ITEM 1A.  RISK FACTORS:

The following information sets forth material risks and uncertainties that may affect our business, including our future financial and operational results and could cause our actual results to differ materially from those contained in forward ‑looking statements we have made in this Annual Report on Form 10 ‑K and elsewhere as discussed in the introduction to Part I above. You should carefully consider the risks described below, in addition to the other information in this Annual Report on Form 10 ‑K, before making an investment decision. The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us to present material risks to our business at this time also may impair our business operations.

Risks Related to Our Products and Services

We are primarily dependent on revenues from our principal products and services.

We currently derive substantially all of our revenue from sales of Makena, s ervices related to the collection, processing and storage of umbilical cord blood stem cell and cord tissue units (the “CBR Services”) and Feraheme . Although we may introduce additional products or services for commercialization to our portfolio, we may be substantially dependent on sales of our current products and services for many years. Our financial condition will be materially adversely affected, we may have to restructure our current operations, and our business prospects will be limited if we experience any significant negative developments relating to our products or services, including the following:

● Actual or perceived safety or efficacy issues;

● Restrictions on current or future labels or other regulatory actions;

● The introduction or greater acceptance of competing products or services, including generic products, products that may be prescribed off-label  ( i.e., outside of indications approved by the U.S. Food and Drug Administration (the “FDA”) ) , products made by compounding pharmacies or cryopreservation services offered by other cord blood banks ;  

● Change in consumers’ perception of the value of the cryopreservation of cord blood and /or cord tissue ;

● Constraints on product or service pricing or the impact of price increases;

● The success of our commercialization efforts, such as our ability to retain or grow our current customer base, realize the benefit of our current orphan drug exclusivity and successfully implement our next generation development programs; and

● Changes in reimbursement policies or adverse regulatory or legislative developments.

If our products face any safety or efficacy issues, including drug interaction problems, under the Federal Food, Drug and Cosmetic Act (the "FDC Act"), the FDA has broad authority to force us to take any number of actions, including, but not limited to the following:

● Requiring us to conduct post-approval clinical studies to assess known risks or new signals of serious risks, or to evaluate unexpected serious risks;

● Mandating changes to a product ’s label ;  

● Requiring us to implement a risk evaluation and mitigation strategy ("REMS") where necessary to assure safe use of the drug; or

● Removing an already approved product from the market.

Further, until our recent acquisition of Cord Blood Registry (“ CBR ”) , we had no experience providing services or maintaining a service-based business model. The success of our expanded enterprise will be dependent on our ability to manage and promote the CBR Services, which is subject to a number of risks and uncertainties, including our ability to maintain compliance with all applicable FDA or accrediting organization regulations, including those regarding cord blood and cord tissue collection, processing and storage services, the application to and implications for CBR’s operations of certain laws, regulations and industry guidelines relating to healthcare or stem cell preservation companies, new and evolving regulatory restrictions on cord blood and cord tissue banking, and those other risks described below under Risks Related to CBR. 

The commercial success of our products and services depends upon the level of market adoption and continued use by and the support of physicians, hospitals, patients, and /or healthcare payers, including government payers, health maintenance organizations (“HMOs”), consumers, managed care organizations and specialty pharmacies. Our products and services might not be adopted if perceived to be no safer, less safe, no more effective, less effective, no more convenient, less convenient , or less valuable than currently available products or services . In addition, the pricing and/or reimbursement rates and terms of our products may not be viewed as advantageous to potential prescribers, and payers as compared to the pricing and/or reimbursement rates and terms of other available products, including, generic products and in the case of Makena , compounded products. If our products or services do not achieve or maintain an adequate level of market adoption for any reason, our profitability and our future business prospects will be adversely impacted.

Competition in the pharmaceutical and biopharmaceutical industries, including from companies marketing generic products, is intense. In addition, competition in the cord blood stem cell and cord tissue banking processing and storage business is increasing. If we fail to compete effectively, our business and market position will suffer.

The pharmaceutical and cord blood banking   industries are intensely competitive and subject to rapid technological change. For Makena , most of our competition comes from pharmacies that compound a non-FDA approved version of Makena , which is sold at a much lower list price than Makena . Many of our competitors for Feraheme are large, well-known pharmaceutical companies and may benefit from significantly greater financial, sales and marketing capabilities, greater technological or competitive advantages, and other resources.  For the CBR Services, competition in the private cord blood and cord tissue banking business is already intense and is likely to increase as the number of competitors continues to grow, given the relatively low barriers to entry. Our existing or potential competitors may develop products or services that are more widely accepted than ours and may receive patent protection that dominates, blocks , makes obsolete or adversely affects our product development or business.   The introduction by our competitors of alternatives to our products or services that would be, or are perceived to be, more efficacious, safer, less expensive, easier to administer, available for a broader patient population, provide more favorable insurance coverage, reimbursement or terms, or less valuable than currently available products or services could reduce our revenues and the value of our product development and commercialization efforts . For more information on specific competition risks for our products or services , please see Risk Factors “ Our ability to successfully commercialize Makena is dependent upon a number of factors, including maintaining the benefits of Makena’s orphan drug exclusivity and the length of time before competitors begin selling generic versions of Makena” ;   “ Market acceptance of Feraheme may suffer as a result of the widespread use of competing iron replacement therapy products, including Injectafer ® , and as a result of the approval of generic drug products in the near-term, which would have a material adverse effect on our operations and our profitability ”; and  “ Competition in the umbilical cord blood stem cell and cord tissue banking business is significant and may be increasing. If we are unable to maintain our position as the market leader, our CBR business may decline and our results of operations could suffer. ”

The success of our products depends on our ability to maintain the proprietary nature of our technology.

We rely on a combination of patents, trademarks and trade secrets in the conduct of our business. The patent positions of pharmaceutical and biopharmaceutical firms are generally uncertain and involve complex legal and factual questions. We may not be successful or timely in obtaining any patents for which we submit applications. The breadth of the claims obtained in our patents may not provide sufficient protection for our technology. The degree of protection afforded by patents for proprietary or licensed technologies or for future discoveries may not be adequate to preserve our ability to protect or commercially exploit those technologies or discoveries. The patents issued to us may provide us with

little or no competitive advantage. In addition, there is a risk that others will independently develop or duplicate similar technology or products or circumvent the patents issued to us.

One of our U.S. Feraheme patents is subject to a patent term extension under U.S. patent law and FDA regulations and will expire in June 2023. Our other U.S. patents relating to Feraheme expire in 2020. These and any other patents issued to or acquired by us may be contested or invalidated. There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. We may become a party to intellectual property litigation and other proceedings, including interference and reexamination proceedings declared by the United States Patent and Trademark Office. For example, on February 5, 2016, we received a Paragraph IV certification notice letter regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Sandoz Inc. (“Sandoz”) requesting approval to engage in commercial manufacture, use and sale of a generic version of Feraheme (ferumoxytol), and we could therefor face generic competition in the near term.  In its notice letter, Sandoz claims that our ferumoxytol patents are invalid, unenforceable and/or not infringed by Sandoz’s manufacture, use, sale or offer for sale of the generic version.  We plan to initiate a patent infringement suit to defend the patents identified in the notice letter within 45 days after our receipt of the notice letter. Once such suit is commenced within this 45-day period, the FDA would be prevented from approving the ANDA until the earlier of 30 months or entry of a district court decision finding the patents invalid or not infringed. Such litigation is often time-consuming and costly, and may result in generic competition if such patents are not upheld or if the generic competitor is found not to infringe such patents. Further, Sandoz’s application could encourage other generic entrants seeking a path to approval of a generic ferumoxytol to file an ANDA. Even if we are successful, such litigation will be expensive and will consume considerable time and other resources, which could materially and adversely impact business.   In addition, there are no patents covering Makena and thus the successful commercialization of Makena is significantly reliant on our ability to take advantage of its orphan drug exclusivity, which risks are described in the Risk Factor - Risks Related to Makena -" Our ability to successfully commercialize Makena is dependent upon a number of factors, including maintaining the benefits of Makena's orphan drug exclusivity and the length of time before competitors begin selling generic versions of Makena ."  

