Our failure to comply with the covenants or other terms of the Credit Agreement, including as a result of events beyond our control, could result in a default under the Credit Agreement or Revenue Interest Financing Agreement that could materially and adversely affect the ongoing viability of our business.

On May 11, 2021 (Credit Agreement Closing Date), we entered into a Credit Agreement and Guaranty (as amended by that certain letter agreement on May 17, 2021, that certain letter agreement on May 23, 2022 and that certain Limited Consent and First Amendment to Credit Agreement on October 28, 2022, the Credit Agreement) with Oaktree Fund Administration, LLC, as administrative agent (Oaktree) and the lenders party thereto (collectively, the Lenders) that provides for a five-year senior secured term loan facility in an aggregate original principal amount of up to $100.0 million, consisting of (i) tranche A-1 term loans in an aggregate principal amount of $15.0 million advanced on the Credit Agreement Closing Date; (ii) tranche A-2 term loans in an aggregate principal amount of $30.0 million advanced on September 27, 2021; (iii) tranche B term loans in an aggregate principal amount of $30.0 million advanced on March 30, 2022; and (iv) tranche C term loans in an aggregate principal amount of $25.0 million (collectively, the Term Loans). Our ability to draw each tranche of the Term Loans is subject to the satisfaction of certain conditions applicable to each tranche as specified in the Credit Agreement. The Term Loans bear interest at a fixed per annum rate (subject to increase during an event of default) of 11.50% and are scheduled to mature on the fifth anniversary of the Credit Agreement Closing Date (Maturity Date). In addition, at the time of funding of any tranche of the Term Loans, we are required to pay an upfront fee of 2.0% of the aggregate principal amount being funded. We are required to make quarterly interest payments until the Maturity Date. We are also required to make principal payments, which are payable in quarterly installments beginning on the last day of the first quarter ending after the third anniversary of the Credit Agreement Closing Date, in an amount equal to 5.0% of the aggregate amount of the Term Loans outstanding on the date of the first such quarterly principal payment and continuing until the Maturity Date, on which date all outstanding Term Loans and other amounts owed under the Credit Agreement will be required to be paid in full. The Term Loans will be guaranteed by certain of our future subsidiaries. Our obligations under the Credit Agreement and the guarantee of such obligations are secured, subject to customary permitted liens and other agreed upon exceptions and subject to an intercreditor agreement with Sagard Healthcare Royalty Partners, LP (Sagard), by a pledge of substantially all of our assets and will be secured by a pledge of substantially all of the assets of the future guarantors. The Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions without Oaktree's prior consent, as well as a financial covenant that requires us to maintain at all times cash and cash equivalents in certain deposit accounts in an amount at least equal to (i) from the funding date of the tranche A-2 term loans until the funding date of the tranche B term loans, $20.0 million, and (ii) from the funding of the tranche B term loans until the Maturity Date, $15.0 million.

Oaktree may elect to accelerate the repayment of all unpaid principal of the Term Loans, accrued interest and other amounts owed under the Credit Agreement upon consummation of a specified change of control transaction or the occurrence of certain events of default (as specified in the Credit Agreement), including, among other things:

Subject to any applicable cure period set forth in the Credit Agreement, all amounts outstanding with respect to the Term Loans (principal and accrued interest), as well as any applicable prepayment premiums, interest “make-whole” payments or exit fees, would become due and payable (i) immediately, in the case of a payment or bankruptcy event of default or (ii) in the case of any other event of default, upon the request of Lenders holding at least a majority of the outstanding Term Loans and Term Loan commitments, at a default interest rate of 13.50%. Our assets or cash flow may not be sufficient to fully repay our obligations under the Term Loans if the obligations thereunder are accelerated upon any events of default. The duration and magnitude of any negative impact from the COVID-19 pandemic on ganaxolone commercialization, development or net revenues could also affect our ability to meet the requirements to draw on one or more of the Term Loan tranches and to remain in compliance with our liquidity financial covenant. Further, if we are unable to repay, refinance or restructure our obligations under the Term Loans, Oaktree on behalf of the Lenders could proceed to protect and enforce their rights under the Credit Agreement and other loan documents by exercising such remedies (including foreclosure on the assets securing our obligations under the Credit Agreement and the other loan documents) as are available to Oaktree and the Lenders and in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in the Credit Agreement or other loan documents or in aid of the exercise of any power granted in the Credit Agreement or other loan documents. The foregoing would materially and adversely affect the ongoing viability of our business.

On October 28, 2022 (RIFA Closing Date), we entered into a revenue interest financing agreement (Revenue Interest Financing Agreement) with Sagard pursuant to which Sagard agreed to pay us $32.5 million (Investment Amount) to provide funding for our development and commercialization of ganaxolone and related pharmaceutical products, including the commercial launch of ZTALMY, and for working capital and general administrative purposes.

In exchange for the Investment Amount, we have agreed to make quarterly payments to Sagard (the Payments) as follows: (i) for each calendar quarter from and after the RIFA Closing Date through and including the quarter ended June 30, 2026, an amount equal to 7.5% of (a) our net sales of ZTALMY and all other pharmaceutical products that contain ganaxolone (Net Sales), in each case with any dosage form, dosing regimen, or strength, or any improvements related thereto (collectively, the Included Products); and (b) payments received by us in connection with the manufacture, development and sale of Included Products in the U.S., including in connection with any out-licensing of U.S. rights to any Included Product (Other Included Payments, and together with Net Sales, Product Revenue), and (ii) for each calendar quarter following the calendar quarter ended June 30, 2026, an amount equal to (x) 15.0% of the first $100.0 million in annual Product Revenues of the Included Products and (y) 7.5% of annual Product Revenues of the Included Products in excess of $100.0 million.

