014, the last patient was enrolled in a 52-week single arm dose-blinded, concentration controlled multiple-dose, phase III study (QST-13-003) to evaluate the efficacy and safety of XYOSTED^TM administered subcutaneously once each week to testosterone-deficient adult males.  Patients enrolled in this study had a documented diagnosis of hypogonadism and testosterone

deficiency defined as having testosterone levels below 300 ng/dL.  The study included a screening phase, a treatment titration (efficacy) phase and an extended treatment phase.  One hundred fifty patients were enrolled in this study.  Patients meeting all eligibility criteria were assigned to receive a starting dose of XYOSTED^TM once weekly for six weeks.  Adjustments to dose could be made at week seven based upon the week six pre-dose blood level.  The testosterone levels and dose adjustment to regulate testosterone levels were evaluated after 12 weeks of treatment.

The study evaluated the pharmacokinetics of testosterone at the week 12 endpoint relative to the registration endpoints required by the FDA: (i) the primary endpoint of at least 75% of all patients’ C_avg are within the range of 300 to 1100 ng/dL, with a lower limit of a 95% 2-sided confidence interval of greater than or equal to 65%, (ii) the major secondary endpoint for C_max of at least 85% of patients’ C_max be less than 1500 ng/dL and no more than 5% of patients have a C_max greater than 1800 ng/dL. The primary endpoint of C_avg range of  300 to 1100 ng/dL in the population that received one or more doses of XYOSTED™ was met by 139 out of 150 patients, equating to 92.7% with a 95% confidence interval of 87.3% to 96.3%.  Among the 137 patients that completed all 12 weeks of dosing and PK sampling, 98.5% were within the pre-defined range.  The results for the C_avg and C_max endpoints are summarized in the table below.

Overall, the regimen demonstrated a mean (± standard deviation) steady state concentration of testosterone of 553.3 ± 127.3 ng/dL at 12 weeks.  Participants in the study remained on XYOSTED™ and were followed for an additional 40 weeks for the collection of safety data.  In October 2015, the last patient in study QST-13-003 received their week 52 treatment, which marked the end of the treatment phase of this study.  

In March 2016, we reported the complete results of study QST-13-003. The safety population, defined as patients who received at least one dose of study drug, was comprised of 150 patients.  The most common treatment-emergent adverse events (TEAE’s) (incidence ≥5%) in this phase III study, irrespective of relationship to the study drug, were increased hematocrit, hypertension, increased prostate-specific antigen, upper respiratory tract infection, sinusitis, injection site bruising and headache. Serious adverse events (SAE’s) reported included one case each of worsening depression, vertigo and suicide.  None of the SAE’s were considered to be related to the study drug by the investigators, however the Company determined that the case of suicide could not be ruled out as potentially being related to study drug, as depression is a labelled adverse event for testosterone products.  There have been no reported adverse events consistent with urticaria (hives), pulmonary oil micro embolism (POME), anaphylaxis or major adverse cardiovascular events in this study.

In June 2015, we finalized and submitted the protocol for a second phase III study (“QST-15-005”) to increase the number of patients evaluated for safety through 26 weeks, and in August 2015, the first patients were enrolled in the study.  QST-15-005 was a dose-blind, multiple-dose, concentration-controlled 26-week supplemental safety and pharmacokinetic study of XYOSTED™, which included a screening phase, a treatment titration phase, and a treatment phase for evaluation of safety and tolerability assessments including vital signs, laboratory assessments, adverse events and injection site assessment. The primary objective was to study the safety of XYOSTED™ administered subcutaneously once each week to adult males with hypogonadism. Patients meeting all eligibility criteria were assigned to receive 75 mg of XYOSTED™ once weekly for six weeks.  According to the protocol, adjustments to dose could be made at week seven based upon the week six C_trough value.  XYOSTED™ was provided to clinical sites at dosage strengths of 100 mg, 75 mg and 50 mg to be utilized in dose titration.

In early November 2015, enrollment was complete in study QST-15-005. The safety population, defined as patients who received at least one dose of the study drug, consisted of 133 patients dosed with XYOSTED™.  In June 2016, the last patient had completed treatment under QST-15-005, and in September 2016 we announced the results of the study. The most common adverse reactions (incidence ≥5%) in the QST-15-005 study were increased hematocrit, upper respiratory tract infection and injection site ecchymosis. There were four patients with treatment emergent SAE’s, which included one patient with transient visual impairment determined not to be drug related, one patient with appendicitis that was not drug related and one patient with deep vein thrombosis (DVT).  The investigator attributed DVT as possibly drug related, which is consistent with testosterone class label warnings.  The fourth patient had multiple hospitalizations related to septic arthritis and coronary artery disease, with a complicated clinical course

post-angioplasty. These multiple reported events from the fourth patient were deemed not to be drug related, as he had worsening angina prior to enrolling in the study.  There were no reported adverse events consistent with urticaria, POME or anaphylaxis.  The safety data collected also included an assessment of pain.  

Based upon the completion of our clinical and development work and the results of the studies detailed above, we submitted a 505(b)(2) New Drug Application for XYOSTED™ with the FDA in December 2016. The NDA submission was accepted for standard review by the FDA and assigned a PDUFA target date for completion of its review by October 20, 2017.

On October 11, 2017, we received a letter from the FDA stating that, as part of its ongoing review of the NDA, the FDA had identified deficiencies that preclude the continuation of the discussion of labeling and postmarketing requirements/commitments.  On October 20, 2017, we received the Complete Response Letter from the FDA regarding our NDA for XYOSTED^TM, which identified two deficiencies and indicated that the NDA cannot be approved in its current form. Based on findings in studies QST-13-003 and QST-15-005, the FDA stated its concern that XYOSTED^TM could cause a clinically meaningful increase in blood pressure.  In addition, the FDA raised a concern regarding the occurrence of depression and suicidality.  

Following the receipt of the CRL for XYOSTED^TM, we prepared a comprehensive briefing document, which was submitted to the FDA on December 21, 2017 along with a written request for a Type A meeting. A Type A meeting is a formal meeting requested by a sponsor within three months after an FDA regulatory action for purposes of discussing post-CRL activities. On February 21, 2018, we met with the FDA to discuss a potential path forward for submission of a response to the CRL for XYOSTED^TM. We intend to provide further information following the receipt of the official meeting minutes from the FDA, which is typically within 30 days of the meeting date.

Partnered Development Projects.  We, along with our pharmaceutical partner, are engaged in research and development activities related to our VIBEX^® disposable pressure assisted auto injectors and our disposable pen injectors.  We have signed license agreements with Teva for our VIBEX^® system for a product containing epinephrine and for our pen injector devices for use with generic versions of BYETTA^® (exenatide) and Forteo^® (teriparatide). The development programs consist of determination of the device design, development of prototype tooling, production of prototype devices for testing and clinical studies, and development of commercial tooling and assembly.  We expect development related to these products to continue, however, the development timelines are generally controlled by our partners and the extent of near-term and future development will be dependent on decisions made by our partners. The following is a summary of the development stages for each of the partnered products in development.

VIBEX^® with epinephrine

We, in collaboration with Teva, have developed a VIBEX^® auto injector device for a product containing epinephrine. Teva is responsible for development work on the drug epinephrine, and we are responsible for development of the device.  Teva filed an ANDA for the VIBEX^® epinephrine pen as a generic substitute of Mylan’s branded product, EpiPen^®, which was accepted by the FDA, and amended in December 2014.  We have scaled up the commercial tooling and molds for this product and delivered pre-launch quantities of the product in anticipation of a potential approval and launch.  However, Teva received a CRL from the FDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies.  Teva has disclosed that they submitted a response to the FDA’s CRL. We continue to work with Teva toward a potential approval of the epinephrine auto injector pen ANDA.

Exenatide disposable pen injector

We designed and produced, under a license, development and supply agreement with Teva, a multi-dose pen injector for use with a generic form of BYETTA^® (exenatide injection) for the treatment of diabetes.  Teva is working through the U.S. regulatory approval process for its exenatide pen using the ANDA pathway.

Teriparatide disposable pen injector

We also designed and produced for Teva another multi-dose pen for a generic form of Forteo^® (teriparatide [rDNA origin] injection) for the treatment of osteoporosis. Teva is working through the U.S. regulatory approval process for a generic version of Forteo^® (teriparatide [rDNA origin] injection) using the ANDA pathway.  Teva and Eli Lilly and Company (“Lilly”) settled their Paragraph IV patent litigation, the terms of which have not been disclosed. Teva also successfully completed a decentralized procedure registration process in 17 countries in Europe for teriparatide, and is awaiting patent clearance in the EU prior to launch

Manufacturing

We do not own any manufacturing facilities; we use third parties to manufacture our products and product candidates.  To the extent that we are the sponsor of a drug/device combination product or product candidate or to the extent that we are responsible for drug and device operations with regard to products or product candidates sponsored by our partners, we must ensure that the product

or product candidate is manufactured in accordance with FDA’s current Good Manufacturing Practices (“cGMPs”) for drug products and FDA’s current Quality System Regulations (“QSRs”) for medical devices and equivalent provisions in the EU and elsewhere which are required as part of the overall obligations necessary, in the EU for instance, to obtain a CE-mark .  To the extent that we are only supplying the device component to one of our partners, we are responsible for compliance with QSRs. We believe that our third party manufacturers are currently in compliance with cGMPs and QSRs, to the extent applicable. Assembly and packaging of all of our products is performed by third-party service providers under our direction.  All manufacturers and suppliers are monitored and evaluated by our quality department to assess compliance with regulatory requirements and our internal quality standards and benchmarks.  We perform quality review and product release.  

We utilize a range of third party manufacturers to manufacture and supply certain components, drugs, final assembly and finished product.  Below is a summary of our production, manufacturing, assembly and packaging arrangements with third parties:

We also have a highly experienced quality group that works with and regularly inspects or meets with our manufacturers to review the manufacturing process for our products and to provide input on quality issues.

Collaborative Arrangements and License Agreements

We have entered into significant partnering arrangements and licensing agreements with Teva, AMAG, Pfizer, Idorsia and other pharmaceutical partners. The following is a summary of those agreements.

Teva License, Development and Supply Agreements

In July 2006, we entered into an exclusive License, Development and Supply Agreement with Teva for an epinephrine auto injector product to be marketed in the U.S. and Canada. Pursuant to the agreement, Teva is obligated to purchase all of its delivery device requirements from us. We received an upfront cash payment and a milestone payment upon FDA product approval.  We also receive a negotiated purchase price for each device sold, as well as royalties on Teva’s future sales of the product.  This agreement has been amended to provide for payment of capital equipment and other ongoing development work that was outside the scope of the original agreement.  The agreement will continue until the expiration of the last to expire patent that is filed no later than 12 months after FDA approval.  We have multiple patents that have been granted by the USPTO that cover this product, the latest of which will expire in 2033.  We have and plan to continue to file patent applications covering this product.

In December 2007, we entered into a license, development and supply agreement with Teva under which we developed and will supply a disposable pen injector for two therapeutic products: exenatide and teriparatide.  Under the agreement, we received an upfront payment and development milestones, and may receive royalties on future product sales.  This agreement has been amended numerous times and provides for payment of capital equipment and other development work that was outside the scope of the original agreement. This agreement will continue until the later of December 2017 or the expiration date of the last to expire patent covering the device or product that is filed no later than 12 months after FDA approval, and will be automatically renewed for successive

periods of two years each.  Currently the expiration date of the last to expire patent is 2035, and we have filed additional patent applications that, if granted, would expire beyond that date.2035.

In November 2012, we entered into a license, supply and distribution agreement with Teva for an auto injector product containing sumatriptan for the treatment of migraines.  Under the agreement, we received an upfront payment and a milestone payment upon commercial launch, which occurred in June 2016.launch.  Teva is responsible for the manufacture and supply of the drug, and we are responsible for the manufacture and supply of the device and assembly and packaging of the finished product.  We are compensated at cost for product shipment to Teva and Teva distributes the product in the U.S.  Teva also received an option for distribution rights in other territories.  In addition, net profits are split 50/50 between us and Teva.  The term of the agreement continues seven years from commercial launch, which was in June 2016, with automatic one-year renewals unless terminated sooner by either party in accordance with the terms of the agreement.

AMAG Development and License AgreementAgreements

In September 2014, we entered into a development and license agreement with Lumara Health, Inc., which was subsequently acquired by AMAG, to develop and supply an auto injector system for use with Makena^®, a progestin drug (hydroxyprogesterone caproate) indicated to reduce the risk of preterm birth.  Under the agreement, we granted an exclusive, worldwide, royalty-bearing license, with the right to sublicense, to certain intellectual property rights, including know-how, patents and trademarks, and received an upfront payment for our license and development activities.  We are also entitled to milestone payments upon the achievement of pre-determined amounts of net sales of the product.

AMAG was responsible for the clinical development and preparation, submission and maintenance of all regulatory applications, and is responsible for the manufacture and supply of the drug to be used in the product, and to market, distribute and sell the product.  We are the exclusive supplier of the auto injection system devices for the product and are responsible for the manufacture and supply of the devices and final assembly and packaging of the finished product.  Under the arrangement, we will receive payment for each device, and royalties based on theAMAG’s net sales of products commencing on product launch in a particular country until the product is no longer developed, marketed, sold or offered for sale in such country. The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of products and decrease after the expiration of licensed patents or where there are generic equivalents to the auto injector product being sold in a particular country.

Ferring Agreements

In January 2003,March 2018, we entered into a revised License Agreementmanufacturing agreement with Ferring, under which we licensed certain of our intellectual property and extended the territories available to Ferring for use of certain of our reusable needle-free injection devices to include all countries and territories in the world except Asia/Pacific. Specifically, we granted to Ferring an exclusive, royalty-bearing license, within a prescribed manufacturing territory, to utilize certain of our reusable needle-free injector devicesAMAG for the field of hGH until the expirationexclusive supply of the last to expiredevices and fully assembled and packaged final finished product of the patents in any country in the territory. We granted to Ferring similar non-exclusive rights outsideMakena^® subcutaneous auto injector. The term of the prescribed manufacturing territory.  In 2007, we amended this agreement providing for non-exclusive rights in Asia alongis concurrent with other changes to financial termsthe term of the agreement.development and license agreement and will continue until such time AMAG halts commercialization of the product. We receive a purchasecontracted price and a royaltyper unit on product manufactured for each device sold to Ferring and a royalty on their hGH sales if we meet certain product quality metrics. This agreement will remain in effect until the completion of the Ferring Transaction, as described in Part I, Item 1. Business “Overview” section above.AMAG.

Pfizer Agreement

In September 2006,August 2018, we entered into a Supply Agreementcollaboration agreement with Teva,Pfizer to jointly develop a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot^® auto injector and in December 2014, Ferring acquired the U.S. rights from Teva and assumed Teva’s obligations under the Supply Agreement.  Pursuant to the agreement, Ferring is obligated to purchase all of its delivery device requirements froman undisclosed Pfizer drug. Pfizer will pay us for hGH marketeddesign and development services and be responsible for obtaining FDA approval of the combination product. We intend to enter into a separate supply agreement with Pfizer pursuant to which we will provide fully packaged commercial ready finished product to Pfizer and Pfizer will then be responsible for commercializing the product in the U.S. We received an upfront cash, pending FDA approval, for which the Company will receive royalties on net sales and other sales-based milestone payments and are entitledpayments.