In addition, claims of infringement or violation of the proprietary rights of others may be asserted against us. If we are required to defend against such claims or to protect our own proprietary rights against others, it could result in substantial financial and business costs, including the distraction of our management. An adverse ruling in any litigation or administrative proceeding could result in monetary damages, injunctive relief or otherwise harm our competitive position, including by limiting our marketing and selling activities, increasing the risk for generic competition, limiting our development and commercialization activities or requiring us to obtain licenses to use the relevant technology (which licenses may not be available on commercially reasonable terms, if at all).

We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our corporate licensees, collaborators, contract manufacturers, employees and consultants. These agreements, however, may be breached. We may not have adequate remedies for any such breaches, and our trade secrets might otherwise become known or might be independently discovered by our competitors. In addition, we cannot be certain that others will not independently develop substantially equivalent or superseding proprietary technology, or that an equivalent product or service will not be marketed in competition with our products, thereby substantially reducing the value of our proprietary rights.

We may not be able to further expand our portfolio by entering into additional business development transactions, such as in-licensing arrangements, acquisitions, or collaborations or, if such arrangements are entered into, we may not realize the anticipated benefits and they could disrupt our business, decrease our profitability , result in dilution to our stockholders or cause us to incur significant additional debt or expense.

As part of our business strategy to expand our portfolio, we are seeking to in-license or acquire additional pharmaceutical products or companies that leverage our corporate infrastructure and commercial expertise, such as the recent acquisitions of Lumara Health Inc. ("Lumara Health") and CBR. We have limited experience with respect to these business development activities and there can be no assurance that we will be able to identify or complete any additional transactions in a timely manner, on a cost-effective basis, or at all.

Further, the valuation methods that we use for any acqui red product or business require significant judgment and assumptions. Actual results and performance of the products or businesses that we may acquire, including anticipated synergies and other financial benefits, could differ significantly from our original assumptions, especially during the periods immediately following the closing of the transaction. In addition, acquisitions may cause significant changes to our current organization and operations, may subject us to more rigid or constraining regulations or government oversight and may have negative tax and accounting consequences. These results could have a negative impact on our financial position or results of operations and result in significant charges in future periods.

In addition, proposing, negotiating and implementing collaborations, in-licensing arrangements or acquisition agreements is a lengthy and complex process. Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for these arrangements, and we may not be able to enter into such arrangements on acceptable terms or at all. Further, any such strategic transactions by us could result in large and immediate write-offs or the incurrence of additional debt and contingent liabilities, each of which may contain restrictive covenants that could adversely impact or limit our ability to grow our business, enter into new agreements, and adversely affect our operating results. Management of a license arrangement, collaboration, or other strategic arrangement and/or integration of an acquired asset or company may also disrupt our ongoing business and require management resources that otherwise would be available for ongoing development of our existing enterprise.

In addition, our cash, cash equivalents and investments may not be sufficient to finance any additional strategic transactions, and we may choose to issue shares of our common or preferred stock as consideration, which would result in dilution to our stockholders. Alternatively, it may be necessary for us to raise additional funds through public or private financings, and such additional funds may not be available on terms that are favorable to us, if at all, and our stockholders may experience significant dilution. For example, our term loan facility , which provided us with $350.0 million to finance a portion our CBR acquisition (the "2015 Term Loan Facility") contains restrictions on our ability to acquire additional pharmaceutical products and companies, to consummate mergers, to enter into exclusive licensing arrangements, to incur or guarantee additional indebtedness, to create liens, to transfer or sell assets, to pay dividends and to engage in businesses other than our current businesses. The 2015 Term Loan Facility will also require us to use a portion of our free cash flow to repay indebtedness under the facility on an annual basis. These provisions, and similar restrictions contained in the indenture governing our 2023 Senior Notes, described below, may limit our ability to pursue attractive business development opportunities. If we are unable to successfully obtain rights to suitable products or if any acquisition or in-license arrangement we make is not successful, our business, financial condition and prospects for growth could suffer.

Further, even if we do acquire additional products or businesses, the integration of the operations of such acquired products or businesses requires significant efforts, including the coordination of information technologies, sales and marketing, operations, manufacturing, safety and pharmacovigilance, medical ,   finance and business systems and processes . These efforts result in additional expenses and involve significant amounts of management's time. For example, with the acquisition of CBR in August 2015, our business is significantly larger and more complex than it had been prior to the acquisition. Our future success will significantly depend upon our ability to manage our expanded enterprise, including multiple locations, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

In addition, we may have to rely on the other parties with whom we may enter into a future agreement to perform certain regulatory filings, oversee certain functions, such as pharmacovigilance or the manufacture of the product we license from them, and any failure of such party to perform these functions for any reason, including ceasing doing business, could have a material effect on our ability to commercialize the licensed product. For example ,   as the CBR service-based business model is substantially different from that of our historical business model, which was focused on product sales , we are dependent upon the contributions of the CBR organization , including key CBR personnel and CBR’s pre-acquisition relationships ,  to drive CBR revenues, and we may be unable to continue to retain the commercial organization, including   key personnel ,  or successfully maintain the relationships CBR had in place at the time of the closing of the acquisition. In addition, different skills and training are required for the promotion of a therapeutic product compared to a service business, and our revenues could suffer if this integrated sales force is unable

to successfully promote a portfolio of products and services, especially since they may have limited experience with promoting both a therapeutic and a service business.

If we cannot successfully integrate businesses or products we may acquire or in-license into our company, we may experience material negative consequences to our business, financial condition or results of operations. We cannot be certain that, following any such acquisitions or in-licenses we will achieve the expected synergies and other benefits that justify the purchase price of such transaction.

We are completely dependent on third parties to manufacture our commercial products and any difficulties, disruptions or delays, or the need to find alternative sources, could adversely affect our profitability and future business prospects.

We do not own or operate, and currently do not plan to own or operate, facilities for the manufacture of our products or for any commercial products we may acquire or in-license. We rely solely on third-party contract manufacturers to manufacture our products for our commercial and clinical use and for certain materials required to support our CBR Services. We may not be able to enter into agreements with second source manufacturers whose facilities and procedures comply with current good manufacturing practices ("cGMP") regulations and other regulatory requirements on a timely basis and with terms that are favorable to us, if at all . For example, Hospira, Inc. (“Hospira”) is our sole source manufacturer of Makena and our Development and Supply Agreement with Hospira could terminate as early as December 31, 2016 in the case of the single- dose formulation and as early as December 31, 2017 for the multidose formulation. We cannot make any guarantees that we will be able to extend the term of this agreement on favorable terms, if at all.

