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New words:
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Removed:
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Financial report summary
?Competition
Enveric Biosciences • PTC Therapeutics • GB Sciences • Marinus Pharmaceuticals • CNBX Pharmaceuticals • Zogenix • Malachite Innovations • CV Sciences • Evergreen Sustainable Enterprises • Avalo TherapeuticsRisks
- There are material uncertainties and risks associated with the Transaction Agreement and Proposed Transaction.
- The value of the share portion of the Transaction consideration is subject to change based on fluctuations in the value of Jazz ordinary shares, and our shareholders may, in certain circumstances, receive stock consideration with a value that, at the time received, is less than $20.00 per ADS.
- The Transaction may not be completed in a timely manner or at all.
- Failure to complete the Transaction could negatively impact the Company’s business, financial results and the market price of our ADSs.
- The Transaction Agreement contains provisions that could discourage a potential competing acquirer of the Company.
- The Company has incurred, and will incur, substantial direct and indirect costs as a result of the Transaction.
- Our prospects are highly dependent on the successful commercialization of Epidiolex/Epidyolex, which received approval in 2018 from the FDA and in September 2019 from the EC. To the extent Epidiolex/Epidyolex is not commercially successful, our business, financial condition and results of operations may be materially adversely affected and the price of our ADSs may decline.
- If we do not obtain regulatory approval of Epidiolex for other indications in the U.S., Europe or for any indications in foreign jurisdictions, we will not be able to market Epidiolex for other indications or in other jurisdictions, which will limit our commercial revenues.
- In 2018, we received FDA approval for Epidiolex for the treatment of seizures associated with LGS or Dravet syndrome in patients two years of age and older. In July 2020, FDA expanded the approval of Epidiolex, adding seizures associated with TSC, and also approved the expansion of all existing indications, LGS, Dravet syndrome and TSC, to patients one year of age and older. In September 2019, we received EC approval of the marketing authorization for Epidyolex. Those approvals subject us to ongoing obligations and continued regulatory review, which may result in significant additional expense. If we do not meet those ongoing obligations, we could be subject to significant penalties, including market withdrawal and/or civil or criminal penalties. Additionally, our other product candidates, if approved, could be subject to labeling and other restrictions and we may be subject to penalties (including market withdrawal) if we fail to comply with regulatory requirements or experience unanticipated problems with our products.
- We are dependent on the success of our product candidates, some of which may not receive regulatory approval or be successfully commercialized.
- We have limited marketing experience, and have only recently established our sales force, distribution and reimbursement capabilities, and we may not be able to successfully commercialize Epidiolex, or any of our product candidates if they are approved in the future.
- If we are unable to effectively train and equip our sales force, our ability to successfully commercialize Epidiolex may be harmed.
- We have recently grown our business and will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in managing our growth and executing our growth strategy.
- Our product candidates, if approved, may be unable to achieve the expected market acceptance and, consequently, limit our ability to generate revenue from new products.
- If the price for Epidiolex, nabiximols or any future approved products decreases or if governmental and other third-party payers do not provide coverage and adequate reimbursement levels, our revenue and prospects for profitability will suffer.
- We expect to face intense competition, often from companies with greater resources and experience than we have.
- Product shipment delays could have a material adverse effect on our business, results of operations and financial condition.
- Problems in our manufacturing process, failure to comply with manufacturing regulations or unexpected increases in our manufacturing costs could harm our business, results of operations and financial condition.
- We may fail to expand our growing and manufacturing capability in time to meet market demand for our products and product candidates, and FDA and EMA may refuse to accept our facilities or those of our contract manufactures as being suitable for the production of our products and product candidates. Any problems in our growing or manufacturing process could have a material adverse effect on our business, results of operations and financial condition.
- Product recalls or inventory losses caused by unforeseen events, cold chain interruption and testing difficulties may adversely affect our operating results and financial condition.
- Nabiximols and our product candidates contain controlled substances, the use of which may generate public controversy.
- Business interruptions could delay us in the process of developing our product candidates and could disrupt our product sales.
- We have significant and increasing liquidity needs and may require additional funding.
- Operating results may vary significantly in future periods.
- If product liability lawsuits are successfully brought against us, we will incur substantial liabilities and may be required to limit the commercialization of Epidiolex, Sativex and our product candidates.
- Counterfeit versions of our products could harm our business.
- We depend upon our key personnel and our ability to attract and retain employees.
- Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
- If we are unable to use net operating loss carry-forwards and certain built-in losses to reduce future tax payments, or benefit from favorable tax legislation, our business, results of operations and financial condition may be adversely affected.
