ANI PHARMACEUTICALS INC (ANIP) Business

Verbatim Item 1 Business section from ANI PHARMACEUTICALS INC's latest 10-K. Filing date: 2026-02-27. Accession: 0001023024-26-000014.

This page reproduces the company's own Item 1 Business text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.

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Item 1. Business

ANI Pharmaceuticals is a diversified bio-pharmaceutical company. The Company's mission is “Serving Patients, Improving Lives” by developing, manufacturing, and commercializing therapeutics through its Rare Disease, Generics, and Brands businesses.

On September 16, 2024, the Company acquired Alimera Sciences, Inc. ("Alimera"). In connection with the acquisition, the Company added two new products, ILUVIEN® ("ILUVIEN") and YUTIQ® ("YUTIQ"). See Note 3 "Business Combination" in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

During March 2025, the FDA approved an expanded label for ILUVIEN to include an indication for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye ("NIU-PS") in addition to the then-current indication of Diabetic Macular Edema ("DME"). The Company is currently marketing ILUVIEN for both indications in the U.S. ILUVIEN was already approved for both DME and NIU-PS outside the U.S., including in seventeen European countries. During the second quarter of 2025, the Company transitioned promotional efforts in the U.S. from YUTIQ to ILUVIEN with its combined label of DME and NIU-PS.

The Company owns and operates three pharmaceutical manufacturing facilities, including two facilities in Baudette, Minnesota and one in East Windsor, New Jersey, which collectively are capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. The Company ceased operations at another manufacturing facility in Oakville, Ontario as of March 31, 2023. See Note 4 "Restructuring Canada Operations" in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

On August 13, 2024, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the financial institutions party thereto as lenders (the "2024 Credit Agreement"), which provides for aggregate principal commitments consisting of (i) a senior secured delayed-draw term loan facility in an aggregate principal amount of $325.0 million, and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $75.0 million, which may be used for revolving credit loans, swingline loans and letters of credit.

On September 16, 2024, ANI drew the full $325.0 million of principal under the term loan facility to finance the acquisition of Alimera, including fees, costs and expenses incurred in connection with the acquisition. As of December 31, 2025, $74.9 million is available for borrowing on the revolving credit facility, subject to the satisfaction of certain conditions. The term loan and the revolving credit facility each mature on September 16, 2029.

On August 13, 2024, the Company completed an offering of $316.25 million aggregate principal amount of the Company's Convertible Senior Notes due 2029 (the “Notes”). The Notes are due September 1, 2029, unless earlier repurchased, redeemed, or converted. After deducting the initial purchasers’ discounts and commissions of approximately $9.5 million, but before deducting the Company’s offering expenses, the net proceeds to the Company from the offering of the Notes were approximately $306.8 million. In connection with the offering of Notes, on August 7, 2024 and August 8, 2024, the Company entered into capped call transactions with certain financial institutions (“Capped Calls”). After payment of the cost of entering into the Capped Calls transactions, of approximately $40.6 million, the Company used the remainder of the net proceeds from the Notes offering, together with cash on hand, to repay the Company’s existing senior secured credit agreement with Truist Bank, dated as of November 19, 2021.

As of December 31, 2025, our Generics portfolio included more than 120 products with a wide variety of indications. Our diversified portfolio is the result of internal research and development, acquisitions of businesses, acquisitions of Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”), product rights, and entry into agreements to obtain the distribution rights for various products. We expect that our robust pipeline will continue to yield approximately 10 to 15 new product launches per year. We expect to continue to expand our Rare Disease and Brands offerings by addressing unmet needs across indications and evaluating opportunities to enhance patient convenience.

Strategy

Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors. Our overall strategy is enabled by an empowered, collaborative, and purposeful team with high performance-orientation that seeks to deliver on our purpose of “Serving Patients, Improving Lives.”

Our strategy is driven by the following key growth drivers:

Building a Successful Rare Disease and Brands Segment

We spend significant time, effort and resources in expanding our Rare Disease and Brands segment which consists of our Rare Disease and Brands portfolio of products.

We acquired the NDAs for Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”) and Cortrophin-ZincTM in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer. On October 29, 2021, the U.S. Food and Drug Administration (“FDA") approved the Company’s Supplemental New Drug Application ("sNDA") for Cortrophin Gel for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome. Cortrophin Gel is an adrenocorticotropic hormone (“ACTH”), also known as purified corticotropin. On January 24, 2022, we announced the commercial launch of Cortrophin Gel in the U.S. as our foundational Rare Disease asset.

On February 28, 2025, the FDA approved a prefilled syringe format for Cortrophin Gel. This new presentation became available in 40 USP units/0.5 mL and 80 USP units/mL single-dose options through Cortrophin Gel’s established specialty pharmacy network during the second quarter of 2025. The prefilled syringe reduces administration steps for patients using Cortrophin Gel, which remains available in 5 mL and 1 mL vials.

During 2026, we plan to build a dedicated sales organization focused on acute gouty arthritis flares, an indication unique to Cortrophin Gel within the ACTH class. We anticipate that our dedicated sales force will focus on the appropriate patient population through podiatry and primary care physicians, while our existing sales organization will continue to focus on appropriate acute gouty arthritis flare patients seen by rheumatologists and nephrologists.

In September 2024, we acquired ILUVIEN and YUTIQ (together, the "Retina Franchise") in connection with the acquisition of Alimera. The acquisition of Alimera strengthened our Rare Disease business and expanded our footprint beyond the U.S. through Alimera’s direct marketing operations in Germany, the United Kingdom ("UK"), Portugal, and Ireland, as well as its partnerships in Europe, Asia, and the Middle East. We believe that the Retina Franchise is durable with high barriers to genericization and a clear role for patients in need of alternative therapeutic options. Importantly, the addition of Alimera expanded the reach of the ophthalmology sales team and we believe there will be significant overlap between high potential prescribers of Cortrophin Gel and the Retina Franchise.

As noted above, during March 2025, the FDA approved an expanded label for ILUVIEN (fluocinolone acetonide intravitreal implant) to include an indication for the treatment of chronic NIU-PS in addition to the then-current indication of DME. During the second quarter of 2025, we transitioned promotional efforts in the U.S. from YUTIQ to ILUVIEN with its combined label of DME and NIU-PS.

We plan to continue to expand our Rare Disease business, through a combination of organic growth and acquisitions. While we execute against our strategic initiatives that we believe will result in long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.

The Brands portion of the Rare Disease and Brands segment is comprised of various branded products. We have grown our Brands portfolio of products through acquisitions. We have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Inderal LA, Inderal XL, InnoPran XL, Inzirqo, Lithobid, Oxistat, Vancocin, and Veregen. We are innovating in our go-to-market strategy through creative partnerships and a sales force for these products.

Strengthening Our Generics and Other Segment

We plan to strengthen our Generics and Other segment through continued investment in our research and development capabilities and increased focus on niche opportunities. We have grown our Generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions. Our most recent business acquisition in the Generics and Other segment was the acquisition of Novitium Pharma LLC ("Novitium") in 2021, which included Novitium's portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabilities. We have begun to increase our focus on niche lower competition opportunities such as injectables, paragraph IV ("PIV"), and competitive generic therapy (“CGT”) designation filings.

Additionally, we plan to continue to seek opportunities to enhance our capabilities through strategic partnerships and acquisitions of assets and businesses.

We consider a variety of criteria in determining which products to develop. These criteria include:

•Formulation Complexity. Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are differentiated and include high potency, modified release, combination, and hormonal products. This ability to manufacture a variety of differentiated products is a competitive strength that we intend to leverage in selecting products to develop and commercialize.

•Market Size and Patient Need. When determining whether to develop or acquire an individual product, we review the current and expected market size and competitive environment for that product. We endeavor to pursue products with sufficient market size to enable us to enter the market with a strong likelihood of serving patients in need and thus being able to price our products both competitively and at a profit.

•Profit Potential. In determining the potential profit of a product, we forecast our anticipated market share, pricing, competitive environment and the estimated cost to manufacture the products.