The Payments are subject to a hard cap equal to 190% ($61.8 million) of the Investment Amount (Hard Cap). Sagard’s right to receive payments will terminate when Sagard has received payments in respect of the Included Products, including any additional payments described below, equal to the Hard Cap. Further, we have the right to make voluntary prepayments to Sagard, and such payments will be credited against the Hard Cap.

If Sagard has not received aggregate payments equaling at least 100% of the Investment Amount by December 31, 2027 or at least 190% of the Investment Amount by December 31, 2032 (each, a Minimum Amount), then we will be obligated to make a cash payment to Sagard in an amount sufficient to gross up Sagard up to the applicable Minimum Amount within a specified period of time after each reference date.

The obligations under the Revenue Interest Financing Agreement, including the Payments, will be guaranteed by certain of our future subsidiaries (Subsidiaries) that are required to become a party thereto as guarantors (Guarantors). Our obligations under the Revenue Interest Financing Agreement and the guarantee of such obligations are secured, subject to customary permitted liens and other agreed upon exceptions and subject to an intercreditor agreement with Oaktree as administrative agent for the lenders under the Credit Agreement, by a pledge of substantially all of ours and the Guarantors’ assets that relate to, or are used or held for use for, the development, manufacture, use and/or commercialization of ZTALMY and all other pharmaceutical products that contain ganaxolone in the U.S., including the Product Revenue, pursuant to the terms of the Security Agreement dated as of the RIFA Closing Date by and among us, the Guarantors from time to time party thereto, and Sagard (Security Agreement).

At any time, we have the right, but not the obligation (Call Option), to repurchase all, but not less than all, of Sagard’s interest in the Payments at a repurchase price (Put/Call Price) equal to: (a) on or before the third anniversary of the RIFA Closing Date, 160% of the Investment Amount; (b) after the third anniversary but on or prior to the fourth anniversary of the RIFA Closing Date, 180% of the Investment Amount; and (c) after the fourth anniversary of the RIFA Closing Date, 190% of the Investment Amount, in each case, less the aggregate of all of our payments in respect of the Payments made to Sagard prior to such date.

The Revenue Interest Financing Agreement contains certain restrictions on ours and our Subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Revenue Interest Financing Agreement contains a financial covenant that requires us to maintain at all times cash and cash equivalents in certain deposit accounts in an amount at least equal to (i) from the RIFA Closing Date until the repayment of the loans under the Credit Agreement, $15.0 million and (ii) thereafter, $10.0 million.

In addition, the Revenue Interest Financing Agreement provides that if certain events occur, including certain bankruptcy events, a change of control, non-payment of Payments, divestiture of rights to commercialize Included Products in the U.S., divestiture of certain assets related to the Included Products (subject to customary carve-outs), and (subject to applicable cure periods) non-compliance with the covenants in the Revenue Interest Financing Agreement, Sagard has the right, but not the obligation, to require us to repurchase all, but not less than all, of Sagard’s interest in the Payments at the Put/Call Price. Our assets or cash flow may not be sufficient to fully repurchase all of Sagard’s interest in the Payments if such obligation is triggered upon any events of default. The duration and magnitude of any negative impact from the COVID-19 pandemic on ganaxolone commercialization, development or net revenues could also affect our ability to remain in compliance with our liquidity financial covenant. Further, if we are unable to repay, refinance or restructure our obligations under the Revenue Interest Financing Agreement, Sagard could proceed to protect and enforce its rights under the Revenue Interest Financing Agreement and other transaction documents by exercising such remedies (including foreclosure on the assets securing our obligations under the Revenue Interest Financing Agreement and the other transaction documents) as are available to Sagard and in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in the Revenue Interest Financing Agreement or other transaction documents or in aid of the exercise of any power granted in the Revenue Interest Financing Agreement or other transaction documents. The foregoing would materially and adversely affect the ongoing viability of our business.

If we are unable to satisfy certain conditions in our Credit Agreement, we will be unable to draw down the remaining amount of the term loan facility.

For our Credit Agreement, we must satisfy certain conditions to be eligible to draw down the tranche C term loans of $25.0 million. The tranche C term loans of $25.0 million may be drawn by us on or before December 31, 2023, provided that we satisfy certain conditions described in the Credit Agreement, including (i) the completion of one or more financings, including through the issuance of common stock, convertible debt, subordinated debt, a synthetic royalty or a sublicense in which we receive gross proceeds in an aggregate amount of at least $40.0 million and net proceeds in an aggregate amount of at least $36.0 million (Qualified Financing Condition) and (ii) either our current Phase 3 RAISE trial or a Phase 3 trial in tuberous sclerosis complex (TSC) achieving statistical significance (p value < 0.05) across all primary endpoints and ganaxolone being generally well tolerated, with a safety profile generally consistent with previous clinical trials. We satisfied the Qualified Financing Condition in connection with our November 2022 underwritten public offering, however, if we are unable to satisfy the remaining condition, we would not be able to draw down the remaining tranche of loans and may not be able to obtain alternative financing on commercially reasonable terms or at all.

