The manufacture of pharmaceutical products is a highly complex process in which a variety of
difficulties may arise from time to time, including product loss due to material failure, equipment failure, vendor error, operator error, labor shortages, inability to obtain material, equipment or transportation, physical or electronic security
breaches and natural disasters. Problems with manufacturing processes could result in product defects or manufacturing failures, which could require us to delay shipment of products or recall products previously shipped, or could impair our ability
to expand into new markets or supply products in existing markets. We may not be able to resolve any such problems in a timely manner, if at all.
We depend on third-party suppliers and contract manufacturers to manufacture SUSTOL, CINVANTI and
HTX-011,
and
we expect to do the same for any future products that we develop; if our contract manufacturers do not perform as expected, our business could suffer.
We do not own or operate manufacturing facilities for the production of commercial or clinical quantities of any product, including SUSTOL,
CINVANTI and
HTX-011.
Our ability to successfully commercialize SUSTOL, CINVANTI and
HTX-011,
as well as any other products or product candidates that we may develop,
depends in part on our ability to arrange for and rely on other parties to manufacture our products at a competitive cost, in accordance with regulatory requirements, and in sufficient quantities for clinical testing and eventual commercialization.
We currently rely on a small number of third-party manufacturers to produce compounds used in our product development activities and expect to continue to do so to meet the preclinical and clinical requirements of our potential products and for all
of our commercial needs. Certain contract manufacturers are, at the present time (and are expected to be for the foreseeable future), our sole resource to manufacture certain key components of SUSTOL, CINVANTI and
HTX-011,
as well as key components for product candidates in clinical and preclinical testing in our research and development program. Although we entered into long-term commercial manufacturing agreements for
the manufacture of SUSTOL, CINVANTI and
HTX-011,
and we have a long-term agreement for the manufacture of our Biochronomer Technology, we might not be able to successfully negotiate long-term agreements with
any additional third parties, or we might not receive all required regulatory approvals to utilize such third parties, and, accordingly, we might not be able to reduce or remove our dependence on a single supplier for the commercial manufacturing of
SUSTOL, CINVANTI and
HTX-011,
or any other product we may develop for marketing. We may have difficulties with these manufacturer relationships, and we may not be able to find replacement contract
manufacturers on satisfactory terms or on a timely basis. Also, due to regulatory and technical requirements, we may have limited ability to shift production to a different third-party should the need arise. We cannot be certain that we could reach
agreement on reasonable terms, if at all, with such a manufacturer. Even if we were to reach agreement, the transition of the manufacturing process to a different third-party could take a significant amount of time and money, and may not be
successful.
Further, we, along with our contract manufacturers, are required to comply with FDA and foreign regulatory requirements
related to product testing, quality assurance, manufacturing and documentation. Our contract manufacturers may not be able to comply with the applicable FDA or foreign regulatory requirements. They may be required to pass an FDA preapproval
inspection for conformity with cGMP before we can obtain approval to manufacture our products and will be subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMP, and
other applicable government regulations and corresponding foreign standards. If we and our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance with cGMP, or fail to
scale-up
manufacturing processes in a timely manner, we may experience manufacturing errors resulting in defective products that could be harmful to patients, product recalls or withdrawals, delays or
interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval of marketing applications for our products, cost overruns or other problems that could seriously harm our business. Not complying with
FDA or foreign regulatory requirements could result in an enforcement action, such as a product recall, or prevent commercialization of our product candidates and delay our business development activities. In addition, such failure could be the
basis for the FDA or foreign regulators to issue a warning or untitled letter or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve
pending applications or supplemental applications, and potentially civil and/or criminal penalties depending on the matter.
SUSTOL,
CINVANTI,
HTX-011
or any of our other product candidates may be in competition with other products for access to the facilities of third parties. Consequently, SUSTOL, CINVANTI,
HTX-011
or any of our other product candidates may be subject to manufacturing delays if our contractors give other companies products greater priority than our products. For this and other reasons, our
third-party contract manufacturers may not be able to manufacture SUSTOL, CINVANTI,
HTX-011
or any of our other product candidates in a cost-effective or timely manner. If not manufactured in a timely manner,
the clinical development of any of our product candidates or their submission for regulatory approval could be delayed, and our ability to deliver products to market on a timely basis could be impaired. This could increase our costs, cause us to
lose revenue or market share and damage our reputation.
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