Accordingly, if crenezumab, anti-Tau antibody,
ACI-24 for AD and DS, ACI-35, Morphomer Tau or Tau-PET Imaging tracer are approved, competitors could file ANDAs for generic versions
of crenezumab, anti-Tau antibody, ACI-24 for AD and DS, ACI-35 and Morphomer Tau, or 505(b) (2) NDAs that reference crenezumab,
anti-Tau antibody, ACI-24 for AD and DS, ACI-35, Morphomer Tau or anti-Tau antibody candidate, respectively. If there are patents
listed for crenezumab, anti-Tau antibody, ACI-24 for AD or DS, ACI-35 and Morphomer Tau in the Orange Book, those ANDAs and 505(b)
(2) NDAs would be required to include a certification as to each listed patent indicating whether the ANDA applicant does or does
not intend to challenge the patent. We cannot predict whether any patents issuing from our pending patent applications will be
eligible for listing in the Orange Book, how any generic competitor would address such patents, whether we would sue on any such
patents, or the outcome of any such suit.
We may not be successful in securing or
maintaining proprietary patent protection for products and technologies we develop or license. Moreover, if any patents that are
granted and listed in the Orange Book are successfully challenged by way of a Paragraph IV certification and subsequent litigation,
the affected product could immediately face generic competition and its sales would likely decline rapidly and materially. Should
sales decline, we may have to write off a portion or all of the intangible assets associated with the affected product and our
results of operations and cash flows could be materially and adversely affected.
One of our collaboration partners is evaluating
a product candidate in the same indication as our lead product candidate crenezumab.
Our collaboration partner Genentech is
a subsidiary of Roche, which is evaluating gantenerumab, a product candidate for the same indication as our lead product candidate
crenezumab, and Roche’s collaboration partner MorphoSys AG initiated multiple phase 3 programs for gantenerumab in patients
with prodromal to mild AD. Gantenerumab is also being studied as part of the DIAN-TU trial, a worldwide clinical study evaluating
multiple compounds in individuals at risk for or with a type of early-onset AD caused by a genetic mutation. Our collaboration
agreement with Genentech for crenezumab provides Genentech with control over, and responsibility for, the clinical development
process, including obtaining regulatory and marketing approvals, manufacturing costs and sales and marketing costs. In addition,
the collaboration agreement provides that Genentech may terminate the agreement at any time by providing three months’ notice
to us. As a result, Genentech may choose to devote more time and resources to advancing gantenerumab instead of crenezumab, which
could render crenezumab non-competitive and limit or make it more difficult for us to achieve or maintain profitability with crenezumab.
Should this occur, our business, financial condition and results of operations could be materially impacted.
The successful commercialization of our product
candidates will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage
and reimbursement levels and pricing policies.
The successful commercialization of our
product candidates will depend, in part, on the extent to which coverage and reimbursement for our products will be available from
government and health administration authorities, private health insurers and other third-party payors. To manage healthcare costs,
many governments and third-party payors increasingly scrutinize the pricing of new technologies and require greater levels of evidence
of favorable clinical outcomes and cost-effectiveness before extending coverage. In light of such challenges to prices and increasing
levels of evidence of the benefits and clinical outcomes of new technologies, we cannot be sure that coverage will be available
for any of our current or future product candidates that we or our collaboration partners will commercialize and, if available,
that the reimbursement rates will be adequate in each respective region. If we are unable to obtain adequate levels of coverage
and reimbursement for our product candidates, their marketability will be negatively and materially impacted.
Third party payors may deny coverage and
reimbursement status altogether of a given drug product, or cover the product but may also establish prices at levels that are
too low to enable us to realize an appropriate return on our investment in product development. Because the rules and regulations
regarding coverage and reimbursement change frequently, in some cases at short notice, even when there is favorable coverage and
reimbursement, future changes may occur that adversely impact the favorable status. Further, the net reimbursement for drug products
may be subject to additional reductions if proposed changes by the Trump administration to Medicare drug reimbursement policies,
which presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States, are
enacted by the United States Congress. In addition, legislative or regulatory changes in U.S. trade policy, such as imposition
of heightened tariffs on imported medicine, may adversely impact our financial results.