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Our Credit Agreement and Revenue Interest Financing Agreement contain restrictions that limit our flexibility in operating our business.

The Credit Agreement and the Revenue Interest Financing Agreement contain various covenants that limit our ability to engage in specified types of transactions without the prior consent of Oaktree and the Lenders holding a

majority of the Term Loan commitments and/or Sagard, as applicable,. These covenants limit our ability to, among other things:

The covenants in our Credit Agreement, Revenue Interest Financing Agreement and related security agreements may limit our ability to take certain actions that may be in our long-term best interests. In the event that we breach one or more covenants, Oaktree and/or Sagard may choose to declare an event of default and (i) in the case of the Credit Agreement, require that we immediately repay all amounts outstanding under the Credit Agreement, plus penalties and interest, terminate the Lenders’ commitments to fund any undrawn Term Loan tranches and foreclose on the collateral granted to them to secure the obligations under the Credit Agreement and the other loan documents and/or (ii) in the case of the Revenue Interest Financing Agreement, require that we repurchase all, but not less than all, of Sagard’s interest in the Payments and foreclose on the collateral granted to them to secure the obligations under the Revenue Interest Financing Agreement and the other transaction documents. Such repayment could have a material adverse effect on our business, operating results and financial condition.

Raising additional capital could dilute our stockholders, restrict our operations or require us to relinquish rights to ganaxolone or any other future product candidates.

Until we can generate substantial revenue from product sales, if ever, we expect to seek additional capital through a combination of private and public equity offerings, debt financings, strategicgovernment funding, collaborations, and alliances, licensing arrangements and other strategiccommercial transactions and funding opportunities. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing or other commercial transactions, if available, may involve agreements that include liens or restrictive covenants limiting our ability to take important actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic collaborations, and alliances or licensing arrangements or other commercial with third parties, we may have to relinquish valuable rights to ganaxolone or any other future product candidates in particular countries, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing

when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market ganaxolone or any other future product candidates that we would otherwise prefer to develop and market ourselves.

We intend to expend our limited resources to pursue our sole clinical stage product candidate, ganaxolone and may fail to capitalize on other indications, technologies or any other future product candidates that may be more profitable or for which there may be a greater likelihood of success.

Because we have limited financial and managerial resources, we are focusing on commercializing ZTALMY and on research programs relating to ganaxolone, which concentrates the risk of product failure in the event ganaxolone proves to be ineffective or inadequate for clinical development or commercialization. As a result, we may forego or delay pursuit of opportunities for other technologies or product candidates that later could prove to have greater commercial potential. We may be unable to capitalize on viable commercial products or profitable market opportunities as a result of our resource allocation decisions. Our spending on proprietary research and development programs relating to ganaxolone may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for ganaxolone, we may relinquish valuable rights to ganaxolone through collaboration, licensing or other royaltycommercial arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to ganaxolone.

We have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

Our operations to date have been limited to conducting preclinical and clinical development and regulatory activities for ganaxolone and performing research and development with respect to our preclinical clinical and clinical programs.as well as early commercialization of ZTALMY for CDD in the US. In addition, as a clinical stage pharmaceutical company, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical area. Nor have we demonstratedCommercial sales from ZTALMY in CDD, an abilityultra rare disease, are not expected to obtain regulatory approvalbe sufficient to commercialize anyfund our clinical development of our product candidates.new indications for ganaxolone, including RSE and TSC. Consequently, any predictions about our future performance may not be as accurate as they would be if we had a longer history of successfully developing and commercializing pharmaceutical products. Further, our budgeted expense levels are based in part on our expectations concerning the costs of commercialization of ZTALMY and on our research, preclinical development and clinical trials, which depend on the success of such activities, and our ability to effectively and efficiently conduct such research, preclinical development, clinical trials and our expectations related to our efforts to achieve FDA or foreign regulatory approval with respect to ganaxolone and any other product candidates.for additional indications. Our limited operating history and clinical trial experience make these costs difficult to forecast accurately. We may be unable to adjust our operations in a timely manner to compensate for any unexpected increase in costs. Further, our manufacturing costs and operating expenses may increase significantly as we expand our operations.operations and our commercial activities. Accordingly, a significant increase in costs could have an immediate and material adverse effect on our business, results of operations and financial condition.

the time during which these carry forwards may have had. be applied against future taxes, therefore, we may not be able to take full advantage of these carry forwards for federal income tax purposes.

We may experience additional ownership changes in the future as a result of subsequent shifts in our stock ownership, including through completed or contemplated financings, some of which may be outside of our control. If we determine that a future ownership change has occurred and our ability to use our historical net operating loss and tax credit carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. Furthermore, the losses could expire before we generate sufficient income to utilize them.

Risks Related to the Commercialization of ZTALMY and Other Future Product Candidates

ZTALMY is our first commercial product and we have a limited history of commercializing drugs, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

Our operations to date have been largely focused on raising capital and developing ganaxolone in several indications, including undertaking preclinical studies and conducting clinical trials. We have only recently received FDA approval of ZTALMY, and as such we have not yet demonstrated our ability to successfully supply ZTALMY for ongoing commercial sale or conduct sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer history of successfully developing and commercializing drugs.