•Manufacturing. We generally seek to develop and manufacture products at our own manufacturing plants to ensure quality control of our products, supply chain reliability and to more closely control the economic inputs and outputs of our products.

•Competition. When determining whether to develop or acquire a product, we research existing and expected competition. We seek to develop products for which we can obtain sufficient market share and may decline to develop a product if we anticipate significant competition. Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete.

Products

A complete list of our generic and branded pharmaceutical products and descriptions is posted on our website, www.anipharmaceuticals.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this report or any other SEC filing.

Manufacturing, Suppliers, and Raw Materials

Our manufacturing procedures and operations must conform to FDA requirements and guidelines, generally referred to as current good manufacturing practice ("cGMP"), which govern all aspects of the production process. Our facilities, procedures, operations, and testing of products are subject to periodic inspection by the FDA, the U.S. Drug Enforcement Agency ("DEA"), and other authorities. In addition, the FDA conducts drug pre-approval and post-approval reviews and plant inspections to determine whether our systems and processes are in compliance with product specifications, cGMP and other FDA regulations. Our suppliers are subject to similar regulations and periodic inspections.

Several of our key products, including injectables, softgel capsules, Cortrophin Gel, and ILUVIEN, are currently manufactured and supplied by third parties, in some cases as a single source. We expect our reliance on third party manufacturers to increase in the future as we receive approvals for new products to be manufactured through our collaboration arrangements, and as we seek additional growth opportunities outside of the capabilities of our current manufacturing facilities.

We require a supply of quality raw materials, including API, and components to manufacture and package our pharmaceutical products. In order to manufacture certain of our products deemed controlled substances, we must submit a request to the DEA for a quota to purchase the amount of API needed for manufacture. Without approved quotas from the DEA, we would not be able to purchase these ingredients from our suppliers.

We source the raw materials for our products from both domestic and international suppliers, which we carefully select. Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply. Any change in one of our API suppliers generally is required to be approved by the FDA through a prior approval supplement ("PAS"). Generally, the process of obtaining approval of a PAS can take between six and nine months, and could take an additional eight to ten months if additional information is required to be submitted by the FDA. While we also generally qualify a single source for non-API raw materials, the process required to qualify an alternative source of a non-API raw material is typically much less rigorous. If we were to change the supplier of a raw material for a product, the cost for the material could be greater than the amount we paid with the previous supplier. Changes in suppliers are rare but could occur as a result of a supplier’s business failing, an issue arising from an FDA inspection, or failure to maintain our required standards of quality. As a result, we selectively choose suppliers based on various factors including quality, reliability of supply, and long-term financial stability.

Certain of the APIs for our drug products, including those that are marketed without approved NDAs or ANDAs, are sourced from international suppliers. From time to time, we have experienced temporary disruptions in the supply of certain of such imported API due to FDA inspections and customs delays. In addition, certain of our products are manufactured, packaged, or manufactured and packaged by third parties. We do not have in-house manufacturing capabilities for the production of Cortrophin Gel or ILUVIEN, and thus we depend, and expect to continue to depend, exclusively on third-party contract manufacturers to manufacture and package these products.

Government Regulation

The research, development, testing, manufacturing, labeling, advertising, promotion, distribution, packaging, storage, exportation and marketing of our products are subject to extensive regulation by governmental authorities in the U.S. and in other countries in which we sell our products.

A new drug generally must be approved by the FDA or by comparable foreign regulatory authorities before it may be legally marketed in the U.S. and in foreign jurisdictions. Generally, prescription pharmaceutical products distributed in the U.S., whether branded or generic, must be approved by the FDA through the NDA, 505(b)(2) New Drug Application (“505(b)(2) NDA”) or ANDA processes. Similar application processes exist in foreign jurisdictions. However, we also market certain of our products without approved NDAs or ANDAs (see “Regulation of Unapproved Products”) below.

We, along with any third-party contractors, are required to comply with the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval of our products and product candidates. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

We are subject to extensive and complex rules and regulations, which are subject to revision from time to time, including changes in the priorities and focus of presidential administrations relating to our industry, as has occurred since January 2025, or when a U.S. Supreme Court ruling changes the scope of judicial deference to federal agency interpretations of law, as occurred in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). While we have experience with these regulations and changes, we cannot be certain that we will be able to fully comply with all applicable regulations or that our past compliance activities will be upheld by government agencies or U.S. courts in the future.

Regulation in the U.S.

The Drug Approval Process

The Federal Food, Drug, and Cosmetic Act (“FDCA”) sets forth three types of drug applications that may be submitted to the FDA for marketing authorization for a new drug. Under section 505(b)(1), sponsors may file an NDA, which must contain full reports of investigations of safety and efficacy. Under section 505(b)(2), sponsors may file an NDA with full reports of investigations of safety and efficacy but may include at least some of the information required for approval from investigations that were not conducted by or for the applicant and relying, in part, on the FDA’s prior findings of safety and efficacy for an existing product, or published literature.

Under section 505(j), the ANDA approval pathway allows an abbreviated approval process for a generic version of an approved drug by which a manufacturer scientifically demonstrates that its duplicate product performed in the same manner as an existing approved drug (the “RLD”), by measuring the rate and extent at which the duplicate (or “generic”) drug becomes available in the bloodstream (or other site of drug action) in healthy volunteers and thereby demonstrating “bioequivalence” to the RLD. An approved ANDA provides marketing authorization for a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use as a previously approved product.

The process required to obtain FDA approval to market a new drug in the U.S. generally requires that a sponsor complete nonclinical laboratory tests, animal studies and formulation studies under the FDA’s Good Laboratory Practice (“GLP”) regulations and other applicable laws or regulations; for NDAs and 505(b)(2) NDAs, conduct clinical testing in humans pursuant to an investigational new drug application (“IND”) and in accordance with FDA’s Good Clinical Practices (“GCP”); develop manufacturing processes to ensure the product’s identity, strength, quality, purity, and potency; prepare and submit a marketing application to the FDA, which includes information relating to product formulation, raw material suppliers, analytical testing, stability, manufacturing processes, packaging, labeling, and quality control; successfully undergo an FDA inspection of the manufacturing facility or facilities where the product is produced to assess compliance with cGMP and potential inspection of selected clinical investigation sites to assess compliance with GCPs; and receive FDA approval of the marketing application to permit commercial marketing of the product for particular indications for use.

Clinical Trials

Clinical trials involve the administration of an investigational product to human subjects under the supervision of qualified investigators. Clinical trials must be conducted in accordance with protocols detailing objectives, safety parameters, effectiveness criteria, human subject protections, and statistical analysis plans, as well as GCP requirements. Prior to initiating a clinical trial, the trial sponsor must submit the proposed clinical study protocol, together with nonclinical study results, manufacturing information, analytical data, and any available clinical data or literature, to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin. Furthermore, each clinical trial must be reviewed and approved by an Institutional Review Board (“IRB”) for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trial are minimized and are reasonable in relation to anticipated benefits.

The FDA may order the temporary or permanent discontinuation of, or impose conditions on the conduct of, a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to clinical trial patients. An IRB also may require the clinical trial to be halted for failure to comply with the IRB’s requirements or if the trial poses an unexpected serious harm to human subjects. Certain clinical trial information must be submitted within specified timeframes for publication on the www.clinicaltrials.gov website.

The purpose of a clinical trial is to generate the data necessary to demonstrate the safety of the product candidate for its intended use, establish the overall risk-benefit profile of the product candidate and provide an adequate basis for physician labeling.

NDA Approval Process

Following the completion of clinical trials, the results of nonclinical studies and clinical trials may be submitted to the FDA as part of an NDA, along with proposed labeling, chemistry, and manufacturing information to ensure product quality and other relevant data. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the product candidate to the satisfaction of the FDA. The FDA typically requires that an NDA include data from two adequate and well-controlled clinical trials, but sometimes approval may be based upon a single adequate and well-controlled clinical trial plus confirmatory evidence or a single large multicenter trial without confirmatory evidence.