Our ability to have our products manufactured in sufficient quantities and at acceptable costs to meet our commercial demand and clinical development needs is dependent on the uninterrupted and efficient operation of our third-party contract manufacturing facilities. Any difficulties, disruptions or delays in the manufacturing process could result in product defects or shipment delays, suspension of manufacturing or sale of the product, recall or withdrawal of product previously shipped for commercial or clinical purposes, inventory write-offs or the inability to meet commercial demand in a timely and cost-effective manner. Furthermore, our current third-party product manufacturers do not manufacture for us exclusively and may exhaust some or all of their resources meeting the demand of other customers. In addition, securing additional third-party contract manufacturers will require significant time for transitioning the necessary manufacturing processes, gaining regulatory approval, and for having the appropriate oversight and may increase the risk of certain problems, including cost overruns, process reproducibility, stability issues, the inability to deliver required quantities of product that conform to specifications in a timely manner, or the inability to manufacture our products or the propriety materials for our services in accordance with cGMP.

Further, we and our third-party product manufacturers currently purchase certain raw and other materials used to manufacture our products from third-party suppliers and, at present, do not have long-term supply contracts with most of these third parties. These third-party suppliers may cease to produce the raw or other materials used in Feraheme and Makena or otherwise fail to supply these materials to us or our third-party manufacturers or fail to supply sufficient quantities of these materials to us or our third-party manufacturers in a timely manner for a number of reasons, including but not limited to the following:

● Adverse financial developments at or affecting the supplier;

● Unexpected demand for or shortage of raw or other materials;

● Regulatory requirements or action;

● An inability to provide timely scheduling and/or sufficient capacity;

● Manufacturing difficulties;

● Changes to the specifications of the raw materials such that they no longer meet our standards;

● Lack of sufficient quantities or profit on the production of raw materials to interest suppliers;

● Labor disputes or shortages; or

● Import or export problems.

Any other interruption in our third-party supply chain could adversely affect our ability to satisfy commercial demand and our clinical development needs for our products. For example, although we believe we have sufficient Makena drug substance in inventory to meet demand until we can qualify a new drug substance manufacturer, we do not currently have a manufacturer for the production of Makena drug substance . The qualification of an alternative source may require repeated testing of the new materials and generate greater expenses to us if materials that we test do not perform in an acceptable manner. In addition, we or our third-party manufacturers sometimes obtain raw or other materials from one vendor only, even where multiple sources are available, to maintain quality control and enhance working relationships with suppliers, which could make us susceptible to price inflation by the sole supplier, thereby increasing our production costs. As a result of the high-quality standards imposed on our raw or other materials, we or our third-party manufacturers may not be able to obtain such materials of the quality required to manufacture Feraheme or Makena from an alternative source on commercially reasonable terms, or in a timely manner, if at all.

We also rely upon third-party contractors to assist in supporting the CBR Services, including to supply proprietary materials , some of which are sole source providers who we believe may have financial difficulty and be unable to fulfill their contractual obligations to us . Although we believe we have sufficient contingency plans in place, if current suppliers need to be changed or are disrupted , especially our sole source providers , we could face operational delays and lost revenue, as well as the need to reconfigure machinery and/or systems, which could be costly.

If, because of the factors discuss ed above, we are unable to have our products manufactured on a timely or sufficient basis, or if our supply chain attendant to the CBR Services is disrupted, we may not be able to meet commercial demand or our clinical development needs for our products , may not be able to manufacture Makena or Feraheme in a cost-effective manner or may be unable to adequately provide the CBR Services. As a result, we may lose sales, fail to generate increased revenues or suffer regulatory setbacks, any of which could have an adverse impact on our profitability and future business prospects.  

We rely on third parties in the conduct of our business, including our clinical trials and product distribution, and if they fail to fulfill their obligations, our commercialization and development plans may be adversely affected.

We rely on and intend to continue to rely on third parties, including clinical research organizations ("CROs"), healthcare providers, third-party logistics providers, packaging, storage and labeling providers, wholesale distributors and certain other important vendors and consultants in the conduct of our business. For example, third-parties who perform tests on behalf of CBR   are responsible for performing such testing in compliance with the FDA regulations that govern those functions. CBR is dependent upon the actions of these third parties with whom CBR contracts. If these third parties fail to comply with applicable requirements, the CBR Services will be negatively affected and at risk of FDA enforcement action, and our business could be negatively affected.

In addition, we have contracted and plan to continue to contract with certain third parties to provide certain services, including site selection, enrollment, monitoring, data management and other services, in connection with the conduct of our clinical trials and the preparation and filing of our regulatory applications. Although we depend heavily on these parties, we do not control them and, therefore, we cannot ensure that these third parties will adequately and timely perform all of their obligations to us. If our third-party service providers cannot adequately fulfill their obligations to us in a timely and satisfactory manner, if the quality and accuracy of our clinical trial data or our regulatory submissions are compromised due to poor quality or failure to adhere to our protocols or regulatory requirements , or if such third parties otherwise fail to adequately discharge their responsibilities or meet deadlines, our current and future development plans and regulatory submissions, or our commercialization efforts in current indications and with the CBR Services, may be delayed, terminated, limited or subject us to additional expense or regulatory action, which would adversely impact our ability to generate revenues.

Further, in most cases, we do not currently have back-up suppliers or service providers to perform these tasks. If any of these third parties experience significant difficulties in their respective processes, fail to maintain compliance with applicable legal or regulatory requirements, fail to meet expected deadlines or otherwise do not carry out their contractual duties to us, or encounter physical or natural damages at their facilities, our ability to deliver our products to meet commercial demand could be significantly impaired. The loss of any of our third-party providers, especially if compounded by a delay or inability to secure an alternate distribution source for end-users in a timely manner, could cause the distribution of our products to be delayed or interrupted, which would have an adverse effect on our business, financial condition and results of operations.

Additionally, we have limited experience independently commercializing multiple pharmaceutical products and services, including managing and maintaining a supply chain and distribution network for multiple products and the CBR Services, and we are placing substantial reliance on third parties to perform this expanded network of supply chain and distribution services for us. Any failure on our part to effectively execute on our portfolio-wide commercial plans or to effectively manage our supply chain and distribution networks would have an adverse impact on our business.

We depend, to a significant degree, on the availability and extent of reimbursement from third-party payers for the use of our products, and a reduction in the availability or extent of reimbursem ent could adversely affect our revenues and results of operations.

Our ability to successfully commercialize our products is dependent, in significant part, on the availability and extent of reimbursement to end-users from third-party payers for the use of our products, including governmental payers, HMOs, managed care organizations and private health insurers. Reimbursement by third-party payers depends on a number of factors, including the third-party's determination that the product is competitively priced, safe and effective, appropriate for the specific patient, and cost-effective. Third-party payers are increasingly challenging the prices charged for pharmaceutical products and have instituted and continue to institute cost containment measures to control or significantly influence the purchase of pharmaceutical products, such as through the use of prior authorizations and step therapy. Certain specialty pharmaceuticals, pharmaceutical companies and pricing strategies have been the subject of increased scrutiny and criticism by politicians and the media, which could also increase pricing pressure throughout the industry or lead to new legislation that may limit our pricing flexibility. If these third-party payers do not provide coverage and reimbursement for our products or provide an insufficient level of coverage and reimbursement, physicians and other healthcare providers may choose to use alternative products, which would have an adverse effect on our ability to generate revenues.