Idorsia Agreement

In November 2019, we entered into a new global agreement with Idorsia to royalty paymentsdevelop a novel, drug-device product containing selatogrel. Selatogrel,anewchemicalentity,isbeingdevelopedforthetreatmentofasuspectedacutemyocardialinfarction(AMI)inadultpatientswithahistoryofAMI.Idorsiawillpayforthedevelopmentofthecombinationproductandwillberesponsibleforapplyingforandobtainingglobalregulatoryapprovalsfortheproduct.ThepartiesintendtoenterintoaseparatecommerciallicenseandsupplyagreementpursuanttowhichAntareswillprovidefullyassembledandlabelledproducttoIdorsiaatcostplusmargin.Idorsiawillthenberesponsibleforglobalcommercializationoftheproduct,pendingFDAorforeignapproval.Antareswillbeentitledtoreceiveroyalties on net sales of hGH, as well as a purchase price for each device sold.  The original term of this agreement extended through September 2013, which was amended in May 2013 to provide for one-year automatic renewals unless terminated by either party six months ahead of the expiring term.   This agreement will remain in effect until the completion of the Ferring Transaction, as described in Part I, Item 1. Business “Overview” section above.

In November 2009, we entered into a license agreement with Ferring under which we licensed certain of our patents and agreed to transfer know-how for our transdermal gel technology for certain pharmaceutical products.  Under this agreement, we received an upfront payment, milestone payments and will receive additional milestone payments as certain defined product development milestones are achieved.  The agreement is effective until the last to expire patent.commercial product.

Other Agreements

We have a licensing agreement with Allergan, plc, under which we receive royalties on sales of their oxybutynin gel product Gelnique^® 10%. The term of the agreement ends on the later of April 2024 or the expiration date of the last to expire patent.

We also have a licensing agreement with Meda (acquired by Mylan, in 2016), under which we receive royalties on sales of Elestrin^®.

Proprietary Rights

When appropriate, we actively seek protection for our products and proprietary information by means of U.S. and international patents and trademarks.  We currently hold numerous patents and numerous additional patent applications pending in the U.S. and other countries.  Our patents have expiration dates ranging from 2019 to 2035. In addition to issued patents and patent applications, we are also protected by trade secrets in all of our technologies.

Some of our technology is developed on our behalf by independent outside contractors. To protect the rights of our proprietary know-how and technology, Company policy requires all employees and consultants with access to proprietary information to execute confidentiality agreements prohibiting the disclosure of confidential information to anyone outside the Company. These agreements also require disclosure and assignment to us of discoveries and inventions made by such individuals while devoted to Company-sponsored activities. Companies with which we have entered into development agreements have the right to certain technology developed in connection with such agreements.

Seasonality of Business

WeCertain parts of our business may be affected by seasonality. Our revenues may be influenced by many factors, including regulatory and reimbursement approvals, timing of product launches, acquisitions or divestitures, holiday schedules, and other macro-economic conditions. While our revenues do not believereflect any significant degree of seasonality, has a significant impact on our business.  However, we typically seecustomer purchases have historically been lower OTREXUP^® sales duringin the first quarter which we believe is driven byof the year due to the resetting of high-deductible health insurance deductibles at the beginning of each year.plans. Seasonality may affect a quarterly comparison within any fiscal year; however, we believe this impact is generally not material to our annual consolidated results.

Competition

The pharmaceutical, medical device and biotechnology industries are intensely competitive and subject to rapid and significant technological change. We have a wide range of competitors depending upon the branded or generic marketplace, the therapeutic product category, and the product type, including dosage strengths and route of administration. Our competitors include established biotechnology development companies, specialty pharmaceutical companies, major brand name and generic manufacturers of pharmaceuticals such as Teva, Mylan, Lilly and Endo, as well as a wide range of medical device companies that sell a single or limited number of competitive products or participate in only a specific market segment.  Our competitors also include third party contract medical device design and development companies such as Scandinavian Health Ltd. (“SHL”), Ypsomed AG, West Pharmaceutical and Owen Mumford Ltd. (“Owen Mumford”). Many of our competitors have greater financial and other resources than we have, such as more commercial resources, larger research and development staffs and more extensive marketing and manufacturing organizations. Smaller or early stage emerging companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

Competition in the injectable drug delivery market is intensifying. We face competition from traditional needles and syringes as well as newer pen-like and sheathed needle syringes and other injection systems as well as alternative drug delivery methods including oral, transdermal and pulmonary delivery systems. Nevertheless, the majority of injections are still currently administered using needles. Because injections are typically only used when other drug delivery methods are not feasible, the auto injector systems may be made obsolete by the development or introduction of drugs or drug delivery methods which do not require injection for the treatment of conditions we have currently targeted. In addition, because we intend to, at least in part, enter into collaborative arrangements with pharmaceutical companies, our competitive position will depend upon the competitive position of the pharmaceutical company with which we collaborate for each drug application.

If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our products can be subject to progressive price reductions or decreased volume of sales, or both. Branded products not only face competition from other brands, but also from generic versions. Generic versions are generally significantly less expensive than branded versions, and, where available, may be required in preference to the branded version under third-party reimbursement programs, or substituted by pharmacies. Most new products that we introduce must compete with other products already on the market or products that are later developed by competitors. Manufacturers of generic pharmaceuticals typically invest far less in research and development than research-based pharmaceutical companies and therefore can price their products significantly lower than branded products. Accordingly, when a branded product loses its market exclusivity, it normally faces intense price competition from generic forms of the product. To successfully compete for business with managed care and pharmacy benefits management organizations, we must often demonstrate that our products offer not only medical benefits but also cost advantages as compared with other forms of care.

Newly introduced generic products with limited or no other generic competition typically command higher prices initially. At the expiration of the exclusivity period, other generic distributors may enter the market, resulting in a significant price decline for the drug. As a result, the maintenance of profitable operations in generic pharmaceuticals depends, in part, on our ability to select, develop

and launch new generic products in a timely and cost efficientcost-efficient manner and to maintain efficient, high quality manufacturing capabilities.

Industry Trends

Based upon our experience, we believe the following significant trends have important implications for the growth of our business. Recent trends in the pharmaceutical industry include merger and acquisition activity leading to further market consolidation.  In many cases, the resulting combined pharmaceutical companies are bigger and have more financial, technical and market strength and greater resources, which increases competitive pressure in the industry.

There is ongoing effort by public and private payers to reduce the cost of drugs and reduce the overall cost of health care.  There continues to be greater pressure on drug manufacturers to provide greater discounts and rebates on their products.  The drug distribution channels are complex and involve many different parties.  Recently, such channels have undergone and continue to undergo consolidation.  Drug wholesalers and retail drug chains have merged or consolidated resulting in significantly larger organizations with greater resources and bargaining power controlling multiple levels of the drug distribution network.  Consequently, pharmaceutical companies are facing increasing pressure to reduce prices.  Additionally, the emergence of large buying groups representing independent retail pharmacies and other drug distributors, and the prevalence and influence of managed care organizations and similar institutions, enable those groups to demand larger price discounts on our products. For example, there has been a recent trend of large wholesalers and retailer customers forming partnerships, such as the alliance between CVS and Cardinal Health. As a result of this consolidation among wholesale distributors as well as the growth of large retail drug store chains, a small number of large wholesale distributors control a significant share of the market.

Government Regulation

Any potential products discovered, developed and manufactured by us or our collaborative partners must comply with comprehensive regulation by the FDA in the U.S. and by comparable authorities in other countries. These national agencies and other federal, state, and local entities regulate, among other things, the pre-clinical and clinical testing, safety, effectiveness, approval, manufacturing operations, quality, labeling, distribution, controlled substance security, export, import, storage, record keeping, safety and other reporting, sampling, advertising, marketing, and promotion of pharmaceutical products and medical devices. Facilities and certain company records are also subject to inspections by the FDA and comparable authorities or their representatives.

The FDA has broad discretion in enforcing the Federal Food, Drug and Cosmetic Act (“FFDCA”) and the regulations thereunder, and noncompliance can result in a variety of regulatory enforcement actions ranging from warning letters, product detentions, device alerts or field corrections to recalls, seizures, manufacturing shut downs, quarantines, refusal of the government to approve NDAs or ANDAs, or supplements to the same, clinical holds, injunctive actions, withdrawal of approvals, civil or criminal actions or penalties, disgorgement, adverse publicity, labeling revisions, dear healthcare provider letters, FDA debarment, exclusion from Federal healthcare programs, contract debarment or refusal of future orders under existing government contracts, consent decrees, and corporate integrity agreements.  Furthermore, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

Drug Approval Process

FDA approval of our own and our partners’ products is required before the products may be commercialized in the United States. U.S. Section 505 of the FFDCA describes three regulatory pathways for marketing authorization for a new drug:

For both NDAs and ANDAs, the FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing methods and controls are adequate to assure and preserve the product’s identity, strength, quality, safety, potency, and purity.

The following table provides a summary description of the various regulatory pathways:

NDA Submission

The process required by the FDA before a new drug pharmaceutical product or a change to an already approved pharmaceutical product, may be approved for marketing in the U.S. generally involves:

The preclinical and clinical testing and approval process takes many years and the actual time required to obtain approval, if any, may vary substantially based upon the type, complexity and novelty of the product or disease. Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including cGLPs. The results of preclinical testing are submitted to the FDA as part of an IND, to support human clinical trials along with other information, including information about product chemistry, manufacturing and controls, available scientific literature, and a proposed clinical trial protocol. Some preclinical testing may continue even after the IND is submitted. In the case of drug product candidates for which the sponsor will seek marketing approval via a 505(b)(2) NDA application, some of the above information may be abbreviated or omitted.

A sponsor of a proposed clinical trial must submit an IND application to the FDA before a clinical trial may commence.  The IND application automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating to one or more proposed clinical trials and places the clinical trial on a clinical hold, including concerns that human research subjects will be exposed to unreasonable health risks. If the FDA places a trial on clinical hold, the sponsor must address the issue to the FDA’s satisfaction before the trial may begin. In addition, an independent Institutional Review Board (“IRB”), covering each site proposing to conduct the clinical trial or a central IRB must review and approve the plan for any clinical trial, subject communications, and informed consent information for subjects before the trial commences at that site and it must monitor the study until completed. The FDA, the IRB, or the sponsor may suspend a clinical trial, place a trial on hold, or discontinue a trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk or for failure to comply with the IRB's or FDA’s requirements.

Once an IND is in effect, each new clinical protocol and any amendments to the protocols must be submitted to the IND for FDA review, and to the IRB for approval. Progress reports detailing the results of the clinical trials must also be submitted at least annually to the FDA and the IRB and more frequently if serious adverse events or other significant safety information is found.

Sponsors of clinical trials generally must register and report, at the NIH-maintained website ClinicalTrials.gov, key parameters of certain clinical trials, including clinical trial results within set timeframes. Failure to submit the required information to ClinicalTrials.gov can result in monetary penalties. Investigators must also provide certain information to the clinical trial sponsors to enable sponsors to make certain financial disclosures to the FDA. Moreover, under the 21st Century Cures Act, manufacturers or distributors of investigational drugs for the diagnosis, monitoring, or treatment of one or more serious diseases or conditions must have a publicly available policy concerning expanded access to investigational drugs.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients in accordance with the applicable protocol and all applicable laws, rules and regulations. Clinical trials are typically conducted in sequential phases, which may overlap, though in the case of a 505(b)(2) NDA, some study requirements may be abbreviated.  Studies, in addition to the below, such as pediatric studies, may also be required by the FDA:

In the case of 505(b)(2) NDAs, the above studies may be abbreviated. In addition to the above traditional kinds of data required for the approval of a NDA, the recently passed 21st Century Cures Act, provides for FDA acceptance of new kinds of data such as patient experience data, real world evidence, for previously approved products, and, for appropriate indications sought through supplemental marketing applications, data summaries.

In some cases, FDA programs may be available to expedite or simplify the process for drug development and FDA marketing application review.  For instance, drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means the FDA may approve the product based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis. All promotional materials for products approved under accelerated regulations are subject to prior review by the FDA.

In addition, under the Pediatric Research Equity Act, or PREA, a NDA or supplement to a NDA for a new active ingredient, indication, dosage form, dosage regimen, or route of administration must contain data that are adequate to assess the safety and

effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

The FDA, an IRB, or a sponsor may suspend or terminate clinical trials at any point in this process on various grounds, including a finding that patients are being exposed to an unacceptable health risk, if they decide it is unethical to continue the study, the clinical trial is not being conducted in accordance with FDA or IRB requirements, or based on evolving business objectives or the competitive climate. Results of pre-clinical and clinical trials must be summarized in comprehensive reports for the FDA. In addition, the results of phase III studies are subject to rigorous statistical analyses.

Following marketing approval, sponsors may also voluntarily or be required to conduct additional studies, called Phase IV studies.  For instance, the FDA may approve a NDA for a product candidate, but require that the sponsor conduct additional clinical trials to further assess the drug after NDA approval under a post-approval commitment. In addition, a sponsor may decide to conduct additional clinical trials after the FDA has approved a NDA.

The results of drug development, pre-clinical studies and clinical trials are submitted to the FDA as part of a NDA. NDAs also must contain extensive chemistry, manufacturing and control information. In most cases, the submission of a NDA is subject to a substantial application user fee. Fee waivers or reductions are available in certain circumstances.

Once the FDA receives an application, it has 60 days to review the NDA to determine if it is substantially complete to permit a substantive review.review and will be accepted for filing. The FDA may request additional information rather than accept a NDA for filing. Once the submission is accepted for filing, the FDA’s goal is to review 90% of all applications for non-New Molecular Entities (“NMEs”), within ten months from the submission date. For NMEs, FDA has the goal of completing its review of 90% of applications within ten months of the 60-day filing date.  The FDA, however, may give a priority review designation to drugs that are intended to treat serious conditions and, if approved, would provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of the serious conditions. A priority review means that the goal for the FDA is to review an application within six months of the submission date for nonnon-NMEs and within six months of the 60-day filing date for NMEs. These timeframes, however, are only goals, which FDA may not meet.  Moreover, the review process may also be extended if the FDA requests or the NDA sponsor otherwise provides substantial additional information or clarification regarding the submission.    

