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Any future acquisitions could present a number of risks, including: •the risk of using management time and resources to pursue acquisitions that are not successfully completed; •the risk of incorrect assumptions regarding the future results of acquired operations; •the risk that the amount and timing of the expected benefits of any acquisition, including potential synergies, are subject to uncertainties; •the risk of unexpected losses of key employees, customers and suppliers of the acquired business; •the risk of increasing the scope, geographic diversity, and complexity of our business; •the risk of unfavorable accounting treatment and unexpected increases in taxes; •the risk of difficulty in conforming standards, controls, procedures, policies, business cultures, and compensation structures; •the risk of failing to integrate the operations or management of any acquired operations or assets successfully and in a timely manner; and •the risk of diversion of management’s attention from existing operations or other priorities. |
Mergers Termination On June 20, 2019, Inuvo entered into an Agreement and Plan of Merger Termination Agreement (the “Merger Termination Agreement”) with ConversionPoint Technologies Inc., a Delaware corporation (“CPT”), ConversionPoint Holdings, Inc., a Delaware corporation (“Parent”), CPT Merger Sub, Inc., a Delaware corporation, (“CPT Merger Sub”), and CPT Cigar Merger Sub, Inc., a Nevada corporation (“Inuvo Merger Sub”), which, among other things, (1) terminated the Agreement and Plan of Merger, dated November 2, 2018, by and among Inuvo, CPT, Parent, CPT Merger Sub, and Inuvo Merger Sub, as amended (the “Merger Agreement”), pursuant to which Inuvo would have merged with and into Inuvo Merger Sub and become a wholly-owned subsidiary of Parent, and CPT would have merged with and into CPT Merger Sub and become a wholly-owned subsidiary of Parent (the “Mergers”), and (2) terminated each of the Support Agreements that were entered into by certain officers and directors of Inuvo and the parties to the Merger Agreement. |
Concurrently with the execution of the Merger Termination Agreement, CPT Investments, LLC, a California limited liability company and an affiliate of CPT (“CPT Investments”), and Inuvo entered into a certain Inuvo Note Termination Agreement (the “Note Termination Agreement”) and agreed to (1) terminate and cancel the 10% Senior Unsecured Subordinated Convertible Promissory Note, dated November 1, 2018, executed by Inuvo in favor of CPT Investments (the “CPTI Note”), which as of June 20, 2019, had $1,063,288 in accrued principal and interest outstanding (the “Outstanding Indebtedness”) by July 20, 2019, (2) effective immediately, terminate all conversion rights under the CPTI Note to convert amounts outstanding into shares of Inuvo’s common stock, (3) terminate the Securities Purchase Agreement, dated November 1, 2018, by and between Inuvo and CPT Investments (the “Securities Purchase Agreement”), and (4) terminate the Registration Rights Agreement, dated November 1, 2018, by and between Inuvo and CPT Investments. |
The Merger Termination Agreement provided that the termination fee of $2,800,000 to be paid to Inuvo (the “Termination Fee”) for failure to fulfill the Financing Condition would be satisfied as follows: (1) $1,063,288 of the Termination Fee was satisfied in consideration of the termination and cancellation of the Outstanding Indebtedness pursuant to the CPTI Note Termination Agreement that was approved by CPT’s senior lenders Montage Capital II, L.P. and Partners for Growth IV, L.P. and CPT’s issuance of a replacement note to CPT Investments that was entered into in July 2019; (2) $1,611,712 of the Termination Fee was satisfied by CPT transferring all of the assets related to CPT’s programmatic and RTB advertising solutions business conducted through managed services and a proprietary SaaS solution (the “ReTargeter Business”), free and clear of all liabilities, encumbrances, or liens, to Inuvo; and (3) CPT paid $125,000 to Inuvo on September 15, 2019 to be contributed to the settlement of ongoing litigation with respect to the Mergers. |
Mergers Termination On June 20, 2019, Inuvo entered into an Agreement and Plan of Merger Termination Agreement (the “Merger Termination Agreement”) with ConversionPoint Technologies Inc., a Delaware corporation (“CPT”), ConversionPoint Holdings, Inc., a Delaware corporation (“Parent”), CPT Merger Sub, Inc., a Delaware corporation, (“CPT Merger Sub”), and CPT Cigar Merger Sub, Inc., a Nevada corporation (“Inuvo Merger Sub”), which, among other things, (1) terminated the Agreement and Plan of Merger, dated November 2, 2018, by and among Inuvo, CPT, Parent, CPT Merger Sub, and Inuvo Merger Sub, as amended (the “Merger Agreement”), pursuant to which Inuvo would have merged with and into Inuvo Merger Sub and become a wholly-owned subsidiary of Parent, and CPT would have merged with and into CPT Merger Sub and become a wholly-owned subsidiary of Parent (the “Mergers”), and (2) terminated each of the Support Agreements that were entered into by certain officers and directors of Inuvo and the parties to the Merger Agreement. |
In addition to the impact of the COVID-19 pandemic on our revenues, quarterly fluctuations in our operating results also might be due to numerous other factors, including: •our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; •technical difficulties or interruptions in our services; •changes in privacy protection and other governmental regulations applicable to our industry; •changes in our pricing policies or the pricing policies of our competitors; •the financial condition and business success of our distribution partners; •purchasing and budgeting cycles of our distribution partners; •acquisitions of businesses and products by us or our competitors; •competition, including entry into the market by new competitors or new offerings by existing competitors; •discounts offered to advertisers by upstream advertising networks; •our history of litigation; •our ability to hire, train and retain sufficient sales, client management and other personnel; •timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; •concentration of marketing expenses for activities such as trade shows and advertising campaigns; •expenses related to any new or expanded data centers; and •general economic and financial market conditions. |
Mergers Termination On June 20, 2019, Inuvo entered into an Agreement and Plan of Merger Termination Agreement (the “Merger Termination Agreement”) with ConversionPoint Technologies Inc., a Delaware corporation (“CPT”), ConversionPoint Holdings, Inc., a Delaware corporation (“Parent”), CPT Merger Sub, Inc., a Delaware corporation, (“CPT Merger Sub”), and CPT Cigar Merger Sub, Inc., a Nevada corporation (“Inuvo Merger Sub”), which, among other things, (1) terminated the Agreement and Plan of Merger, dated November 2, 2018, by and among Inuvo, CPT, Parent, CPT Merger Sub, and Inuvo Merger Sub, as amended (the “Merger Agreement”), pursuant to which Inuvo would have merged with and into Inuvo Merger Sub and become a wholly-owned subsidiary of Parent, and CPT would have merged with and into CPT Merger Sub and become a wholly-owned subsidiary of Parent (the “Mergers”), and (2) terminated each of the Support Agreements that were entered into by certain officers and directors of Inuvo and the parties to the Merger Agreement. |
The Merger Termination Agreement provided that the termination fee of $2,800,000 to be paid to Inuvo (the “Termination Fee”) for failure to fulfill the Financing Condition would be satisfied as follows: (1) $1,063,288 of the Termination Fee (the “Indebtedness Satisfaction Amount”) was satisfied in consideration of the termination and cancellation of the Outstanding Indebtedness pursuant to the CPTI Note Termination Agreement that was approved by CPT’s senior lenders Montage Capital II, L.P. and Partners for Growth IV, L.P. (the “Senior Lenders”) of CPT’s issuance of a replacement note to CPT Investments that was entered into in July 2019; (2) $1,611,712 of the Termination Fee (the “ReTargeter Satisfaction Amount”) was satisfied by CPT transferring all of the assets related to CPT’s programmatic and RTB advertising solutions business conducted through managed services and a proprietary SaaS solution (the “ReTargeter Business”), free and clear of all liabilities, encumbrances, or liens, to Inuvo (the “ReTargeter Asset Transfer”); and (3) CPT paid $125,000 to Inuvo on September 15, 2019 to be contributed to the settlement of ongoing litigation with respect to the Mergers (the “Litigation Fee”). |
To submit a recommendation of a director candidate to the Nominating, Corporate Governance and Compensation Committee, a stockholder should submit the following information in writing, addressed to the corporate secretary of Inuvo at our main office: ● the name and address of the person recommended as a director candidate; ● all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act; ● the written consent of the person being recommended as a director candidate to be named in the proxy statement as a nominee and to serve as a director if elected; ● as to the person making the recommendation, the name and address, as they appear on our books, of such person, and number of shares of our common stock owned by such person; provided, however, that if the person is not a registered holder of our common stock, the person should submit his or her name and address along with a current written statement from the record holder of the shares that reflects the recommending person’s beneficial ownership of our common stock; and ● a statement disclosing whether the person making the recommendation is acting with or on behalf of any other person and, if applicable, the identity of such person. |