In addition, the U.S. government continues to propose and pass legislation designed to reduce the cost of healthcare for patients. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the "Healthcare Reform Act") includes certain cost containment measures including an increase to the minimum rebates for products covered by Medicaid programs, the extension of such rebates to drugs dispensed to Medicaid beneficiaries enrolled in Medicaid managed care organizations and the expansion of the 340B Drug pricing Program under the Public Health Services Act. In addition, federal budgetary concerns could result in the implementation of significant federal spending cuts, including cuts in Medicare and other health related spending in the near-term. The magnitude of the impact of these laws on our business is uncertain. Further, in recent years, some states have also passed legislation to control the prices of drugs as well as begun a move toward managed care to relieve some of their Medicaid cost burden. Given that almost half of Makena patients are Medicaid beneficiaries, the impact of future legislative changes may have a significant and adverse impact on Makena sales. Further, while Medicare is the predominant payer for Feraheme ,   Medicare payment policy, in time, can also influence pricing and reimbursement in the non-Medicare markets, as private third-party payers and state Medicaid plans frequently adopt Medicare principles in setting reimbursement methodologies. These and any future changes in government regulation or private third-party payers' reimbursement policies may reduce the extent of reimbursement for our products and adversely affect our future operating results.

Risks Related to Makena  

Our ability to successfully commercialize Makena is dependent upon a number of factors, including maintaining the benefits of Makena’s orphan drug exclusivity and the length of time before competitors begin selling generic versions of Makena.

Makena  has been granted orphan drug exclusivity in the U.S. until February 3, 2018 for reducing the risk of preterm birth in women pregnant with a single baby who have a history of singleton spontaneous preterm birth. Our ability to successfully commercialize Makena is dependent upon maintaining Makena’s orphan drug exclusivity. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, defined, in part, as a patient population of fewer than 200,000. The company that first obtains FDA approval for a designated orphan drug for the specified rare disease or condition receives orphan drug marketing exclusivity for that drug for a period of seven years. This orphan drug exclusivity prevents the FDA from approving another application for the same drug for the same orphan indication during the exclusivity period, except in very limited circumstances . A designated orphan drug may not receive orphan drug exclusivity for an approved indication if that indication is for the treatment of a condition broader than that for which it received orphan designation .   In addition, Makena’s orphan drug exclusivity may be lost if the FDA determines that our request for orphan designation was materially defective or if we are unable to assure sufficient quantity of Makena to meet the needs of patients. Furthermore, the FDA may approve a subsequent drug that is otherwise the same as Makena for the same orphan indication during the orphan drug exclusivity period if the sponsor of the subsequent drug can demonstrate that the drug is clinically superior to Makena . Clinical superiority may be demonstrated by showing that a drug is more effective in a clinical trial, safer in a substantial portion of the target population, or provides a major contribution to patient care relative to the currently approved drug.

Additionally, in 1956, the FDA approved the drug Delalutin, which contained the same active ingredient as  Makena . Delalutin was approved for conditions other than reducing the risk of preterm birth and was marketed by Bristol-Myers Squibb (“BMS”). BMS stopped marketing and manufacturing Delalutin and it was withdrawn from the market in 1999. In 2010, the FDA determined that Delalutin was not withdrawn from sale for reasons of safety or efficacy.  As such, generic drug applications may reference the withdrawn Delalutin New Drug Application (“NDA”). In August 2015, the FDA approved an ANDA for hydroxyprogesterone caproate (“HPC”), which was submitted by McGuff Pharmaceuticals, Inc. (“McGuff”) in 2009 ,   and which was subsequently transferred to Aspen Global Incorporated (“Aspen”) in 2015. The ANDA label approved by the FDA for the McGuff product is for the same patient population and indications as Delalutin (i.e., it is approved only for use in non-pregnant women with indications such as uterine cancer or abnormal uterine bleeding). Aspen has indicated that it intends to make its generic version of Delalutin commercially available in the U.S. in 2016 .   Although A spen’s generic version of Delalutin is not indicated for pregnant women and is not therapeutically equivalent to Makena ,   doctors may elect to prescribe this product off-label for  Makena ’s orphan-protected indication, which could have an adverse impact on our business and results of operations. In addition, if such generic Delalutin product is priced at a discount to Makena , commercial or government insurers could prefer or encourage the use of the generic Delalutin product for patients who are indicated for Makena .  

Moreover, if one or more ANDA applicants were to receive approval to sell a generic or follow-on version of  Makena  for the orphan indication, those generic products could potentially be approved as early as February 3, 2018 (the date on which  Makena 's orphan exclusivity ends) and we would become subject to increased competition at that time.

Further, our ability to successfully commercialize  Makena  depends on a number of additional factors, including but not limited to the following:

Failure to achieve any or all of these commercial objectives could have an adverse material effect on the growth of  Makena  and our ability to achieve our revenue forecasts, which could impact our financial condition or results of operations.

We may not be successful in developing, gaining regulatory approval for and commercializing any products from Makena’s next generation development programs, which could have a negative impact on our business.

We are seeking to expand  Makena 's drug delivery technologies and formulations as part of our multi-pronged next generation development programs to deliver new and improved versions of Makena . The next generation development programs for  Makena  is an important strategy for our business, especially in light of the expiration of  Makena 's orphan drug exclusivity in February 2018, and the possibility that generic versions of Makena could enter the market following such loss of exclusivity.

For example, we are working to develop an auto-injector device for subcutaneous administration of Makena (the “auto-injector”), which could possibly provide Makena with additional exclusivity through the combination of potential additional orphan drug exclusivity and patent protection on the new dosing, route of administration and auto-injector. Although our current timelines anticipate a launch of the auto-injector prior to the loss of current exclusivity in February 2018, this is only an estimate and we can make no assurances that the development work necessary to obtain approval, including the results of planned bioequivalence clinical studies, will yield the anticipated results , or that the FDA will approve the auto-inj ector on the expected timelines or at all. Further, we can make no assurances that clinical data or other information that we generate or submit will be adequate for the FDA to grant new orphan drug exclusivity for the auto-injector. The degree of protection afforded by any intellectual property that we may in-license or develop may not enable us to protect or commercially exploit the auto-injector technology, providing us with little or no competitive advantage. In addition, there is a risk that others may circumvent any patents licensed or issued to us relating to the auto-injector, including any intellectual property covering the injector device, or that another company may develop a product that circumvents any new orphan drug exclusivity.

We are relying on third-party manufacturers to aid in the design of the injector device as part of the auto-injector, and we may encounter difficulties finalizing a safe and effective subcutaneous delivery system design. Further, we are currently in discussions with third-party manufacturers to secure commercial supply of certain components and for assembly of the auto-injector. We may not be able to reach agreement on acceptable terms or encounter difficulties including problems involving scale-up, yields, quality control and assurance, product reliability, and manufacturing costs, any of which could result in significant delays in production.