The FDA may also refer drugs to advisory committees when it is determined that an advisory committee’s expertise would be beneficial to the regulatory decision-making process, including the evaluation of new technology. For product candidates for which no active ingredient (including any ester or salt of an active ingredient) has previously been approved by FDA, the FDA must either refer the product candidate to an advisory committee or provide in a letter a summary of the reasons why FDA did not refer the product candidate to an advisory committee.  An advisory committee is a panel that includes clinicians and other experts, which review, evaluate, and make a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

After evaluating the NDA and all related information, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a CRLComplete Response Letter (“CRL”) describing the application deficiencies. If a CRL is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter; withdraw the application; or request an opportunity for a hearing. The FDA has the goal of reviewing 90% of application resubmissions in either two or six months of the resubmission date, depending on the kind of resubmission. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

ANDA Submissions

Much like NDAs, FDA approval is required before a generic drug equivalent to a listed drug can be marketed. Generic drugs are the pharmaceutical and therapeutic equivalents of branded products and are generally marketed under their generic (chemical) names rather than by brand names. A pharmaceutical company seeking to market a generic version of a branded drug must file a ANDA with the FDA. For ANDAs, applicants are not required to conduct complete clinical studies. Such applications, though, normally require bioavailability and/or bioequivalence studies. “Bioavailability” indicates the rate and extent to which the active ingredient or active moiety is absorbed from a drug product and becomes available at the site of drug action. “Bioequivalence” indicates that there are no significant differences in the rate and extent to which the active ingredient or active moiety becomes available at the site of drug action, when administered at the same molar dose and under similar conditions in an appropriately designed study. Generic drug products must be bioequivalent to a drug product approved by the FDA under a NDA application, referred to as a reference listed drug.  While an IND, in many cases, is not required for bioavailability and bioequivalence testing, such studies must still be conducted in accordance with Good Clinical Practices (“GCPs”) and under the supervision of an IRB.

Like NDAs, ANDAs must be accompanied by user fees.  For generic drugs, other fees, such as fees for drug master files, program fees and fees for manufacturing facilities, also may also be required to be paid by the applicant, manufacturer, and/or drug master file holder.

Following submission of an ANDA, the FDA has 60 days to evaluate the application to determine if it is substantially complete.  If the agency finds that the application is substantially complete, it will receive the application and begin its substantive review.  As part of this substantive review, the FDA will determine whether or not the generic version submitted by the company meets the necessary approval standards, including bioequivalence to the reference listed drug, adequate chemistry, manufacturing, and controls, and manufacturing facilities and clinical study sites passing pre-approval inspections.  Under FDA’s Generic Drug User Fee Act performance goals, the FDA has the goal of reviewing and acting on 90% of standard original ANDAs within ten months of submission.  Certain factors, such as the availability of other approved drug products, certain patent certifications, and certain exclusivities, may result in an ANDA being considered to be a priority ANDA, which can result in this review time being shortened to eight months, provided that a sufficiently complete and accurate pre-submission facility correspondence is submitted to FDA two months before the ANDA submission, and information provided in this correspondence remains unchanged.  

Following its completion of the review of a ANDA, the FDA will either issue an approval letter or a CRL.  If a CRL is issued, the applicant may either respond to FDA, addressing all of the deficiencies identified in the letter; withdraw the application; or request an opportunity for a hearing. The FDA has the goal of reviewing 90% of applicants’FDA’s CRL responses within eight orreview goals range from three to ten months, depending on whether a preapproval inspection is required.  This timeframe may be shortenedrequired, the response is a major or minor amendment, the application is a standard or priority review application, and whether the applicant submitted a timely, complete and accurate pre-submission facility correspondence to six or eight months, respectively, for priority responses and provided that certain criteria are met.FDA.    Even with the applicant’s submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Upon approval, the FDA will rate generic drug products in the Orange Book.  Products meeting bioequivalence standards will typically receive an AB rating.  Under state law, such generic drug products may be able to be substituted at the pharmacy for the brand-name drug, without the intervention of the prescribing physician, unless otherwise specified by the patient or physician, Many third party payers of prescription drugs (e.g., health insurance plans, Medicare and Medicaid programs) have adopted policies to encourage the substitution of the lower-priced AB-rated generic drugs for the higher-priced branded drugs, when an AB-rated generic drug is available, as generic drugs are sold generally at prices below those of the corresponding branded products. Generic drugs may provide a cost-effective alternative for consumers, while maintaining the same active ingredient(s), dosage form, strength, route of administration, and conditions of use as the branded product.

Generally Applicable Requirements

Clinical trials for all product candidates must be conducted in accordance with GCPs.GCPs, which include the requirements that all research subjects provide their informed consent in writing for their participation in any clinical trial as well as review and approval of the study by an IRB.  Before approving an application, the FDA may inspect one or more clinical trial sites to assure compliance with GCPs.

Further, during development, the manufacture of investigational drugs for the conduct of human clinical trials is subject to cGMP requirements. Investigational drugs and active pharmaceutical ingredients imported into the United StatesU.S. are also subject to regulation by the FDA relating to their labeling and distribution. Further, the export of investigational drug products outside of the United StatesU.S. is subject to regulatory requirements of the receiving country as well as U.S. export requirements under the FDCA.

For both NDAs and ANDAs, the FDA also may require submission of a risk evaluation and mitigation strategy (“REMS”) or REMS, to ensure that the benefits of the drug outweigh the risks of the drug. The REMS plan could include medication guides, physician communication plans, and elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools. An assessment of the REMS must also be conducted at set intervals. Following product approval, a REMS may also be required by the FDA if new safety information is discovered and the FDA determines that a REMS is necessary to ensure that the benefits of the drug outweigh the risks of the drug.  

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval. Further, should new safety information arise, additional testing, product labeling, or FDA notification may be required.

The Hatch-Waxman Amendments, Regulatory Exclusivity, and Patent Term Extension

Orange Book Patent Listing

When a NDA is submitted to the FDA seeking approval of a drug, including a 505(b)(2) NDA, the applicant is required to list certain patents whose claims cover the applicant's product or method of use with the FDA. Upon approval of a NDA, each of the patents listed in the application for the drug is then published in the Orange Book. The Orange Book listed NDA products may be cited by potential competitors in support of approval of an ANDA or 505(b)(2) NDA.  Any applicant who files an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a 505(b)(2) NDA referencing a drug listed in the Orange Book must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires and approval will not be sought until after the patent expiration; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. This last certification is known as a paragraph IV patent certification. The applicant may also elect to submit a "section viii" statement certifying that its proposed label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent. Generally, the ANDA or 505(b)(2) NDA approval cannot be made effective by FDA until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through a paragraph IV certification or if the applicant is not seeking approval of a patented method of use.

If the ANDA or 505(b)(2) applicant makes a paragraph IV certification challenging an Orange Book-listed patent, a notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers.

If the NDA holder or patent owners of the listed drug asserts an infringement of the patent in court within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from making the approval of the ANDA or 505(b)(2) application effective until the earlier of 30 months from the receipt of the paragraph IV certification, the expiration of the patent, the settlement of the lawsuit,  a decision in the infringement case that is favorable to the applicant, or such shorter or longer period as may be ordered by a court. The ANDA or 505(b)(2) application approval also will not be made effective until any applicable non-patent exclusivity listed in the Orange Book for the reference drug has expired as described in further detail below.

Recently, Congress, the Administration, and administrative agencies have taken certain measures to increase drug competition and thus, decrease drug prices. By example, in 2019 FDA introduced a proposed rule and draft guidance to facilitate drug importation. Congress also passed a bill requiring sponsors of NDA approved products to provide sufficient quantities of drug product on commercially reasonable market-based terms to entities developing generic and similar drug products. This bill also included provisions on shared and individual REMS for generic drug products. New legislative and regulatory efforts could ultimately have an adverse impact on our business and results of operation.

Non-Patent Exclusivity

The holder of thean NDA for the listed drug may be entitled to a period of non-patent exclusivity, during which the FDA cannot make the approval of an ANDA or 505(b)(2) application that relies on the listed drug effective. For example, a pharmaceutical manufacturer may obtain five years of non-patent exclusivity upon NDA approval of a new chemical entity (“NCE”), which is a drug that contains an active moiety that has not been approved by FDA in any other NDA. An "active moiety" is defined as the molecule or ion responsible for the drug substance's physiological or pharmacological action. During the five year exclusivity period, the FDA cannot accept for filing any ANDA seeking approval of a generic version of that drug or any 505(b)(2) NDA for the same active moiety and that relies on the FDA's findings regarding that drug, except that FDA may accept an application for filing after four years if the follow-on applicant makes a paragraph IV certification.

The holder of a NDA, including one approved under Section 505(b)(2), may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product or a new dosage form or route of administration, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted or sponsored by the applicant. Should this occur, the FDA would be precluded from making the approval of any ANDA or 505(b)(2) application effective for the protected modification until after that three yearthree-year exclusivity period has run. However, unlike NCE exclusivity, the FDA can accept an application and begin the review process during the exclusivity period.

As a general matter, because the three yearthree-year exclusivity is related to the product’s changed condition only, it does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic or modified versions of the original, unmodified drug product.  Instead, three yearthree-year exclusivity prohibits the FDA making the approval of subsequent ANDAs and 505(b)(2) NDAs that seek approval for that same changed condition and that reference the drug product with the three year exclusivity effective. Five year and three yearthree-year exclusivity will also not delay the submission or approval of a full NDA.

In addition, an applicant submitting an ANDA to the FDA may be entitled to a 180 day market exclusivity period with respect to subsequently filed generic applications if such applicant is the first to submit a substantially complete application to FDA and whose filing includes a Paragraph IV certification that the applicable patent(s) are invalid, unenforceable and/or not infringed, obtains approval, and launches the product in the marketplace without triggering any statutory forfeiture provisions. An ANDA for a product designated as competitive generic therapy that does not otherwise have patent or exclusivity protections listed in the Orange Book and that is the first approved applicant, is also eligible for a period of 180 days of regulatory exclusivity with respect to other ANDAs.

These ANDA exclusivity periods, however, can be lost under certain circumstances.  Competitive generic therapies are products for which there is not more than one approved drug included in the Orange Book.

Pediatric exclusivity is another type of non‑non‑patent marketing exclusivity in the United StatesU.S. and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory and statutory exclusivity for NDA products, including the non‑non‑patent exclusivity period described above and patent protections. This six‑six‑month exclusivity may be granted if a NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the required time frames, whatever statutory or regulatory periods of exclusivity or Orange Book listed patent protection cover the drug are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve an ANDA or 505(b)(2) application owing to regulatory exclusivity or listed patents. Moreover, pediatric exclusivity attaches to all formulations, dosage forms, and indications for products with existing marketing exclusivity or patent life that contain the same active moiety as that which was studied.

If approved, drug products may also be eligible for periods of U.S. patent term restoration.restoration if the approval is the first permitted commercial marketing for the product.  If granted, patent term restoration extends the patent life of a single unexpired patent, that has not previously been extended, for a maximum of five years.  The total patent life of the product with the extension also cannot exceed fourteen years from the product’ approval date.  Subject to the prior limitations, the period of the extension is calculated by adding half of the time from the effective date of an IND to the initial submission of a marketing application, and all of the time between the submission of the marketing application and its approval.  This period may be reduced by any time that the applicant did not act with due diligence.  Whether any of our product candidates will be eligible for patent term restoration is currently unknown.  Later, the applicable regulatory authorities may determine that we are not eligible for such restoration periods.

Depending on the drug product, other periods of regulatory exclusivity, such as orphan drug product exclusivity, may also block subsequent applicants.

Orphan Drug Designation

Some jurisdictions, including the United States,U.S., may designate drugs for relatively small patient populations as orphan drugs. Pursuant to the Orphan Drug Act, the FDA grants orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States,U.S., or affecting more than 200,000 in the United StatesU.S. and for which there is no reasonable expectation that the cost of developing and making the product available in the United StatesU.S. will be recovered from United StatesU.S. sales. Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain orphan designation if there is a product already approved by the FDA that is intended for the same indication and that is considered by the FDA to be the same as the already approved product. This plausible hypothesis must be demonstrated to receive orphan exclusivity.  This hypothesis must be demonstrated to obtain orphan exclusivity.  Orphan drug designation provides certain benefits, such as the opportunity for grants, tax credits, application user fee waivers, and exemption from program user fees under certain circumstances.  The tax advantages, however, were recently limited in the 2017 Tax Cuts and Jobs Act.  If approved for the orphan designation, orphan designated drugs may receive seven years of exclusivity, which, subject to certain exceptions, protects the drug from FDA approval of another drug with the same principal molecular features for the same orphan indication.  FDA may, however, approve a product with the same principal molecular features for the same orphan indication during this time period, if such product is able to demonstrate clinical superiority.  Orphan exclusivity can also be lost under certain circumstances, such as the inability of the application holder to ensure sufficient quantities of the product.  Orphan drugs are also exempt from the above discussed PREA requirements.

Combination Drug/Device Regulation

Our products, our products marketed by our partners, as well as our products being developed by our partners are most often categorized as “drug-device combination products” because they contain both a drug and a device to administer the drug. To date, our and our partners’ combination products have been regulated as drug, and are therefore subject to the NDA, ANDA, sNDA, sANDA and 505(b)(2) drug approval process and regulations. Combination drug/device products raise unique scientific, technical and regulatory issues. The FDA has established an Office of Combination Products (“OCP”) to address the challenges associated with the review and regulation of combination products. The OCP assists in determining strategies for the approval of drug/delivery combinations and assuring agreement within the FDA on review responsibilities.  The device specific information is filed with FDA as part of the drug approval submission or it may be filed separately in the form of a device master file, also known as the master access file (“MAF”).  MAF is not an FDA approval submission but is a filing that can be used to provide supporting data for our partners’ drug approval submissions.  A MAF will be reviewed by the FDA only when referenced in an approval submission.  By filing a MAF,

we are able to provide information directly to the FDA, which can then be referenced by our partners in their drug approval submissions, without having to share our proprietary information directly with our partners.    

Where common data elements may be part of several submissions for regulatory approval, as in the case of information supporting an injection system, a MAF filing with the FDA may be the preferred route.  A delivery device that is applicable to a variety of drug/device combination products, represents another opportunity for such a filing.  Another option would be to obtain a 510(k) premarket clearance from FDA for our delivery device as a stand-alone product. We intend to pursue such strategies as permitted by the law and as directed by the FDA either through guidance documents or discussions.

Development of a device with a specific drug likely will be handled as part of the marketing application for the drug product, which may be a NDA, ANDA, or supplemental application. Under these circumstances, the device component is only approved if the drug component is approved.

To the extent that our injectors are packaged with the drug, as part of a drug delivery system, the entire package will be subject to the requirements for drug/device combination products. These include drug manufacturing requirements, drug adverse reaction and other reporting requirements, and all of the restrictions that apply to drug labeling and advertising. Additionally, such products will also be subject to certain device requirements, including QSRs and certain reporting requirements, such as medical device reporting requirements.reports.  Sponsors of clinical studies using investigational devices are also required to comply with FDA’s investigational device exemption regulations.  These requirements necessitate additional expenditures of time and resources, which could have a substantial adverse impact on our ability to commercialize our products and our operations.