Before approving an NDA, the FDA will typically conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the facilities comply with cGMP requirements and are adequate to assure consistent production of the product within required specifications. The FDA also may audit data from clinical trials to ensure compliance with GCP requirements. The FDA may refer applications for novel products or products which present difficult questions of safety or efficacy to an advisory committee of expert advisors for review, evaluation and a non-binding recommendation as to whether the application should be approved and under what conditions, if any.

After the FDA evaluates an NDA, it will grant marketing approval, request additional information or issue a complete response letter (“CRL”) outlining the deficiencies in the submission. The CRL may require additional testing or information, including additional nonclinical or clinical data, for the FDA to reconsider the NDA. Even if such additional information and data are submitted, the FDA may decide that the NDA still does not meet the standards for approval. If the FDA grants approval, it issues an approval letter that authorizes commercial marketing of the product with specific prescribing information for specific indications.

Abbreviated New Drug Application Development and Approval Process

An ANDA is filed when approval is sought to market a generic equivalent of a drug approved under an NDA. The ANDA development process is generally less time-consuming and less complex than the NDA development process. It typically does not require new preclinical and clinical studies, because it relies on the studies establishing safety and efficacy conducted for the branded drug approved through the NDA process. The ANDA process, however, typically requires one or more bioequivalence studies to show that the ANDA drug is bioequivalent to the previously approved reference listed drug (“RLD”). To support marketing approval, an ANDA generally must contain information to show that the product candidate is the same as the approved product with respect to API, conditions of use, route of administration, dosage form, strength, and labeling, with certain permissible differences, and is the bioequivalent of the approved drug.

The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) provides that generic drugs may enter the market after the approval of an ANDA, which requires (1) that bioequivalence to the branded product be demonstrated through clinical studies or in vitro studies, or be self-evident, and (2) either the expiration, invalidation or circumvention of any patents or the end of any other relevant market exclusivity periods related to the branded drug.

Generic products generally provide a safe, effective, and cost-efficient alternative to users of branded products. Growth in the generic pharmaceutical industry has been driven by the increased market acceptance of generic drugs, as well as the number of branded drugs for which patent terms and/or other market exclusivities have expired.

Competitive Generic Therapy

The FDA Reauthorization Act of 2017 (“FDARA”) created a new pathway by which the FDA may, at the request of the applicant, designate a drug with “inadequate generic competition” as a competitive generic therapy (“CGT”). At the request of the applicant, the FDA may also expedite the review of an ANDA for a drug designated as a CGT. Under the CGT pathway, the FDA provides a statutory provision for a 180-day exclusivity period for certain first to market applicants whose ANDA received a CGT designation. Our Novitium subsidiary has developed a strong track record of obtaining CGT approvals and we expect to continue to develop generic drugs under the CGT pathway.

Section 505(b)(2) NDA Development and Approval Process

505(b)(2) NDAs permit the submission of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. This pathway enables the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved product or the FDA’s findings of safety and efficacy for a previously approved existing product. The FDA may require applicants to perform additional studies or measurements to support any changes from the approved product, such as changes in new dosage form, strength, route of administration, formulation, or indication. The FDA may then approve the new product for all or some of the labeled indications for which the reference product has been approved, as well as for any new indication supported by the Section 505(b)(2) application. While references to nonclinical and clinical data not generated by the applicant or for which the applicant does not have a right of reference are allowed, all development, process, stability, qualification, and validation data related to the manufacturing and quality of the new product must be included in a 505(b)(2) NDA.

Impact of Regulatory and Patent Protections on 505(b)(2) NDA and ANDA Approval

The ANDA or 505(b)(2) NDA approval generally cannot be made effective until all of the RLD’s FDA-listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through a PIV certification. Upon submission of an ANDA or 505(b)(2) NDA that references an RLD with listed patents, an applicant must certify to the FDA that at least one of the following criteria are met – (1) no patent information has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. Alternatively, the applicant may elect to submit a “section viii” statement certifying that its proposed label does not contain any language regarding the RLD’s patented method-of-use.

If the ANDA or 505(b)(2) NDA applicant has provided a PIV certification to the FDA, the applicant must also notify NDA and patent holders of the certification, who may then initiate a patent infringement lawsuit. If the suit is filed within 45 days of receipt of the certification, the FDA is subject to a 30-month stay such that the ANDA or 505(b)(2) NDA approval does not become effective until the earlier of (i) 30 months from the patent or application owner’s receipt of the notice of the PIV certification, (ii) the expiration of the patent, (iii) when the infringement case concerning each such patent is decided in the applicant’s favor or settled, or (iv) such shorter or longer period as may be ordered by a court. It is common for the NDA holder or patent owner(s) to sue for patent infringement, thereby initiating a 30 month stay and delaying approval of the ANDA or 505(b)(2) NDA for a significant period of time.

In addition to patent exclusivity, the holder of the NDA may be entitled to a period of non-patent market exclusivity, during which the FDA cannot approve an application for a 505(b)(2) or ANDA. Also, if the NDA drug is a new chemical entity (“NCE”), the FDA may not approve a 505(b)(2) or ANDA for a generic product for up to five years following approval of the NDA for the NCE. If an NDA drug is not an NCE, but the holder of the NDA conducted or sponsored clinical trials (that are not bioequivalence studies) essential to approval of the NDA or a supplement thereto, the FDA may not approve a 505(b)(2) or ANDA that relies on the new clinical investigation for three years. Certain 505(b)(2) NDAs may also be eligible for three-year exclusivity for new clinical investigations. Certain other periods of exclusivity may be available if the branded drug is indicated for treatment of a rare disease, is an antibiotic, or is studied for pediatric indications.

Orphan Drug Designation

The FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which is defined as a disease or condition that affects fewer than 200,000 individuals in the U.S., or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making the drug available in the U.S. will be recovered from sales in the U.S. for that product. Orphan drug designation must be requested before submitting an application to FDA for marketing approval. When reviewing a request for orphan drug designation, FDA considers the mechanism of action of the drug to determine what distinct disease or condition the drug is intended to treat, diagnose or prevent. Whether a given medical condition constitutes a distinct disease or condition for the purpose of orphan-drug designation depends on a number of factors, assessed cumulatively, including, pathogenesis of the disease or condition; course of the disease or condition; prognosis of the disease or condition; and resistance to treatment. These factors are analyzed in the context of the specific drug for which designation is requested.

While an orphan drug designation does not shorten the regulatory review and approval process or convey any other advantage in the review process, it does provide opportunities for grant funding towards clinical trial costs, tax advantages, and FDA user-fee exemptions. Additionally, if a product with orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as if the latter product is shown to be clinically superior to the orphan product.

Post-Approval Requirements

After marketing approval of a product is obtained, there are many post-approval requirements that must be met. These include registering the manufacturing establishment and listing the product with the FDA, reporting and keeping records of any adverse reactions or production problems, providing updated safety and efficacy information to the agency, drug shortage and manufacturing volume reporting, and complying with advertising and promotional labeling regulations. Additionally, FDA may approve an NDA with post-marketing study requirements, meaning that additional clinical trials must be conducted after approval in order to further monitor the drug’s safety and efficacy.

If there are any modifications to the drug, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or NDA supplement, which may require the development of additional data or preclinical studies and clinical trials.

The FDA has the authority to require a Risk Evaluation and Mitigation Strategy (“REMS”) for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks. A REMS may include, but is not limited to, elements such as medication guides, patient package inserts, communication plans to educate healthcare providers of the product's risks, patient registries, or limitations on who can prescribe or dispense it. A REMS imposes numerous compliance obligations on the manufacturers. We currently participate in the Opioid Analgesic REMS for our Oxycodone Hydrochloride Oral Solution, Oxycodone Capsules and Levorphanol Tartrate Tablets commercial products, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures, including a new REMS, revisions to an existing REMS, or the conduct of post-marketing studies to assess a newly discovered safety issue. Product approvals may be withdrawn for non-compliance with regulatory standards, or if problems occur following initial marketing.

