We believe that vonapanitase, or any additional
product candidates approved as a biological product under a BLA, should qualify for the BPCIA’s 12-year period of exclusivity.
However, there is a risk that BPCIA will be repealed or amended, or the FDA will not consider vonapanitase or any additional product
candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner
Additionally, this period of regulatory exclusivity
does not currently apply to companies pursuing regulatory approval via their own traditional BLA, rather than via the abbreviated
pathway. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in
a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number
of marketplace and regulatory factors that are still developing. It is possible that payers will give reimbursement preference
to biosimilars even over reference biologics absent a determination of interchangeability.
If the government or other third-party payors fail to provide
adequate and timely coverage and payment rates for vonapanitase or any additional product candidates or if surgeons or hospitals
choose not to use vonapanitase, our revenue and prospects for profitability will be limited.
In both domestic and foreign markets, sales
of our future products will depend substantially upon the availability of timely coverage and reimbursement from government and
other third-party payors. The majority of incident and prevalent hemodialysis patients have Medicare coverage, while other patients
have other third-party payors, including other government health programs such as Medicaid, managed care providers, private health
insurers and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new drug and
biologic products when more established or lower cost therapeutic alternatives are already available or subsequently become available.
Vonapanitase or any additional product candidates, if approved, may face competition from other therapies, biologics, and drugs
for limited financial resources. We may need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of
any future products to the satisfaction of outpatient clinics, hospitals, other target customers and their third-party payors.
These post-marketing studies might require us to commit a significant amount of management time and financial and other resources.
Our future products might not ultimately be considered cost-effective. Adequate third-party coverage and reimbursement might not
be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.
Third-party payors, whether foreign or domestic,
or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. Assuming coverage
is approved, the resulting reimbursement payment rates might not be adequate to allow us to establish or maintain a market share
sufficient to realize a sufficient return on our investments. If reimbursement is not available, or is available only to limited
levels, our product candidates may be competitively disadvantaged, and we, or our collaborators, may not be able to successfully
commercialize our product candidates. Alternatively, securing favorable reimbursement terms may require us to compromise pricing
and prevent us from realizing an adequate margin over cost. In addition, in the United States, no uniform policy of coverage and
reimbursement for drug and biologic products exists among third-party payors. Therefore, coverage and reimbursement for drug and
biologic products can differ significantly from payor to payor. Further, we believe that future coverage and reimbursement will
likely be subject to increased restrictions both in the United States and in international markets. Third-party coverage and reimbursement
for our products or product candidates for which we receive regulatory approval may not be available or adequate in either the
United States or international markets, which could have a negative effect on our business, results of operations, financial condition
Government programs impose price controls on
pharmaceutical and biological products and penalties for increasing commercial prices at rates that exceed the government inflation
index, which may limit the commercial price we charge and our realization on sales. Further, the net reimbursement for drug and
biologic products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs
and biologics from countries where they may be sold at lower prices than in the United States. An inability to promptly obtain
coverage and adequate payment rates from both government-funded and private payors for any our product candidates for which we
obtain marketing approval could have a material adverse effect on our operating results, our ability to raise capital needed to
commercialize products and our overall financial condition.