Other Post-Approval Requirements and Promotional Activities

Any product manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements related to manufacturing, recordkeeping, reporting, including adverse experience reporting, drug shortage reporting, and periodic reporting, product sampling and distribution, advertising, marketing, and promotion, and post‑approval obligations imposed as a condition of approval, such as Phase IV clinical trials, REMS, and surveillance to assess safety and effectiveness after commercialization.

There also are continuing annual user fee requirements. In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register and/orand, in the case of generic drug products, self-identify their establishments with the FDA and certain state agencies and list their drug products.  Device manufacturers must also register their facilities and list the devices that they design, develop, manufacture, or import, except those subject to a drug approval.  These facilities must also pay annual registration fees. The distribution of prescription pharmaceutical product samples is also subject to the Prescription Drug Marketing Act (“PDMA”).

The FDA closely regulates the post-approval marketing and promotion of drugs and devices, including standards and regulations for direct-to-consumer advertising, dissemination of off-label information, industry-sponsored scientific and educational activities and promotional activities involving the Internet. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved label. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new or supplemental NDA, which may require us to develop additional data or conduct additional preclinical studies and clinical trials. Failure to comply with these requirements can result in adverse publicity, Warning Letters, Untitled Letters, corrective advertising and potential civil and criminal penalties, as well as liability under the civil False Claims Act, exclusion from participation in federal healthcare programs, mandatory compliance programs under corporate integrity agreements, debarment, and refusal of government contracts among other consequences.

Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use. Specifically, manufacturers and product sponsors may not promote a product for off-label uses and must also comply with FDA’s other promotional requirements.

Manufacturing and Quality Regulations

The FDA established regulations to require that the methods used in, and the facilities and controls used for, the manufacture, processing, packing and holding of drugs and medical devices conform to cGMPs and QSRs. The cGMP regulations the FDA enforces are comprehensive and cover all aspects of manufacturing operations and require the conduct of investigations and FDA reporting under certain circumstances. The cGMP regulations for devices, called the Quality System Regulation, are also comprehensive and cover all aspects of device manufacture, fromdesign, quality, and manufacturing, including, for example, pre-production design requirements and validation tovalidation; production and process controls; complaint handling and investigations; corrective and preventative actions; and distribution, installation,

and servicing, insofar as they bear upon the safe and effective use of the device and whether the device otherwise meets the requirements of the FFDCA.servicing. Compliance with the regulations requires a continuous commitment of time, money and effort in all operational areas.

Concurrent with clinical trials, companies must also develop additional information about the chemistry and physical characteristics of the product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP and QSR requirements. The FDA conducts pre-approval inspections of facilities engaged in the development, design, import, manufacture, processing, packing, testing and holding of the drugs and devices subject to NDAs and ANDAs. In addition, manufacturers of both pharmaceutical products and active pharmaceutical ingredients (APIs) used to formulate the drug also ordinarily undergo a pre-approval inspection. Failure of any facility to pass a pre-approval inspection will result in delayed or non-approval and would have a material adverse effect on our business, results of operations, financial condition and cash flows.

The FDA also conducts periodic inspections of drug and device facilities to assess the cGMP/QSR status of marketed products. Following such inspections, the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the threshold of regulatory significance for a Warning Letter. FDA guidelines also provide for the issuance of Warning Letters for violations of “regulatory significance” for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action. Finally, the FDA could issue a Form 483 Notice of Inspectional Observations. Moreover, depending on the violation, the FDA could take more significant enforcement actions as a result of inspectional findings.  Any of the foregoing could cause us to modify certain activities identified during the inspection. If the FDA were to find serious cGMP/QSR non-compliance during such an inspection, it could take other regulatory actions that could adversely affect our business, results of operations, financial condition and cash flows. Imported API and other components needed to manufacture our products could be rejected by U.S. Customs. In respect to domestic establishments, the FDA could initiate product seizures or request or in some instances require product recalls and seek to enjoin or otherwise limit a product’s manufacture and distribution. In certain circumstances, violations could support civil penalties, criminal prosecutions, and sanctions that include preventing that company from receiving the necessary licenses to export its products, among other consequences.

Controlled Substances Regulation

Certain of our drug products are considered “controlled substances” as defined in the Controlled Substances Act (“CSA”) and implementing regulations, which, depending on the controlled substance schedule, establish certain registration, security, monitoring, reporting, storage, distribution, importation, inventory, quota, record keeping, and other requirements administered by the Drug Enforcement Agency (“DEA”). The DEA regulates controlled substances as Schedule I, II, III, IV or V substances, with Schedule I and II substances considered to present the highest risk of substance abuse and Schedule V substances the lowest risk. These requirements are directly applicable to us and also applicable to our contract manufacturers and to distributors, prescribers and dispensers of our products.

The DEA regulates the handling of controlled substances through a closed chain of distribution. This control extends to the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce.

The active ingredient in our pending XYOSTED™ productXYOSTED^®, testosterone, is listed by the DEA as a Schedule III substance under the CSA. Consequently, if in the future XYOSTED™XYOSTED^® is approved by the FDA, XYOSTED™ will be subject to certain regulations under the CSA. For example, certain prescription requirements must be met for the dispensing of Schedule III controlled substances both on the federal and state level.

Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. Dispensers must renew their registrations every three years. The registration is specific to the particular location, activity and controlled substance schedule.

The DEA typically inspects a facility to review its security measures prior to issuing a registration and on a periodic basis. Security requirements vary by controlled substance schedule.  Certain reports must also be made for controlled substances, such as reports for thefts or significant losses of any controlled substance.  Failure to maintain compliance with applicable requirements, particularly as manifested in loss or diversion, can result in administrative, civil or criminal enforcement action that could have a material adverse effect on our business, results of operations and financial condition. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate administrative proceedings to revoke those registrations. In certain circumstances, violations could result in criminal proceedings.

Individual states may also regulate controlled substances, and we, as well as our third-party suppliers and manufacturers, are subject to such regulation by several states with respect to the manufacture and distribution of certain controlled substances.

Foreign Approval Process

In addition to regulations in the U.S., we (and, where appropriate, our partners marketing medicinal products incorporating our devices) are subject to various foreign regulations governing clinical trials, manufacturing, and the commercial sales and distribution of our medicinal products. We and/or our partners must obtain approval of a medicinal product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The requirements governing the conduct of clinical trials, manufacturing, product licensing, pricing and reimbursement and the regulatory approval process all vary greatly from country to country. Additionally, the time it takes to complete the approval process in foreign countries may be longer or shorter than that required for FDA approval. Foreign regulatory approvals of our products are necessary whether or not we obtain FDA approval for such products. Finally, before a new drug may be exported from the U.S., it must either be approved for marketing in the U.S. or meet the requirements of exportation of an unapproved drug under Section 802 of the Export Reform and Enhancement Act or comply with FDA regulations pertaining to INDs.

In the European Union (“EU”), marketing authorizations for medicinal products can be obtained through several different procedures, principally the centralized procedure, the decentralized procedure and the mutual recognition procedure. The centralized procedure allows a company to submit a single application to the European Medicines Agency (“EMA”), which may provide a positive opinion regarding the application to the effect that it meets certain safety, quality and efficacy requirements. A centralized marketing authorization will be granted based on a positive opinion of the EMA as approved by the European Commission. It is valid in all EU member states and three of the four European Free Trade Association countries (Iceland, Liechtenstein and Norway). The centralized procedure is mandatory for certain medicinal products, including orphan medicinal products and biologic products, and optional for certain other high technology products. The decentralized procedure allows companies to file identical applications for authorization to several EU member states simultaneously for medicinal products that have not yet been authorized in any EU member state. The competent authority of one EU member state, selected by the applicant (the Reference Member State), assesses the application for marketing authorization. The competent authorities of the other EU member states for which marketing authorizations are sought (concerned member states) are subsequently required to grant marketing authorization for their territories on the basis of this assessment except where grounds of potential serious risk to public health require an authorization to be refused. The mutual recognitionThis procedure allows companies that have a medicinal product already authorized in one EU member state to apply for this authorization to be recognized by the competent authorities in other EU member states.

In so far as our products may be sold as medical devices outside of the U.S. (as opposed to a delivery system of a medicinal product) we are also subject to foreign legal and regulatory requirements. Legal restrictions on the sale of imported medical devices and products vary from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. We primarily rely upon the companies marketing our injectors in foreign countries to obtain the necessary regulatory approvals for sales of our products in those countries.

Our Minneapolis Quality Management System has ISO 13485: 2003 certification, the medical device industry standard for our quality systems. This certification shows that our device development and manufacturing comply with standards for quality assurance, design capability and manufacturing process control. Such certification, along with compliance with the European Medical Device Directive 93/42/EC (to be replaced inon May 27, 2020 by the EU Medical Devices Regulation 2017/745), enables us to affix the CE Mark (a certification indicating that a product has met EU consumer safety, health or environmental requirements) to current products and supply the device with a Declaration of Conformity. Regular surveillance audits by our notified body, British Standards Institute, are required to demonstrate continued compliance.

Other Healthcare Laws and Compliance Requirements

In the United States,U.S., the research, manufacturing, distribution, marketing, sale and promotion of drug products and medical devices are subject to numerous regulations by various federal, state and local authorities.  

We are subject to various U.S. federal and state laws restricting certain marketing practices in the pharmaceutical industry, including anti-kickback laws and false claims laws. The federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs.programs, except for activities protected by narrowly-drawn statutory and regulatory safe harbors. Liability under the federal anti-kickback statute may be established without a person or entity having actual knowledge of the statute or specific intent to violate it.it, and a violation of the anti-kickback statute may be grounds for a government or whistleblower claim under the federal False Claims Act. Violations of the federal anti-kickback statute may be punished by civil and criminal fines, imprisonment, and/or exclusion from participation in federal healthcare programs.

The federal civil False Claims Act, also known as the False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of federal funds, or knowingly making, or causing to be made, a false statement to get a false claim paid. Violations ofClaims may be pursued by whistleblowers through qui tam actions, even if the government declines to intervene.  Intent to deceive is not necessary to establish civil liability, which may be predicated on reckless disregard for the truth.  The civil False Claims Act authorizes imposition of treble damages and a civil penalty for each false claim, such as an invoice, submitted for payment and may result in significant financial penalties and damages.  The criminal federal False Claims Act imposes criminal fines or imprisonment against individuals or entities who make or present a claim to the government knowing such claim to be false fictitious or fraudulent.  Conviction or civil judgment for violation of the False Claims Act can also result in debarment from government contracting and exclusion from participation in federal healthcare programs.

Various federal and state health care programs obligate us to report drug pricing information that is used as the basis for their reimbursement rates for pharmacies and other health care providers, prices charged certain federal agencies and non-federal purchasers, and rebates on prescriptions paid by Medicaid and other plans.  States, such as California, have also enacted transparency laws that require manufacturers to report price increases and related information.  Some government health care programs impose penalties if drug price increases exceed specified percentages or inflation rates, and these penalties can result in mandatory penny prices for certain federal and 340B program customers. Failure to comply with the rules for calculating and submitting pricing information or otherwise overcharging the government or its beneficiaries could expose us to sanctions, including False Claims Act liability.

In addition, the Physician Payment Sunshine Act provisions of the Healthcare Reform Act require extensive tracking of payments and transfers of value to physicians and teaching hospitals and public reporting of the data collected, and government agencies and private entities may inquire about our marketing practices or pursue other enforcement activities based on the disclosures in those public reports. The Sunshine Act and similar state laws impose reporting requirements for various types of payments to physicians and teaching hospitals. Failure to comply with required reporting requirements under these laws could subject manufacturers and others to substantial civil money penalties.

The majority of states also have statutes or regulations similar to the federal anti-kickback law and the False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. A number of states now require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to individual physicians in the states. Other states restrict when pharmaceutical companies may provide meals to prescribers or engage in other marketing related activities. Some states require the posting of information relating to clinical studies and their outcomes. In addition, California, Connecticut, Massachusetts and Nevadasome states require pharmaceutical companies to implement compliance programs or marketing codes of conduct.  Failure to comply with state laws could result in regulatory enforcement actions.

Although we may not provide financial assistance to Medicare patients taking drugs sold by us, the OIG has established guidelines that permit pharmaceutical manufacturers to make donations to charitable organizations who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria, and do not link aid to use of a donor’s product. If we or our vendors or donation recipients are deemed to fail to comply with relevant laws, regulations or evolving government guidance in the operation of these programs, we could be subject to damages, fines, penalties or other criminal, civil or administrative sanctions or enforcement actions.

Federal price reporting laws require manufacturers to calculate and report complex pricing metrics used to determine prescription rebates paid under the Medicaid Drug Rebate Program and amounts reimbursed to pharmacies and other providers by the Medicaid and Medicare programs.  Payment for a manufacturer’s drugs by these programs is conditioned on submission of this pricing information.  Failure to report accurate pricing information may result in criminal, civil, or administrative sanctions or enforcement actions.   In addition, individual states such as California have reporting requirements intended to provide drug price transparency and deter price increases.

The Veterans Health Care Act of 1992 requires, as a condition of payment by certain federal agencies and the Medicaid program, that manufacturers of “covered drugs” enter into a Master Agreement and Federal Supply Schedule (FSS) contract with the Department of Veterans Affairs through which their covered drugs must be offered for sale at a mandatory ceiling price to certain federal agencies, including the VA and Department of Defense.  FSS contracts require compliance with applicable federal procurement laws and regulations, including disclosure of commercial prices during contract negotiations and maintenance of price relationships during the term of the contract, and subject manufacturers to contractual remedies as well as administrative, civil, and criminal sanctions.  The Veterans Health Care Act also requires manufacturers to enter into pricing agreements with the Department of Health and Human Services to charge no more than a different ceiling price (derived from the Medicaid rebate percentage) to covered entities participating in the 340B drug discount program.  Failure to provide the mandatory discount may subject the manufacturer to specific civil monetary penalties.  Termination of either of these agreements also jeopardizes payment by Medicaid for the manufacturer’s drugs.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, which we refer to together as the Healthcare Reform Act, expanded healthcare coverage within the U.S., primarily through establishment of state insurance exchanges and expansion of the Medicaid program. This law substantially changed the way healthcare is financed by both governmental and private insurers and significantly impacts the pharmaceutical industry. Changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, payment of an annual fee by manufacturers of branded drugs and biological products based on their share of the federal market, benefits for patients within a coverage gap in the Medicare Part D prescription drug program (commonly known as the “donut hole”), rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicaid Drug Rebate program, expansion of the Public Health Service’s 340B drug pricing discount program, or 340B program, fraud and abuse and enforcement. These changes impact existing government healthcare programs and are resulting in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. The Affordable Care Act has since been amended to repeal the individual health insurance mandate, change price reporting rules for authorized generics, and increase manufacturers’ share of Medicare Part D prescription costs in the donut hole, and other provisions of the law may be repealed and replaced by Congress, which may greatly affect these government and third-party programs and their effect on our business.  