Even though we have obtained regulatory approval for ZTALMY in the U.S., we will still face extensive FDA regulatory requirements and may face regulatory difficulties.

Even though we have obtained regulatory approval in the U.S. for ZTALMY, the FDA and state regulatory authorities (and, if we obtain foreign regulatory approvals, comparable foreign regulatory authorities) may still impose significant restrictions on the indicated uses or marketing of ZTALMY, or impose ongoing requirements for potential costly post-approval studies or post-marketing surveillance. For example, as part of its approval of ZTALMY for the treatment of CDD, the FDA requires several post-marketing commitments. The Phase 1 renal impairment study commitment was completed and submitted to the FDA in May 2022. The Phase 1 hepatic impairment study and the thorough QTc study were completed and submitted to the FDA in December 2022. The remaining post-marketing commitments include the following studies:

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These additional studies will likely require us to undergo a costly and time-consuming development process. If we do not meet our obligations, the FDA may issue a non-compliance letter and may also consider ZTALMY to be misbranded and subject to potential enforcement action. There is a risk that the studies could take longer than expected to complete or the studies may have adverse findings which may require additional investments and have the potential to materially impact our marketing of Ztalmy.

We are also subject to ongoing FDA requirements governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, patient registry, import, export, advertising,

promotion, recordkeeping and reporting of safety and other post-market information. The safety profile of ganaxolone will continue to be closely monitored by the FDA and comparable foreign regulatory authorities after approval. If new safety information becomes available after approval of ganaxolone, the FDA or comparable foreign regulatory authorities may require labeling changes or establishment of a REMS or similar strategy, impose significant restrictions on ganaxolone’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval trials or post-market surveillance. We will also be subject to continued compliance with current good manufacturing practices (cGMP) and good clinical practices (GCP) requirements for any clinical trials that we conduct post-approval.

In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP and other regulations. If we or a regulatory authority discover previously unknown problems with a product, such as AEs of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, ganaxolone or the manufacturing facilities for ganaxolone fail to comply with applicable regulatory requirements, a regulatory authority may, among other things:

The occurrence of any event or penalty described above may inhibit or preclude our ability to commercialize ganaxolone and generate revenue.

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval for ganaxolone that we may have obtained, and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

Advertising and promotion of pharmaceutical products, including ZTALMY, is heavily scrutinized by, among others, the FDA, the U.S. Department of Justice (DOJ), the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS OIG), state attorneys general, members of Congress and the public. The FDA and other federal regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer advertising, advertising and promotion to healthcare professionals, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional

activities involving the Internet. A product cannot be promoted before it is approved. After approval, product promotion can include only those claims relating to safety and effectiveness that are consistent with the labeling approved by the FDA. Healthcare providers are permitted to prescribe drugs for “off-label” uses — that is, uses not approved by the FDA and not described in the product’s labeling — because the FDA does not regulate the practice of medicine. However, FDA regulations impose restrictions on manufacturers’ communications regarding off-label uses. Broadly speaking, a manufacturer may not promote a drug for off-label use, but under certain conditions may engage in non-promotional, balanced, scientific communication regarding off-label use.  Failure to comply with applicable FDA requirements and restrictions in this area may subject a company to adverse publicity and enforcement action, including enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA or other government agencies. In addition, advertising and promotion of ganaxolone, if approved outside of the U.S., will be heavily scrutinized by comparable foreign regulatory authorities.

In the U.S., promoting ganaxolone for unapproved indications can also subject us to false claims litigation under federal and state statutes, and other litigation and/or investigation, which can lead to civil and criminal penalties and fines and agreements that materially restrict the manner in which we promote or distribute our drug products. These false claims statutes include the False Claims Act (FCA), which allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid. If the government prevails in the lawsuit, the individual will share in any fines or settlement funds. If we do not lawfully promote our approved products, we may become subject to such litigation and/or investigation and, if we are not successful in defending against such actions, those actions could adversely affect our business prospects, financial condition and results of operations.

In the European Union (EU), strict requirements and restrictions regarding advertising and promotion apply, the details of which may vary per EU Member States. Violation of those rules could subject us to litigation, investigations and/or civil and criminal penalties, which could adversely affect our business, prospects, financial condition and results of operations.

Our commercial success depends upon attaining significant market access and acceptance of ZTALMY among physicians, patients, government and private payers and others in the medical community and attaining sufficient reimbursement for ganaxolone.

Even though ZTALMY received FDA approval for CDD, it may not gain market acceptance among physicians, patients, government and private payers, or others in the medical community. Market acceptance of ZTALMY (and of any potential future products we commercialize) depends on a number of factors, including:

If ZTALMY fails to achieve market acceptance among physicians, patients, government or private payers or others in the medical community, or the products or product candidates that are being administered with ganaxolone cause AEs, as the case may be, we may not be able to generate significant revenues, which would compromise our ability to become profitable. Many of these matters are beyond our control and are subject to other risks described elsewhere in this “Risk Factors” section. Accordingly, we cannot assure you that we will be able to successfully commercialize or generate revenue from ZTALMY (or any future products).