As another example, we are in the early stages of developing a longer-acting formulation of Makena , that could potentially be eligible for orphan drug exclusivity. Because this is a new formulation of Makena , our path to gaining regulatory approval will require us to perform additional formulation work as well as pre-clinical and clinical studies attempting to demonstrate clinical safety and efficacy of the new formulation, rather than gaining approval by demonstrating bioequivalence with the current form of Makena .   Furthermore, in order to be eligible for orphan

exclusivity, we would likely need to demonstrate that this new formulation of Makena is clinically superior to the current form of Makena .   Thus, pursuing the new formulation will require significant resources, financial and otherwise, over a considerable period of time. Despite our efforts, we may not be successful in developing the longer-acting formulation, including because the data obtained from any pre-clinical and clinical trials that we undertake may not generate anticipated results, may not demonstrate appropriate safety and efficacy, may be subject to varying interpretations and may not be deemed adequate by the FDA. Unexpected or unfavorable pre-clinical or clinical data can delay, limit or prevent regulatory approval. Failure to demonstrate clinical superiority to the current version of Makena will li k e l y preclude the new formulation of Makena from being eligible for orphan drug exclusivity. 

Even if we succeed in gaining FDA approval for an auto-injector or the new formulation for Makena , we will likely be competing against generics of the current formulation of Makena after February 2018. These generics could be less expensive than our potential new and improved version of Makena . As a result of the lower cost for the generics or a lack of perceived benefit of our new formulation of Makena , physicians may choose to prescribe the generic, which could cause sales of Makena to decline. In addition, insurance companies and government payors, such as state Medicaid agencies, who currently provide coverage for Makena may make it more difficult for physicians to prescribe our new version of Makena by charging higher copays, implementing prior authorizations, or not reimbursing for our new version at all. Furthermore, other companies are or may be working on developing additional formulations or routes of administration for products that reduce or prevent preterm birth . For example, an oral HPC is currently in development and its developer has stated that it intends to discuss a Phase 3 development plan with the FDA. If such products are approved, they could be, or be perceived to be, more efficacious, safer, less expensive, easier to administer, available for a broader patient population, or provide more favorable insurance coverage or reimbursement, and could reduce our revenues and the value of our product development efforts.

In addition, in February 2016, the FDA approved our prior approval supplement to the original  Makena  NDA , which we filed with the FDA in July 2015 seeking approval of a single-dose (1 mL) preservative-free formulation of   Makena to be manufactured by Hospira, our current manufacturer of the multidose vial. We are also pursuing approval of our October 2014 prior approval supplement for   Coldstream La boratories, Inc. (“Coldstream”) to be approved to manufacture the single-dose preservative-free formulation. In May 2015, we received a complete response letter from the FDA for the Coldstream prior approval supplement requesting additional information related to manufacturing procedures for the single-dose preservative-free formulation at Coldstream and we are currently working with Coldstream to develop the required information requested by the FDA in the com plete response letter in order to provide a response to the FDA. In light of the recent approval of the Hospira prior approval supplement, we are planning for a commercial launch of the single-dose preservative-free formulation in the second quarter of 2016. We can make no assurance that our commercialization plans for the single-dose preservative-free forrmulation of Makena will commence   on the expected timeline, or at all, or that Coldstream will also be approved for its manufacture. Further, although we anticipate the single-dose preservative-free forrmulation of Makena   will increase market acceptance of Makena , it will not extend our current exclusivity period or grant new exclusivity or provide new patent protection.

We have limited experience in the development of an auto-injector and alternative formulations for  Makena and in developing and implementing next generation development programs. If we are not successful in implementing Makena ’s next generation development programs, or if such activities cannot be completed on anticipated timelines, our business will suffer.

If we are unsuccessful in differentiating Makena from compounded HPC products, sales of Makena, and thus our profitability, could be materially adversely affected.

Formulations of HPC have been available from compounding pharmacies for many years (which compounded formulations of HPC we refer to as "c17P") and will likely remain available even though Makena has been granted orphan drug exclusivity until February 3, 2018, and we have no prior experience with facing such competition. In March 2011, the FDA communicated to Lumara Health and also separately issued a press release that, in order to ensure continued access for patients, the FDA intended to refrain from taking enforcement action with respect to compounding pharmacies producing c17P in response to individual prescriptions for individual patients. The FDA's statement had an adverse effect on Lumara Health's ability to realize the benefit of orphan drug exclusivity and its ability to grow sales of Makena following the launch of the product in March 2011. The failure by the FDA to take enforcement action against

compounding pharmacies resulted in substantial sales of compounded copies of Makena and the effective loss of the value of marketing exclusivity for the affected period of time. In June 2012, the FDA recommended using an FDA-approved drug product, such as Makena , instead of a compounded drug except when there is a specific medical need ( i . e ., an allergy) that cannot be met by the approved drug. In July 2014, the FDA issued another public statement affirming the position it took in its June 2012 statement recommending use of Makena except when there is a specific need for a compounded drug. The FDA also stated that when it identifies a pharmacist that compounds regularly or in inordinate amounts of any drug products that are essentially copies of Makena , the FDA intends to take enforcement action as it deems appropriate. Despite recent negative publicity regarding compounding pharmacies, including the 2012 meningitis outbreak involving compounded drugs, the November 2013 enactment of the DQSA and recent enforcement actions against compounders violating the FDC Act, Makena may continue to face competition from c17P, especially in light of the long-standing availability of such compounded products, their lower price and the criticism Lumara Health received in the past in connection with the pricing of Makena . Further, if any safety or efficacy concerns arise with respect to the c17P products, it may negatively impact sales of Makena if healthcare providers and patients do not distinguish between the compounded product and Makena .  

The commercial success and growth prospects for Makena will be dependent upon perceptions related to pricing and access.

The initial list pricing of Makena was criticized in numerous news articles and internet postings following the FDA's February 2011 approval of Makena for reducing the risk of recurrent preterm birth in certain at-risk women. The list price of Makena was subsequently reduced in March 2011, and ha d not been increased until January 2016, at which time we increased the price   in line with the rate of inflation over the past five years. Makena is priced at a premium to c17P, which has negatively impacted coverage of Makena by some state Medicaid programs and certain commercial payers. Although we are undertaking efforts to educate physicians and patients about progress made toward expanding coverage of Makena and about the benefits of Makena , certain doctors continue to prescribe non-FDA approved compounded formulations of HPC. In addition, efforts to appropriately respond to future concerns about pricing and access raised by the media, professional societies, advocacy groups, policymakers or regulatory agencies regarding patient access to Makena , are costly and may not be successful, especially in light of the increasing scrutiny on specialty pharmaceuticals by politicians and the media. If we are unable to increase the prescribing of Makena by physicians and strengthen relationships with professional societies, advocacy groups, policymakers and regulatory agencies, some of whom have been or are critical of Lumara Health, our sales of Makena may suffer, which would have a materially adverse impact on revenues and our results of operations.

The FDA has required post-marketing studies to verify and describe the clinical benefit of Makena, and the FDA may limit further marketing of the product based on the results of these post-marketing studies, failure to complete these trials in a timely manner or evidence of safety risks or lack of efficacy .  