In addition, we may be subject to, or our marketing activities may be limited by, data privacy and security regulation by both the federal government and the states in which we conduct our business. TheOne such statute is the Health Insurance Portability and Accountability Act of 1996 ("HIPPAA"HIPAA") and its implementing regulationsregulations. HIPAA established uniform standards for certain "covered entities," which are certain healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, governing the conduct of specified electronic healthcare transactions and protecting the security and privacy of protected health information. The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included the Health Information Technology for Economic and Clinical Health Act ("HITECH"), which expanded certain of HIPAA's privacy and security standards. Among other things, HITECH makes HIPAA's security standards and certain privacy standards directly applicable to business associates. HITECH also created four new tiers ofstrengthened the civil monetaryand criminal penalties that may be imposed against covered entities, business associates, and individuals, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions.  In addition, other federal and state laws, such as the California Consumer Privacy Act, may govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and may not be preempted by HIPAA, thus complicating compliance efforts.

The Foreign Corrupt Practices Act (“FCPA”) further 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. The FCPA also obligates companies whose securities are listed in the United StatesU.S. to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the United States,U.S., can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, disgorgement, contractual damages, reputational harm, exclusion from participation in government healthcare programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private qui tam actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, the U.S.regulations. In particular, in the EU the data privacy regime (the General Data Protection Regulation which came into effect on May 25, 2018) is regarded as stricter than in the US and the coming into force of the General Data Protection Regulation on 25 May 2018 is in broad terms more restrictive than the current EU data protection laws. EU laws restrict the export of personal data outside the EU, for instance to the US, unless certain safeguards are in place.

Third-Party Payer Coverage and Reimbursement

The commercial success of the approved products in our portfolio depends, in part, upon the availability of coverage and adequate reimbursement from third-party payers at the federal, state and private levels. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payers to reimburse all or part of the associated healthcare costs. Sales of our product portfolio will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our product portfolio will be paid by health maintenance, managed care, pharmacy benefit, and/or similar healthcare management organizations, or are reimbursed by government health administration authorities, such as Medicare and Medicaid, private health coverage insurers and other third-party payers. The market for our product portfolio will depend significantly on access to third-party payers' formularies or lists of treatments for which third-party payers provide coverage and reimbursement.

Also, third-party payers are developing increasingly sophisticated methods of controlling healthcare costs. For example, for high cost specialty drugs, third party payers have begun demanding value-based pricing in which price is linked to performance metrics.  Further, coverage and reimbursement for therapeutic products can differ significantly from payer to payer. As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that adequate coverage and reimbursement will be obtained. The cost of pharmaceuticals and medical devices continues to generate substantial governmental and third-party payer scrutiny. We expect that the pharmaceutical industry will experience continued pricing pressures due to the trend toward managed healthcare, the increasing influence of managed care organizations and additional legislative and administrative proposals. Our results of operations and business could be adversely affected by current and future third-party payer policies as well as healthcare legislative and administrative reforms.

Some third-party payers also require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, these requirements or any announcement or adoption of such proposals could have a material adverse effect on our ability to obtain adequate prices for our product portfolio and to operate profitably.

In international markets, there are health technology assessment regimes with price ceilings and supply and demand side restraints on specific products and therapies and profit controls in certain countries including the UK. There can be no assurance that our products will be considered medically reasonable and necessary for a specific indication, that our products will be considered cost-effective by third-party payers, that an adequate level of reimbursement will be available or that the third-party payers' reimbursement policies will not adversely affect our ability to sell our products profitably.

Healthcare Reform

In the United StatesU.S. and foreign jurisdictions, the legislative landscape continues to evolve. There have been a number of legislative and regulatory changes to the healthcare system that will likely affect our future operations. In particular, there have been and continue to be a number of initiatives at the United StatesU.S. federal and state levels that seek to reduce healthcare costs, improve access, and improve quality. The Affordable Care Act (“ACA”), passed in 2010, provided more Americans with health care coverage

while attempting to curb the growth in healthcare spending in the United States.U.S. The legislation included reforms to patient rights and protections, rules for insurance companies, taxes, tax breaks, funding, spending, and amended other laws including the Food, Drug and Cosmetics Act. Some of the main provisions of the ACA that affected the pharmaceutical and biotechnology industry include, among others, the following:

Since enactment of the ACA, some of its provisions have been repealed or amended, and other provisions may be repealed and replaced by Congress. Some of the main provisions of the ACA that affected the pharmaceutical and biotechnology industry include, among others, the following:

The Drug Supply Chain Security Act imposes on manufacturers of certain pharmaceutical products obligations related to product tracking and tracing, among others.  Among the requirements of this legislation, manufacturers are required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, will beare required to label drug product with a product identifier, and are required to keep certain records regarding the drug product.  The transfer of information to subsequent product owners by manufacturers is required to be done electronically. Manufacturers are also required to verify that purchasers of the manufacturers' products are appropriately licensed.  Further, manufacturers have drug product investigation, quarantine, disposition, and FDA and trading partner notification responsibilities related to counterfeit, diverted, stolen,  and intentionally adulterated products that would result in serious adverse health consequences or death to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. Similar requirements are also imposed on other trading partners in the supply chain.

We expect that additional state and federal healthcare reform measures will be adopted in the future. Legislators and regulators at both the federal and state level are increasingly focused on containing the cost of drugs, and there has been increasing legislative and enforcement interest in the United StatesU.S. with respect to specialty drug pricing practices. Specifically, there have been recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. For example, California recently enacted a transparency law requiring manufacturers to report drug price increases and related information, and CMS reduced the payment rate for certain hospitals purchasing outpatient drugs at the 340B program discounted price.information.  In 2016, CMS issued a final rule regarding the Medicaid drug rebate program, which among other things, revises the manner in which the “average manufacturer price” is to be calculated by manufacturers participating in the program and implements certain amendments to the Medicaid rebate statute created under the ACA. However, certain aspects of the proposed rule have yet to be finalized. Similarly, 340B program guidance wasregulations on civil monetary penalties for statutory violations, which had been finalized in early 2017, but itswent into effect in 2018. In October 2018, CMS issued an advance notice of proposed rulemaking paving the way for a proposed rule in 2019 that would significantly reduce the price of drugs paid by Medicare Part B by basing reimbursement on the average prices among other industrialized countries.  Congress also amended the Medicaid statute to alter price reporting of branded products sold as authorized generics, effective date has been deferred4th quarter 2019, which effectively increases the rebates paid on the brand.    These and the guidance may be reissued. Anyany additional healthcare reform measures could further constrain our business or limit the amounts that federal and state governments will pay for healthcare products and services, which could result in additional pricing pressures.

Other Regulatory Requirements

In addition to regulations enforced by the FDA, we must also comply with regulations under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other federal, state and local regulations. We are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals, and the use and disposal of hazardous or potentially hazardous substances in connection with our research. In each of these areas, as above, the FDA and other government agencies have broad regulatory and enforcement powers, including, among other things, the ability to levy fines and civil penalties, suspend or delay issuance of approvals, seize or recall products, and withdraw approvals, any one or more of which could have a material adverse effect on us.

Employees

Corporate Information

Antares is a Delaware corporation with principal executive offices located at 100 Princeton South Corporate Center, Suite 300, Ewing, New Jersey 08628.  We have two wholly owned subsidiaries in Switzerland (Antares Pharma AG and Antares Pharma IPL AG).  On January 31, 2001, we completed a business combination to acquire the operating subsidiaries of Permatec Holding AG, headquartered in Basel, Switzerland. Upon completion of the transaction, our name was changed from Medi Ject Corporation to Antares Pharma, Inc. We were incorporated as a Delaware corporation on April 29, 2005.

Segment and Geographic Information

We have a single reportable operating segment, which encompasses all of our self-administered parenteral pharmaceutical products and technologies. See Note 2 to the Consolidated Financial Statements in Part II, Item 8 about segment financial information.

Employees

As of February 28, 2020, we had 178 full-time employees. We believe that our success is largely dependent upon our ability to attract and retain qualified personnel in the research, development, manufacturing, business development and commercialization fields. As of March 1, 2018, we had 111 full-time employees. Of the 111 employees, 44 are primarily involved in research, development and manufacturing activities, 48 are primarily involved in commercialization and sales, with the remainder engaged in executive and administrative capacities. Although we believe that the size of our current workforce is appropriate to achieve our objectives, we are appropriately sized to focus on our mission, we intend to add personnelmay hire additional employees with specialized expertise as needed.

we continue to grow our business. We believe that we have been successful to date in attracting skilled and experienced scientific and business professionals. We consider our employee relations to be good, and none of our employees are represented by any labor union or other collective bargaining unit.

Available Information

We file with the United StatesU.S. Securities and Exchange Commission (“SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other documents as required by applicable law and regulations.  The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N. E., Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330 (1-800-732-0330). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  We maintain an Internet site (http://www.antarespharma.com).  We make available free of charge on or through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after electronically filing those documents with or furnishing them to the SEC.  The information on our website is not incorporated into and is not a part of this annual report.

The following “risk factors” contain important information about us and our business and should be read in their entirety.   Additional risks and uncertainties not known to us or that we now believe to be not material could also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline and you could lose all of your investment.  In this Section, the terms the “Company,” “we”, “our” and “us” refer to Antares Pharma, Inc.

Risks Related to Our Operations

We have incurred significant losses to date, and there is no guarantee that we will ever become profitable.achieve or sustain profitability.

We incurred net losses of $16.7$2.0 million, $6.5 million and $24.3$16.7 million for the years ended December 31, 20172019, 2018 and 2016,2017, respectively. In addition, we had an accumulated deficit at December 31, 20172019 of $270.3$278.8 million. The costs for research and development of our products, product candidates and drug delivery technologies, and certain product candidates of our partners, along with marketing and selling expenses and general and administrative expenses, have been the principal causes of our losses. Although we have reported net earnings and earnings per share in recent quarters, there is no guarantee we will continue to post quarterly profitable results of operations or achieve profitability on an annual basis. We may not ever become profitableachieve sustained profitability, and if we do not become profitableas a result your investment could be harmed.

We may need additional capital in the future in order to continue our operations.

At December 31, 2017,2019, we had cash, cash equivalents and short-term investments of $31.6$45.7 million.  We believe the combination of our current cash and projected product sales, product development fees, license revenues, milestone payments and royalties should provide us with sufficient funds to meet our obligations and support operations through at least the first quarter of 2019.2021.  However, we have not historically generated, and do not currently generate, enough revenue or operating cash flow to support our operations. We have historically funded our operations and continue to operate primarily by raising capital through equity and debt financing arrangements.arrangements and may need to do so in the future. We reported net losses of $16.7$2.0 million, $24.3$6.5 million and $20.7$16.7 million, and negative cash flows from operations for each of the years ended December 31, 2019, 2018 and 2017, 2016 and 2015, respectively. To the extent additional financing is needed, the failure to raise necessary cash may require the Company to defer or delay spending relatedfor research and development or cause us to a potential approval and launch of XYOSTED^TM, or curtail other controllable costs and discretionary spending for new research and development issues.spending.

We have funded our operations with proceeds from borrowings under a long-term debt financing arrangement.  On June 6, 2017 we entered into a loan and security agreement with Hercules Capital, Inc. for a term loan of up to $35.0 million, under which we initially borrowed $25.0 million. The principalOn June 26, 2019, we entered into an amendment of the loan agreement, which increased the aggregate principle amount available under the term loan from $35.0 million to $50.0 million. Upon signing of the amendment, an additional $15.0 million was funded to us, resulting in total principle balance outstanding under thisthe loan was $25.0 million as of December 31, 2017. We$40.0 million. Payments under the loan are interest only until the first principal payment is due on August 1, 2021. The loan is secured by substantially all of the Company’s assets, excluding intellectual property, and matures on July 1, 2022, which may but are not obligatedbe extended to request one or more additional advancesJuly 1, 2024 contingent upon satisfaction of at least $5.0 million not to exceed $10.0 million in the aggregate, subject to the achievement ofa certain

corporate milestones and satisfying customary conditions. We must achieve the corporate milestones and request additional advances prior to September 30, 2018, which is currently unlikely to occur. loan extension milestone.

We have also entered into a sales agreement (the “Sales Agreement”)funded operations with Cowen and Company, LLC (“Cowen”) under which we may offer and sell,proceeds from time to time at our sole discretion, shares of common stock having an aggregate offering price of up to $30.0 million. Cowen may sell the common stock by any method permitted by law deemed to be an “at the market offering” (the “ATM”) as defined in Rule 415 of the Securities Act of 1933, as amended. We are not obligated to make any sales of our common stock underthrough an “at the Sales Agreementmarket” offering (the “ATM”). During 2018 and as2019, we sold a total of the date of this report we have not sold any common stock pursuant to the Sales Agreement.

If we do obtain additional financing or sell4.4 million shares under the ATM, we cannot assure that the amount or the termsrepresenting gross proceeds of such financing will be as attractive as we may desire, and your equity interest in the company may be diluted. approximately $15.6 million to us. The ATM facility was terminated effective July 6, 2019.

If we are unable to obtain financing when needed, or if the amount of such financing is not sufficient, it may be necessary for us to take significant cost saving measures or generate funding in ways that may negatively affect our business in the future.  To reduce expenses, we may be forced to make personnel reductions or curtail or discontinue development programs.  To generate funds, it may be necessary to monetize future royalty streams, sell intellectual property, divest of technology platforms or liquidate assets. However, there is no assurance that, if required, we will be able to generate sufficient funds or reduce spending to provide the required liquidity.

Long-term capital requirements will depend on numerous factors, including, but not limited to, the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. Our ability to achieve and/or sustain profitable operations depends on a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following:

We have significant outstanding indebtedness under a loan and security agreement.  If we do not have sufficient cash available to repay the outstanding indebtedness as it becomes due, or if an event of default were to occur providing Hercules Capital, Inc. the right to accelerate the outstanding balance of the loan and to take possession of some or all of our collateral securing the loan, either situation could have a materially adverse effect on our business.

In June 2017, weWe have entered into a loan and security agreement, referred to herein as the Hercules Loan Agreement, with Hercules Capital, Inc., or Hercules, for a term loan of up to $35.0$50.0 million, under which we have borrowed a total of $40.0 million.  The first advance of $25.0 million was funded uponProceeds from the execution of the Hercules Loan Agreement on June 6, 2017, which hasloan have been and will be used for working capital and general corporate purposes. Under terms of the Hercules Loan Agreement, we may, but are not obligated to, request one or more additional advances of at least $5.0 million, not to exceed $10.0 million in the aggregate, subject to the Company achieving certain corporate milestones prior to September 30, 2018 and satisfying customary conditions.  We can make no assurances that we will meet such corporate milestones within the specified time frame that would give us the ability to request additional advances.