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of new drug products is highly competitive. We face competition with respect to ganaxolone both for the treatment of CDD and for other indications, and will face competition with respect to any other product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing ganaxolone. Some of these competitive products and therapies are based on scientific approaches that are the same as, or similar to, our approach, and others are based on entirely different approaches. For example, there are several companies developing product candidates that target the same GABA_A neuroreceptor that we are targeting or that are testing product candidates in the same indications that we are testing. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Ganaxolone is presently being developed as an antiepileptic therapeutic. There are a variety of marketed therapies available for these patients.

Specifically, there are more than 25 approved AEDs available in the U.S. and worldwide, including the generic products levetiracetam, lamotrigine, carbamazepine, oxcarbazepine, valproic acid and topiramate. Recent market entrants include branded products developed by UCB (including acquisition of Zogenix), Eisai, Jazz Pharmaceuticals (via acquisition of GW Pharmaceuticals), SK Biopharmaceuticals and Sunovion Pharmaceuticals. In addition, there are several drugs in clinical development for the treatment of pediatric orphan epilepsy indications, including compounds being developed by Jazz Pharmaceuticals (via acquisition of GW Pharmaceuticals), UCB (including acquisition of Zogenix) and Takeda.

Many of the approved drugs are well established therapies or products and are widely accepted by physicians, patients and third-party payers. Insurers and other third-party payers may also encourage the use of generic products. These factors may make it difficult for us to achieve market acceptance at desired levels or in a timely manner to ensure viability of our business.

More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and human resources.

As a result of these factors, our competitors may obtain regulatory approval of their products before we are able to, which may limit our ability to develop or commercialize ganaxolone. Our competitors may also develop products that are safer, more effective, more widely used and cheaper than ours, and may also be more successful than us in manufacturing and marketing their products. These appreciable advantages could render ganaxolone obsolete or non-competitive before we can recover the expenses of ganaxolone’s development and commercialization.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

If we are unable to differentiate ZTALMY from current and future products or existing methods of treatments, our ability to successfully commercialize ZTALMY would be adversely affected.

We initially intend to commercialize ZTALMY for the treatment of CDD and seek FDA approval for ganaxolone with respect to additional indications. Ganaxolone is the first product to receive regulatory approval for reduction of seizures specifically in patients with CDD.  Patients with CDD are generally on a number of anti-epileptic medications and physicians’ determining whether to prescribe ZTALMY to their CDD patients may add ZTALMY to existing regimens for patients or make changes in their patients’ current medications to introduce ZTALMY. If we are unable to achieve significant differentiation for ZTALMY against these other products and treatments or future treatments, including on the basis of efficacy, safety and tolerability profile, reliability, convenience of administration, price and reimbursement, the opportunity for ZTALMY to be commercialized successfully would be adversely affected.

ZTALMY is our first commercial product. If our sales and marketing capabilities to market and sell ganaxolone are not effective, we may be unable to generate meaningful revenue.

ZTALMY is our first commercial product and we have hired experienced commercial leadership in our organization to support commercialization of ZTALMY, including sales, marketing, sales operations, a field force, market access professionals, and supply chain and distribution professionals. We compete for commercial talent with companies that have extensive, well-funded marketing and sales operations and successful products in the market. We have a limited track record with the early launch for ZTALMY in CDD which may make it more difficult to attract and retain effective commercial talent . If we are unable to maintain an effective commercial team, we may not be

successful in generating meaningful revenue. Even if we are able to maintain an effective commercial team, we may be unable to compete successfully against more established companies.

While ZTALMY has received favorable reimbursement determinations to date from third party payers for its approved indication, adverse changes in reimbursement or failure to obtain favorable reimbursement for future indications, if approved, could harm our business.

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Our ability to successfully commercialize ganaxolone depends, in part, on the extent to which coverage and adequate reimbursement for ganaxolone is available from government health administration authorities, including Medicaid, which we expect will be a significant portion of patients prescribed ZTALMY, private health insurers and other organizations. Government authorities and commercial third-party payers, such as private health insurers and health maintenance organizations, determine which medications they will cover, the process for making such decisions, and the reimbursement levels for those medications. Obtaining formulary coverage and favorable reimbursement levels for ZTALMY from government authorities or other third-party commercial payers can be a time consuming and costly process, especially in the early years of regulatory approval. It is expected that we will be required to provide supporting clinical scientific and economic evidence in the form of cost-effectiveness and real-world data, outcomes beyond the data required to obtain marketing approval.  We may not be able to gain acceptance from government health authorities, third-party payers or employer sponsored plans and, even if we are able to do so, the timing and the consistency in payer formulary placement or utilization management may vary greatly from government health authorities, third-party payers and by employer sponsored plans.

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A primary trend in the U.S. healthcare industry and elsewhere is budget predictability and cost containment. Government authorities and third-party payers have attempted to control costs by limiting access through utilization management controls, formulary placement and reimbursement amounts for particular medications and procedures. Increasingly, third-party payers are requiring that drug companies provide them with predetermined utilization discounts from list prices and are challenging the prices charged for drugs. Third-party payers or PMBs may also seek additional clinical and economic evidence, beyond the data required to obtain marketing approval, which may include demonstrating clinical benefits and value in specific patient populations before covering ganaxolone for those patients. We cannot be sure that formulary placement, coverage and adequate reimbursement will be available for ganaxolone and, if such is available, what hurdles may be put in place for prescribing physicians to navigate. Coverage and reimbursement may impact physician or institutional demand for ganaxolone, and that demand may vary by region or by payer segment. If coverage and reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize ganaxolone.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on formulary coverage or reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs will be reduced by mandatory discounts or rebates required by Medicaid government healthcare programs and may be reduced by private payers and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S.. Third-party payers and PBMs often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. Any challenges in obtaining coverage and favorable reimbursement rates from both government-funded and private payers for ZTALMY could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

If the market opportunities for ZTALMY in CDD and other indications for which we obtain regulatory approval, if any, are smaller than we believe they are, our results of operations may be adversely affected and our business may suffer. 

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We focus our research and product development on therapeutics to treat patients suffering from seizure disorders. Our projections of both the number of people who have these disorders, as well as the subset of people with these diseases who have the potential to benefit from treatment with ganaxolone, are based on estimates. These estimates may prove to be incorrect and new studies or clinical trials may change the estimated incidence or prevalence of these disorders. The number of patients in the U.S. and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with ganaxolone, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.  ZTALMY has received regulatory approval in the U.S. for CDD and our estimates of the market for ZTALMY in CDD may be incorrect. Our ability to obtain market information is limited since ZTALMY is the first drug to be approved specifically for use in seizures associated with CDD and the ICD10 code for CDD was established in 2020, and there is limited market data available for CDD.

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A variety of risks associated with marketing ganaxolone internationally could materially adversely affect our business.

We plan to seek regulatory approval for ganaxolone outside of the U.S., and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of ganaxolone or other future product candidates that we may develop.

We face an inherent risk of product liability exposure related to the testing of ganaxolone by us or our investigators in human clinical trials and will face an even greater risk now that ZTALMY has received FDA approval and we enter the commercial market. Product liability claims may be brought against us by patients enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling ganaxolone. If we cannot successfully defend ourselves against claims that ganaxolone caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in, for example:

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We currently have product liability insurance coverage, which may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We have expanded our product liability insurance coverage to include commercial sales of ZTALMY, but we may be unable to obtain commercially reasonable limits for product liability insurance. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could have a material adverse effect on our business and financial condition.

If the FDA or other applicable regulatory authorities approve generic products that compete with any of our products or product candidates, it could reduce our sales of those products or product candidates.

In the U.S., after an NDA is approved, the product generally becomes a “listed drug” which can, in turn, be relied upon by potential competitors in support of approval of an ANDA. The Federal Food, Drug, and Cosmetic Act, FDA regulations and other applicable regulations and policies provide incentives to manufacturers to create generic, non-infringing versions of a drug to facilitate the approval of an ANDA. These manufacturers might show that their product has the same active ingredients, dosage form, strength, route of administration, conditions of use, and labeling as

our product candidate and might conduct a relatively inexpensive study to demonstrate that the generic product is absorbed in the body at the same rate and to the same extent as, or is bioequivalent to, our product. These generic equivalents would be significantly less costly than ours to bring to market, and companies that produce generic equivalents are generally able to offer their products at lower prices. Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product are typically lost to the generic product. Accordingly, competition from generic equivalents to our products would substantially limit our ability to generate revenues and therefore to obtain a return on the investments we have made in our products.

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Risks Related to Clinical Development and Regulatory Approval of our Product Candidates

Our future success is dependent on the successful clinical development, regulatory approval and commercialization of ganaxolone, which is being studied in five clinical trialsseveral indications and will require significant capital resources and years of additional clinical development effort.effort.

We do not have any products that have gained regulatory approval.  Our only clinical stage product candidate is ganaxolone.recently received FDA approval of ZTALMY in CDD, and we plan to develop ganaxolone in several additional indications in oral and IV formulations. As a result, our business is dependent on our ability to successfully complete clinical development, of, scale-up manufacturing, obtain regulatory approval, for, and, if approved, commercialize ganaxolone in a timely manner. We cannot commercialize ganaxolone in the United StatesU.S. in any other indication without first obtaining regulatory approval from the FDA; similarly, we cannot commercialize ganaxolone outside of the United States U.S. without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of ganaxolone for a target indication, we must demonstrate with substantial evidence gathered in preclinical studies and clinical trials generally including two adequate and well-controlled clinical trials, and, with respect to approval in the United States,U.S., to the satisfaction of the FDA, that ganaxolone is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

Ganaxolone is metabolized extensively in animals and humans.  During the development of CDD, one major metabolite (M2) was present in plasma of humans that was not found in plasma of rats or dogs. The chemical structure of M2 has been identified.  An activity assay, dose range finding study in rats and an in vivo micronucleus with comet analysis for the detection of genotoxicity have been conducted and the results submitted to the FDA. Results from additional preclinical studies are required to the FDA as post-marketing requirement(s). These include: 2-year carcinogenicity studies of ganaxolone and the major human unconjugated plasma metabolite, M2, in rats; a 26-week carcinogenicity of ganaxolone in transgenic mice; a juvenile animal toxicity study of the major human unconjugated plasma metabolite, M2, in rats; a CNS distribution study of the M47 metabolite in rats; and in vitro studies to assess the drug interaction potential of M47 metabolite. Additional post-marketing requirements include: phase 1 renal and hepatic impairment studies and a thorough QTc study; and extractable/leachable study results on the container closure system. The Phase 1 renal impairment study commitment was completed and submitted to the FDA in May 2022. The Phase 1 hepatic impairment study and the thorough QTc study were completed and submitted to the FDA in December 2022. We plan to complete the required FDA studies within the required FDA timeframe. However, there is a risk that the studies could take longer than expected to complete or the studies may have adverse findings which may require additional investments and have the potential to materially impact the label or our ability to market Ztalmy. In the EU, if additional studies are needed, these are usually required before or during MAA review.

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We are conducting the RAISE trial in RSE, which is a life threatening medical condition involving prolonged seizure activity in seriously ill patients. The RAISE trial requires expertise in electroencephalogram (EEG) interpretation, which may be subject to variability, and the FDA or foreign regulatory authorities could find the data generated in this trial inadequate or difficult to interpret, which could delay, limit or prevent regulatory approval for this indication. There is also a risk that the Phase 3 clinical trial of ganaxolone in RAISE will generate data that is not sufficient to support regulatory approvals for this indication. Additionally, the clinical trial endpoints of the RAISE trial are based on treatment outcomes, including initiation of anesthesia for treatment of RSE. Practice variability in the use of anesthesia for SE treatment could adversely impact the ability to show a treatment effect with ganaxolone. Even if the RAISE trial shows that ganaxolone is effective, there is a risk that the FDA will require more safety data generated with IV ganaxolone at the doses given to patients in this trial before approving an NDA or require post approval commitments to generate additional safety data as a condition of approval ganaxolone for use in RSE. 

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We have recently reported data from the CALM trial evaluating safety and efficacy of adjunctive oral ganaxolone treatment in patients with TSC. The primary endpoint showed median 16.6% reduction in 28-day primary endpoint seizure frequency relative to the four-week baseline period. In addition, data from the Phase 2 TSC trial suggested that in patients on concomitant Epidiolex, early elevation of ganaxolone blood levels occurred and appeared to be linked to greater somnolence. A formal Phase 1 drug-drug interaction trial was completed, demonstrating a lack of significant interaction between ganaxolone and Epidiolex. Additionally, the titration schedule for all subjects in the Phase 3 TSC trial has been adjusted to maximize tolerability. Undesirable side effects could delay clinical trials and result in the FDA or other regulatory authorities requiring us to conduct additional studies or trials for our product candidate either prior or post-approval, such as additional drug-drug interaction studies or safety or efficacy studies, or it may object to elements of our clinical development program. There is also a risk that the Phase 3 clinical trial of ganaxolone in TSC will generate data that is not sufficient to support regulatory approvals for this indication.

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Even if ganaxolone were to obtain approval from the FDA and comparable foreign regulatory authorities for TSC, RSE, or any other indication under development, any approval might contain significant limitations, such as restrictions as to specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval trial or risk management requirements. If we are unable to obtain regulatory approval for ganaxolone in these additional indications in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other indications for ganaxolone or any other product candidate that we may in-license, develop or acquire in the future. Furthermore, even if we obtainwith regulatory approval for ganaxolone, we will still need to develop a commercial organization, establish commercially viable pricing and obtain adequate reimbursement from third-party and government payers. If we are unable to successfully commercialize ganaxolone, we may not be able to earn sufficient revenue to continue our business.business.

Because the results of preclinical studies or earlierWe are conducting clinical trials are not necessarily predictive of future results,development activities for ganaxolone across multiple indications, and such clinical development activities may not haveproduce favorable results, which could adversely impact our ability to achieve regulatory approval for ganaxolone in latersuch indications.

We are conducting clinical trials or receive regulatory approval.

development activities for ganaxolone across multiple indications. Success in preclinical studies and early clinical trials in one indication does not ensure that later clinical trials in such indication or other indications will generate adequate data to demonstrate the efficacy and safety of ganaxolone.ganaxolone in one or more indications. Furthermore, unfavorable clinical trial results in one ganaxolone indication may adversely impact our ability to continue to develop such indication or other ganaxolone indications. A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience, have suffered significant setbacks in clinical trials, even after seeing promising results in earlier studies and clinical trials. For example, while ganaxolone

received oral formulations of ganaxolone for durations from one day to more than two years at doses of 50 to 2,000 mg/day. The majority of AEs were non-serious and resolved upon discontinuation of therapy. The most common side effects with oral ganaxolone relate to sedation or somnolence. Somnolence and sedation have appeared early during treatment and were generally dose related. In the oral ganaxolone safety database there are no trends of medically important changes in blood chemistry, vital signs, liver function, renal function or cardiovascular parameters in adult or pediatric populations. Additionally, over 60 patients have received the IV formulation of ganaxolone in our clinical trials to date. Although ganaxolone has generally been well-tolerated by patients in our clinical trials to date, in some cases there were side effects, and some of the side effects were severe. The most frequent side effects were dizziness, fatigue and somnolence (or drowsiness). More side effects of the CNS were categorized as severe as compared to side effects of other body systems. Antiepileptic drugs, including ganaxolone, increase the risk of suicidal thoughts or behavior. In addition, as with most antiepileptic drugs, ganaxolone should be withdrawn gradually to minimize the risk of increased seizure frequency and status epilepticus.

There were no deaths reported in the double-blind phase of the Marigold Trial. Three deaths globally have occurred during the open label extension phase of the trial, two of which were assessed by the investigators as unrelated to trial treatment. The third death was assessed by the investigator as probably related to trial medication. Given the severity of CDD and its medical complications, serious adverse events or deaths may occur which, in the absence of a control group, make determination of relatedness to treatment difficult.

If these side effects are reported in future clinical trials, or if other safety or toxicity issues are reported in our future clinical trials, we may not receive approval to market ganaxolone or approval may be limited, which could prevent us from ever generating material revenue or achieving profitability. Furthermore, although we are currently developing ganaxolone for multiple indications, negative safety findings in any one indication could force us to delay or discontinue development in other indications. Results of our clinical trials could reveal an unacceptably high severity and prevalence of side effects. In such an event, our clinical trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development, or deny approval, of ganaxolone for any or all targeted indications. Drug-related side effects could affect trial subject recruitment or the ability of enrolled patients to complete our future clinical trials and may result in potential product liability claims. Additionally, in our clinical trials ganaxolone is added to the standard of care, which includes many antiseizure medications. Drug interactions with any of the medications could result in safety concerns or reduce the population in which ganaxolone may be used. For example, in our recently completed clinical trial of ganaxolone in TSC, we reported data that suggested that in patients on concomitant Epidiolex, early elevation of ganaxolone blood levels occurred and appeared to be linked to greater somnolence. A formal Phase 1 drug-drug interaction trial was completed, demonstrating a lack of significant interaction between ganaxolone and Epidiolex. Additionally, the titration schedule for all subjects in the Phase 3 TSC trial has been adjusted to maximize tolerability. Undesirable side effects could delay clinical trials and result in the FDA or other regulatory authorities requiring us to conduct additional studies or trials for our product candidate either prior to or post-approval, such as additional drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of our clinical development program.

Ganaxolone is metabolized extensively in animals and humans.  During the development of CDD, one major metabolite (M2) was present in plasma of humans that was not found in plasma of rats or dogs. The chemical structure of M2 has been identified. An activity assay, dose range finding study in rats and an in vivo micronucleus with comet analysis for the detection of genotoxicity have been conducted and the results submitted to the FDA. Results from additional preclinical studies are required to the FDA as post-marketing requirement(s). These include: 2-year carcinogenicity studies of ganaxolone and the major human unconjugated plasma metabolite, M2, in rats; a 26-week carcinogenicity of ganaxolone in transgenic mice; a juvenile animal toxicity study of the major human unconjugated plasma metabolite, M2, in rats; a CNS distribution study of the M47 metabolite in rats; and in vitro studies to assess the drug interaction potential of M47 metabolite. Additional post-marketing requirements include: phase 1 renal and hepatic impairment studies and a thorough QTc study; and extractable/leachable study results on the container closure system. The Phase 1 renal impairment study commitment was completed and submitted to the FDA in May 2022. The Phase 1 hepatic impairment study and the thorough QTc study were completed and submitted to the FDA in December 2022. We plan to complete the required FDA studies within the required FDA timeframe. However, there is a risk that the studies could take longer than expected to complete or the studies may have adverse findings which may require additional

investments and have the potential to materially impact our marketing of Ztalmy. In the EU, if additional studies are needed, these are usually required before or during MAA review.

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If we or others identify undesirable side effects caused by ganaxolone after receiving marketing approval, a number of potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of ganaxolone.

The FDA recommended scheduling of ganaxolone as a controlled substance based on the abuse liability assessment conducted for the NDA submission. As such, the U.S. DEA reviewed ganaxolone and following the review classified ganaxolone as a Schedule V drug. As a controlled substance, the manufacture, import, export, distribution, storage, sale, dispensing, prescribing, and use will be subject to a significant degree of additional regulation by the DEA as well as state regulatory authorities. The restrictive nature of these regulations could also limit commercialization and market acceptance of ganaxolone.

The therapeutic efficacy and safety of ganaxolone are unproven,in indications other than CDD have not been established by regulatory authorities, and we may not be able to successfully develop and commercialize ganaxolone in the other indications under clinical development in the future.

Ganaxolone is a novel compound and its potential therapeutic benefit is unproven. Our ability to generate revenue from ganaxolone whichin other indications we do not expect will occur for at least the next several years, if ever,have under clinical development such as RSE and TSC will depend on our successful development and commercialization after regulatory approval in those indications, which is subject to many potential risks and may not occur. Ganaxolone may interact with human biological systems in unforeseen, ineffective or harmful ways. If ganaxolone is associated with undesirable side effects or has characteristics that are unexpected in these indications, we may need to abandon its development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promiseare approved in early stage testing for treating the target indications for ganaxolone have later been foundone indication fail to cause side effects that prevented further development of the compound.achieve regulatory approvals in additional indications. As a result of these and other risks described herein that are inherent in the development of novel therapeutic agents, we may never successfully develop enter into or maintain third-party licensing or collaboration transactions with respect to, or successfully commercialize, ganaxolone in additional indications, which case we will not achieve profitability andwould significantly decrease the valuecommercial potential of our stock may decline.ganaxolone overall.

Clinical development of product candidates involves a lengthy and expensive process with an uncertain outcome.

Clinical trials are expensive, can take many years to complete, and are inherently uncertain as to outcome. Failure can occur at any time during the clinical development process.

We may experience delays in our ongoing or future clinical trials and we do not know whether planned clinical trials will begin or enroll patients on time, need to be redesigned or be completed on schedule, if at all. There can be no assurance that the FDA or other foreign regulatory authorities will not put clinical trials of ganaxolone on clinical hold now or in the future. Clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as: