Paratek Pharmaceuticals (PRTK) Risk Analysis

In October 2018, the FDA approved NUZYRA in the U.S. for the treatment of adults with CABP and ABSSSI that are proven or strongly suspected to be caused by susceptible bacteria. The completion of any future clinical trials, including for NTM and FDA PMRs, could be substantially delayed or prevented by several factors, including: - severe restrictions on the clinical and healthcare system resulting from global health outbreaks, including the COVID-19 pandemic;- delay or failure to obtain sufficient supplies of the product candidate or of the comparator product for our clinical trials;- the limited number of, and competition for, suitable sites to conduct our clinical trials, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication as our product candidates;- any delay or failure to obtain regulatory approval or agreement to commence a clinical trial in any of the countries where enrollment is planned;- clinical holds on, or other regulatory objections to, a new or ongoing clinical trial;- delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites or clinical research organizations, or CROs, or local regulatory authorities, the terms of which can be subject to extensive negotiation and may vary significantly among different sites or CROs; and - delay or failure to obtain Institutional Review Board/ethics committee approval to conduct a clinical trial at a prospective site or within a specific region or country. The completion of our clinical trials could also be substantially delayed or prevented by several factors, including: - slower than expected rates of patient recruitment and enrollment;- feasibility of continuous trial execution in countries impacted by war, political conflict, and other humanitarian crises;- failure of patients to complete the clinical trial;- unforeseen safety issues, including severe or unexpected drug-related adverse effects experienced by patients;- lack of omadacycline efficacy, or efficacy of other product candidates, evidenced during clinical trials;- termination of our clinical trials by one or more clinical trial sites;- inability or unwillingness of patients or clinical investigators to follow our clinical trial protocols;- inability to monitor patients adequately during or after treatment by us and/or our CROs;- delay or failure to obtain sufficient supplies of omadacycline or of the relevant comparator product; and - the need to repeat or terminate clinical trials as a result of inconclusive or negative results or unforeseen complications during clinical trial testing. For example, in February 2022, Russia commenced a military invasion of Ukraine. Russia's invasion and the ensuing response by Ukraine caused us to stop enrollment in both countries in one of our current clinical trials and has increased our costs and disrupted planned clinical development activities. In addition, data collected from trial participants in Russia and Ukraine may not be captured in the clinical database or it may not be possible to adequately monitor it. As a result, the data may need to be excluded from analyses and additional patients may need to be enrolled in other countries. Alternative countries and sites were included to fully and timely compensate for our clinical trial activities in Ukraine and Russia. While the cost of this trial is currently reimbursed under our BARDA contract, if our clinical trials are further interrupted, our costs and ability to generate revenues could be materially adversely impacted. In particular, our ability to enroll patients in our clinical trials in sufficient numbers and on a timely basis will be subject to a number of factors, including the size of the patient population needed, the nature of the protocol, the proximity of patients to clinical sites, the availability of effective treatments for the relevant indication and the eligibility criteria for the clinical trial. Changes in regulatory requirements and guidance may also occur, and we may need to amend clinical trial protocols to reflect these changes with appropriate regulatory authorities, which could impact the costs, timing, or successful completion of a clinical trial. Our clinical trials may be suspended or terminated at any time by the FDA, other regulatory authorities, or the overseeing Institutional Review Board due to a number of factors, including: - failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;- unforeseen safety issues or any determination that a clinical trial presents unacceptable health risks;- lack of adequate funding to continue the clinical trial due to unforeseen costs or other business decisions; and - upon a breach or pursuant to the terms of any agreement with, or for any other reason by, current or future collaborators that have responsibility for the clinical development of any of our product candidates. In addition, clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies of different regions and countries with respect to the data that is required to receive marketing approval, which makes designing global trials increasingly complex. Differing regulatory approval requirements in different countries also make it more difficult for us to conduct unified global trials, which can lead to increased development costs and marketing delays or non-viability of our clinical trials. The approval procedure and the time required to obtain approval also varies among countries. Furthermore, approval by one regulatory authority does not ensure approval by regulatory authorities in other jurisdictions.

Issued patents may be challenged, invalidated or circumvented. In addition, court decisions may introduce uncertainty in the enforceability or scope of patents owned by pharmaceutical companies. The legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not allow us to protect our inventions with patents to the same extent as do the laws of the U.S. Because patent applications in the U.S. and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, and because publications of discoveries in scientific literature lag behind actual discoveries or may not be the first to make the inventions claimed in issued patents or pending patent applications, or may not be the first to file for protection of the inventions set forth in our patents, or patent applications. As a result, we may not be able to obtain or maintain protection for certain inventions. If such inventions or related inventions are successfully patented by others, we may be required to obtain licenses under third-party patents to market our product candidates, as described in greater detail below. Therefore, enforceability and scope of our patents in the U.S. and in foreign countries cannot be predicted with certainty, and, as a result, any patents that we own or license may not provide sufficient protection against competitors. We may not be able to obtain or maintain patent protection from our pending patent applications, from those we may file in the future, or from those we may license from third parties. Moreover, even if we are able to obtain patent protection, such patent protection may be of insufficient scope to achieve our business objectives or may not survive legal or administrative challenges by competitors. Our strategy depends on our ability to identify and seek and obtain patent protection for our discoveries. This process is expensive and time consuming, and we may not be able to file and prosecute successfully all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. The issuance of a patent does not ensure that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties. In addition, the issuance of a patent does not give us the right to practice the patented invention. Third parties may have blocking patents that could prevent us from marketing our own patented product and practicing our own patented technology. Third parties may also seek to market generic versions of any approved products by submitting ANDAs to the FDA in which they claim that patents owned or licensed by us are invalid, unenforceable and/or not infringed. Alternatively, third parties may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid and/or unenforceable. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factual considerations. The standards that the U.S. Patent and Trademark Office, or USPTO, and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical or biotechnology patents. The laws of some foreign countries do not protect proprietary information to the same extent as do the laws of the U.S., and many companies have encountered significant problems and costs in protecting their proprietary information in these foreign countries. Outside of the U.S., patent protection must be sought in individual jurisdictions, further adding to the cost and uncertainty of obtaining adequate patent protection outside of the U.S. Accordingly, additional patents protecting our technology may not issue in the U.S. or in foreign jurisdictions, and any patents that do issue may not have claims of adequate scope to provide competitive advantage. Moreover, third parties may be able to successfully obtain claims and such claims may be broad. The allowance of broader claims may increase the incidence and cost of patent interference proceedings, opposition proceedings and/or reexamination proceedings, the risk of infringement litigation and the vulnerability of the claims to challenge. On the other hand, the allowance of narrower claims does not eliminate the potential for adversarial proceedings and may fail to provide a competitive advantage. Our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products or provide us with any competitive advantage. Moreover, even after they have issued, our patents and any patent for which we have licensed or may license rights may be challenged, narrowed, invalidated or circumvented. If our patents are invalidated or otherwise limited or expire prior to the commercialization of our product candidates, other companies may be better able to develop products that compete with our products which could adversely affect our competitive business position, business prospects and financial condition. The following are examples of litigation and other adversarial proceedings or disputes that we could become a party to involving our patents or patents licensed to us: - we or our partners may initiate litigation or other proceedings against third parties to enforce our patent rights;- third parties may initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their product or technology does not infringe our patents or patents licensed to us;- third parties may initiate opposition or reexamination proceedings challenging the validity or scope of our patent rights, requiring us or our partners to participate in such proceedings to defend the validity and scope of our patents;- there may be a challenge or dispute regarding inventorship or ownership of patents currently identified as being owned by or licensed to us;- the USPTO may initiate an interference between patents or patent applications owned by or licensed to us and those of our competitors, requiring us or our collaborators to participate in an interference proceeding to determine the priority of invention, which could jeopardize our patent rights; or - third parties may submit ANDAs to the FDA seeking approval to market generic versions of our approved or future approved products prior to expiration of relevant patents owned by or licensed to us, requiring us to defend our patents, including by filing lawsuits alleging patent infringement. These lawsuits and proceedings would be costly and could adversely affect our results of operations and divert the attention of our managerial and scientific personnel. A court or administrative body may decide that our patents are invalid or not infringed by a third party's product or activity or that the scope of certain issued claims must be further limited. An adverse outcome in a litigation or proceeding involving our own patents could limit our ability to assert our patents against these or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. An adverse outcome in a dispute involving inventorship or ownership of our patents could, for example, subject us to additional royalty obligations and expand the number of product candidates that are subject to the royalty and other obligations of our license agreement with Tufts. The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example: - others may be able to develop a platform that is similar to, or better than, ours in a way that is not covered by the claims of our patents;- others may be able to make compounds that are similar to our products or product candidates but that are not covered by the claims of our patents;- we might not have been the first to make the inventions covered by our pending patent applications;- we might not have been the first to file patent applications for these inventions;- others may independently develop similar or alternative technologies or duplicate any of our technologies;- we may be unable to effectively protect our trade secrets;- any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable;- we may not develop additional proprietary technologies that are patentable; or - the patents of others may have an adverse effect on our business.