The Hercules Loan Agreement is secured by substantially all of our property other than our intellectual property. The term loan accrues interest at a calculated prime-based variable rate with a maximum interest rate of 9.50% and requires the payment of an additional end of term charge equal to 4.25% ofon the total principal amount offirst $25.0 million and 3.95% on all other advances under the loan. The termHercules Loan Agreement requires payments of interest only until the first principal payment is due on August 1, 2021. The loan maturesis secured by substantially all of the Company’s assets, excluding intellectual property, and will mature on July 1, 2022.2022, unless extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone

The Hercules Loan Agreement contains customary affirmative and restrictive covenants and representations and warranties, including financial reporting obligations and limitations on dividends, indebtedness, liens, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries. Our business may be adversely affected by the restrictions on our ability to operate our business. The Hercules Loan Agreement also contains other customary provisions, such as expense reimbursement, non-disclosure obligations, as well as indemnification rights for the benefit of the lenders. Upon the occurrence of an event of default and following any applicable cure periods, if any, a default interest rate of an additional 4.00% may be applied to the outstanding loan balances, and the lenders may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Hercules Loan Agreement.        

Additionally, we may be required to repay the outstanding indebtedness plus penalties immediately under the term loan if an event of default occurs under the Hercules Loan Agreement.  Under the Hercules Loan Agreement, an event of default will occur if, among other things, we fail to make payments as required under the Hercules Loan Agreement, we breach or default in the performance of any covenant or secured obligation under the Hercules Loan Agreement, a circumstance occurs that would reasonably be expected to have a material adverse effect on the Company, we become unable to pay our debts as they come due or are otherwise insolvent, we or our assets become subject to certain legal proceedings such as bankruptcy proceedings, a cross default to other indebtedness obligations of the Company in excess of $500,000, or a stop order is issued with respect to our common stock.

We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs. In that case, we may be required to delay, limit, reduce or terminate our product candidate development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Hercules could also exercise its rights as collateral agent to take possession and dispose of the collateral securing the loan for its benefit, which collateral includes all of our property other than our intellectual property. Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

We have limited sales and marketing experience asand limited experience working with payers on coverage issues, and we can provide no assurances of continued success in commercialization of our products.

The launch and successful commercialization of a Company.

new product requires substantial dedication of financial and other resources and include steps related to manufacturing, logistics, sales and marketing, and establishing insurance coverage and reimbursement.  We launched OTREXUP^® in February 2014.2014, and XYOSTED^® in November 2018. Although we have hired and expect to continue to hire highly qualified personnel with specialized expertise, as a company, we have limited experience commercializing pharmaceutical products on our own. In order to commercialize OTREXUP^®,our products, we have built and expect to continue to build our sales, marketing, distribution, managed care and trade, managerial and other non-technical capabilities and have made and expect to continue to make arrangements with third parties to perform these services when needed. In January 2015, we hired sales representatives and district managers to fill our  sales territories.  We have the exclusive U.S. marketing rights to OTREXUP^® for the treatment of psoriasis, however, we have limited commercial resources and may incur incremental sales and marketing costs if we choose to market OTREXUP^® for the treatment of psoriasis in the U.S. and may be unsuccessful in this commercial strategy.  To the extent we rely on third parties to commercialize OTREXUP^® in the future, we may receive less revenues or incur more expenses than if we had commercialized OTREXUP^® ourselves. In addition, we may have limited control over the sales efforts of any third parties involved in our commercialization efforts. Regardless of whether we commercialize our products ourselves or rely on third parties, we will be responsible for compliance with FDA’s laws and regulations concerning marketing and promotion.  Should our employees or the employees of a third party fail to comply with these requirements, we may face regulatory enforcement action.

If we are unable to successfully implement our sales and marketing plans and obtain adequate third party coverage and drive adoption by patients and physicians of OTREXUP^®our products through our sales, marketing and commercialization efforts, then we may not be able to generate sustainable revenuesrevenue growth from product sales which will have a material adverse effect on our business and future product opportunities.

Similarly, we may not be successful in maintaining the necessary commercial infrastructure, including sales representatives, managed care and medical affairsaffairs. Developing and pharmacovigilance teams. The development of

commercializationenhancing our commercial capabilities to market OTREXUP^®our products has been and will continue to be expensive and time-consuming. As we continue to develop, maintain and grow these capabilities, we will have to compete with other pharmaceutical companies to recruit, hire, train and retain sales and marketing personnel. If we have underestimated the necessary sales and marketing capabilities or have not established the necessary infrastructure to support successful commercialization, or if our efforts to do so take more time and expense than anticipated, our ability to market and sell OTREXUP^®our drug products may be adversely affected.

There is no guarantee that patients and healthcare providers will adopt our or our partners’ products, and that we and our partners will be able to receive adequate payer coverage and reimbursement.  

There is no guarantee that patients and healthcare providers will adopt any newly approved products, or that insurers will provide adequate coverage and reimbursement, or will not disadvantage our products through imposition of prior authorization, step therapy, high co-payments, or similar formulary management techniques.  Any labeled limitations on the use of a product or warnings could discourage adoption of the product by patients, healthcare providers, and insurers.

Moreover, we and our partners may experience a delay in receiving coverage and reimbursement for any new products or may not receive adequate levels of coverage or reimbursement at all. By way of example, while we have obtained significant payer coverage for our testosterone replacement treatment product, XYOSTED^®, there is no assurance we will maintain coverage with payers or at the same coverage level with existing payers in future periods. The process for obtaining payer coverage is time consuming and uncertain. If the time to obtain coverage is lengthy, or if we are unable to obtain or maintain adequate coverage or if the rebates we negotiate are higher than anticipated, it may negatively impact our revenue from product sales.  

Additionally, if patients and healthcare providers do not adopt any new product, or if insurers restrict patient access or disadvantage our or our partners’ products in their formularies or otherwise do not provide adequate coverage and reimbursement, we and our partners may not be able to generate sustainable revenue growth from product sales and royalties which will have a material adverse effect on our business and future product opportunities.

Product labeling restrictions and warnings may also discourage payers from providing adequate levels of coverage and reimbursement. We and our partners, accordingly, may need to take steps to assist patients to afford our products, such as offering bridge programs, free-trial, discounts, rebates and co-pay coupon programs. These programs, however, may not ultimately be successful.

New information concerning our or our partners’ products learned through required post-approval studies and product use may also result in changes to our or our partners’ products.  Should any of these events occur, they could have a material and adverse effect on our operations and business.

Any post-approval requirements, including phase IV studies and Risk Evaluation and Mitigation Strategies, or REMS, may also require the dedication of substantial time and resources.  By example, as a post-marketing requirement for XYOSTED^®, the FDA has asked us to conduct a label comprehension study that assesses patients’ understanding of key risk messages in the Medication Guide for XYOSTED^® and a study of testosterone replacement therapy in pediatric males ages 14 years and older for conditions associated with a deficiency or absence of endogenous testosterone. The label comprehension study findings may result in revisions to the Medication Guide to optimize patients’ understanding of important risks of XYOSTED^® and potentially other label restrictions or changes.  Additionally, the outcome of any post-approval studies, including the pediatric study, is uncertain and may not result in an expanded label indication or could result in additional labeling requirements or other post-approval restrictions or regulatory actions. The label comprehension study was completed and submitted to the FDA in December 2019. The pediatric study must be completed by the end of 2026, and the conduct of this study will require dedication of funds and resources.

Additionally, use of our or our partners’ products by patients and in phase IV and post-marketing studies may result in the discovery of new information concerning the products.  By example, the products may be found to be less effective than initially demonstrated, or new, more severe, or more frequent adverse events or side effects may be reported.  This may result in regulatory or other actions, including, product liability actions, enforcement actions, distribution and manufacturing restrictions, changes to product labeling and promotional materials, the imposition of post-market requirements, such as REMS or additional phase IV studies, withdrawal of marketing application approvals, withdrawal of the product from the market, refusal to approve new marketing applications or supplements, product recalls, clinical holds and suspension of clinical studies, safety alerts, dear healthcare provider letters, adverse publicity, and reimbursement and insurance coverage consequences, among others.  Should any of these events occur, they could have a material and adverse effect on our operations and business.

By way of example, in October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. The PROLONG trial was conducted as a post-market study requirement under the 2011 Makena^® accelerated approval.  Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial.  The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. We do not yet know what FDA’s decision will be, however, if FDA decides to withdraw Makena from the market, our business may be materially harmed.  Moreover, even if FDA determines that Makena^® may remain on the market, Makena^® sales may decrease or AMAG may decrease the resources that it dedicates to the manufacture, supply, commercialization, and distribution of Makena^®.  Finally, if FDA requires that AMAG conduct a new confirmatory study, AMAG may not be able to successfully conduct such study, which could ultimately result in FDA withdrawal of the Makena^® approval.  

If we or our partners are unable to achieve and maintain adequate levels of coverage and reimbursement for our or our partners’ products or any of our or our partners’ future products for which we or our partners receive regulatory approval, their commercial success may be severely hindered.

Successful sales of our products, such as XYOSTED^® and OTREXUP^®, depend on the availability of adequate coverage and reimbursement from third-party payers. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payers to reimburse all or part of the costs associated with their prescription drugs. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

In addition, the market for our products will depend significantly on access to third-party payers' drug formularies or lists of medications for which third-party payers provide coverage and reimbursement. Health plans often use tiered formularies that prefer one branded product in a therapeutic class over another through different patient co-payment amounts and disadvantaging some products through techniques such as step therapy and prior authorization. Many states use formularies and preferred drug lists to obtain supplemental Medicaid rebates in excess of those required for Medicaid coverage.  The industry competition to be included in such formularies and not disadvantaged often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payers may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another alternative is available. Additionally, certain third-party payers restrict or block access to

patients for new products until a clinical review has occurred or clinical evidence is provided to support the benefits for covered patients. These restrictions may be imposed for months or longer and some third-party payers may refuse to add new products to their formularies or otherwise restrict patient access. To ensure sales, manufacturers often must provide multiple discounts on the same drug in the chain of distribution to the health care provider and the payer.  Further, manufacturers are required to assume responsibility for Medicare Part D prescription costs for innovator drugs and biologics and authorized generics while the beneficiary is in the coverage gap.  Increasingly, payers are looking for metrics and performance-based pricing to justify increased cost of therapeutic advancements.  Even if coverage is obtained, the net realization from price concessions may negatively impact our profitability.  Government health programs also impose inflation penalties which may have adverse consequences if we increase prices in the future.

Our partnered products encounter similar issues in obtaining reimbursement from third-party payers. While we are unable to control the reimbursement rate or discounts contracted with third-party payers by our partners, these rates ultimately affect our profit sharing on Sumatriptan Injection USP and royalties on products such as Teva’s epinephrine auto injector and the Makena^® Subcutaneous Auto-Injector.

Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the U.S., no uniform policy of coverage and reimbursement for drug products exists among third-party payers. Therefore, coverage and reimbursement for drug products can differ significantly from payer to payer.

Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the U.S. and in international markets. Third-party coverage and reimbursement for XYOSTED^®, OTREXUP^® or any of our other products or product candidates for which we may receive regulatory approval may not be available or adequate in either the U.S. or international markets, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

The sale ofXYOSTED^® and OTREXUP^® requires significant resources, and if we do not achieve the sales expected, we may lose the substantial investment we have made in OTREXUP^®.these products.

We have and expect to continue to devote substantial resources to establish and maintain a sales and marketing capability for XYOSTED^® and OTREXUP^®. If we are unsuccessful in our commercialization efforts and do not achieve the sales levels of OTREXUP^® that we expect, we may be unable to recover the large investment we have made in research, development, manufacturing, inventory and marketing efforts, and our business and financial condition could be materially adversely affected.

We rely on third parties to perform many necessary services forXYOSTED^® and OTREXUP^®, including services related to the distribution, invoicing, rebates and contract administration, storage and transportation of our products.

We have retained third-party service providers to perform a variety of functions related to the sale and distribution of our products, key aspects of which are out of our direct control. For example, we rely on Cardinal to provide key services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management, sample administration and call center management, and, as a result, most of our finished goods inventory is stored at a single warehouse maintained by the service provider. We place substantial reliance on this provider as well as other third-party providers that perform services for us, including entrusting our inventories of products to their care and handling. We also rely on third parties to administer our drug price reporting and rebate payments and contracting obligations under federal programs; however,programs. Despite our reliance on third parties, we are responsible for compliance with the applicable legal and program requirements.  IfBy example, in certain states, we are required to hold licenses to distribute our employees or these third-party service providers fail toproducts in the state and must comply with applicable laws and regulations, we and/or they may face regulatory or False Claims Act enforcement action.the associated state laws.  Moreover, if these third-party service providers fail to meet expected deadlines, or otherwise do not carry out their contractual duties to us or encounter physical damage or natural disaster at their facilities, our ability to deliver product to meet commercial demand would be significantly impaired. In addition, we utilize third parties to perform various other services for us relating to sample accountability and regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services. If our employees or any third-party service providers fail to comply with applicable laws and regulations, we and/or they may face regulatory or False Claims Act enforcement actions. Moreover, if the quality or accuracy of the data maintained by these service providers is insufficient, our ability to continue to market our products could be jeopardized or we and/or they could be subject to regulatory sanctions. We do not currently have the internal capacity to perform these important commercial functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.

The increase

Our employees, independent contractors, consultants, commercial partners, manufacturers, principal investigators, or CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, independent contractors, consultants, commercial partners, manufacturers, investigators, or contract research organizations (“CROs”) could include intentional, reckless, negligent, or unintentional failures to comply with FDA regulations, comply with applicable fraud and abuse laws, provide accurate information to the FDA, properly calculate pricing information required by federal programs, comply with federal procurement rules or contract terms, report financial information or data accurately or disclose unauthorized activities to us. This misconduct could also involve the improper use or misrepresentation of information obtained in the numbercourse of competitors targeting generic and 505(b)(2) ANDA opportunities and seeking U.S. market exclusivity may adversely affect our revenues and profits.

Our ability to achieve continued growth and profitability through sales of generic pharmaceuticals is dependent on our and our partners’ continued success in challenging patents, developing non-infringing products or developing products with increased complexity to provide opportunities with U.S. market exclusivity or limited competition.

Our or our partners’ products may be eligible for periods of regulatory exclusivity.  For those products being developed using the 505(b)(2) NDA pathway, we or our partners may be eligible for three years of marketing exclusivity, provided that we or they conduct clinical trials, other than bioavailability or bioequivalence trials, that are essential to approval of the application.  This, however, is a limited exclusivity,which could result in that it will not block full competitor NDAsregulatory sanctions and only protects the change presented by the 505(b)(2) application.  Competitors may also not referserious harm to our or our partners’ drug products as reference listed drugs, in which case, they wouldreputation. It is not be blocked byalways possible to identify and deter this type of misconduct, and the three-year period of exclusivity.

To the extent thatprecautions we or our partner succeed in being the firsttake to market a generic version of a product,detect and particularly if we or our partner receives a 180-day period of exclusivity in the U.S. market, as a result of being the first applicant to submit a substantially complete ANDA with a paragraph IV certification and successfully launch the product as provided under the Hatch-Waxman Act, our and our partners’ sales, profits and profitability can be substantially increased in the period following the introduction of such product and prior to a competitor’s introduction of an equivalent product. Even after the exclusivity period ends, there is often continuing benefit for a time from having the first generic product in the market.

Similarly, to the extent we are able to receive exclusivity for our products approved through the 505(b)(2) pathway, our sales, profits, and profitability can be positively impacted.  However, weprevent this activity may not be granted the periods of regulatory exclusivity that we anticipate, and if we do not receive such periods, we may be subject to ANDA and/effective in controlling unknown or 505(b)(2) competition sooner than we anticipate.

Additionally, the number of generic manufacturers targeting significant new generic opportunities with Hatch-Waxman exclusivity,unmanaged risks or which are complex to develop, continues to increase. Additionally, many of the smaller generic manufacturers have increased their capabilities, level of sophistication and development resourceslosses or in recent years. Other companies may also be developing drugs using the 505(b)(2) pathway that are substantially similar to our products and/protecting us from governmental investigations or product candidates. Theother actions or lawsuits stemming from a failure to successfully develop and commercialize highly complex generic and 505(b)(2) products could adversely affect our sales and profitability. For instance, to the extent that another company receives a period of regulatory exclusivity, the FDA would not make our application effective during that company’s exclusivity period.  This would delay our and our partners’ marketing of products and may prevent usbe in compliance with such laws or them from establishing a sufficient market share for our product.  Similarly, should another company obtain FDA approvalregulations. Moreover, it is possible for a pharmaceutically equivalent productwhistleblower to onepursue a False Claims Act (“FCA”) case against us based on the actions or inactions of our product candidates, we may no longer be ablethese third parties even if the government considers the claim unmeritorious and declines to use the 505(b)(2) pathway.  In that case, it is the FDA’s policy that the appropriate submission would be an ANDA. We may, however, not be ableintervene, which could require us to immediately submit an ANDA or have an ANDA approval made effective, as we could be blocked by others’ periods of patent and regulatory exclusivity protection.

The 180-day market exclusivity period is triggered by commercial marketing of the generic product or, in certain cases, byincur costs defending against such a final court decision holding the applicable patentsclaim. Further, due to be invalid, unenforceable or not infringed. The 180-day exclusivity period may also be triggered by a settlement order or consent decree, or the withdrawal of the patent information by the reference listed drug sponsor.  However, the exclusivity period can be forfeited by our failure to obtain tentative approval of our product or to launch a product within a specified statutory period. The Hatch-Waxman Act also contains other forfeiture provisions that may deprive the first “Paragraph IV” filer of exclusivity if certain conditions are met, some of which may be outside our control. Accordingly, we may face the risk that our exclusivity period is triggered or forfeited before we are able to commercialize a product and therefore may not be able to exploit a given exclusivity period for specific products.

We face intense competition from companies that have greater resources and capabilities.

Many of our competitors are larger and have substantially longer experiencejudgment in the development and marketing of innovative and specialty consumer-oriented products. They may be able to respond more quickly to new or emerging market preferences or to devote greater resources to the development and marketing of new products and/or technologies than we can. As a result, any products and/or innovations that we develop may become obsolete or noncompetitive before we can recover the expenses incurred in connection with their development. In addition, for these product categories we must demonstrate to physicians, patients and third-party payers the benefits of our products relative to competing products that are often more familiar or otherwise better established. If competitors introduce new products or new variations on their existing products, our marketed products, even those protected by patents, may be replaced in the marketplace, we may never be able to establish a sufficient market shareor we may be required to lower our prices.

In addition, our specialty pharmaceuticals business requires much greater use of a direct sales force than does our generic business. Our ability to realize significant revenues from direct marketing and sales activities depends on our ability to attract and retain qualified sales personnel. Competition for qualified sales personnel is intense. We may also need to enter into co-promotion, contract sales force or other such arrangements with third parties, for example, where our own direct sales force is not large enough or sufficiently well-aligned to achieve maximum penetration in the market. Any failure to attract or retain qualified sales personnel or to enter into third-party arrangements on favorable terms could prevent us from successfully maintaining current sales levels or commercializing new innovative and specialty products.

We depend on Teva to manufacture and supply the drug and to distribute and commercialize VIBEX^® Sumatriptan in the U.S.

We have entered into a license, supply and distribution agreement with Teva to distribute VIBEX^® Sumatriptan, an auto injector product containing sumatriptan for the treatment of migraines.  Under our arrangement, we will manufacture the auto injector and are responsible for final assembly and packaging of the final product and Teva will manufacture and supply the drug sumatriptan and distribute and commercialize the product in the U.S. Teva also has an option for rights in other territories.  

There is no guarantee that our partnership with Teva to distribute VIBEX^® Sumatriptan will be successful.  Teva controls the manufacture and supply of the drug, sumatriptan, which is necessary for the production of VIBEX^® Sumatriptan. If, at any time, Teva ceases to manufacture and supply us with sumatriptan or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors designed for this product to Teva.  In addition, if Teva is not able to produce sufficient supplies of the drug in accordance with cGMPs, we also will be unable to produce a finished product and we and/or Teva may be subject to regulatory enforcement action. We also rely on Teva to commercialize and distribute the product within the U.S. and if Teva is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, we may disagree with Teva on certain business strategies or its manufacturing and distribution decisions.  Such decisions by Teva may be beyond our control and may impact the success of VIBEX^® Sumatriptan and we may receive less revenue than desired or expected. We have

invested significant resources in the development of VIBEX^® Sumatriptan,and, if our partnership with Teva is not profitable or is terminated for any reason, we may not receive a return on our investment and may suffer significant losses.

We depend on AMAG to manufacture and supply the drug and distribute and commercialize a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® worldwide.

We have entered into a license, development and supply agreement with AMAG to distribute a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^®, the Makena^® Auto Injector.  AMAG is preparing for a launch and expects the device to be available in the second half of March 2018.

There is no guarantee that our partnership with AMAG will be successful.  AMAG controls the manufacture and supply of the drug, hydroxyprogesterone caproate, and has complete control over the launch and continuous commercialization and marketing of Makena^® Auto Injector worldwide. If, at any time, AMAG ceases to manufacture and supply us with hydroxyprogesterone caproate or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors for this product to AMAG.  In addition, if AMAG is unable to produce sufficient supplies of the drug in accordance with cGMPs, we also will be unable to produce a finished product and we and/or AMAG may be subject to regulatory enforcement action. We will also rely on AMAG to commercialize and distribute the product worldwide and if AMAG is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, we may disagree with AMAG on certain business strategies or its manufacturing and distribution decisions.  Such decisions by AMAG may be beyond our control and may impact the success of the Makena^® Auto Injector and we may receive less revenue than desired or expected.

We are also relying on AMAG to convert patients from using the current intramuscular formulation of Makena^® to the subcutaneous formulation of Makena^® by, in part, pricing the Makena^® Auto Injector at parity to ensure timely and affordable access.  However, such decisions will be made by AMAG and may be beyond our control, which could impact the sales of the product and we may receive less revenue than desired or expected.  Further, we and AMAG are subject to potential competition regarding the a generic version of the intramuscular formulation of the drug, which presumably would be less costly for patients.  This competitionFCA case could result in receiving less revenue than expected.exclusion from federal health programs or debarment from government contracts, whistleblower cases often result in large settlements. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, and results of operations, including the imposition of significant fines or other sanctions.

We rely on third parties to manufacture our and our partners’ product.products. If we do not develop and maintain relationships with manufacturers and/or assemblers of our and our partners’ drug/device products or product candidates, or if such third parties are unable to manufacture or supply product, or assemble and package the final products, we may be unable to successfully manufacture, assembly,assemble, package and sell our and our partners’ products, which could have a material adverse effect on our business.

We do not currently possess the facilities to manufacture commercial quantities of our or our partners’ drug/device combination products or components, including XYOSTED^®, OTREXUP^®, VIBEX^® Sumatriptan Injection USP, epinephrine auto-injector devices, Makena^® auto injectors or any other of our or our partners’ products or product candidates.   We also do not possess the facilities to manufacture clinical supplies of any product candidates.candidates or components.  We must contract with third parties and/or our partners to produce products, components, and product candidates and to assemble and package products and components according to specifications and government regulations. The future development and delivery of our and our partners’ products and product candidates depends on the capability, timely, profitable and competitive performance of these third parties.parties and/or our partners.  There is also no assurance that such third parties and/or our partners will be willing to manufacture, assemble or sell the drug/device products or components. A limited number of manufacturers exist that are capable of manufacturing our and our partners’ products, components, and product candidates. We and our partners may fail to contract with the necessary third parties or we and our partners may contract with third parties on terms that may not be favorable to us.  

Our and our partners’ contract manufacturers must comply with all applicable manufacturing requirements, including cGMPs for drug products and QSRs for medical devices.  Before approving any marketing application, FDA will inspect the product manufacturing facilities. We and/or our partners must obtain FDA approval for a product’s or product candidate’s manufacturing process and facilities to receive product marketing approval, which we and/or our partners may never obtain or may not be able to maintain. Moreover, following product approval, FDA regularly also inspects drug and device manufacturers to ensure continued compliance with FDA’s requirements.requirements and requires reporting certain manufacturing and quality issues.  If we or our partners are not able to obtain or maintain this approval and regulatory compliance, we and/or they would not be able to receive product approval, and commercialize and/or sell the applicable products.  Moreover, should any manufacturer fail to comply with the applicable regulatory requirements, we, our partners, and/or the manufacturer may face regulatory consequences, including enforcement actions and/or product recalls.  Additionally, use of third-party contract manufacturers exposes us to risks in the manufacturer's business such as their potential inability to perform from a technical, operational or financial standpoint. Failure by a contract manufacturer to supply product, could have a material adverse effect on our ability to generate revenue and profit.

In addition, contract manufacturers may utilize their own technology, technology developed by us, technology developed by our partners, or technology acquired or licensed from third parties. When contract manufacturers develop proprietary process technology, our reliance on such contract manufacturers is increased.  Technology transfer from the original contract manufacturer may be required. Any such technology transfer may also require transfer of requisite data for regulatory purposes, including information

contained in a proprietary drug or device master file held by a contract manufacturer. We and/or our partners would be dependent on the contract manufacturer for the maintenance and right of reference to the drug or device master file.  If the contract manufacturer fails to maintain a drug or device master file or withdraws our or our partners’ right of reference, we and/or our partners may no longer be able to manufacture, develop, market, and sell our or our partners’ products or product candidates.  FDA approval of the new manufacturer and manufacturing site, as well as certain changes to the manufacturing process, would also be required.

required in the event a contract manufacturer is no longer available to us.  We have entered intomay also be required to gather data and conduct studies and analyses to support the use of a new manufacturer or manufacturing process.

We rely on multiple commercial supply agreementsarrangements with third-party manufacturers for, including, without limitation:

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured products ourselves, including:

We and our partners depend on these third-party manufacturers to comply with cGMPs/QSRs enforced by the FDA and other regulatory requirements and to deliver materials on a timely basis.  To the extent that a contract manufacturer cannot deliver adequate quantities of clinical supplies that meet the applicable quality standards, our or our partners’ product development efforts may be delayed.  To the extent that a contract manufacturer cannot deliver adequate quantities of commercial products that meet the applicable quality standards, our or our partners’ commercialization efforts would be inhibited and as a result our revenue and profit may be adversely impacted.  In addition, because regulatory approval to manufacture a drug is site-specific, the FDA and other regulatory authorities will repeatedly inspect our and our partners’ current and future third-party manufacturers’ facilities for compliance with cGMPs/QSRs.  If we, our partners, or third-party manufacturers fail to comply with applicable regulatory requirements, a regulatory agency may issue warning letters or suspend or withdraw our regulatory approval for approved or in-market products, refuse to approve any marketing applications, or refuse to allow future or current development of product candidates, among other things.  Departures from the applicable quality standards can also necessitate product recalls.  Our third-party manufacturers may also fail to pass the audits by our or our partners’ internal quality and regulatory group.  Any of these actions could delay or prevent our development of products, delay or prevent the submission of these products for regulatory approval, delay or prevent marketing approval, or result in insufficient product or product candidate quantity to support commercial demand or development.  We may also be required to replace manufacturers, which would be time consuming and expensive, and we may not be able to reach favorable agreements with or FDA approval for alternative manufacturers.  As a result, our business, financial condition and results of operations could be seriously harmed. See additional risk factors associated with manufacturing in the section “Risks Related to Regulatory Matters.”

In addition, we may consider entering into additional manufacturing arrangements with third partymanufacturers or may need to change manufacturers. In each case, we will incur significant costs in obtaining the regulatory approvals, conducting any necessary studies, and taking the other steps necessary to begin commercial or clinical supply production by these manufacturers.

We depend on Teva to manufacture the drug and finished packaged product and to distribute and commercialize the epinephrine auto-injector in the U.S.

We have entered into a license, development and supply agreement with Teva, pursuant to which we developed and are the exclusive supplier of the device for an epinephrine auto injector product marketed by Teva in the U.S.

There is no guarantee that our partnership with Teva will be successful.  Teva controls the manufacture and supply of the drug, epinephrine, and the final assembly of the devices and packaging of the finished product, and has complete control over the commercialization and sale of the epinephrine auto injector product. If, at any time, Teva ceases to manufacture and supply the epinephrine drug or fails to produce sufficient supplies of the drug, Teva will be unable to produce a finished product and we may be unable to sell our auto injectors for this product to Teva resulting in less revenue for us.

In addition, if Teva is unable to complete the final assembly and packaging of the finished epinephrine auto injector product, we may receive less revenue than desired or expected.   If Teva is unable to produce sufficient supplies of the drug or finished epinephrine auto injector product in accordance with the applicable manufacturing requirements or otherwise fails to comply with applicable regulatory requirements, Teva may be subject to regulatory enforcement action, which could impact its ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. We rely on Teva to commercialize and distribute the product, including determining the price and payer coverage. If Teva is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, Teva controls the business strategy, manufacturing and distribution decisions concerning the epinephrine auto injector product.  Such decisions by Teva may be beyond our control and may impact the success of the epinephrine auto injector product. As a result, we may receive less revenue than desired or expected. Further, Teva is subject to potential competition regarding other generic versions of the epinephrine auto injector product, and such additional competition could result in receiving less revenue than expected.

We depend on Teva to manufacture and supply the drug and to distribute and commercialize VIBEX^® Sumatriptan in the U.S.

We have entered into a license, supply and distribution agreement with Teva to distribute VIBEX^® Sumatriptan, an auto injector product containing sumatriptan for the treatment of migraines.  Under our arrangement, we will manufacture the auto injector and are responsible for final assembly and packaging of the final product and Teva will manufacture and supply the drug sumatriptan and distribute and commercialize the product in the U.S. Teva also has an option for rights in other territories.  