The Prescription Drug Marketing Act regulates the distribution of a manufacturer’s prescription drug samples and requires a compliance program governing the storage, security, distribution and recordkeeping of samples, as well as monitoring for loss or theft. The Drug Supply Chain Security Act (“DSCSA”) requires manufacturers and their trading partners, such as repackagers, wholesale distributors, dispensers, and third-party logistics providers, to implement interoperable electronic product tracking and tracing technology at the package level to identify and trace certain prescription drugs as they are distributed in the U.S. Products subject to the DSCSA must only be transferred to appropriately licensed purchasers. The DSCSA also establishes product verification, investigation, quarantine, disposition and notification responsibilities related to counterfeit, diverted, stolen, fraudulent and intentionally adulterated products that would result in serious adverse health consequences or death to humans. See "Risk Factors ― We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs."

Drug Advertising, Marketing and Promotion

The FDA regulates the marketing, labeling, advertising, and promotion of products that are placed on the market. Manufacturers must adhere to strict guidelines when promoting their products; all statements regarding a product must be consistent with its approved labeling and truthful and non-misleading in nature. Additionally, manufacturers may only promote their product for approved indications outlined by the FDA. All claims made about a product should also be adequately substantiated with evidence of both benefits and risks associated with use in order to ensure fair balance between them. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Physicians may prescribe drugs off-label but manufacturers cannot promote such uses unless they have been previously authorized by the FDA.

We also are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws such as the federal Anti-Kickback Statute (the “AKS”) and the federal civil False Claims Act (“FCA”). These laws regulate our interactions with healthcare providers, including prescribers, patients, third party payors and other individuals and entities in the healthcare space, and our government reporting of drug pricing and product information.

With respect to anti-kickback laws, the AKS generally prohibits, among other things, a pharmaceutical manufacturer from directly or indirectly soliciting, offering, receiving, or paying any remuneration in cash or in kind where one purpose is either to induce the referral of an individual for, or the purchase or prescription of, a particular drug that is payable by a federal health care program, including Medicare or Medicaid. A person or entity does not need to have actual knowledge of the statute or a specific intent to violate the statute. A claim arising from a violation of the AKS also constitutes a false or fraudulent claim for purposes of the FCA. Analogous federal and state laws exist. For example, another healthcare anti-kickback statute prohibits certain payments related to referrals of patients to certain providers (such as clinical laboratories) and applies to services reimbursed by private health plans as well as government health care programs.

Federal and state false claims laws generally prohibit anyone from knowingly and willfully, among other activities, presenting, or causing to be presented for payment to third party payors (including Medicare and Medicaid) claims for drugs or services that are false or fraudulent . The FCA, which may be enforced by the federal government or by private individuals (known as “whistleblowers”) bringing suit on behalf of the government, has been used extensively to challenge the activities of pharmaceutical companies. FCA allegations in such actions have included violations of the AKS, noncompliant reporting of prices or other information under government price reporting programs, improper promotion of uses not expressly approved by the FDA in a product’s label, and causing the submission of false information by healthcare providers to government health care programs to obtain product coverage. False claims laws are not always limited to activities involving government programs or payors. For example, a federal healthcare fraud statute prohibits the knowing and willful execution of, or attempt to execute, a scheme to defraud a health care benefit program, including private health plans, or obtain, through false or fraudulent pretenses, money or property owned by, or under the custody or control of, such a health care benefit program.

Other laws and regulations have also been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers; require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; require disclosure to the government and/or public of financial interactions (so-called “sunshine laws”) and/or require registration of pharmaceutical representatives. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Manufacturers must also submit information to the FDA on the identity and quantity of drug samples requested and distributed by a manufacturer during each year.

Violations of federal and state fraud and abuse and other laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties, and/or exclusion from federal health care programs (including Medicare and Medicaid). Compliance is challenging in light of the scope, complexity and lack of clarity in laws and their implementation. The scope of the federal and the various analogous state anti-kickback, false claims, and similar fraud and abuse laws vary, but is generally broad. Many of the fraud and abuse laws and regulations contain ambiguous requirements or require administrative guidance for implementation. Federal and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical industry, and private individuals have been active in alleging violations of the laws and bringing suits on behalf of the government under the FCA as evidenced by numerous significant settlements. In light of these considerations, our activities could be subject to scrutiny and the imposition of penalties under the laws. If we were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed. See “Risk Factors ― We may become subject to federal and state false claims litigation brought by private individuals and the government.”

Regulation of Controlled Substances

The DEA regulates certain drug products containing controlled substances, pursuant to the U.S. Controlled Substances Act (“CSA”). Certain of our products contain significant components that are classified as controlled substances. CSA and DEA regulations impose specific requirements on manufacturers and other entities that handle these substances including registration, recordkeeping, reporting, storage, security, and distribution. Recordkeeping requirements include accounting for the amount of product received, manufactured, stored, and distributed. Companies handling controlled substances also are required to maintain adequate security and to report suspicious orders, thefts, and significant losses. The DEA periodically inspects facilities for compliance with the CSA and its regulations. Failure to comply with current and future regulations of the DEA could lead to a variety of sanctions, including revocation or denial of renewal of DEA registrations, injunctions, or civil or criminal penalties.

In addition, we must submit a request to the DEA for a quota to purchase the amount of API needed to manufacture certain of our products deemed Schedule II controlled substances. Without approved quotas from the DEA, we would not be able to purchase these ingredients from our suppliers. As a result, we are dependent upon the DEA to approve quotas large enough to support our continued manufacture of our controlled substances at commercial levels. See “Risk Factors ― We are entirely dependent on periodic approval by the DEA for the supply of the API needed to manufacture our controlled substances. An inability to obtain such approvals would reduce or eliminate our revenues for our controlled substances, and could have a material adverse effect on our business, financial position, and operating results. In addition, we are subject to strict regulation by the DEA and are subject to sanctions if we are unable to comply with related regulatory requirements.”

Regulation of Unapproved Products

Four of our products, Esterified Estrogen with Methyltestosterone ("EEMT"), Opium Tincture, Thyroid Tablets, and Hyoscyamine, are marketed without approved NDAs or ANDAs. The FDA's policy with respect to the continued marketing of unapproved products appears in the FDA's September 2011 Compliance Policy Guide Sec. 440.100 titled “Marketed New Drugs without Approved NDAs or ANDAs.” Under this policy, the FDA has stated that it will follow a risk-based approach with regard to enforcement against marketing of unapproved products. The FDA evaluates whether to initiate enforcement action on a case-by-case basis, but gives higher priority to enforcement action against products in certain categories, such as those with potential safety risks or that lack evidence of effectiveness. We continue to believe that, so long as we comply with applicable manufacturing standards, the FDA will continue to operate on a risk-based approach and will not take action against us. However, we cannot be certain that the FDA will continue to follow this approach or that it will not take a contrary position with any individual product or group of products. See “Risk Factors – Four products, which together comprised less than 10% of our total revenue in 2025, are marketed without approved NDAs or ANDAs and we cannot be certain that the FDA will not require us to either seek approval for these products or withdraw them from the market. In either case, our business, financial position, and operating results could be materially adversely affected.”

Pharmaceutical Coverage, Pricing, and Reimbursement

In the U.S. and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, private health insurers and other organizations is critical to the commercial success of our products. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

Within the U.S., no uniform policy for coverage and reimbursement exists across all payors. Coverage and reimbursement can differ significantly from payor to payor and be subject to change at any time. Most of our products are eligible for coverage by various government health benefit programs, as well as purchase by government agencies. We participate in various government programs to obtain coverage for our products. Such participation requires us to determine, certify and submit complex pricing calculations to federal agencies and to offer discounts to government programs, as well as government and private purchasers, with penalties for non-compliance. Private insurers may also impose coverage and reimbursement restrictions.

Medicaid. Medicaid is a joint federal and state program that is administered by the states for low income, disabled, and other defined categories of beneficiaries. Our products are eligible to be reimbursed by Medicaid as we participate in the Medicaid Drug Rebate Program, under which participating manufacturers must pay a rebate for each unit of product reimbursed by state Medicaid programs. The amount of the rebate for each product is set by law and includes an additional rebate if certain reported prices increase faster than inflation. State Medicaid programs and Medicaid managed care plans can seek additional “supplemental” rebates from manufacturers in connection with favorable coverage (e.g., positioning on formularies).

Medicare. Medicare is a program administered by the federal government that provides healthcare coverage to individuals age 65 and over, as well as those with certain disabilities. Some of our products are eligible for reimbursement under Medicare Part B. Medicare Part B generally covers drugs that must be administered by physicians. Medicare Part B generally pays for such drugs under a payment methodology based on the average sales price (“ASP”) of the drugs. Some of our products are eligible for reimbursement under Medicare Part D. Medicare Part D generally provides coverage for self-administered drugs (i.e., drugs that do not need to be injected or otherwise administered by a physician). Medicare Part D is administered by private prescription drug plans under contract with and approved by the federal government. Each drug plan establishes its own government-approved Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time-to-time. The drug plans negotiate pricing with manufacturers and may determine formulary placement based on consideration of the availability of manufacturer discounts. Since 2011, manufacturers of branded drugs (which include any drug marketed under an NDA) and biologics have been required to participate in Medicare Part D discount programs in order for their products to be eligible for coverage under Medicare Part D. Effective January 1, 2025, a new manufacturer discount program Medicare Part D Manufacturer Discount Program ("MDP") took effect, requiring manufacturers to pay a discount of 10% of the reimbursement in the initial phase of the Part D benefit and 20% in the catastrophic phase of the benefit. Additionally, as the result of recent changes, drug utilization under Medicare Part B and Part D may be subject to an additional rebate if the pricing increases more than inflation.

Federal Purchasers. Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule (“FSS”). FSS participation is required for a drug product to be covered and reimbursed by certain federal agencies and for coverage under Medicaid, Medicare Part B and the Public Health Service (“PHS”) 340B drug pricing program. FSS pricing is determined based, in part, on manufacturer-reported prices and is further negotiated periodically with the Department of Veterans Affairs. In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and PHS are subject to a cap on pricing (known as the “federal ceiling price”) and may be subject to an additional discount if pricing increases more than the rate of inflation.

PHS 340B Drug Pricing Program. To maintain coverage of drugs under the Medicaid Drug Rebate Program, manufacturers are required to extend discounts to certain purchasers under the PHS 340B drug pricing program. Purchasers eligible for discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics and other entities that receive health services grants from the PHS.

More generally, in the U.S., third-party payors are increasingly seeking to control drug costs by examining the cost effectiveness of products and services in addition to their safety and efficacy, managing drug utilization and challenging the price of drugs. To obtain or maintain coverage and reimbursement for our products, we may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of our product. These studies will be in addition to the studies required to obtain regulatory approvals. Third-party payors may limit coverage of product by, for example, only covering specific products on an approved list, or formulary, which might not include all of the FDA approved products for a particular indication. Some third-party payors may manage utilization of a particular product by requiring pre-approval (known as “prior authorization”) for coverage of particular prescriptions (to allow the payor to assess medical necessity) or otherwise restricting coverage of a product even if used consistent with its approved indication. Our branded and generic products with other generic competition may be subject to increasing price erosion.

The containment of healthcare costs also has become a priority of federal, state and foreign governments. In the U.S., in recent years, the pharmaceutical industry has been a particular focus of such reform efforts and has been significantly affected by major legislative, administrative and executive initiatives. For example, the Inflation Reduction Act (“IRA”) of 2022 included a number of changes intended to address rising prescription drug prices in Medicare Parts B and D. These changes included caps on Medicare Part D out-of-pocket costs, Medicare Part B and Part D drug price inflation rebates, a new Medicare Part D manufacturer discount drug program (replacing the previous coverage gap discount program) and a drug price negotiation program for certain high-spend Medicare Part B and D drugs. The IRA has had and will likely continue to have a significant impact on the pharmaceutical industry. Beyond the IRA, changes to Medicaid effective in 2024 eliminated the Medicaid rebate cap. Additionally, changes to certain Medicare price reporting requirements for drugs beginning in 2026 will likely increase the administrative and compliance burden for manufacturers.

More recently, President Trump issued an executive order in April 2025 with multiple directives aimed at lowering drug prices, including refining the Medicare drug price negotiation program established by the IRA; accelerating competition for high-cost prescription drugs by accelerating approval of generics and biosimilars and facilitating the process for re-classifying prescription drugs as over-the-counter drugs; and increasing drug importation. In May 2025, President Trump issued another executive order that directed government agencies and officials to identify most-favored nation pricing targets for prescription drugs (and looked to pharmaceutical manufacturers to make significant progress towards delivering target prices to patients); to prevent foreign countries from disproportionately shifting the cost of global pharmaceutical research and development to the U.S.; and to facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers to sell their products to patients at the most-favored-nation price. In the wake of the executive orders and related executive initiatives, a number of pharmaceutical manufacturers have announced direct-to-consumer offerings with discounted prices and/or reached agreement with the federal government regarding pricing for drugs, including prices for Medicaid drugs and newly launched products. A website sponsored by the federal government offering pharmaceutical direct-to-consumer channels has also been launched. Federal agencies are developing new drug pricing pilot programs, such as the GENEROUS model, which would authorize the federal government to negotiate Medicaid supplemental rebates with participating manufacturers on behalf of state Medicaid programs, in exchange for standardized coverage criteria for participating manufacturer drugs, and the proposed Medicare Part B and Part D pilot models that, if finalized as proposed, would replace existing inflation-based Medicare rebates with rebates determined on the basis of international prices, for drugs and patients subject to the model. Many of these reform initiatives would require additional legal and/or administrative action to implement and may be subject to legal challenge.

Other federal healthcare reform efforts or actions may affect access to healthcare coverage or the funding of health care benefits, although the full impact of such efforts or actions cannot be predicted.

At the state level, individual states are increasingly implementing initiatives designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and measures to encourage importation from other countries and bulk purchasing. For example, certain states have formed Prescription Drug Affordability Boards that assert authority to set reimbursement rates and/or drug pricing in the state. States are also increasingly expanding or changing Medicaid supplemental rebate programs to secure additional rebates from manufacturers in exchange for drug coverage and to limit coverage of certain drugs for certain Medicaid patients or to all Medicaid patients. These and other future state-level reform activities could negatively affect Medicaid coverage and reimbursement for our products.

In addition, health systems, hospitals and other healthcare organizations are increasingly using bidding procedures (directly or through group purchasing organizations) to determine what pharmaceutical products and which suppliers will be included in their prescription drug formularies or otherwise available. These measures could reduce the ultimate demand for our products or put pressure on our product pricing.

We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments, third party payors, and other purchasing customers pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Other Healthcare Regulation

Our business activities may be subject to other healthcare laws and regulations, including state laws regulating the manufacture and distribution of drugs and biologics, federal and state laws regulating the privacy and security of health information, and federal and state consumer protection laws.

Regulation in the United Kingdom and European Union

ILUVIEN was initially authorized in the United Kingdom on May 4, 2012, following a full stand-alone application under Article 8(3) of Directive 2001/83/EC (as amended) for the known active substance fluocinolone acetonide. At that time, Campharm Limited was the marketing authorization holder, with ownership subsequently transferred to Alimera Sciences Limited on September 26, 2012.

In the European Union, ILUVIEN received approval via the decentralized procedure, with the UK acting as the Reference Member State and Austria, France, Germany, Italy, Portugal and Spain acting as Concerned Member States. This process concluded positively on February 27, 2012. A subsequent wave of mutual recognition, finalized on June 26, 2014, extended approval to Belgium, Czech Republic, Denmark, Finland, Luxembourg, Norway, Poland, Republic of Ireland, Sweden, and the Netherlands. Following the UK’s exit from the EU, the Republic of Ireland assumed the role of Reference Member State, overseeing ongoing management of the mutual recognition procedure.

