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Our cGMP and pharmacology facilities and practices may fail to comply with government
regulations.
All facilities and manufacturing processes used in the production of API and drug products for clinical use
in the U.S., must be operated in conformity with cGMP as established by the FDA. Similar requirements in
other countries exist for manufacture of drug products for clinical use. These requirements include,
among other things, quality control, quality assurance and the maintenance of records and
documentation. If we or any contract manufacturers we use fail to comply with these requirements, we
may not be able to continue the production of our products and we could be subject to civil and criminal
fines and penalties, suspension of production, suspension or delay in product approval, product seizure
or recall, or withdrawal of product approval. We operate a clinical-scale manufacturing facility that we
believe conforms to cGMP requirements. This facility and our cGMP practices may be subject to periodic
regulatory inspections to ensure compliance with cGMP requirements. In addition, we could be required
to comply with specific requirements or specifications of other countries and/or of our collaborators, which
may exceed applicable regulatory requirements. Failure on our part to comply with applicable regulations
and specific requirements or specifications of other countries and/or our collaborators could result in the
termination of ongoing research, disqualification of data for submission to regulatory authorities, delays or
denials of new product approvals, warning letters, fines, consent decrees restricting or suspending
manufacturing operations, injunctions, civil penalties, recall or seizure of products and criminal
prosecution. Material violations of cGMP requirements could result in regulatory sanctions and, in severe
cases, could result in a mandated closing of our cGMP facility.
In connection with our application for commercial approvals and, if any drug candidate is approved by the
FDA or other regulatory agencies for commercial sale, a significant scale-up in manufacturing may
require additional validation studies. If we are unable to successfully increase the manufacturing capacity
for a drug candidate, the regulatory approval or commercial launch of that drug candidate may be
delayed, or there may be a shortage of supply, which could limit our ability to develop or commercialize
the drug.
In addition, our pharmacology facility may be subject to FDA Good Laboratory Practices, or GLP, and the
USDA regulations for certain animal species. Failure on our part to comply with applicable regulations
and specific requirements of our collaborators could result in the termination of ongoing pharmacology
research. Material violations of GLP and USDA requirements could result in additional regulatory
sanctions and, in severe cases, could result in a mandated closing of our pharmacology facility for certain
species.
We or other third party manufacturers we rely on may encounter failures or difficulties in
manufacturing or formulating clinical commercial supplies of drugs, which could delay the
clinical development or regulatory approval of our drug candidates, or their ultimate commercial
production if approved.
We and third parties manufacture our drug candidates. We also from time to time manufacture drug
candidates for our collaborators. We do not have manufacturing facilities that can produce sufficient
quantities of active pharmaceutical ingredient, or API, and finished drug product for large-scale clinical
trials. Accordingly, we must either develop such facilities, which will require substantial additional funds,
or rely, at least to some extent, on third-party manufacturers for the production of drug candidates.
Furthermore, should we obtain FDA approval for any of our drug candidates, we expect to rely, at least to
some extent, on third-party manufacturers for commercial production. Our dependence on others for the
manufacture of our drug candidates may adversely affect our ability to develop and deliver such drug
candidates on a timely and competitive basis.
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Any performance failure on the part of us or a third-party manufacturer could delay clinical development,
regulatory approval or, ultimately, sales of our or our collaborators' drug candidates. We or third-party
manufacturers may encounter difficulties involving production yields, regulatory compliance, lot release,
quality control and quality assurance, as well as shortages of qualified personnel. Approval of our drug
candidates could be delayed, limited or denied if the FDA does not approve our or a third-party
manufacturer's processes or facilities. Moreover, the ability to adequately and timely manufacture and
supply drug candidates is dependent on the uninterrupted and efficient operation of the manufacturing
facilities, which is impacted by many manufacturing variables including:
availability or contamination of raw materials and components used in the manufacturing process,
particularly those for which we have no other source or supplier;
capacity of our facilities or those of our contract manufacturers;
facility contamination by microorganisms or viruses or cross contamination;
compliance with regulatory requirements, including Form 483 notices and Warning Letters;
changes in forecasts of future demand;
timing and actual number of production runs;
production success rates and bulk drug yields; and
timing and outcome of product quality testing.
In addition, we or our third-party manufacturers may encounter delays and problems in manufacturing our
drug candidates or drugs for a variety of reasons, including accidents during operation, failure of
equipment, delays in receiving materials, natural or other disasters, political or governmental changes, or
other factors inherent in operating complex manufacturing facilities. Supply chain management is
complex, and involves sourcing from a number of different companies and foreign countries.
Commercially available starting materials, reagents and excipients may become scarce or more
expensive to procure, and we may not be able to obtain favorable terms in agreements with
subcontractors. We or our third-party manufacturers may not be able to operate our respective
manufacturing facilities in a cost-effective manner or in a time frame that is consistent with our expected
future manufacturing needs. If we or our third- party manufacturers cease or interrupt production or if our
third-party manufacturers and other service providers fail to supply materials, products or services to us
for any reason, such interruption could delay progress on our programs, or interrupt the commercial
supply, with the potential for additional costs and lost revenues. If this were to occur, we may also need to
seek alternative means to fulfill our manufacturing needs.
We may not be able to enter into agreements for the manufacture of our drug candidates with
manufacturers whose facilities and procedures comply with applicable law. Manufacturers are subject to
ongoing periodic unannounced inspection by the FDA, the DEA and corresponding state and foreign
authorities to ensure strict compliance with cGMP and other applicable government regulations and
corresponding foreign standards. We do not have control over a third-party manufacturer's compliance
with these regulations and standards. If we or one of our manufacturers fail to maintain compliance, we or
they could be subject to civil or criminal penalties, the production of our drug candidates could be
interrupted or suspended, or our product could be recalled or withdrawn, resulting in delays, additional
costs and potentially lost revenues.
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