Makena was approved by the FDA in February 2011 under the provisions of the FDA's "Subpart H" Accelerated Approval regulations. As a condition of approval under Subpart H, the FDA required that Makena 's sponsor perform certain adequate and well-controlled post-marketing clinical studies to verify and describe the clinical benefits of Makena as well as fulfill certain other post-approval commitments. Given the patient population ( i.e., women pregnant and at an increased high risk for recurrent preterm delivery based on their pregnancy history) and the informed risk of receiving a placebo instead of the active approved drug, the pool of prospective subjects for such clinical trials in the U.S. is small, and we have therefore sought enrollment on a global scale. These factors make the enrollment process slow, difficult, time-consuming and costly. If the required post-marketing studies fail to verify the clinical benefits of the drug, if a sufficient number of participants cannot be enrolled, or if we fail to perform the required post-marketing studies with due diligence, the FDA has the authority to withdraw approval of the drug following a hearing conducted under the FDA's regulations, which would have a materially adverse impact on our business. We cannot be certain of the results of the confirmatory clinical studies or what action the FDA may take if the results of those studies are not as expected based on clinical data that FDA has already reviewed or if such studies are not completed in a timely manner.

Risks Related to CBR

The potential for cord blood stem cell and cord tissue science and its recognition in regenerative medicine may not continue to grow . 

The growth of the CBR Services is partially dependent upon the potential for cord blood stem cell and cord tissue science and upon increasing its recognition, adoption and utility among the medical community for a broader set of applications than is currently established and potentially FDA’s approval of those new uses . Although cord blood is utilized for certain   homologous uses in the child from whom the cord blood was recovered or in first- or second-degree relative s, if clinical research is unable to demonstrate the utility of cord blood stem cells and cord tissue for use in treating diseases or injuries in a broader set of applications or if the FDA does not permit the clinical use of cord blood stem cells and cord tissue processed and stored using CBR’s methods for those applications , then healthcare professionals may discount its potential utility among patients, or may not have access at all to cord blood stem cells and cord tissue for such expanded uses . The perception of the future value and uses of cord blood stem cells and cord tissue stored with CBR is a key driver of CBR’s business and therefore any significant changes to this perception could have an adverse impact on sales of CBR Services.

If our cord blood and cord tissue processing and storage facility in Tucson, Arizona is damaged or destroyed, the CBR Services will be materially disrupted and impaired.

Currently, all of our customers’ cord blood and cord tissue samples are stored in one facility in Tucson, Arizona. Our business would suffer, and we would lose credibility with and the trust of physicians, healthcare providers and consumers, if there were any material disruption in our ability to maintain continued and fully operating storage systems, or any loss or deterioration of cord blood and cord tissue stored in our storage systems, including in the event of any damage or interruption from fire, earthquake, flood, break-ins, tornadoes and similar events.

Competition in the cord blood a nd cord tissue banking business is significant and may be increasing.  If we are unable to maintain our position as the market leader, our CBR business may decline and our results of operations could suffer.

The barriers to entry into the cord blood and cord tissue banking business are relatively low. We therefore face competition from new entrants to the market, which could affect our market share or put downward pressure on the pricing of the CBR Services. Furthe rmore, new market entrants may not abide by industry guidelines, regulations and standards, including quality, compliance and marketing standards that could allow them to offer and promote similar services at lower prices and/or engage in marketing behaviors that communicate false or misleading information. In addition to having a potential adverse impact on our business, these behaviors of such competitors could create a negative perception of our industry if they violate or operate outside of regulations and/or pursue other questionable business practices.  

Further, we may face competition from market entrants outside of the cord blood and cord tissue banking business.   For example, stem cell science generally is a relatively nascent field and is subject to potential new technological and/or medical and therapeutic developments, which could render stem cell usage for es tablished applications obsolete and could limit the future value of stem cells for our customers resulting in an adverse impact on our growth. Moreover, stem cell research continues to be an area of ethical and social controversy, and has suffered criticism that the benefits of private cord blood and cord tissue banking have been overstated. Any negative public opinion about stem cell therapy or the benefits of private cord blood and cord tissue banking could damage the perception and reputation of our industry, the CBR Services and our overall business, both among the medical community and the public generally, which could cause our stock price to suffer and result in a materially adverse impact on our revenues and results of operations.

CBR is subject to data security and privacy obligations. With the addition of the CBR Services to our portfolio, our existing data security and privacy obligations have expanded and the failure to comply with these obligations could adversely affect our financial condition and operating results.

CBR is subject to data security and privacy obligations. Through April 29, 2033, CBR is required to comply with a Federal Trade Commission (“FTC”) Order (the “FTC Order”). The FTC Order requires CBR, among other things, to implement and maintain a comprehensive information security program and conduct a biennial assessment of its information security program. CBR is also required not to make any misrepresentations , expressly or by implication, regarding its privacy practices or its information security program. The costs of compliance with, and other burdens imposed by, these obligations are substantial and may impede our performance and our ability to develop the CBR Services, or lead to significant fines, penalties or liabilities for noncompliance. The integration of CBR into our operations may also be impact ed by the FTC Order. These limitations on our efforts to integrate CBR may impede our ability to operate and deploy our systems in the most efficient and cost effective manner.

The regulatory landscape for cord blood and cord tissue banking is complex and evolving ,   and we could become subject to a more complicated and rigorous regulatory scheme, which could expose us to more severe FDA enforcement action or other regulatory implications, which could materially harm our business.

Human tissues intended for transplantation, including cord blood stem cell s and cord tissue, are subject to comprehensive regulations that address activities associated with human cells, tissues and cellular and tissue-based products (“HCT/Ps”). One set of regulations requires that companies that engage in the recovery, processing, storage, labeling, packaging, or distribution of any HCT/Ps, or the screening or testing of a cell or tissue donor, register with the FDA. This set of regulations also includes the criteria that must be met in order for the HCT/P to be eligible for distribution solely under Section 361 of the Public Health Service Act (the “PHSA”), and the regulations in 21 CFR Part 1271, rather than under the drug or device provisions of the FDC Act or the biological product licensing provisions of the PHSA. Another set of regulations provides criteria that must be met for donors to be eligible to donate HCT/Ps and is referred to as the “Donor Eligibility” rule. A third set of provisions governs the processing and distribution of the tissues and is often referred to as the “Current Good Tissue Practices” rule. The Current Good Tissue Practices rule covers all stages of HCT/P processing, from procurement to distribution of final allografts. Together these regulations are designed to ensure that sound, high quality practices are followed to reduce the risk of tissue contamination and of communicable disease transmission to recipients.

CBR is registered with the FDA as an HCT/P establishment that screens, packages, processes, stores, labels and distributes umbilical cord blood stem cell and cord tissue by virtue of the services it provides to expectant parents as a private cord blood and cord tissue bank. The FDA periodically inspects such registered establishments to determine compliance with HCT/P requirements. Violations of applicable regulations noted by the FDA during facility inspections could adversely affect the continued operation and marketing of the CBR Services.  

In addition, the FDA could conclude that CBR cord blood stem cells and cord tissue do not meet the criteria for distribution solely under Section 361 of the PHSA, and therefore, CBR’s banked HCT/Ps would require the submission and approval or clearance of a marketing application in order for us to continue to process and distribute any cord blood stem cells or cord tissue . Such an action by the FDA could cause negative publicity, decreased or discontinued sales of CBR ’s banking services for cord blood stem cells and cord tissue , and significant expense in obtaining required marketing approval or clearance, if we are able to obtain such approval or clearance at all, and in conforming our marketing approach to the FDA’s expectations.

Some states impose additional regulation and oversight of cord blood and cord tissue banks and of clinical laboratories operating within their borders and impose regulatory compliance obligations on out-of-state laboratories providing services to their residents, and many states in which we and our business partners operate have licensing requirements that must be complied with. 

Further, in the future, the FDA or state governments may promulgate new regulatory requirements and standards for HCT/Ps. We may not be able to comply with any such future regulatory requirements or product standards. If the FDA or any state regulators determine that we have failed to comply with applicable regulatory requirements or any future

regulatory requirements or standards, it can impose or initiate a variety of enforcement actions, including but not limited to, public warning or untitled letters, written recall or destruction orders, written cease manufacturing orders, court-ordered seizures, injunctions, consent decrees, civil penalties, or criminal prosecutions. Regulatory or other developments could result in unexpected increases in expenses, which will be difficult to pass on to current CBR customers, some of whom have agreed to a set price for a period of future storage services, and potential CBR customers who may be unwilling to pay for the CBR Services if prices were to increase significantly. We can make no assurances that our business partners, or members of our collection center network, will be able to obtain or maintain any necessary licenses required to conduct our business under the current or future regulatory regime, which could in turn negatively impact our business and ability to comply with regulations. If any of these events were to occur, our business could be materially and adversely affected.

Our post-closing recourse from the CBR seller is limited under the CBR Agreement.

We may face legal, regulatory, and compliance scrutiny or increased expenses as a result of CBR’s pre-acquisition business practices, including if CBR were alleged to have violated any privacy, data security, or other healthcare compliance laws, or failed to comply with all applicable FDA laws and requirements , regardless of whether such allegations have merit . Our recourse for such risks is limited, as t he CBR seller’s obligation to indemnify us is limited to breaches of specified representations and warranties and covenants included in the CBR Agreement and certain claims related to the reimbursement of engagement and retainer fees. The maximum liability of the CBR seller for indemnification claims is capped at $20.0 million   and the indemnification obligations expire in the first quarter of 2016 . If any issues arise, we may not be entitled to sufficient, or any, indemnification or recourse from the CBR Seller, which could have a materially adverse impact on our business and results of operations.

Risks Related to Feraheme  

The market for Feraheme is limited because Feraheme is only indicated for the treatment of IDA in adult patients with CKD. Significant safety or drug interaction problems, or the evaluation or reevaluation of existing or future data by the FDA or other regulators, could have an adverse impact on Feraheme in this indication, which would adversely impact our future business prospects.

The market for Feraheme is limited because Feraheme is only indicated for the treatment of iron deficiency anemia (“ IDA ”) in adult patients with chronic kidney disease (“ CKD ”) . Although we intend to continue to dedicate significant resources to the commercialization of Feraheme , it may never receive approval for a broader indication and we may not be successful in our efforts to continue to successfully commercialize Feraheme in its current market, which would have a materially adverse effect on our results of operations and future business prospects.

Sales in the current indication may be limited or may decrease if label changes require us to provide additional warnings and/or restrictions related to Feraheme ’s current or future indications or impose further limitations or changes to the method of administering the drug, thereby giving rise to increased competitive pressures if Feraheme is viewed as less safe than other IV iron products. Significant safety or drug interaction problems with respect to Feraheme , including an increase in the severity or frequency of known adverse events or the discovery of previously unknown adverse events, or the evaluation or reevaluation of data, including pharmacovigilance data by the FDA, could result in lawsuits and increased regulatory scrutiny or a variety of adverse regulatory actions, including changes to the product label, the implementation of a REMS or any other enforcement actions. For example, in March 2015, following discussions with the FDA, we updated our Feraheme label to include (a) the addition of a boxed warning related to the risks of serious hypersensitivity reactions or anaphylaxis, which risks were previously described only in the Warnings and Precautions section; (b) revisions to the Dosing and Administration section to indicate that Feraheme should only be administered by IV infusion (replacing injection); and (c) modifications to the Warnings and Precautions section to include a statement that patients with a history of multiple drug allergies may have a greater risk of anaphylaxis with parenteral iron products. Our sales have already been negatively impacted by the label changes and these or any future changes to the label/ package could adversely impact our ability to successfully compete in the IV iron market and could have an adverse impact on potential sales of Feraheme and our future business prospects.

Moreover, new safety or drug interaction issues may arise as Feraheme is used over longer periods of time by a wider group of patients, some of whom may be taking other medicines or have additional underlying health problems, which may require us to, among other things, provide additional warnings and/or restrictions on the label/package insert, notify healthcare providers of new safety information, narrow our approved indications, change the rate of administration, alter or terminate current or future trials for additional uses of Feraheme , or even remove Feraheme from the market, any of which could have a significant adverse impact on potential sales of Feraheme or require us to expend significant additional funds.

We may never receive regulatory approval to market and sell Feraheme to the broader IDA patient population.

In January 2014, we received a complete response letter from the FDA informing us that our     supplemental new drug application (“ sNDA ”) for the broad IDA indication could not be approved in its present form. In the let ter, the FDA stated that we had not provided sufficient information to permit labeling of Feraheme for safe and effective use for the proposed indication. The FDA indicated that its decision was based on the cumulative ferumoxytol data, including the global Phase 3 IDA program and global post-marketing safety reports for the currently indicated CKD patient population. The FDA suggested, among other things, that we submit additional clinical trial data in the proposed broad IDA patient population . Following discussions with the FDA , w e have recently commenced start-up activities on a new head-to-head Phase 3 clinical trial evaluating  Feraheme  in adults with IDA, excluding patients on hemodialysis. This new trial is a randomized, double-blind multicenter non-inferiority trial that will  evaluate the incidence of moderate to severe hypersensitivity reactions (including anaphylaxis) and moderate to severe hypotension with  Feraheme  compared to ferric carboxymaltose infusion in adults with IDA. We currently expect to initiate the trial in the first quarter of 2016. We will have to demonstrate, through the submission of clinical study reports and data sets from one or more controlled clinical trials, that the benefit of Feraheme use in the proposed population would warrant the risks associated with Feraheme , including the potential for adverse events, including anaphylaxis, cardiovascular events, and death. Although we plan to initiate this new clinical trial, which will be expensive and time-consuming, t he FDA has substantial discretion in the approval process and may decide that the results of any such additional trials and the information we submit seeking approval in the broader patient population or other information reviewed, such as post-marketing safety data, including reports of serious anaphylaxis, cardiovascular events, and death, or any information we provide in response to FDA requests, are insufficient for approval or that Feraheme is not effective or safe for the proposed broader indication, or in any of the individual subpopulations of IDA patients.

If we do not obtain approval to market and sell Feraheme for the treatment of IDA in a broad range of patients, or if we experience additional significant delays or setbacks in obtaining approval, or if we receive approval with significant restrictions, or are required to incur significant costs as post-marketing commitments, our cash position, our ability to increase revenues, our ability to leverage our portfolio, our profitability, and the future prospects of our business could be materially adversely affected.