In October 2018, the FDA approved NUZYRA in the U.S. for the treatment of adults with CABP and ABSSSI that are proven or strongly suspected to be caused by susceptible bacteria. We have global commercial rights to omadacycline, except that we have entered into a collaboration with Zai to develop, manufacture and commercialize omadacycline in the Zai territory. In December 2021, we received regulatory approval for omadacycline for the treatment of CABP in the People's Republic of China. In October 2018, the FDA also approved SEYSARA for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in patients nine years of age and older. In the U.S. and the greater China region, Almirall has the exclusive rights to commercialize SEYSARA for the treatment of acne, whereas we retain all rights to sarecycline in all other countries. In the future, we, or our partners, may seek to commercialize omadacycline or sarecycline in countries outside of the U.S. and the greater China region, and in February 2020, we exclusively licensed from Almirall certain technology owned or in-licensed by Almirall or its affiliates that is necessary or useful to develop or commercialize sarecycline outside of the U.S. Almirall plans to develop sarecycline for acne in China, with a submission to the NMPA expected in 2023, according to Almirall. In order to market products outside of the U.S., we and our partners must comply with numerous and varying regulatory requirements of other jurisdictions regarding safety and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approvals could result in significant delays, difficulties and costs for us and may require additional preclinical studies or clinical trials. Satisfying these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries. Regulatory approval in one jurisdiction does not ensure regulatory approval in another, but failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory process in others. Failure to obtain regulatory approvals in other jurisdictions or any delay or setback in obtaining such approvals could adversely affect our business and financial condition.

We face an inherent risk of product liability lawsuits related to the testing of our products in seriously ill patients and face an even greater risk from sales of NUZYRA and SEYSARA. Product liability claims may be brought against us or our partners by participants enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling any of our products. If we cannot successfully defend ourselves against any such claims, we may incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: - decreased demand for NUZYRA or SEYSARA;- injury to our reputation and negative media attention;- withdrawal of clinical trial participants;- termination of clinical trial sites or entire clinical trial programs;- significant litigation costs;- substantial monetary awards to or costly settlements with patients or other claimants;- product recalls or a change in the indications for which they may be used;- loss of revenue;- diversion of management and scientific resources from our business operations; and - the inability of us or our partners to successfully commercialize our products. With the approval of NUZYRA and SEYSARA for commercial sale, we are highly dependent upon consumer perceptions of us and the safety and quality of our products. We could be adversely affected if we are subject to negative publicity. We could also be adversely affected if any of our products or any similar products distributed by other companies prove to be, or are asserted to be, harmful to patients. Also, because of our dependence upon consumer perceptions, any adverse publicity associated with illness or other adverse effects resulting from patients' use or misuse of our products or any similar products distributed by other companies could have a material adverse impact on our results of operations. We currently hold $10.0 million in product liability insurance coverage in the aggregate annually, with a per incident limit of $10.0 million, which may not be adequate to cover all liabilities that we may incur. Insurance coverage is becoming increasingly expensive. As a result, we may be unable to maintain or obtain sufficient insurance at a reasonable cost to protect us against losses that could have a material adverse effect on its business. These liabilities could prevent or interfere with our product development and commercialization efforts. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash resources and adversely affect our business, financial condition and results of operation.

In recent years, there has been an increase in legal requirements relating to the collection, storage, use transfer and security of personal information. We are or may be subject to privacy and security laws in the various jurisdictions in which we operate, obtain or store personally identifiable information. The legislative and regulatory landscape for privacy and data protection continues to evolve at the international, federal and state level, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business. Data protection, privacy and information security regulations could increase costs, and a failure to comply could result in fines, sanctions or other penalties. Within the U.S., our operations may be affected by the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, collectively, HIPAA, which impose obligations on certain "covered entities," such as healthcare providers, health plans and healthcare clearinghouses, and certain of their "business associate" contractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Although we believe that we currently are neither a "covered entity" nor a "business associate" under the legislation, a business associate relationship may be imputed from facts and circumstances even in the absence of an actual business associate agreement. In addition, HIPAA may affect our interactions with customers who are covered entities or their business associates because HIPAA affects the ability of these entities to disclose patient health information to us. Various states also have laws that regulate the privacy and security of personal information and so may affect our business operations. For example, we are subject to the California Consumer Privacy Act, or CCPA, as amended by the California Privacy Rights Act beginning January 1, 2023, or together, the CCPA. The CCPA gives California consumers, defined to include all California residents, certain rights, including the right to ask companies to disclose a copy of their personal information and request that such information be deleted or corrected. The CCPA also imposes obligations on companies to provide notice to California consumers regarding a company's data processing activities and places limitations on a company's ability to sell personal information or share it for purposes of cross-context behavioral advertising, including providing consumers a right to opt out of such disclosures of their personal information. In addition, Colorado, Connecticut, Utah and Virginia have also passed comprehensive privacy laws that may impact our operations and have or will go into operation in 2023 imposing expanded data protection obligations that may apply to us with respect to notice, data subject rights, and limitations as to the purposes for which personal data may be processed, and there are similar legislative proposals being advanced in other U.S. states, as well as in Congress. Outside the U.S., other data privacy and security regulations may apply. For example, the processing of personal data in the European Economic Area, or the EEA, is subject to the General Data Protection Regulation, or the GDPR, which took effect in May 2018, and is also applicable in the U.K. as it forms part of the law of England and Wales, Scotland and Northern Ireland by virtue of section 3 of the European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (SI 2019/419), which went into effect in January 2021. The GDPR increases obligations with respect to clinical trials conducted in the EEA and the U.K., such as in relation to the provision of fair processing notices, exercising data subject rights and reporting certain data breaches to regulators and affected individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf. The GDPR also increases the scrutiny applied to transfers of personal data from the EEA and U.K., including from clinical trial sites in the EEA, to countries that are considered by the European Commission or the U.K. Secretary of State to lack an adequate level of data protection, such as the U.S. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA and the U.K. to the United States, and other jurisdictions. For example, in July 2020, the Court of Justice of the E.U., or the CJEU, limited how organizations could lawfully transfer personal data from the EEA to the United States, by invalidating the Privacy Shield and placing limitations on the use of the European Commission's approved Standard Contractual Clauses. Compliance with data privacy and security regulation can require allocation of resources as well as changes in operations and non-compliance can result in substantial fines. In addition, the GDPR and the CCPA impose substantial fines and other regulatory penalties for breaches of data protection requirements and they confer a private right of action on data subjects, in the case of the GDPR, and consumers, in the case of the CCPA, and their representatives for breaches of certain data protection requirements.

Our success is currently dependent on the successful commercialization of NUZYRA in the U.S., as well as the commercialization of NUZYRA in the Zai territory, and, to a lesser extent, SEYSARA, which Almirall has the rights to commercialize in the U.S. and the greater China region. We are not currently developing, and have no such plans to develop, any other product candidates, other than NUZYRA (omadacycline) for the treatment of NTM, anthrax, and other relevant preclinical or clinical investigations. We may need additional financing or grants to fund development of any current or future product candidates. The majority of our time, resources and effort are focused on the commercialization of NUZYRA, the success of which depends on, among other things, our ability to: - secure sufficient starting materials and maintain commercial manufacturing arrangements with third-party manufacturers;- produce, through a validated process, sufficient quantities and inventory of NUZYRA to meet demand;- build and maintain internal sales, distribution and marketing capabilities sufficient to generate commercial sales of NUZYRA, including in the community setting;- secure widespread acceptance of our product from physicians, healthcare payors, patients and the medical community;- properly price and obtain coverage and adequate reimbursement of NUZYRA by governmental authorities, private health insurers, managed care organizations and other third-party payors;- maintain compliance with ongoing FDA labeling, packaging, storage, advertising, promotion, recordkeeping, safety and other PMRs;- manage our costs and expenses commensurate with NUZYRA's projected growth; and - establish and maintain collaborations with third parties for the commercialization of NUZYRA in countries outside of the U.S., such as our existing collaboration with Zai to develop, manufacture and commercialize omadacycline in the Zai territory, and such collaborators' ability to obtain regulatory and reimbursement approvals in such countries. There are no guarantees that we will be successful in completing these tasks. In addition, we will need to continue investing substantial financial and management resources to build out our commercial infrastructure and to recruit and train sufficient additional qualified marketing, sales and other personnel in support of our sales of NUZYRA.

Although NUZYRA and SEYSARA have undergone safety testing in humans and in laboratory animals, not all adverse effects of drugs can be predicted or anticipated from these clinical studies and preclinical safety and toxicology studies. Unforeseen side effects from either NUZYRA or SEYSARA could arise after the approved product has been marketed. Many of the most widely used antibiotics are associated with treatment-limiting adverse events, including in some instances, kidney damage, allergic reactions or sudden cardiovascular death due to cardiac arrhythmia. The results of future clinical trials or from marketing experience may show that NUZYRA or SEYSARA, or any other product candidate, cause undesirable or unacceptable side effects. Furthermore, even though both NUZYRA and SEYSARA have received marketing approval, if we or others later identify undesirable or unacceptable side effects caused by NUZYRA or SEYSARA: - regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies;- we or our partners may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;- we or our partners may be subject to limitations on how we may promote the product;- sales of the product may decrease significantly;- regulatory authorities may withdraw approvals of an approved product, or otherwise require us or our partners to take our approved product off the market, or impose restrictions on its distribution;- we or our partners may be subject to litigation or product liability claims and be held liable for harm caused to patients; and - our reputation may suffer. Any of these events could prevent us, our current partners or our potential future partners from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenue from the sale of our products. Furthermore, NUZYRA and SEYSARA are commercially available and each may be used in a wider population and in a less rigorously controlled environment than in clinical studies. As a result, regulatory authorities, healthcare practitioners, third-party payors or patients may perceive or conclude that the use of the product is associated with previously unknown serious adverse effects, undermining commercialization efforts.

We are exposed to the risk that our employees, contractors, partners, principal investigators, CROs, consultants and vendors may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, federal and state healthcare fraud and abuse laws and regulations, laws that require the reporting of financial information or data timely, completely or accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Third-party misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us resulting from this misconduct, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, which could significantly harm our business.

We do not currently own or operate manufacturing facilities for the production of NUZYRA or any other product candidate, nor do we currently intend to do so in the future. We currently depend on third-party contract manufacturers for the supply of the active pharmaceutical ingredients for NUZYRA. We have entered into certain long-term manufacturing and supply agreements, including agreements for the (i) supply of starting materials for crude omadacycline, (ii) supply of active pharmaceutical ingredient for our omadacycline products, (iii) manufacture and supply of omadacycline oral solid dosage tablets and omadacycline in injectable form, (iv) primary packing, labelling, storage and related services for omadacycline oral solid dosage tablets and injectable omadacycline in vials, and (v) distribution and logistics services. We are currently in discussions with third-party manufacturers and may enter into additional long-term supply agreements with them. We may not be able to reach agreement with some of these contract manufacturers, or to identify and reach arrangement on satisfactory terms with other contract manufacturers, to manufacture NUZYRA or any future product candidates. Additionally, we anticipate that the facilities used by any contract manufacturer to manufacture NUZYRA or any future product candidates will be the subject of inspections by regulatory agencies before the FDA and other regulatory authorities that approve an NDA or marketing authorization for the product candidate manufactured at that facility. We will depend on these third-party manufacturing partners for compliance with the FDA's manufacturing requirements for finished products. If our manufacturers cannot successfully manufacture material that conforms to our specifications and the FDA and other regulatory authorities' cGMP requirements, any future product candidates may not be approved or, in the case of NUZYRA, may be subject to delays in release and/or product recalls. While third-party manufacturers of NUZYRA have previously passed FDA and other regulatory agency inspections, we cannot provide assurance that they will pass such inspections in the future. Furthermore, any interruption of the development or operation of the manufacturing facilities due to, among other reasons, the COVID-19 pandemic or another global health outbreak, or events such as order delays for equipment or materials, equipment malfunction, quality control and quality assurance issues, regulatory delays, or and possible negative effects of such delays on supply chains and expected timelines for product availability, production yield issues, shortages of qualified personnel, discontinuation of a facility or business or failure or damage to a facility by natural disasters or pandemics, could result in the cancellation of shipments, loss of product in the manufacturing process or a shortfall in available NUZYRA, other product candidates or materials. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured products and product candidates ourselves, including: - the possibility of a breach of the manufacturing agreements by the third parties because of factors beyond our control;- the possibility of termination or nonrenewal of the agreements by the third parties before we are able to arrange for a qualified replacement third-party manufacturer;- the possibility that third parties are unable to manufacture NUZYRA consistently in commercial quantities, at acceptable costs on expected timelines;- the possibility that we may not be able to maintain or secure manufacturers or manufacturing capacity in a timely manner and on satisfactory terms in order to meet our manufacturing needs; and - the possibility that the third parties may not be able to respond adequately to unexpected changes in demand forecasts that may result in either lost revenue or excessive inventory with decreasing shelf-life. Any of these factors could cause the delay of further commercialization of NUZYRA, delay the development and approval of any future product candidates, or cause us to incur higher costs or prevent us from commercializing any future product candidates successfully. Furthermore, if contract manufacturers fail to continuously meet FDA compliance standards or fail to deliver the required commercial quantities of finished product on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality and on a timely basis, we would likely be unable to meet demand for our products and could lose potential revenue. It may take one or more years to establish an alternative source of supply and to have any such new source approved by the FDA or any other relevant regulatory authorities. Our current and anticipated future dependence upon others for manufacturing may adversely affect our future profit margins and our ability to commercialize on a timely and competitive basis NUZYRA or any future product candidates that receive marketing approval.