- Our proprietary information, or that of our customers, suppliers and business partners, may be lost or we may suffer security breaches.
- Failure of our information technology systems, including cybersecurity attacks or other data security incidents, could significantly disrupt the operation of our business.
- Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation.
- Legislative or regulatory reform of the health care system in the U.S. and foreign jurisdictions may affect our ability to profitably sell our products, if approved.
- We expect additional federal and state legislative proposals for health care reform, which could limit the prices that can be charged for the products we develop and may limit our commercial opportunity.
- We may acquire other companies which could divert our management’s attention, result in additional dilution to our shareholders and otherwise disrupt our operations and harm our operating results.
- The United Kingdom’s withdrawal from the European Union could lead to increased market volatility, which could adversely impact the market price of our ADSs and make it more difficult for us to do business in Europe or have other adverse effects on our business.
- Clinical trials for our product candidates are expensive, time-consuming, uncertain and susceptible to change, delay or termination. The results of clinical trials are open to differing interpretations.
- Any failure by us to comply with existing regulations could harm our reputation and operating results.
- We are subject to federal, state and foreign healthcare laws and regulations and implementation of or changes to such healthcare laws and regulations could adversely affect our business and results of operations.
- There is a high rate of failure for drug candidates proceeding through clinical trials.
- Our ability to research, develop and commercialize Epidiolex, nabiximols and our product candidates is dependent on our ability to maintain licenses relating to the cultivation, possession and supply of controlled substances.
- Serious adverse events or other safety risks could require us to abandon development and preclude, delay or limit approval of our product candidates, limit the scope of any approved label or market acceptance, or cause the recall or loss of marketing approval of products that are already marketed.
- The development of a REMS for Epidiolex or our product candidates could cause delays in the approval process and would add additional layers of regulatory requirements that could impact our ability to commercialize our product candidates in the U.S. and reduce their market potential.
- Our existing collaboration arrangements and any that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize Epidiolex, nabiximols and our product candidates.
- We depend on a limited number of suppliers for materials and components required to manufacture Epidiolex, nabiximols and our product candidates. The loss of these suppliers, or their failure to supply us on a timely basis, could cause delays in our current and future capacity and adversely affect our business.
- A significant portion of our cash and cash equivalents are held at a small number of banks.
- We may not be able to adequately protect Epidiolex, nabiximols, our product candidates or our proprietary technology in the marketplace.
- If third parties claim that the Company’s intellectual property, products, processes, or anything else used by us infringes upon their intellectual property, our operating profits could be adversely affected.
- Controlled substance legislation differs between countries and legislation in certain countries may restrict or limit our ability to sell Epidyolex, nabiximols and our product candidates.
- The legalization and use of medical and recreational marijuana in the U.S. and elsewhere may impact our business.
- The market price of our ADSs may be volatile.
- Our largest shareholder owns a significant percentage of our share capital and voting rights of the Company.
- Substantial future sales of our ADSs in the public market, or the perception that these sales could occur, could cause the price of the ADSs to decline.
- The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
- We may be classified as a passive foreign investment company, or PFIC, in any taxable year and U.S. holders of our ADSs could be subject to adverse U.S. federal income tax consequences.
Management Discussion
- Epidiolex, our treatment for certain severe childhood-onset, drug-resistant epilepsy syndromes, was launched in the United States in November 2018 and in certain European markets in late 2019. We also sell Epidiolex through certain early access programs outside of the United States. Sativex, our treatment for spasticity due to multiple sclerosis, is sold outside of the United States, primarily through license agreements with commercial partners. In March 2020, we reacquired the rights to sell Sativex in the U.K. and began to record direct sales in that market.
- Product net sales for the three months ended March 31, 2021 consists of $148.2 million in net sales of Epidiolex and $4.2 million in net sales of Sativex. Product net sales for the three months ended March 31, 2020 consists of $116.1 million in net sales of Epidiolex and $4.4 million in net sales of Sativex. The $31.9 million increase in product net sales for the three months ended March 31, 2021 compared to the same period in the prior year was primarily due to the growth of U.S. Epidiolex revenue and the launch of Epidiolex in certain European markets.
- Cost of sales increased $1.0 million, or 9%, in the three months ended March 31, 2021 to $11.8 million, or 8% of product net sales, compared to $10.8 million, or 9% of product net sales in the three months ended March 31, 2020. The increase in cost of sales in dollars is primarily due to an increase of product net sales. The decrease in cost of sales as a percentage of product net sales is primarily due to the impact of volume-based efficiencies on our inventory production costs.