There is no guarantee that our partnership with Teva to distribute VIBEX^® Sumatriptanwill be successful.  Teva controls the manufacture and supply of the drug, sumatriptan, which is necessary for the production of VIBEX^® Sumatriptan.If, at any time, Teva ceases to manufacture and supply us with sumatriptan or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors designed for this product to Teva.  In addition, if Teva is not able to produce sufficient supplies of the drug in accordance with cGMPs, we also will be unable to produce a finished product and we and/or Teva may be subject to regulatory enforcement action. We also rely on Teva to commercialize and distribute the product within the U.S. and if Teva is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Moreover, because we hold the FDA approved application for this product, we are responsible for FDA regulatory compliance.  Should Teva fail to comply with the applicable regulatory requirements, they or we may be subject to regulatory enforcement action.  Any enforcement action could impact the ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. Additionally, we may disagree with Teva on certain business strategies or its manufacturing and distribution decisions.  Such decisions by Teva may be beyond our control and may impact the success of VIBEX^® Sumatriptan and we may receive less revenue than desired or expected. We have invested significant resources in the development of VIBEX^® Sumatriptan,and, if our partnership with Teva is not profitable or is terminated for any reason, we may not receive a return on our investment and may suffer significant losses.

We depend on AMAG to manufacture and supply the drug, distribute and commercialize a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^®, and to maintain regulatory approval of the product.

We have entered into a license, development and supply agreement with AMAG to distribute a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^®, the Makena^® Auto Injector. Makena^® was first approved by FDA via the accelerated approval pathway in 2011.  In 2018, FDA approved a supplemental application for the use of Makena^® with our VIBEX^® QuickShot^® subcutaneous auto injector.

There is no guarantee that our partnership with AMAG will be successful, that AMAG will be able to maintain approval for Makena^® or that AMAG will be able to successfully manufacture, supply, commercialize, and distribute the drug product.  By example, in October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. The PROLONG trial was conducted as a post-market study requirement under the 2011 Makena^® accelerated approval.  Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial. The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. We do not yet know what FDA’s decision will be, however, if FDA decides to withdraw Makena^® from the market, our business may be materially harmed.  Moreover, even if FDA determines that Makena^® may remain on the market, Makena^® sales may decrease or AMAG may decrease the resources that it dedicates to the manufacture, supply, commercialization, and distribution of Makena^®.  Finally, if FDA requires that AMAG conduct a new confirmatory study, AMAG may not be able to successfully conduct such study, which could ultimately result in FDA withdrawal of the Makena^® approval.  

Additionally, AMAG controls the manufacture and supply of the drug, hydroxyprogesterone caproate, and has complete control over the launch and continuous commercialization and marketing of Makena^® Auto Injector worldwide. If, at any time, AMAG ceases to manufacture and supply us with hydroxyprogesterone caproate or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors for this product to AMAG.  In addition, if AMAG is unable to produce sufficient supplies of the drug in accordance with cGMPs or otherwise fails to comply with the applicable regulatory requirements, we also will be unable to produce a finished product and/or we and/or AMAG may be subject to regulatory enforcement action, which would impact the ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. We rely on AMAG to commercialize and distribute the product worldwide and if AMAG is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, we may disagree with AMAG on certain business strategies or its manufacturing and distribution decisions.  Such decisions by AMAG may be beyond our control and may impact the success of the Makena^® Auto Injector and we may receive less revenue than desired or expected.

We and AMAG are subject to competition for generic versions of the intramuscular formulation of Makena^®, which is less costly for patients.  This competition could result in more patients utilizing the intramuscular formulation rather than the subcutaneous auto injector, thus resulting in us receiving potentially less revenue than expected.

We are dependent on numerous third parties in our supply chain for the commercial supply of our products and partners’ products most of which are currently single source suppliers, and if any of these single-source suppliers are not able to satisfy demand and alternative sources are not available, the manufacturing and distribution of our products and our partners’ products could be delayed and our business could be harmed.

The availability of our products for commercial sale depends upon our ability to procure the raw materials, components, packaging materials and finished products we need from third parties. We have entered into supply agreements with numerous third party suppliers, many of which are currently our single source for the materials necessary for certain of our products.  For example, we currently have the following single source suppliers in our supply chain for the commercial supply of XYOSTED^®, OTREXUP^®, Sumatriptan Injection USP, generic epinephrine injection devices and the Makena^® subcutaneous auto injector:

If any of these or other third parties isare unable to supply its respective component for any reason, including due to violations of the FDA’s QSR or cGMP requirements, our or our partners’ ability to manufacture the finished product will be adversely affected and our ability to meet the distribution requirements for any product sales of such products and the resulting revenue therefrom will be negatively affected. We and our partners could also face enforcement actions or may need to engage in recalls due to issues with component suppliers. Accordingly, there can be no assurance that any failure in any part of our supply chain will not have a material adverse effect on our ability to generate revenue from our products which depend on third party suppliers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

To mitigate some of the short-term risk of relying on single source suppliers, we intend to build a safety stock of component and and/or of finished goods inventories.  However, there can be no assurance that these inventories will be adequate or that we will be able to maintain our desired level of safety stock.  Additionally, maintaining a high level of safety stock exposes us to additional risks such as excess and obsolete inventory if the sales volume of OTREXUP^® or our other products do not meet our forecasts.

If we do not develop and maintain relationships with manufacturers of our device products, or if any of our suppliers experience a failure in the manufacturing process, then we may be unable to successfully manufacture and sell our device products.products or to meet our obligations to deliver to our customers and partners.

Our device manufacturing for our needle-free device has involved the assemblyManufacturing of products from machined stainless steel and composite components in limited quantities.  Our device manufacturing for our VIBEX^® auto injector devices for OTREXUP^® and, Sumatriptan Injection USP and Epinephrine Auto Injectors, and the manufacturing of our Vibex^® QuickShot^® auto injector for Makena^® and XYOSTED^®, involves high volume production of numerous complex parts as well as assembly of those parts.  The manufacture of our device products must also comply with applicable regulatory requirements. To the extent that manufacturers do not comply with the applicable regulatory requirements, we, they, or our partners may be subject to regulatory enforcement action.action or may need to undertake recalls.

Our planned future device business may necessitate changes and additions to our contract manufacturing and assembly process or the use of a secondary manufacturer due to the anticipated larger scale of manufacturing in our business plan.  Our devices must be manufactured in compliance with regulatory requirements, in a timely manner and in sufficient quantities while maintaining quality and acceptable manufacturing costs.  In the course of these changes and additions to our manufacturing and production methods, we may encounter difficulties, including problems involving scale-up, yields, quality control and assurance, validation and qualification, product reliability, manufacturing costs, existing and new equipment and component supplies, any of which could result in significant delays in production.We may also need to obtain FDA approval for any such changes, which may not be granted.

We rely on Nypro, Phillips and ComDel to manufacture our auto injector devices.  Any failure by our contract manufacturers to successfully manufacture the pressure assisted auto injector device in commercial quantities, be in compliance with regulatory regulations, or pass the audits by our internal quality and regulatory group or pharmaceutical partner would have a negative impact on our future revenue expectations.

We use Sharp for final assembly and packaging of many of our and our partners’ products.  Any failure by Sharp to successfully perform final assembly and packaging of our or our partners’ products, or be in compliance with regulatory requirements, may result in product shipment delays and may have a negative impact on our product availability and future revenue expectations.

MRP manufactures and assembles our needle-free devices and certain related disposable component parts for our partners Ferring and JCR.  There can be no assurance that MRP will be able to continue to meet these regulatory requirements or our own quality control standards.  Therefore, there can be no assurance that we will be able to continue to successfully produce and manufacture our products.  Our pharmaceutical partners retain the right to audit the quality systems of our manufacturing partner, and there can be no assurance that MRPour manufacturers will be successful in these audits. Any of these failures would negatively impact our business, financial condition and results of operations.  We will also continue to outsource manufacturing of our future disposable injection products to third parties.  Such products willmay be price sensitive and may be required to be manufactured in large quantities, and we have no assurance that this can be done.  Additionally, use of contract manufacturers exposes us to risks in the manufacturers’ business such as their potential inability to perform from a technical, operational or financial standpoint.

Certain of our technologies contain a number of customized components manufactured by various third parties.  Regulatory requirements applicable to manufacturing can make substitution of suppliers costly and time-consuming and may require regulatory approval. In the event that we could not obtain adequate quantities of these customized components from our suppliers, there can be no assurance that we would be able to access alternative sources of such components within a reasonable period of time, on acceptable terms or at all.  The unavailability of adequate quantities, the inability to develop alternative sources, a reduction or interruption in supply or a significant increase in the price of components could have a material adverse effect on our ability to manufacture and market our products. Moreover, to the extent that manufacturers do not comply with the applicable regulatory requirements, we, they, or our partners may be subject to regulatory enforcement action.

If we are unable to achieve and maintain adequate levels of coverage and reimbursement for OTREXUP^®, or any of our other product candidates for which we may receive regulatory approval, their commercial success may be severely hindered.

Successful sales of our products depend on the availability of adequate coverage and reimbursement from third-party payers. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payers to reimburse all or part of the costs associated with their prescription drugs. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

In addition, the market for our products will depend significantly on access to third-party payors' drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement. Many states use formularies to obtain supplemental Medicaid rebates in excess of those required for Medicaid coverage.  The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available. To ensure sales, manufacturers often must provide multiple discounts on the same drug in the chain of distribution to the health care provider and the payer.  Further, manufacturers are required to assume responsibility for Medicare Part D prescription costs in the donut hole.  Increasingly, payors are looking for metrics and performance-based pricing to justify increased cost of therapeutic advancements.  Even if coverage is obtained, the net realization from price concessions may negatively impact our profitability.  Government health programs also impose inflation penalties which may have adverse consequences if we increase prices in the future.

Our partnered products encounter similar issues in obtaining reimbursement from third-party payers. While we are unable to control the reimbursement rate or discounts contracted with third-party payers by our partners, these rates ultimately affect our profit sharing on Sumatriptan Injection USP with Teva and royalties on products such as the Makena^® Subcutaneous Auto-Injector, Elestrin^® and Gelnique^®.

Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the U.S., no uniform policy of coverage and reimbursement for drug products exists among third-party payers. Therefore, coverage and reimbursement for drug products can differ significantly from payer to payer.

Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the U.S. and in international markets. Third-party coverage and reimbursement for OTREXUP^® or any of our other product candidates for which

we may receive regulatory approval may not be available or adequate in either the U.S. or international markets, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

We may incur significant liability if it is determined that we are promoting or have in the past promoted the “off-label” use of drugs or medical devices.devices, or otherwise promoted or marketed approved products in a manner that is inconsistent with FDA’s requirements.

In the U.S. and certain other jurisdictions, companies may not promote drugs or medical devices for “off-label” uses, that is, uses that are not described in the product’s labeling and that differ from those that were approved or cleared by the FDA or other foreign regulatory agencies. Under what is known as the “practice of medicine,” physicians and other healthcare practitioners may prescribe drug products and use medical devices for off-label or unapproved uses, and such uses are common across some medical specialties. Although the FDA does not regulate a physician’s choice of medications, treatments or product uses, the FFDCA and FDA regulations significantly restrict permissible communications on the subject of off-label uses of drug products and medical devices by pharmaceutical and medical device companies. The FDA, the Federal Trade Commission (“FTC”), the Office of the Inspector General of the Department of Health and Human Services (“HHS-OIG”), the Department of Justice (“DOJ”) and various state Attorneys General also actively enforce laws and regulations that prohibit the promotion of off-label uses. As the sponsor of FDA approved products, we and our partners will not only be responsible for the actions of the companies but also can be held liable for the actions of employees and contractors, requiring that all employees and contractors engaging in regulated functions, such as product promotion, be adequately trained and monitored, which requires time and monetary expenditures.

If the FDA determines that a company has improperly promoted a product “off label” or otherwise not in accordance with the agency’s promotional requirements, the FDA may issue a warning letter or seek other enforcement action to limit or restrict certain promotional activities or materials or seek to have product withdrawn from the market or seize product, among other enforcement requirements.  In addition, a company that is found to have improperly promoted off-label uses may be subject to significant liability, including civil fines, criminal fines and penalties, civil damages and exclusion from federal funded healthcare programs such as Medicare and Medicaid and/or government contracting, consent decrees, corporate integrity agreements, as well as potential liability under the federal False Claims Act and applicable state false claims acts. Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by such conduct.

NotwithstandingMoreover, in addition to the regulatory restrictions on off-label promotion, there are other FDA restrictions on and requirements concerning product promotion and advertising, such as requirements that such communications be truthful and non-misleading and adequately supported.  FDA also has requirements concerning the distribution of drug samples.  In the event that the regulatory restrictions on off-label promotion, the FDA’s regulations and judicial case law allow companies to engage in some forms of truthful, non-misleading, and non-promotional scientific speech concerning the off-label uses of their products. We have endeavored to establish and implement extensive compliance programs in order to instruct employees on complying with the relevant advertising and promotion legal requirements. Nonetheless, the FDA, HHS-OIG, the DOJ and/or the state Attorneys General, and other regulators may take the position that we are not in compliance with suchpromotional, advertising, and marketing requirements, and, if such non-compliance is proven, we may be subject to significant liability, including administrative, civil and criminal penalties and fines.fines, in addition to regulatory enforcement actions.

The failure of any of our third-party licensees to develop, obtain regulatory approvals for, market, distribute and sell their products as planned may result in us not meeting revenue and profit targets.

We partner with pharmaceutical companies, such as Teva, to develop, obtain regulatory approvals for, manufacture and sell our products and technologies along with their products. We are substantially dependent on these partners to perform their obligations under our agreements with them, in accordance with all applicable regulatory requirements.  If one or more of these pharmaceutical company partners fail to pursue the development or marketing of, fail to perform their contractual obligations in accordance with all regulatory requirements, or are unable to receive marketing approval for our and our partners’ products as planned, our revenues and profits may not reach expectations or may decline. While we have agreements with our partners, we do not have any direct control over their activities. For instance, we may not be able to control the timing and other aspects of the development of products because pharmaceutical company partners may have priorities that differ from ours.  Therefore, commercialization of products under development may be delayed unexpectedly.  The success of the marketing organizations of our pharmaceutical company partners, as well as the level of priority assigned to the marketing of the products by these entities, which may differ from our priorities, will determine the success of the products incorporating our technologies.  Competition in this market could also force us or our partners to reduce the prices of our technologies below currently planned levels, which could adversely affect our revenues and future profitability.

For example, we are currently working with Teva on four products: VIBEX^® with epinephrine, VIBEX^® with sumatriptan, and two pen products with exenatide and teriparatide.  While VIBEX^® with sumatriptan and epinephrine received FDA approval, there is no assurance that development of thesethe other two products will continue or that the other threethey will ultimately receive FDA approval in a timely manner or at all, or if FDA approved, they will be a significant revenue source for us. By way of example, Teva received a CRL for the VIBEX^® epinephrine pen ANDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies.  Teva has disclosed that they submitted a response to this CRL.  We continue to work with Teva toward a potential approval of the epinephrine

auto injector ANDA, which remains under active review at the FDA.  However, there is no guarantee that an ANDA for the epinephrine auto injector will ultimately be approved by the FDA.

We currently depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidityliquidity.