We currently rely on third-party suppliers
and other third parties for production of our product candidates and our dependence on these third parties may impair the advancement
of our research and development programs and the development of our product candidates.
We currently rely on and expect to continue
to rely on third parties, for the manufacturing and supply of chemical compounds for the clinical studies of our current and future
product candidates. For the foreseeable future, we expect to continue to rely on such third parties for the manufacture of any
of our product candidates on a clinical or commercial scale, if any of our product candidates receives regulatory approval. Reliance
on third-party providers may expose us to different risks than if we were to manufacture product candidates ourselves. The facilities
used by our contract manufacturers to manufacture our product candidates must be approved by the FDA or other regulatory authorities
pursuant to inspections that will be conducted after we submit our NDA or comparable marketing application to the FDA or other
regulatory authority. We do not have control over a supplier’s or manufacturer’s compliance with these laws, regulations
and applicable cGMP standards and other laws and regulations, such as those related to environmental health and safety matters.
If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory
requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing
facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control,
quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities
for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative
manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our
product candidates, if approved. Any failure to achieve and maintain compliance with these laws, regulations and standards could
subject us to the risk that we may have to suspend the manufacturing of our product candidates or that obtained approvals could
be revoked, which would adversely affect our business and reputation.
Third-party providers may breach agreements
they have with us because of factors beyond our control. Contract manufacturers often encounter difficulties involving production
yields, quality control and quality assurance, as well as shortages of qualified personnel. They may also terminate or refuse to
renew their agreements because of their own financial difficulties or business priorities, potentially at a time that is costly
or otherwise inconvenient for us. If we were unable to find adequate replacement or another acceptable solution in time, our clinical
studies could be delayed or our commercial activities could be harmed.
In addition, the fact that we are dependent
on our suppliers and other third parties for the manufacture, storage and distribution of our product candidates means that we
are subject to the risk that our product candidates and, if approved, commercial products may have manufacturing defects that we
have limited ability to prevent or control. The sale of products containing such defects could result in recalls or regulatory
enforcement action that could adversely affect our business, financial condition and results of operations.
Growth in the costs and expenses of components
or raw materials may also adversely influence our business, financial condition and results of operations. Supply sources could
be interrupted from time to time and, if interrupted, we cannot be certain that supplies could be resumed (whether in part or in
whole) within a reasonable timeframe and at an acceptable cost or at all. Our current and anticipated future dependence upon others
for the manufacturing of our current and future product candidates may adversely affect our future profit margins and our, or our
collaborations partners’ ability to commercialize any products that receive marketing approval on a timely and competitive
Our collaboration arrangements with our strategic
partners may make us an attractive target for potential acquisitions under certain circumstances.
Under certain circumstances, due to the
structure of our collaboration arrangements with our strategic partners, our strategic partners may prefer to acquire us rather
than paying the milestone payments or royalties under the collaboration arrangements, which may bring additional uncertainties
to our business development and prospects. For example, under our collaboration arrangements with Genentech, Lilly and Janssen,
we may become entitled to substantial milestone payments and royalties. As a result, rather than paying the milestone payments
or royalties, Genentech, Lilly or Janssen, or one of their affiliates including Roche or Johnson & Johnson, may choose
to acquire us.
Risks Related to Intellectual Property
We may not have sufficient patent terms to
effectively protect our products and business.