In the event of a termination by our company without cause or a termination by the executive for good reason, the executive would be entitled to receive the following: ● his earned but unpaid basic salary through the termination date, plus a portion of the executive’s bonus based upon the bonus he would have earned in the year in which his employment was terminated, pro-rated for the amount of time employed by us during such year and paid on the original date such bonus would have been payable; ● an amount payable over the 12-month period following termination equal to one times the sum of his basic salary at the time of termination, plus a termination bonus equal to the bonus paid to the executive during the four fiscal quarters prior to the date of termination (except that if a target bonus has been established for Mr. Howe, each such person’s termination bonus is equal to his target bonus for the fiscal year in which the termination occurs, increased or decreased pursuant to actual performance versus targeted performance in the then current plan measured as of the end of the calendar month preceding the termination date), or in the event of a change of control (as defined below), the greater of the relevant calculation above or the bonus paid to the executive during the four fiscal quarters prior to the change of control; ● any other amounts or benefits owing to the executive under our then-applicable employee benefit, long-term incentive, or equity plans and programs, within the terms of such plans, payable over the 12-month period following termination; and ● benefits (including health, life, and disability) as if the executive was still an employee during the 12-month period following termination. |
Mergers Termination On June 20, 2019, Inuvo entered into an Agreement and Plan of Merger Termination Agreement (the “Merger Termination Agreement”) with ConversionPoint Technologies Inc., a Delaware corporation (“CPT”), ConversionPoint Holdings, Inc., a Delaware corporation (“Parent”), CPT Merger Sub, Inc., a Delaware corporation, (“CPT Merger Sub”), and CPT Cigar Merger Sub, Inc., a Nevada corporation (“Inuvo Merger Sub”), which, among other things, (1) terminated the Agreement and Plan of Merger, dated November 2, 2018, by and among Inuvo, CPT, Parent, CPT Merger Sub, and Inuvo Merger Sub, as amended (the “Merger Agreement”), pursuant to which Inuvo would have merged with and into Inuvo Merger Sub and become a wholly-owned subsidiary of Parent, and CPT would have merged with and into CPT Merger Sub and become a wholly-owned subsidiary of Parent (the “Mergers”), and (2) terminated each of the Support Agreements that were entered into by certain officers and directors of Inuvo and the parties to the Merger Agreement. |
The Merger Termination Agreement provided that the termination fee of $2,800,000 to be paid to Inuvo (the “Termination Fee”) for failure to fulfill the Financing Condition would be satisfied as follows: (1) $1,063,288 of the Termination Fee (the “Indebtedness Satisfaction Amount”) was satisfied in consideration of the termination and cancellation of the Outstanding Indebtedness pursuant to the CPTI Note Termination Agreement that was approved by CPT’s senior lenders Montage Capital II, L.P. and Partners for Growth IV, L.P. (the “Senior Lenders”) of CPT’s issuance of a replacement note to CPT Investments that was entered into in July 2019; (2) $1,611,712 of the Termination Fee (the “ReTargeter Satisfaction Amount”) was satisfied by CPT transferring all of the assets related to CPT’s programmatic and RTB advertising solutions business conducted through managed services and a proprietary SaaS solution (the “ReTargeter Business”), free and clear of all liabilities, encumbrances, or liens, to Inuvo (the “ReTargeter Asset Transfer”). |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our distribution partners; • purchasing and budgeting cycles of our distribution partners; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
To submit a recommendation of a director candidate to the Nominating, Corporate Governance and Compensation Committee, a stockholder should submit the following information in writing, addressed to the corporate secretary of Inuvo at our main office: • the name and address of the person recommended as a director candidate; • all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; • the written consent of the person being recommended as a director candidate to be named in the proxy statement as a nominee and to serve as a director if elected; • as to the person making the recommendation, the name and address, as they appear on our books, of such person, and number of shares of our common stock owned by such person; provided, however, that if the person is not a registered holder of our common stock, the person should submit his or her name and address along with a current written statement from the record holder of the shares that reflects the recommending person’s beneficial ownership of our common stock; and • a statement disclosing whether the person making the recommendation is acting with or on behalf of any other person and, if applicable, the identity of such person. |
In the event of a termination by our company without cause or a termination by the executive for good reason, the executive would be entitled to receive the following: • his earned but unpaid basic salary through the termination date, plus a portion of the executive’s bonus based upon the bonus he would have earned in the year in which his employment was terminated, pro-rated for the amount of time employed by us during such year and paid on the original date such bonus would have been payable; • an amount payable over the 12-month period following termination equal to one times the sum of his basic salary at the time of termination, plus a termination bonus equal to the bonus paid to the executive during the four fiscal quarters prior to the date of termination (except that if a target bonus has been established for Mr. Howe, each such person’s termination bonus is equal to his target bonus for the fiscal year in which the termination occurs, increased or decreased pursuant to actual performance versus targeted performance in the then current plan measured as of the end of the calendar month preceding the termination date), or in the event of a change of control (as defined below), the greater of the relevant calculation above or the bonus paid to the executive during the four fiscal quarters prior to the change of control; • any other amounts or benefits owing to the executive under our then-applicable employee benefit, long-term incentive, or equity plans and programs, within the terms of such plans, payable over the 12-month period following termination; and • benefits (including health, life, and disability) as if the executive was still an employee during the 12-month period following termination. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our distribution partners; • purchasing and budgeting cycles of our distribution partners; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
We have a number of highly differentiated and proprietary strengths that include long standing advertising relationships with Yahoo and Google from whom we source advertising inventory which we distribute through our own online properties or through those of third party publishers; • the ability to serve hundreds of millions of advertisements to any device or browser in milliseconds; • the power to both self-market and self-monetize our own publishing business; • the capability to test advertising technology within our own publishing business; • the power to target advertisements based on website content, past behavior or to redirect users back to Inuvo content when the economics and alignment are optimized; • the capacity to expand to other geographies where appropriate; • the capability to develop and publish content just-in-time to meet demand from advertisers; and • a low cost operation in central Arkansas with access to numerous universities, and a proprietary technology infrastructure developed by, and in some cases patented by Inuvo. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our distribution partners; • purchasing and budgeting cycles of our distribution partners; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
We have a number of highly differentiated and proprietary strengths that include; long standing advertising relationships with Yahoo and Google from whom we source advertising inventory which we distribute through our own online properties or through those of third party publishers; the ability to serve hundreds of millions of advertisements to any device or browser in milliseconds; the ability to both self-market and self-monetize our own publishing business; the ability to test advertising technology within our own publishing business; the ability to target advertisements based on website content, past behavior or to redirect users back to Inuvo content when the economics and alignment are optimized; the ability to expand to other geographies where appropriate; the ability to develop and publish content just-in-time to meet demand from advertisers; a low cost operation in central Arkansas with access to numerous universities, and a proprietary technology infrastructure developed by, and in some cases patented by Inuvo. |
We have a number of highly differentiated and proprietary strengths that include; long standing advertising relationships with Yahoo and Google from whom we source advertising inventory which we distribute through our own online properties or through those of third party publishers; the ability to serve hundreds of millions of advertisements to any device or browser in milliseconds; the ability to both self-market and self-monetize our own publishing business; the ability to test advertising technology within our own publishing business; the ability to target advertisements based on website content, past behavior or to redirect users back to Inuvo content when the economics and alignment are optimized; the ability to expand to other geographies where appropriate; the ability to develop and publish content just-in-time to meet demand from advertisers; a low cost operation in central Arkansas with access to numerous universities, and a proprietary technology infrastructure developed by, and in some cases patented by Inuvo. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our distribution partners; • purchasing and budgeting cycles of our distribution partners; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our distribution partners; • purchasing and budgeting cycles of our distribution partners; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our clients; • purchasing and budgeting cycles of our clients; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our history of uncollectable receivables; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
Accordingly, our growth strategy subjects us to a number of risks, including the following: • we may incur substantial costs, delays, or other operational or financial problems in integrating acquired businesses, including integrating each company's accounting, management information, human resource, and other administrative systems to permit effective management; • we may not be able to identify, acquire, or profitably manage any additional businesses; • with smaller acquired companies, we may need to implement or improve controls, procedures, and policies appropriate for a public company; • the acquired companies may adversely affect our consolidated operating results, particularly since some of the acquired companies may have a history of operating losses; • acquisitions may divert management's attention from the operation of our businesses; • we may not be able to retain key personnel of acquired businesses; • there may be cultural challenges associated with integrating employees from acquired companies into our organization; and • we may encounter unanticipated events, circumstances, or legal liabilities. |
While there are currently relatively few laws or regulations directly applicable to Internet access, commerce, or commercial search activity, there is increasing awareness and concern regarding some uses of the Internet and other online services, leading federal, state, local, and international governments to consider adopting civil and criminal laws and regulations, amending existing laws and regulations, conducting investigations, or commencing litigation with respect to the Internet and other online services covering issues such as: • user privacy; • trespass; • defamation; • database and data protection; • limitations on the distribution of materials considered harmful to children; • liability for misinformation provided over the web; • user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products); • delivery of contextual advertisements via connected desktop software; • intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights; • distribution, characteristics, and quality of products and services; and • other consumer protection laws. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our clients; • purchasing and budgeting cycles of our clients; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our history of uncollectable receivables; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
Accordingly, our growth strategy subjects us to a number of risks, including the following: ● we may incur substantial costs, delays, or other operational or financial problems in integrating acquired businesses, including integrating each company’s accounting, management information, human resource, and other administrative systems to permit effective management; ● we may not be able to identify, acquire, or profitably manage any additional businesses; ● with smaller acquired companies, we may need to implement or improve controls, procedures, and policies appropriate for a public company; ● the acquired companies may adversely affect Our consolidated operating results, particularly since some of the acquired companies may have a history of operating losses; ● acquisitions may divert management’s attention from the operation of Our businesses; ● we may not be able to retain key personnel of acquired businesses; ● there may be cultural challenges associated with integrating employees from acquired companies into Our organization; and ● We may encounter unanticipated events, circumstances, or legal liabilities. |
While there are currently relatively few laws or regulations directly applicable to Internet access, commerce, or commercial search activity, there is increasing awareness and concern regarding some uses of the Internet and other online services, leading federal, state, local, and international governments to consider adopting civil and criminal laws and regulations, amending existing laws and regulations, conducting investigations, or commencing litigation with respect to the Internet and other online services covering issues such as: ● user privacy; ● trespass; ● defamation; ● database and data protection; ● limitations on the distribution of materials considered harmful to children; ● liability for misinformation provided over the web; ● user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products); ● delivery of contextual advertisements via connected desktop software; ● intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights; ● distribution, characteristics, and quality of products and services; and ● other consumer protection laws. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: ● our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; ● technical difficulties or interruptions in our services; ● changes in privacy protection and other governmental regulations applicable to the our industry; ● changes in our pricing policies or the pricing policies of our competitors; ● the financial condition and business success of our clients; ● purchasing and budgeting cycles of our clients; ● acquisitions of businesses and products by us or our competitors; ● competition, including entry into the market by new competitors or new offerings by existing competitors; ● discounts offered to advertisers by upstream advertising networks; ● our history of litigation; ● our history of uncollectable receivables; ● our ability to hire, train and retain sufficient sales, client management and other personnel; ● timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; ● concentration of marketing expenses for activities such as trade shows and advertising campaigns; ● expenses related to any new or expanded data centers; and ● general economic and financial market conditions. |
Signature Title Date /s/ Richard K. Howe Executive Chairman of the Board of Directors March 27, 2012 Richard K. Howe /s/ Peter A. Corrao Chief Executive Officer and director, principal executive officer March 27, 2012 Peter A. Corrao /s/ Wallace D. Ruiz Chief Financial Officer, principal financial and accounting officer March 27, 2012 Wallace D. Ruiz /s/ Charles Pope Director March 27, 2012 Charles Pope /s/ Adele Goldberg Director March 27, 2012 Adele Goldberg /s/ Charles Morgan Director March 27, 2012 Charles Morgan /s/ Joseph P. Durrett Director March 27, 2012 Joseph P. Durrett INUVO, INC. FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Inuvo, Inc. We have audited the accompanying consolidated balance sheets of Inuvo, Inc. (the Company) as of December 31, 2011 and 2010 and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for the years then ended. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors; • the financial condition and business success of our clients; • purchasing and budgeting cycles of our clients; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • discounts offered to advertisers by upstream advertising networks; • our history of litigation; • our history of uncollectable receivables; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: • our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; • technical difficulties or interruptions in our services; • changes in privacy protection and other governmental regulations applicable to the our industry; • changes in our pricing policies or the pricing policies of our competitors • the financial condition and business success of our clients; • purchasing and budgeting cycles of our clients; • acquisitions of businesses and products by us or our competitors; • competition, including entry into the market by new competitors or new offerings by existing competitors; • our ability to hire, train and retain sufficient sales, client management and other personnel; • timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; • concentration of marketing expenses for activities such as trade shows and advertising campaigns; • expenses related to any new or expanded data centers; and • general economic and financial market conditions. |
These risks include: · difficulty in assimilating the operations and personnel of the acquired company; · difficulty in effectively integrating the acquired technologies or products with our current products and technologies; · difficulty in maintaining controls, procedures and policies during the transition and integration; · disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; · difficulty integrating the acquired company’s accounting, management information, human resources and other administrative systems; · inability to retain key technical and managerial personnel of the acquired business; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; · inability to achieve the financial and strategic goals for the acquired and combined businesses; · incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · potential impairment of our relationships with employees, customers, partners, distributors or third-party providers of technology or products; · potential failure of the due diligence processes to identify significant issues with product quality, architecture and development, or legal and financial contingencies, among other things; · incurring significant exit charges if products acquired in business combinations are unsuccessful; · potential inability to assert that internal controls over financial reporting are effective; · potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions; and · potential delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product offerings. |
Quarterly fluctuations in our operating results also might be due to numerous other factors, including: · Our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients; · Technical difficulties or interruptions in our services; · Changes in privacy protection and other governmental regulations applicable to the our industry; · Changes in our pricing policies or the pricing policies of our competitors · The financial condition and business success of our clients; · Purchasing and budgeting cycles of our clients; · Acquisitions of businesses and products by us or our competitors; · Competition, including entry into the market by new competitors or new offerings by existing competitors; · Our ability to hire, train and retain sufficient sales, client management and other personnel; · Timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; · Concentration of marketing expenses for activities such as trade shows and advertising campaigns; · Expenses related to any new or expanded data centers; and · General economic and financial market conditions. |
Cash provided by operating activities for the twelve months ended December 31, 2008 of approximately $6.1 million consisted primarily of the following: · net loss of approximately $82.9 million · Add back the following expense items that were non-cash: · $80.6 million for impairment of assets, · $8.2 million for depreciation and amortization, · $2.5 million for working capital changes and · $1.9 million for allowance for doubtful accounts · Less the following income items that were non-cash: · $3.0 million for deferred income taxes, · $0.8 million for stock based settlement, net of compensation and · $0.4 million for other Cash provided by operating activities for the twelve months ended December 31, 2007 of approximately $4.0 million consisted primarily of the following: · net loss of approximately $1.1 million · Add back the following expense items that were non-cash: · $8.7 million for depreciation and amortization, · $1.1 million for stock based compensation, · $0.8 million for allowance for doubtful accounts and · $0.1 million for other · Less the following income items that were non-cash: · $3.0 million for working capital changes, · $1.6 million for deferred income taxes and · $1.0 million for tax benefit from options exercised We used approximately $5.5 million and $5.8 million in investing activities during the twelve months ended December 31, 2008 and 2007, respectively. |
Our revenue, expenses and operating results could vary significantly from quarter to quarter for several reasons, including: · addition of new clients or loss of current clients; · seasonal fluctuations in advertising spending; · timing variations on the part of advertisers with regard to implementing advertising campaigns; · changes in the availability and pricing of advertising space; · timing and amount of our costs; · costs related to any possible future acquisitions of technologies or businesses; · changes in revenue contribution by our business lines, which historically have had varying operating margins; and · timing in the completion of web development projects or in the recognition of revenue on those projects; · fluctuations in our stock price which may impact the amount of stock-based compensation expense we are required to record; · the foreign currency effects of transactions denominated in currencies other than the U.S. dollar; and · deterioration in the credit quality of our accounts receivable and an increase in the related provisions. |
The ability of our online dating business to generate cash flow and profits, if any, depends on acceptance of online dating services and our ability to, among other things, (1) create and increase brand awareness and attract and retain a large number of members and subscribers, including converting members into paying subscribers; (2) maintain current, and develop new, relationships with portals, search engines, ISPs and other Internet properties and entities capable of attracting individuals who might subscribe to our fee-generating services; (3) implement expansion plans or integrate newly acquired companies, including controlling the costs associated with expansion or acquisitions; (4) control general infrastructure costs including the amount and timing of operating and capital expenditures; (5) introduce new websites, features and functionality on a timely basis; (6) achieve economies of scale across our various websites; (7) protect our data from loss or electronic or magnetic corruption; (8) provide failure and disaster recovery programs; (9) upgrade our technology and protect our sites from technology failures; and (10) anticipate and adapt to changing Internet business strategies. |
These risks include: · difficulty in assimilating the operations and personnel of the acquired company; · difficulty in effectively integrating the acquired technologies or products with our current products and technologies; · difficulty in maintaining controls, procedures and policies during the transition and integration; · disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; · difficulty integrating the acquired company's accounting, management information, human resources and other administrative systems; · inability to retain key technical and managerial personnel of the acquired business; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; · inability to achieve the financial and strategic goals for the acquired and combined businesses; · incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · potential impairment of our relationships with employees, customers, partners, distributors or third-party providers of technology or products; · potential failure of the due diligence processes to identify significant issues with product quality, architecture and development, or legal and financial contingencies, among other things; · incurring significant exit charges if products acquired in business combinations are unsuccessful; · potential inability to assert that internal controls over financial reporting are effective; · potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions; and · potential delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product offerings Mergers and acquisitions of high technology companies are inherently risky, and ultimately, if we do not complete the integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition or results of operations. |
Covenants So long as there remain any amounts outstanding under the Loan Agreement and either of the Notes, the Company: (A) is required to maintain a “Total Debt to EBITDA Ratio” of not less than 2.00 to 1.00, calculated quarterly on a rolling four quarters basis, where “Total Debt to EBITDA Ratio” means the sum of all the indebtedness of the Company and its subsidiaries for borrowed money divided by the Company’s EBITDA calculated on a consolidated pro forma basis; (B) is required to maintain a net worth of not less than an amount equal to $36.9 million plus 50% of the Company’s net income for each fiscal quarter (the “Minimum Net Worth Amount”), provided that the Minimum Net Worth Amount for any fiscal quarter must exceed the Minimum Net Worth amount for the immediately preceding fiscal quarter by at least $1.00; (C) is required to maintain, a consolidated “Fixed Charge Coverage Ratio” of not less than 2.50 to 1.00, calculated quarterly on a rolling four quarters basis, where “Fixed Charge Coverage Ratio” means, the sum of the pro forma net income from operations, depreciation and amortization minus all dividends, withdrawals and non-cash income divided by the sum of all current maturities of long-term debt, capital lease obligations and capital expenditures which were not financed; (D) may not, during any fiscal year, expend on gross fixed assets (excluding the proforma impact of “Permitted Acquisitions” (as hereinafter defined) during any fiscal year, but including capital leases and leasehold improvements for the Permitted Acquisitions) an amount exceeding $2 million; (E) may not incur any additional indebtedness which causes the aggregate amount of the Company’s debt, excluding obligations to Wachovia to exceed $5 million; and (F) may not, during any fiscal year, declare or pay dividends in an amount in excess of 50% of its net income. |
Further, so long as there remain any amounts outstanding under the Loan Agreement and either of the Notes, neither the Company nor any Guarantor is permitted to: (A) change its fiscal year; (B) suffer a change in its board of directors, such that the members of the board of directors as of the date of this Agreement fail to constitute a majority of the members of the board; provided that any individual becoming a member of the applicable board of directors who is nominated by the applicable board of directors will be treated as if he or she were a member of the board as of the date of this Agreement; (C) create, assume, or permit to exist any encumbrance on any of its assets, other than (i) security interests required by the Loan Agreement, (ii) liens for taxes contested in good faith, (iii) liens accruing by law for employee benefits, or (iv) acquired indebtedness to the extent permitted as set forth in (E) in the previous paragraph; (D) guarantee or otherwise become responsible for obligations of any other person or entity; (E) acquire any capital stock, interests in any partnership or joint venture except for investments by the Company or any Guarantor in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of capital stock, assets or any combination thereof) of any other person in an electronic commerce line of business which has positive EBITDA for the most recent twelve (12) month period then ended, both prior to the acquisition and after giving effect thereto (a “Permitted Acquisition”); (F) retire any long-term debt entered into prior to the date of the Loan Agreement at a date in advance of its legal obligation to do so. |
The ability of our online dating business to generate cash flow and profits, if any, depends on acceptance of online dating services and our ability to, among other things, (1) create and increase brand awareness and attract and retain a large number of members and subscribers, including converting members into paying subscribers; (2) maintain current, and develop new, relationships with portals, search engines, ISPs and other Internet properties and entities capable of attracting individuals who might subscribe to our fee-generating services; (3) implement expansion plans or integrate newly acquired companies, including controlling the costs associated with expansion or acquisitions; (4) control general infrastructure costs including the amount and timing of operating and capital expenditures; (5) introduce new websites, features and functionality on a timely basis; (6) achieve economies of scale across our various websites; (7) protect our data from loss or electronic or magnetic corruption; (8) provide failure and disaster recovery programs; (9) upgrade our technology and protect our sites from technology failures; and (10) anticipate and adapt to changing Internet business strategies. |
These risks include: · difficulty in assimilating the operations and personnel of the acquired company; · difficulty in effectively integrating the acquired technologies or products with our current products and technologies; · difficulty in maintaining controls, procedures and policies during the transition and integration; · disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; · difficulty integrating the acquired company's accounting, management information, human resources and other administrative systems; · inability to retain key technical and managerial personnel of the acquired business; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; · inability to achieve the financial and strategic goals for the acquired and combined businesses; · incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · potential impairment of our relationships with employees, customers, partners, distributors or third-party providers of technology or products; · potential failure of the due diligence processes to identify significant issues with product quality, architecture and development, or legal and financial contingencies, among other things; · incurring significant exit charges if products acquired in business combinations are unsuccessful; · potential inability to assert that internal controls over financial reporting are effective; · potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions; and · potential delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product offerings Mergers and acquisitions of high technology companies are inherently risky, and ultimately, if we do not complete the integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition or results of operations. |
Covenants So long as there remain any amounts outstanding under the Loan Agreement and either of the Notes, the Company: (A) is required to maintain a “Total Debt to EBITDA Ratio” of not less than 2.00 to 1.00, calculated quarterly on a rolling four quarters basis, where “Total Debt to EBITDA Ratio” means the sum of all the indebtedness of the Company and its subsidiaries for borrowed money divided by the Company’s EBITDA calculated on a consolidated pro forma basis; (B) is required to maintain a net worth of not less than an amount equal to $36.9 million plus 50% of the Company’s net income for each fiscal quarter (the “Minimum Net Worth Amount”), provided that the Minimum Net Worth Amount for any fiscal quarter must exceed the Minimum Net Worth amount for the immediately preceding fiscal quarter by at least $1.00; (C) is required to maintain, a consolidated “Fixed Charge Coverage Ratio” of not less than 2.50 to 1.00, calculated quarterly on a rolling four quarters basis, where “Fixed Charge Coverage Ratio” means, the sum of the pro forma net income from operations, depreciation and amortization minus all dividends, withdrawals and non-cash income divided by the sum of all current maturities of long-term debt, capital lease obligations and capital expenditures which were not financed; (D) may not, during any fiscal year, expend on gross fixed assets (excluding the proforma impact of “Permitted Acquisitions” (as hereinafter defined) during any fiscal year, but including capital leases and leasehold improvements for the Permitted Acquisitions) an amount exceeding $2 million; (E) may not incur any additional indebtedness which causes the aggregate amount of the Company’s debt, excluding obligations to Wachovia to exceed $5 million; and (F) may not, during any fiscal year, declare or pay dividends in an amount in excess of 50% of its net income. |
Further, so long as there remain any amounts outstanding under the Loan Agreement and either of the Notes, neither the Company nor any Guarantor is permitted to: (A) change its fiscal year; (B) suffer a change in its board of directors, such that the members of the board of directors as of the date of this Agreement fail to constitute a majority of the members of the board; provided that any individual becoming a member of the applicable board of directors who is nominated by the applicable board of directors will be treated as if he or she were a member of the board as of the date of this Agreement; (C) create, assume, or permit to exist any encumbrance on any of its assets, other than (i) security interests required by the Loan Agreement, (ii) liens for taxes contested in good faith, (iii) liens accruing by law for employee benefits, or (iv) acquired indebtedness to the extent permitted as set forth in (E) in the previous paragraph; (D) guarantee or otherwise become responsible for obligations of any other person or entity; (E) acquire any capital stock, interests in any partnership or joint venture except for investments by the Company or any Guarantor in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of capital stock, assets or any combination thereof) of any other person in an electronic commerce line of business which has positive EBITDA for the most recent twelve (12) month period then ended, both prior to the acquisition and after giving effect thereto (a “Permitted Acquisition”); (F) retire any long-term debt entered into prior to the date of the Loan Agreement at a date in advance of its legal obligation to do so. |
Moreover, the commencement and completion of clinical trials may be delayed by many factors that are beyond our control, including: •delays obtaining regulatory approval to commence a trial; •delays in reaching agreement on acceptable terms with contract research organizations (“CROs”), and clinical trial sites; •delays in obtaining institutional review board, or IRB, approval at each site; •slower than anticipated patient enrollment or our inability to recruit and enroll patients to participate in clinical trials for various reasons, including the COVID-19 pandemic; •our inability to retain patients who have initiated a clinical trial; •scheduling conflicts with participating clinicians and clinical institutions; •lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with our CROs and other third parties; •negative or inconclusive results; •deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, good clinical practice, or clinical protocols; •deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; •patient noncompliance with the protocol; •adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; •fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; •our ability to sustain the quality or stability of the applicable product candidate in compliance with acceptable standards; •our inability to produce or obtain sufficient quantities of the applicable product candidate to complete the clinical trials; •changes in governmental regulations or administrative actions that adversely affect our ability to continue to conduct or complete clinical trials; •negative or problematic FDA inspections of our clinical operations or manufacturing operations; and •real or perceived lack of effectiveness or safety. |
Any potential acquisitions or in-licensing transactions may entail numerous risks, including but not limited to: •risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; •increased operating expenses and cash requirements; •difficulty in conforming standards, procedures and policies, business cultures and compensation structures; •difficulty integrating acquired technologies, products and personnel with our existing business; •difficulty conforming acquired operations, such as corporate and administrative functions, sales and marketing, or information technology and accounting systems with our existing business; •diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; •retention of key employees; •uncertainties in our ability to maintain key business relationships of any acquired entities; •strain on managerial and operational resources; •exposure to regulatory, compliance and legal risks of the acquired entities; •tax costs or inefficiencies associated with integrating operations; •modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder; •difficulty coordinating geographically dispersed organizations; •exposure to unforeseen liabilities of acquired companies or products or companies or products in which we invest; and •potential costly and time-consuming litigation, including stockholder lawsuits. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: •unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; •uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; •unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; •unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; •initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; •attempts by either party to terminate the collaboration; •our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; •a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; •a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations or otherwise; •unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; •unwillingness or inability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or •we may not be able to guarantee supplies of development or marketed products. |
Factors that may cause the market price and volume of our common stock to decrease include, among other things: •the impact of COVID-19 on the U.S. and global economies; •adverse results or delays in our clinical trials, including as a result of COVID-19; •fluctuations in our results of operations; •timing and announcements of our technological innovations or new products or those of our competitors; •developments concerning any strategic alliances or acquisitions we may enter into; •announcements of FDA non-approval of our products, or delays in the FDA or other foreign regulatory review processes or actions, including the deferral of action on the BLA for ROLONTIS due to the inability to conduct an inspection of the manufacturing facility citing COVID-19 related travel restrictions; •changes in recommendations or guidelines of government agencies or other third parties regarding the use of our products; •adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; •concerns about our in-development products being reimbursed at requisite levels in the future; •any lawsuit involving us or our products; •developments with respect to our patents and proprietary rights; •public concern as to the safety of products developed by us or others; •regulatory developments in the U.S. and in foreign countries; •changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; •failure of our results of operations to meet the expectations of stock market analysts and investors; •sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of our common stock generally; and •loss of any of our key scientific or management personnel. |
For example: •in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; •we or our licensors might not have been the first to file patent applications for these inventions; •others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; •our or our licensors’ pending patent applications may not result in issued patents; •our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; •others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; •we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or •the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Moreover, the commencement and completion of clinical trials may be delayed by many factors that are beyond our control, including: • delays obtaining regulatory approval to commence a trial; • delays in reaching agreement on acceptable terms with contract research organizations, or CROs, and clinical trial sites; • delays in obtaining institutional review board, or IRB, approval at each site; • slower than anticipated patient enrollment or our inability to recruit and enroll patients to participate in clinical trials for various reasons; • our inability to retain patients who have initiated a clinical trial; • scheduling conflicts with participating clinicians and clinical institutions; • lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with our CROs and other third parties; • negative or inconclusive results; • deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, good clinical practice, or clinical protocols; • deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; • patient noncompliance with the protocol; • adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; • fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; • our ability to sustain the quality or stability of the applicable product candidate in compliance with acceptable standards; • our inability to produce or obtain sufficient quantities of the applicable product candidate to complete the clinical trials; • changes in governmental regulations or administrative actions that adversely affect our ability to continue to conduct or complete clinical trials; • negative or problematic FDA inspections of our clinical operations or manufacturing operations; and • real or perceived lack of effectiveness or safety. |
Any potential acquisitions or in-licensing transactions may entail numerous risks, including but not limited to: • risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; • increased operating expenses and cash requirements; • difficulty in conforming standards, procedures and policies, business cultures and compensation structures; • difficulty integrating acquired technologies, products and personnel with our existing business; • difficulty conforming acquired operations, such as corporate and administrative functions, sales and marketing, or information technology and accounting systems with our existing business; • diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; • retention of key employees • uncertainties in our ability to maintain key business relationships of any acquired entities; • strain on managerial and operational resources; • exposure to regulatory, compliance and legal risks of the acquired entities; • tax costs or inefficiencies associated with integrating operations; • modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder; • difficulty coordinating geographically dispersed organizations; • exposure to unforeseen liabilities of acquired companies or products or companies or products in which we invest; and • potential costly and time-consuming litigation, including stockholder lawsuits. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations or otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or inability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include, among other things: • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our products, or delays in the FDA or other foreign regulatory review processes or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our in-development products being reimbursed at requisite levels in the future; • any lawsuit involving us or our products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of our common stock generally; and • loss of any of our key scientific or management personnel. |
Moreover, the commencement and completion of clinical trials may be delayed by many factors that are beyond our control, including: • delays obtaining regulatory approval to commence a trial; • delays in reaching agreement on acceptable terms with contract research organizations, or CROs, and clinical trial sites; • delays in obtaining institutional review board, or IRB, approval at each site; • slower than anticipated patient enrollment or our inability to recruit and enroll patients to participate in clinical trials for various reasons; • our inability to retain patients who have initiated a clinical trial; • scheduling conflicts with participating clinicians and clinical institutions; • lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with our CROs and other third parties; • negative or inconclusive results; • deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, GCP or clinical protocols; • deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; • patient noncompliance with the protocol; • adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; • fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; • our ability to sustain the quality or stability of the applicable product candidate in compliance with acceptable standards; • our inability to produce or obtain sufficient quantities of the applicable product candidate to complete the clinical trials; • changes in governmental regulations or administrative actions that adversely affect our ability to continue to conduct or complete clinical trials; • negative or problematic FDA inspections of our clinical operations or manufacturing operations; and • real or perceived lack of effectiveness or safety. |
Any potential acquisitions or in-licensing transactions may entail numerous risks, including but not limited to: • risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; • increased operating expenses and cash requirements; • difficulty in conforming standards, procedures and policies, business cultures and compensation structures; • difficulty integrating acquired technologies, products and personnel with our existing business; • difficulty conforming acquired operations, such as corporate and administrative functions, sales and marketing, or information technology and accounting systems with our existing business; • diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; • retention of key employees • uncertainties in our ability to maintain key business relationships of any acquired entities; • strain on managerial and operational resources; • exposure to regulatory, compliance and legal risks of the acquired entities; • tax costs or inefficiencies associated with integrating operations; • modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder; • difficulty coordinating geographically dispersed organizations; • exposure to unforeseen liabilities of acquired companies or products or companies or products in which we invest; and • potential costly and time-consuming litigation, including stockholder lawsuits. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations or otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or inability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include, among other things: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our products, or delays in the FDA or other foreign regulatory review processes or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of our common stock generally; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Moreover, the commencement and completion of clinical trials may be delayed by many factors that are beyond our control, including: • delays obtaining regulatory approval to commence a trial; • delays in reaching agreement on acceptable terms with contract research organizations, or CROs, and clinical trial sites; • delays in obtaining institutional review board, or IRB, approval at each site; • slower than anticipated patient enrollment or our inability to recruit and enroll patients to participate in clinical trials for various reasons; • our inability to retain patients who have initiated a clinical trial; • scheduling conflicts with participating clinicians and clinical institutions; • lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with our CROs and other third parties; • negative or inconclusive results; • deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, GCP or clinical protocols; • deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; • patient noncompliance with the protocol; • adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; • fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; • our ability to sustain the quality or stability of the applicable product candidate in compliance with acceptable standards; • our inability to produce or obtain sufficient quantities of the applicable product candidate to complete the clinical trials; • changes in governmental regulations or administrative actions that adversely affect our ability to continue to conduct or complete clinical trials; • negative or problematic FDA inspections of our clinical operations or manufacturing operations; and • real or perceived lack of effectiveness or safety. |
Any potential acquisitions or in-licensing transactions may entail numerous risks, including but not limited to: • risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; • increased operating expenses and cash requirements; • difficulty in conforming standards, procedures and policies, business cultures and compensation structures; • difficulty integrating acquired technologies, products and personnel with our existing business; • difficulty conforming acquired operations, such as corporate and administrative functions, sales and marketing, or information technology and accounting systems with our existing business; • diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; • retention of key employees • uncertainties in our ability to maintain key business relationships of any acquired entities; • strain on managerial and operational resources; • exposure to regulatory, compliance and legal risks of the acquired entities; • tax costs or inefficiencies associated with integrating operations; • modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder; • difficulty coordinating geographically dispersed organizations; • exposure to unforeseen liabilities of acquired companies or products or companies or products in which we invest; and • potential costly and time-consuming litigation, including stockholder lawsuits. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations or otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or inability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include, among other things: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our products, or delays in the FDA or other foreign regulatory review processes or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of our common stock generally; • hedging or arbitrage transactions by holders of the 2018 Convertible Notes; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of (i) the last reported sale price of our common stock on such trading day and (ii) the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; and (4) at any time prior to our stockholders’ approval to settle the 2018 Convertible Notes in our common shares and/or cash. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or inability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include, among other things: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of our common stock generally; • hedging or arbitrage transactions by holders of our convertible notes; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Our New Peer Group consists of the following publicly-traded companies: • AMAG Pharmaceuticals, Inc. • Albany Molecular Research Inc. • Affymetrix, Inc. • Genomic Health, Inc. • Luminex Corporation • Amphastar Pharmaceuticals, Inc. • MiMedx Group, Inc. • Pernix Therapeutics Holdings, Inc. • SciClone Pharmaceuticals, Inc. • Supernus Pharmaceuticals, Inc. • Halozyme Therapeutics, Inc. • Sucampo Pharmaceuticals, Inc. • Enanta Pharmaceuticals, Inc. • Sequenom Inc. • Fluidigm Corporation • Harvard Bioscience, Inc. • Vanda Pharmaceuticals Inc. • Infinity Pharmaceuticals, Inc. • VIVUS, Inc. • Merrimack Pharmaceuticals, Inc. • NewLink Genetics Corporation • Eagle Pharmaceuticals, Inc. Our Old Peer Group consisted of the following publicly-traded companies: • Acorda Therapeutics, Inc. • Aegerion Pharmaceuticals, Inc. • Auxilium Pharmaceuticals, Inc. • Dendreon Corp. • DepoMed Inc. • Emergent BioSolutions, Inc. • Genomic Health Inc. • Hyperion Therapeutics, Inc. • INSYS Therapeutics, Inc. • Sagent Pharmaceuticals, Inc. • SciClone Pharmaceuticals, Inc. • Sucampo Pharmaceuticals, Inc. • Supernus Pharmaceuticals, Inc. • The Medicines Company • VIVUS Inc. (1) The information in this section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of (i) the last reported sale price of our common stock on such trading day and (ii) the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; and (4) at any time prior to our stockholders’ approval to settle the 2018 Convertible Notes in our common shares and/or cash. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • hedging or arbitrage transactions by holders of our convertible notes; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of (i) the last reported sale price of our common stock on such trading day and (ii) the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; and (4) at any time prior to our stockholders’ approval to settle the 2018 Convertible Notes in our common shares and/or cash. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a third-party development partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness to cooperate in the manufacture of the product, including providing us with product data or materials; • unwillingness to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a third-party development partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a third-party development partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • hedging or arbitrage transactions by holders of our convertible notes; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
The New Peer Group (which we believe more closely reflects our operations and business characteristics than the Old Peer Group) consists of the following publicly-traded companies: • Acorda Therapeutics, Inc. • Alkermes plc • Amarin Corporation plc • Auxilium Pharmaceuticals, Inc. • BioMarin Pharmaceutical Inc. • Dendreon Corporation • Halozyme Therapeutics, Inc. • Incyte Corporation • Isis Pharmaceuticals, Inc. • Jazz Pharmaceuticals plc • The Medicines Company • Momenta Pharmaceuticals, Inc. • NPS Pharmaceuticals, Inc. • Salix Pharmaceuticals, Ltd • SciClone Pharmaceuticals, Inc. • Theravance Biopharma, Inc. • Vertex Pharmaceuticals Incorporated The Old Peer Group consists of the following publicly-traded companies: • Alkermes plc • Amarin Corporation plc • BioMarin Pharmaceutical Inc. • Celgene Corporation • Dendreon Corporation • Jazz Pharmaceuticals plc • Regeneron Pharmaceuticals, Inc. • Vertex Pharmaceuticals Incorporated (1) The information in this section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of (i) the last reported sale price of our common stock on such trading day and (ii) the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; and (4) at any time prior to our stockholders’ approval to settle the 2018 Convertible Notes in our common shares and/or cash. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues from such drug product: • unwillingness on the part of a partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data or materials; • unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness of a partner to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability of a partner to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • hedging or arbitrage transactions by holders of our convertible notes; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after March 31, 2014, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock on such trading day and the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; or (4) at any time we have not received stockholder approval, as that term is defined in the Indenture governing the 2018 Convertible Notes. |
Failure to comply with, or changes to, the regulatory requirements that are applicable to FOLOTYN outside the United States may result in a variety of consequences, including the following: • restrictions on FOLOTYN or our manufacturing processes; • warning letters; • withdrawal of FOLOTYN from the market; • voluntary or mandatory recall of FOLOTYN; • fines against us; • suspension or withdrawal of regulatory approvals for FOLOTYN; • suspension or termination of any of our ongoing clinical trials of FOLOTYN; • refusal to permit import or export of FOLOTYN; • refusal to approve pending applications or supplements to approved applications that we submit; • denial of permission to file an application or supplement in a jurisdiction; • product seizure; • our strategic collaborator, Mundipharma, terminating our arrangement to co-develop FOLOTYN globally and commercialize FOLOTYN outside the United States and Canada, which would delay development and may increase the cost of developing and commercializing FOLOTYN; and • injunctions, consent decrees, or the imposition of civil or criminal penalties against us. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues: • unwillingness on the part of a partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data or materials; • unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness of a partner to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability of a partner to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Such agreements included: • an amendment to the original asset purchase agreement between CTI and Biogen, referred to as the CTI/Biogen Agreement, modifying future milestone payments, to provide that (i) concurrently with the execution of the amendment CTI was required to pay Biogen $0.2 million (which was reimbursed to CTI by RIT from the initial capital contributions made by CTI and us), (ii) upon the December 2008 closing of the joint venture transaction, CTI was required to pay Biogen an additional $2.0 million (which was paid by RIT as successor to CTI under the amendment), (iii) upon the achievement of the specified FDA approval milestone, RIT (as successor to CTI) was required to pay Biogen an additional amount of $5.5 million if the milestone event occurred in 2009 (provided that RIT may elect to defer any such payment until January 1, 2010, but upon such election the required payment will increase to $6.0 million), $7.0 million if the milestone event occurs in 2010, $9.0 million if the milestone event occurs in 2011, or $10.0 million if the milestone event occurs in 2012 or later. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues: • unwillingness on the part of a partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data or materials; • unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness of a partner to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability of a partner to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the U.S. and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Such agreements included: • an amendment to the original asset purchase agreement between CTI and Biogen (CTI/Biogen Agreement), modifying future milestone payments, to provide that (i) concurrently with the execution of the amendment CTI was required to pay Biogen $0.2 million (which was reimbursed to CTI by RIT from the initial capital contributions made by CTI and us), (ii) upon the December 2008 closing of the joint venture transaction, CTI was required to pay Biogen an additional $2.0 million (which was paid by RIT as successor to CTI under the amendment), (iii) upon the achievement of the specified FDA approval milestone, RIT (as successor to CTI) was required to pay Biogen an additional amount of $5.5 million if the milestone event occurred in 2009 (provided that RIT may elect to defer any such payment until January 1, 2010, but upon such election the required payment will increase to $6.0 million), $7.0 million if the milestone event occurs in 2010, $9.0 million if the milestone event occurs in 2011, or $10.0 million if the milestone event occurs in 2012 or later. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues: • unwillingness on the part of a partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data or materials; • unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a partner may change the focus of its development and commercialization efforts due to internal reorganizations, mergers, consolidations and otherwise; • unwillingness of a partner to fully fund or commit sufficient resources to the testing, marketing, distribution or development of our products; • unwillingness or ability of a partner to fulfill their obligations to us due to the pursuit of alternative products, conflicts of interest that arise or changes in business strategy or other business issues; and/or • we may not be able to guarantee supplies of development or marketed products. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • changes in recommendations or guidelines of government agencies or other third parties regarding the use of our drug products; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • public concern as to the safety of products developed by us or others; • regulatory developments in the United States and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
Such agreements included: • an amendment to the original asset purchase agreement between CTI and Biogen (CTI/Biogen Agreement), modifying future milestone payments, to provide that (i) concurrently with the execution of the amendment CTI was required to pay Biogen $0.2 million (which was reimbursed to CTI by RIT from the initial capital contributions made by CTI and us), (ii) upon the December 2008 closing of the joint venture transaction, CTI was required to pay Biogen an additional $2.0 million (which was paid by RIT as successor to CTI under the amendment), (iii) upon the achievement of the specified FDA approval milestone, RIT (as successor to CTI) was required to pay Biogen an additional amount of $5.5 million if the milestone event occurred in 2009 (provided that RIT may elect to defer any such payment until January 1, 2010, but upon such election the required payment will increase to $6.0 million), $7.0 million if the milestone event occurs in 2010, $9.0 million if the milestone event occurs in 2011, or $10.0 million if the milestone event occurs in 2012 or later. |
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our drug product, and in turn prevent us from generating revenues: • unwillingness on the part of a partner to pay us milestone payments or royalties that we believe are due to us under a collaboration; • uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; • unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data or materials; • unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; • initiation of litigation or alternative dispute resolution options by either party to resolve the dispute; • attempts by either party to terminate the collaboration; • our ability to maintain or defend our intellectual property rights may be compromised by our partner’s acts or omissions; • a partner may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; • a partner may change the focus of their development and commercialization efforts. |
For example: • in certain jurisdictions, we or our licensors might not have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to participate in expensive and protracted interference proceedings to determine priority of invention; • we or our licensors might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative product candidates or duplicate any of our or our licensors’ product candidates; • our or our licensors’ pending patent applications may not result in issued patents; • our or our licensors’ issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; • others may design around our or our licensors’ patent claims to produce competitive products that fall outside the scope of our or our licensors’ patents; • we may not develop or in-license additional patentable proprietary technologies related to our product candidates; or • the patents of others may prevent us from marketing one or more of our product candidates for one or more indications that may be valuable to our business strategy. |
Factors that may cause the market price and volume of our common stock to decrease include: • recognition on up-front licensing or other fees or revenues; • payments of non-refundable up-front or license fees, or payment for cost-sharing expenses, to third parties; • adverse results or delays in our clinical trials; • fluctuations in our results of operations; • timing and announcements of our bio-technological innovations or new products or those of our competitors; • developments concerning any strategic alliances or acquisitions we may enter into; • announcements of FDA non-approval of our drug products, or delays in the FDA or other foreign regulatory review process or actions; • adverse actions taken by regulatory agencies with respect to our drug products, clinical trials, manufacturing processes or sales and marketing activities; • concerns about our products being reimbursed; • any lawsuit involving us or our drug products; • developments with respect to our patents and proprietary rights; • announcements of technological innovations or new products by our competitors; • public concern as to the safety of products developed by us or others; • regulatory developments in the United States and in foreign countries; • changes in stock market analyst recommendations regarding our common stock or lack of analyst coverage; • the pharmaceutical industry generally and general market conditions; • failure of our results of operations to meet the expectations of stock market analysts and investors; • sales of our common stock by our executive officers, directors and five percent stockholders or sales of substantial amounts of our common stock; • changes in accounting principles; and • loss of any of our key scientific or management personnel. |
The net effect of these changes for fiscal years ended December 31, 2008 and 2007, and for each of the quarterly condensed consolidated financial statements on Form 10-Q for the periods ended March 31, 2008 through September 30, 2009 are as follows: Spectrum Pharmaceuticals, Inc. and Subsidiaries Notes to the Consolidated Financial Statements - (Continued) The following tables summarize the effects of the restatements on the specific line items presented in the Company’s historical consolidated financial statements included in the Company’s Annual Report on Form 10-K as of the fiscal year ended December 31, 2008 and for the two years ended December 31, 2008: The restatements resulted in changes to the opening balances of accumulated defict, additional paid in capital and total shareholders’ equity as of January 1, 2007 as follows: The restatements had no impact on the financial statement amounts previously reported for the Company’s assets, revenues and operating costs and expenses and cash flows from operations other than the change in net income (loss) for the years ended December 31, 2008 and 2007, or for the first nine months ended September 30, 2009, or any quarterly periods in the years ended December 31, 2009, 2008 and 2007. |
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