The EU employs several procedures for granting marketing authorizations for medicinal products, ensuring consistent and efficient evaluation across Member States while accommodating national and regional requirements. The centralized procedure, managed by the European Medicines Agency (“EMA”) and granted by the European Commission, is mandatory for certain categories of medicines, including those produced via biotechnology, orphan drugs, advanced therapies and treatments for viral diseases, cancer, autoimmune and immune disorders, neurodegenerative diseases and diabetes. It is optional for other new active substances that offer significant therapeutic, scientific or technical innovation, or are considered beneficial for public health at the EU level.

For products outside the scope of the centralized procedure, companies may pursue approval through the decentralized procedure—used for products not yet authorized in the EU, allowing simultaneous authorization in multiple Member States led by a Reference Member State—or through the mutual recognition procedure, which extends an existing national authorization to other Member States. The national procedure remains available for products intended for use exclusively within a single Member State.

In both the EU and UK, a post-authorization Risk Management Plan (“RMP”) is required for all new medicinal products to ensure ongoing monitoring of safety and effective management of risks after a product is placed on the market. The RMP outlines identified and potential risks, plans for pharmacovigilance activities, and risk minimization measures. In the EU, RMPs are governed by Regulation (EU) No 726/2004 and Directive 2001/83/EC and are assessed by the EMA. In the UK, following Brexit, the Medicines and Healthcare products Regulatory Agency (“MHRA”) requires submission of an RMP under the Human Medicines Regulations 2012, and the content and format remain closely aligned with EU standards, though the MHRA conducts its own independent assessment.

Drug pricing and market access in the EU Member States and the UK are determined at the national level, resulting in considerable variation. After obtaining marketing authorization, pharmaceutical companies must navigate individual national processes for pricing and reimbursement, typically involving health technology assessments, cost-effectiveness evaluations, budget impact assessments, and price negotiations with national authorities. Each country has its own agencies and criteria, leading to differences in timelines, pricing outcomes, and patient access. In the UK, the National Institute for Health and Care Excellence and health technology bodies in the devolved governments assess clinical and cost-effectiveness, making recommendations for reimbursement in the National Health System (“NHS”). Drug pricing is traditionally regulated in the UK through the Voluntary Scheme for Branded Medicines Pricing and Access (“VPAS”) or the statutory scheme, both of which limit annual NHS expenditure growth on branded medicines and may require manufacturer rebates. The UK’s new voluntary drug pricing system is the 2024 Voluntary Scheme for Branded Medicines Pricing and Access, replacing the old VPAS, running from 2024-2028, and negotiated by the UK Government, the NHS, and the pharmaceutical industry. It controls NHS spending by requiring drug companies to pay rebates (around 22.9% for 2025, dropping to 14.5% for 2026) on sales above a set growth level, plus extra for an £400m investment fund in clinical trials and manufacturing, aiming to balance access to innovation with a sustainable NHS and boost UK life sciences.

Generic medicinal products in the EU and the UK are authorized through a well-established regulatory pathway set out in Directive 2001/83/EC, as amended. Each reference medicinal product approved under Article 8(3) of Directive 2001/83/EC benefits from eight years of regulatory data protection, during which a generic applicant cannot cross-reference the originator’s non-clinical and clinical data on safety and efficacy. This is followed by two years of marketing protection, during which a generic product cannot be placed on the market, resulting in a standard total protection period of ten years. This period may be extended to eleven years if, within the initial eight years, one or more new indications are approved, and these are deemed to offer a significant clinical benefit over existing therapies. To be authorized, a generic product must have the same qualitative and quantitative composition in active substance(s), the same pharmaceutical form, and must be demonstrated to be bioequivalent to the reference medicinal product. Otherwise, if there are differences in these aspects, additional preclinical and/or clinical data must be provided to address the lack of similarity between the generic and the reference medicinal product.

In the EU, orphan designation is granted based on an evaluation of disease prevalence, with the threshold set at fewer than 5 in 10,000 individuals. Additionally, the product must demonstrate a significant benefit over existing authorized treatments. Alternatively, orphan designation may be granted if there is evidence that the return on investment would be insufficient to justify the research and development of the product. The orphan designation must be reassessed and confirmed at the time of marketing authorization to ensure that the criteria for designation continue to be met; otherwise, the designation may be revoked, as confirmed by the rulings of the EU General Court in Bristol-Myers Squibb v. European Commission and European Medicines Agency, and Sanofi v. European Commission and European Medicines Agency that clarified that orphan designation can be withdrawn if the criteria are no longer satisfied at the time of marketing authorization. If orphan designation is maintained at the time of marketing authorization, the product is granted a period of 10 years of orphan market exclusivity, which may be extended to 12 years if data are generated in accordance with an agreed pediatric investigation plan, even if those data do not result in approval of a pediatric indication.

Regulation (EU) 2021/2282, known as the EU Health Technology Assessment (“HTA”) Regulation, establishes a harmonized framework for evaluating certain health technologies across EU Member States. Effective from January 12, 2025, the regulation aims to improve the efficiency, consistency, and transparency of HTA processes, supporting evidence-based decision-making for pricing and reimbursement. However, it does not harmonize national pricing and reimbursement decisions, which remain under the authority of individual Member States. Instead, the regulation focuses on joint clinical assessments to streamline and strengthen the evidence base for national decision-making.

The EU Clinical Trials Regulation (Regulation (EU) No 536/2014), effective from January 31, 2022, harmonizes and streamlines the approval and oversight of clinical trials across Member States by introducing a centralized application process through the EU Clinical Trials Information System, coordinated scientific and ethical assessments, enhanced transparency through public access to trial data, and strengthened safety reporting requirements, thereby facilitating efficient multi-country trials and improving participant protection throughout the EU. Following its exit from the EU, the UK did not adopt the EU Clinical Trials Regulation and continues to apply the previous EU Clinical Trials Directive (2001/20/EC) through local rules. However, the UK has recently enacted new clinical trials regulations, the Medicines for Human Use (Clinical Trials) (Amendment) Regulations 2024, which will take full effect from April 10, 2026. These reforms place patient safety and benefit at the center of all clinical trials, aim to cut duplication and unnecessary delays while maintaining robust safety oversight, and create a proportionate and flexible regulatory environment that reduces bureaucracy for lower-risk trials. The new framework is designed to cement the UK’s position as a destination for international trials and provides a streamlined, agile, and responsive approach to support innovation in clinical research.

Recent legislative proposals in the EU to revise the existing regulatory framework for pharmaceuticals and biotechnology reflect the European Commission’s commitment to modernizing and strengthening the sector. EU Pharma Package, proposed in April 2023, is the most significant overhaul of EU pharmaceutical legislation in 20 years. Its goals are to improve access to medicines, enhance supply security, support innovation, and address antimicrobial resistance. Major changes include streamlining and shortening regulatory procedures to accelerate market access; revising data and market exclusivity periods to incentivize innovation while promoting timely generic and biosimilar entry; strengthening environmental risk assessments for medicines; introducing measures to address shortages and improve supply chain resilience; enhancing transparency and harmonization in regulatory processes. The European Commission has announced plans for a dedicated Biotech Act as part of its broader strategy to boost biotechnology and biomanufacturing in Europe. While details are still emerging, the act is expected to simplify regulatory pathways for biotech products; support research, development, and manufacturing capacity; foster public-private partnerships and investment in biotechnology; address regulatory barriers and promote innovation in areas such as advanced therapies, synthetic biology, and biomanufacturing.

Patents, Trademarks, and Licenses

Our success depends in part on our and our licensors’ ability to obtain and maintain proprietary protection for our key branded products or any future products or product candidates, technology and know-how, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights.

Because we license certain intellectual property relating to ILUVIEN from third parties, we depend on their ability to obtain and maintain such protection. Where we have conducted our own research, our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

As of December 31, 2025, we owned six U.S. patents as well as pending patent applications relating to Cortrophin Gel. In addition, as a result of the Alimera acquisition, in September 2024, we acquired rights to two U.S. utility patents covering ILUVIEN and YUTIQ and foreign counterparts to an expired U.S. design patent covering the ILUVIEN injector. We license one utility patent right relating to the YUTIQ injector from EyePoint Pharmaceuticals US, Inc. (f/k/a pSivida US, Inc. or “EyePoint”). Pursuant to an amended and restated license agreement (the "A&R Collaboration Agreement") with EyePoint, our ILUVIEN-related patent rights are only for diseases of the human eye in Europe, the Middle East and Africa, and for diseases of the human eye excluding uveitis in the rest of the world. Pursuant to a product rights agreement ("Product Rights Agreement") entered into with EyePoint in May 2023, these rights have been expanded to include uveitis worldwide except for China and certain other countries in Asia.

U.S. utility patents generally have a term of 20 years from the date of filing. The utility patent rights relating to ILUVIEN that EyePoint licensed to us include one U.S. patent that will expire in August 2027. An additional licensed patent relating to the YUTIQ injector will expire in January 2028.

In addition to Cortrophin Gel, ILUVIEN and YUTIQ, we own the trademarks for most of our branded products, including Cortenema, Cortrophin-Zinc, Inderal LA, Inderal XL, InnoPran XL, Inzirqo, Kionex, Lithobid, Reglan, SOVUNA, Tezruly, Vancocin, and Veregen. We license the trademarks for Atacand, Atacand HCT, Arimidex, Casodex, Oxistat. With the exception of a license for patent technology for Inderal XL, InnoPran XL, and Veregen, we do not license any patents associated with these products. Further, patent protection and market exclusivity for some of these branded products have expired, with the exception of the Veregen product, which has one patent set to expire in October 2026. Therefore, we consider the trademarks to be of material value and we act to protect these rights from infringement. However, our business is not dependent upon any single trademark. Trademark protection continues in some countries as long as used, and in other countries, as long as registered. Registration is for fixed terms and may be renewed indefinitely. We believe that sales of our branded products have benefited and will continue to benefit from the value of the product names. We also recently acquired certain patents and patent applications relating to baclofen and a patent was granted on our hydrochlorothiazide product.

The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. Our ability to maintain and solidify our proprietary position for our technology will depend on our and our licensor’s success in obtaining effective claims and enforcing those claims once granted. We do not know whether any of our patent applications or those patent applications that we license will result in the issuance of any patents. Our issued patents and those that may issue in the future, or those licensed to us, may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for our products. In addition, the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies or duplicate any technology we develop. Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before such product can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent.

We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets are difficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements with our employees, consultants, scientific advisors and other contractors. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Distribution Agreements

In addition to selling products under our own NDAs and ANDAs, we enter into marketing and distribution agreements from time to time with third parties pursuant to which we sell products under ANDAs or NDAs owned or licensed by these third parties. These products are sold under our own label.

Customers

Our customers include national wholesalers, specialty pharmacies, retail pharmacy chains, distributors, mail order houses, group purchasing organizations, and hospitals and healthcare providers, which then sell our products to patients.

In recent years, the wholesale distributor network for our pharmaceutical products has been subject to increasing consolidation, which has increased the concentration of our wholesale customers. In addition, the number of retail market chains and, in particular, the number of independent drug stores and small chains, has decreased as retail consolidation has occurred, also increasing the concentration of our retail customers. As a result of this trend toward consolidation, a smaller number of companies each control a larger share of pharmaceutical distribution channels. For the year ended December 31, 2025, approximately 53% of our net revenues were attributable to three customers. For the years ended December 31, 2024 and 2023 approximately 64% and 70%, respectively, of our net revenues were attributable to four customers.

In the Rare Disease business, specifically for Cortrophin Gel, there is a limited distribution network and a select group of specialty pharmacies which dispenses product to appropriate patients. We contract and engage with the largest health insurance payers across the appropriate channels and classes of trade. For ILUVIEN, our sales personnel focus on physician offices, clinics, pharmacies and hospitals in the U.S. and in foreign countries where we seek to engage end users to purchase our products.

Consistent with industry practice, we maintain a return policy that allows customers to return product within a specified period prior to and subsequent to the expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Estimates” for a discussion of our accruals for chargebacks, rebates, returns, and other allowances.

Sales, Marketing, and Distribution

We market, sell, and distribute our products in the U.S. and internationally. Our products are distributed through the following channels:

•Wholesalers. We conduct business with the three major wholesalers in the U.S.: Cencora, Inc., Cardinal Health, and McKesson.

•Specialty Pharmacies. We contract with specialty pharmacies, such as CVS Specialty Pharmacy, Accredo Specialty Pharmacy, ASD Specialty Healthcare, Optum Specialty Pharmacy, and others to dispense our Rare Disease products, including Cortrophin Gel.

•Retail Pharmacy Chains. We conduct business with all the major retail chains in the U.S. including CVS, Kroger, Walmart, and Walgreens among others.

•U.S. and International Distributors. We have contracts with several major distributors in the U.S., including Anda, Smith Drug Company, Morris Dickson, CVS Caremark, Accredo, OptumRx, CuraScript and several other partners. We also have various agreements with international distributors for our ILUVIEN product.

•Group Purchasing Organizations. We have contracts with group purchasing organizations in the U.S., including ClarusONE, Walgreens Boots Alliance Development Group, Red Oak Sourcing, Econdisc, Optisource, Rx Sourcing Strategies, The Premier Group, Topco, The Buyer’s Consortium, Managed Health Care Associates Inc., Asembia, and Premier Inc., among others.

•Hospitals, Clinics, and Physicians. In our Rare Disease business, specifically for ILUVIEN, we contract with certain hospital systems, clinics, and physicians.

Competition

Consolidation among pharmaceutical companies has created opportunities by reducing the number of competitors. However, as competitors grow larger through consolidation, so do their resources. Larger competitors may be able to aggressively decrease prices in order to gain market share on certain products and may have resources that would allow them to market their products more effectively to potential customers.

Certain of our products face limited competition due to complexities in formulation, API sourcing, and materials handling and manufacturing, as well as regulatory hurdles. Nevertheless, we compete with numerous other pharmaceutical companies, including large, global pharmaceutical manufacturers capable of addressing these complexities and hurdles with respect to products that we currently produce and products that are in our pipeline.

Our sales can also be impacted by new studies that indicate that a competitor’s product has greater efficacy than one of our products. If competitors introduce new products with therapeutic or cost advantages, our products can be subject to progressive price reductions and/or decreased volume of sales.

Generics and Others Segment

The primary means of competition among generic drug manufacturers are pricing, contract terms, service levels, and reliability. To compete effectively, we seek to consistently produce high-quality, reliable, and effective products. We also establish active working relationships with each of our customers, continually gather important market information in order to respond successfully to requests for proposals, maintain sufficient inventories to assure high service levels, and work to reduce product costs by sourcing and qualifying alternative suppliers whenever possible.

Our principal competitors for our Generics portfolio of pharmaceutical products include, but are not limited to:

•Amneal Pharmaceuticals, Inc., Apotex Inc., Aurobindo Pharma, Camber Pharmaceuticals Inc., Hikma Pharmaceuticals plc, Lupin Pharmaceuticals, Inc., Rising Pharmaceuticals, Inc., Strides Pharma Inc., Sun Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc., Viatris Inc., and Zydus Pharmaceuticals USA.

Rare Disease and Brands Segment

The majority of our Brands portfolio of pharmaceutical products faces competition from generic products and we expect these products to continue to face competition from generic products in the future. Our principal competitor for Cortrophin Gel is Acthar® Gel which is marketed by Keenova Therapeutics plc.

The principal competitors for ILUVIEN are:

DME Competitors

•Eylea© (aflibercept) 4 mg and Eylea® HD (aflibercept) 8 mg, marketed by Regeneron in the U.S. and by Bayer in the European Economic Area ("EEA"); Vabysmo® (faricimab-svoa), marketed by Genentech; Avastin© (bevacizumab), Lucentis© (ranibizumab injection), marketed by Genentech (Roche) in the U.S. and Novartis in the rest of the world; Ozurdex© (dexamethasone intravitreal implant), marketed by Allergan, an AbbVie company; PAVBLU® (aflibercept-ayyh) marketed by Amgen Inc.; and TRIESENCE® (triamcinolone acetonide injectable suspension) marketed by Harrow Eye, LLC.

NIU-PS Competitors

•Ozurdex© (dexamethasone intravitreal implant), marketed by Allergan, an AbbVie company; Xipere® (triamcinolone acetonide injectable suspension 40 mg/ml) marketed by Bausch & Lomb; Retisert®, marketed by Bausch and Lomb; Humira© (adalimumab), marketed by AbbVie; and TRIESENCE® (triamcinolone acetonide injectable suspension) marketed by Harrow Eye, LLC.

Product Liability

Product liability litigation represents an inherent risk to all firms in the pharmaceutical industry. We utilize traditional third-party insurance policies with regard to our product liability claims. Such insurance coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.

Human Capital

As of January 2026, we have 970 employees, of which 753 are in the U.S., 148 in India, 30 in the UK, 19 in Germany, 11 in Portugal, 8 in Ireland, and 1 in Canada. We also utilize agency resources as well as a small number of part-time and consultant resources to meet our operational needs and we believe our turnover is in line with similar businesses in our industry and locations.

Our Purpose and Core Values

Our human capital management strategy is guided by our purpose and core values. Our purpose is Serving Patients, Improving Lives. Our core values are Patient First, Teamwork, Innovation, Integrity & Compliance, Accountability & Transparency, and Commitment to Excellence. We believe that our purpose and core values provide clarity, a shared language, and ultimately create what is distinctive about our company and our culture. We are motivated to bring our best to ANI every day by the patients we serve, the people we work with, the direct impact we have on the work, and the learning, growth and development opportunities we provide.

Culture, Engagement, and Diversity, Equity, and Inclusion

We believe that attracting, retaining, and promoting engagement for talented employees is critical to the success of our business, and we take pride in our values, culture, and communities. We are committed to creating a diverse, equitable, and inclusive work environment within all levels of the business.

Furthermore, we do not tolerate discrimination or harassment of any kind against anyone (including because of gender, gender identity, race, ethnicity, or sexual orientation), or the use of child or forced labor. We value employee input and conduct focus groups and survey employees on specific topics (e.g. approximately 30% of our employees participated in a benefits and wellness survey in 2025). We offer ongoing training and career development to all employees, both through curriculum developed internally, and through external resources (e.g. LinkedIn Learning). Together, we own our culture and participate in ongoing open dialogue as we strive for continued growth.

We believe that no one should go without medicines that they need. We maintain the ANI Rare Disease Patient Assistance Program, Inc. for the purpose of providing certain medicine for free to patients in the U.S. who do not have prescription drug or health insurance coverage and who, without assistance, cannot afford their medicine. In addition, ANI Pharmaceuticals has provided patient-related financial support to nonprofit organizations that are aligned with our mission to address unmet needs. Our charitable contributions support initiatives and programs that advance medical care or patient care within the Company's therapeutic areas of focus.

Total Rewards

Our Total Rewards philosophy is grounded in pay for performance and seeks to provide compensation and benefits that are competitive within the pharmaceuticals industry, as well as competitive with local employers for jobs of a cross-industry nature. We pay fair and competitive salaries, short-term incentives, and long-term incentives that are informed by external market rates and internal equity. We recognize and reward employee performance, productivity, and alignment with our core values. We believe that a holistic rewards strategy should also go beyond compensation and benefits to consider elements such as wellness, recognition, and purpose. We support flexible and remote working arrangements throughout the business, as we are able.

Health and Safety Management and Training

We are committed to the safety and health of our employees, patient-customers, and the public. It is critical within our mission to ensure we keep our employees and customers safe while accomplishing our business goals. We have established a health and safety program with a focus on continuous improvement and employee engagement. Our personnel are encouraged to take corrective actions where appropriate and to communicate concerns to management with a “see something, say something” approach. We recognize and reward personnel for contributing to the safety system within our working environment. The overall program continually evolves to reflect regulatory changes and compliance standard industry best practices. As part of onboarding new employees, we provide health and safety training and periodic training programs to maintain and improve employee awareness of safety issues. The goal of the safety training programs is to ensure that our staff are well informed on the subject matters and have the appropriate tools to make sound health and safety decisions in our day-to-day operations.

Furthermore, our Employee Wellness Steering Committee is dedicated to creating a culture where every employee thrives—physically, mentally, and emotionally. The Steering Committee is committed to empowering our team by providing access to resources that promote overall well-being, foster a sense of belonging, and inspire purpose. Through continuous education, meaningful engagement, and ongoing improvement, the Steering Committee strives to cultivate an environment where our people are healthy, resilient, and compassionate. Additionally, our Employee Assistance Program offers mental/psychological support and a variety of resources to support our employees.

Environmental Stewardship and Sustainability

We are committed to Serving Patients, Improving Lives, both directly though our high-quality products, and through our environmental stewardship and sustainability practices. We strive to minimize waste and emissions, promote reuse and recycling, and conserve resources. Our Environmental, Social, and Governance ("ESG") Steering Committee was formed in October 2023 to oversee cross-functional initiatives. The ESG Steering Committee reports to our Board of Directors through our Nominating and Corporate Governance Committee ("N&CG Committee") and is committed to providing progress updates at least twice per year. The N&CG Committee is responsible for reviewing, monitoring, evaluating, and overseeing ANI’s programs, policies and practices relating to ESG risks and opportunities, including climate, and assessing their impacts to support the sustainable growth of ANI’s businesses.

Available Information

We file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act, with the SEC. We make available free of charge on our website (www.anipharmaceuticals.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those filings as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Also posted on our website in the “Investors – Governance” section are our Corporate Governance Guidelines, Code of Ethics and the charters for the Audit and Finance, Compensation, and N&CG Committees. Information on, or accessible through, our website is not a part of, and is not incorporated into, this report or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to Investor Relations, c/o ANI Pharmaceuticals, Inc., 210 Main Street West, Baudette, Minnesota, 56623.

ANI PHARMACEUTICALS INC (ANIP) Business

Item 1. Business

Strategy

Table of Contents

Building a Successful Rare Disease and Brands Segment

Strengthening Our Generics and Other Segment

Table of Contents

Products

Manufacturing, Suppliers, and Raw Materials

Table of Contents

Government Regulation

The Drug Approval Process

Table of Contents

Clinical Trials

The purpose of a clinical trial is to generate the data necessary to demonstrate the safety of the product candidate for its intended use, establish the overall risk-benefit profile of the product candidate and provide an adequate basis for physician labeling.

NDA Approval Process

Table of Contents

Abbreviated New Drug Application Development and Approval Process

Competitive Generic Therapy

Section 505(b)(2) NDA Development and Approval Process

Table of Contents

Orphan Drug Designation

Post-Approval Requirements

Table of Contents

Drug Advertising, Marketing and Promotion

Table of Contents

Regulation of Controlled Substances

Regulation of Unapproved Products

Table of Contents

Pharmaceutical Coverage, Pricing, and Reimbursement

Table of Contents

Other federal healthcare reform efforts or actions may affect access to healthcare coverage or the funding of health care benefits, although the full impact of such efforts or actions cannot be predicted.

Table of Contents

Other Healthcare Regulation

Table of Contents

Patents, Trademarks, and Licenses

Table of Contents

Distribution Agreements

Table of Contents

Customers

Sales, Marketing, and Distribution

Competition

Table of Contents

Generics and Others Segment

Rare Disease and Brands Segment

DME Competitors

NIU-PS Competitors

Product Liability

Human Capital

Table of Contents

Our Purpose and Core Values

Culture, Engagement, and Diversity, Equity, and Inclusion

Total Rewards

Health and Safety Management and Training

Table of Contents

Environmental Stewardship and Sustainability

Available Information