Efforts to pursue a broader indication could also have a negative impact on the commercialization of Feraheme in its current indication if information submitted for purposes of the broader indication and any reevaluation of existing data, such as reports of serious anaphylaxis, cardiovascular events, and death, results in requirements to provide additional warnings and/or restrictions on our Feraheme label/package insert, change the rate of administration of Feraheme , notify healthcare providers of changes to the label/package insert, narrow the current indication, alter or terminate current or future trials for Feraheme or incur significant costs related to post-marketing requirements/commitments. Such adverse developments could put us at a disadvantage to our competitors and cause healthcare providers to choose to treat all of their IDA patients with competing IV irons based on the actual or perceived safety and efficacy of Feraheme in light of such activities.

Generic competitors are seeking approval of generic versions of Feraheme and the market entry of any such generic would limit Feraheme sales which would have an adverse impact on our business and results of operation.

On February 5, 2016, we received a Paragraph IV certification notice letter regarding an ANDA submitted to the FDA by Sandoz requesting approval to engage in commercial manufacture, use and sale of a generic version of Feraheme ( ferumoxytol ), and we could therefor face generic competition in the near term. As noted above, in its notice letter, Sandoz claims that our ferumoxytol patents are invalid, unenforceable and/or not infringed by Sandoz’s

manufacture, use, sale or offer for sale of the generic version. We plan to initiate a patent infringement suit to defend the patents identified in the notice letter within 45 days after our receipt of the notice letter . Such litigation is often time-consuming and costly, and may result in generic competition if such patents are not upheld or if the generic competitor is found not to infringe such patents. Further, Sandoz’s application could encourage other generic entrants seeking a path to approval of a generic ferumoxytol to file an ANDA. Even if we are successful, such litigation will be expensive and will consume considerable time and other resources, which could materially and adversely impact business.  

The Drug Price Competition and Patent Term Restoration Act of 1984, as amended (the “Hatch ‑Waxman Act”) permits the FDA to approve ANDAs for generic versions of brand name drugs like Feraheme . The ANDA process permits competitor companies to obtain marketing approval for a drug product with the same active ingredient, dosage form, strength, route of administration, and labeling as the approved brand name drug, but without having to conduct and submit clinical studies to establish the safety and efficacy of the proposed generic product. In place of such clinical studies, an ANDA applicant needs to submit data demonstrating that its product is bioequivalent to the brand name product, usually based on pharmacokinetic studies.   The Hatch-Waxman Act requires an applicant for a drug product that relies, in whole or in part, on the FDA’s prior approval of Feraheme , to notify us of its application , a P aragraph IV certification notice, if the applicant is seeking to market its product prior to the expiration of the patents that claim Feraheme . A bona fide P aragraph IV certification notice may not be given under the Hatch-Waxman Act until after the generic company receives from the FDA an acknowledgement letter stating that its ANDA is sufficiently complete to permit a substantive review.

If an ANDA filer, such as Sandoz, is ultimately successful in patent litigation against us, meets the requirements for a generic version of Feraheme to the satisfaction of the FDA under its ANDA (after the litigation-related 30-month stay period expires), and is able to supply the product in significant commercial quantities, the generic company could introduce a generic version of Feraheme . Such a market entry would likely limit our Feraheme sales, which would have an adverse impact on our business and results of operations.

Market acceptance of Feraheme may suffer as a result of the widespread use of competing iron replacement therapy products, including Injectafer ® ,   which would have a material adverse effect on our operations and our profitability.

Market acceptance of Feraheme may suffer as a result of competing iron replacement therapy products, in part because most of these products have been on the market longer and are currently widely used by physicians, and because certain of these products are approved for the treatment of IDA in a broader group of patients. For example, in July 2013, Injectafer ® was approved by the FDA for the treatment of IDA in adult patients who have an unsatisfactory response to oral iron or who have intolerance to oral iron, which is a broader indication than our current Feraheme indication. Injectafer ® is approved in the U.S. with a recommended dose of two slow injections or infusions of 750 milligrams each separated by at least seven days apart for a to tal of 1,500 milligrams. Given the 2015 changes to the Feraheme label, which provide, among other changes, that Feraheme be administered to patients by infusion over at least 15 minutes (replacing injection), Feraheme has lost a competitive advantage to Injectafer ® and other IV irons. Further, we may not be able to offer discounts, incentives or rebates to new or existing customers on terms as appealing as Injectafer ® or other IV irons. Even if we eventually obtain labeling of Feraheme in a broader population, Injectafer ® will have already been available for a considerable period of time. During this period, physicians may continue to increase their use of Injectafer ® , new physicians may begin to use Injectafer ® , and physicians will gain increased familiarity with the product, making it more difficult for us to cause these physicians to use Feraheme in the future. In addition, manufacturers of Injectafer ® may enter into commercial contracts with key customers or  group purchasing organizations (“ GPOs ”) during this period, which could prevent or make it more difficult for Feraheme to retain its existing customers, gain sales to new customers and gain market share in its existing indication with customers or GPOs, and may make entry into the non-CKD market difficult if we were to receive approval for the broader patient population in the future. If we are not able to differentiate Feraheme from other marketed IV iron products, including Injectafer ® , or convince physicians and other customers of Feraheme's safe and effective use, our ability to maintain a premium price, generate revenues and maintain profitability, and our long-term business prospects could be adversely affected.

Feraheme 's ability to maintain its current market share, or gain wider market acceptance in the future, depends on a number of other factors, including but not limited to the following:

● Our ability to demonstrate to healthcare providers, particularly hematologists, oncologists, hospitals, nephrologists, and others who may purchase or prescribe Feraheme , the clinical efficacy and safety of Feraheme as an alternative to currently marketed IV iron products which treat IDA in adult CKD patients;

● Our ability to convince physicians and other healthcare providers to use IV iron, and Feraheme in particular, rather than oral iron, which is the current treatment of choice of most physicians for treating IDA in adult CKD patients;

● The actual or perceived safety and efficacy profile of Feraheme as compared to alternative iron replacement therapeutic agents;

● The relative price and level of reimbursement for Feraheme from payers, including government payers, such as Medicare and Medicaid, and private payers as compared to the price and level of reimbursement for alternative IV iron products;

● The actual or perceived convenience and ease of administration of Feraheme as compared to alternative iron replacement therapeutic agents, including iron administered orally, in light of recent or potential changes to the methods of Feraheme administration;

● Our ability to execute on our contracting strategy and offer competitive discounts, rebates and other incentives, which can result in increasing the rebates we are required to pay under the Medicaid Drug Rebate program and the discounts we are required to offer under the 340B drug pricing program;

● Current and future limitations on the approved indications and patient populations for Feraheme ;  

● The introduction of generic versions of ferumoxytol, which may occur in the near-term given the ANDA submitted to the FDA by Sandoz requesting approval to engage in commercial manufacture, use and sale of a generic version of ferumoxytol ; and

● The effectiveness of our commercial organization and distribution networks in marketing, selling and supplying Feraheme .  

The key component of our commercialization strategy for Feraheme is to market and sell Feraheme for use in non-dialysis adult CKD patients. The current non-dialysis CKD market is comprised primarily of three sites of care where a substantial number of CKD patients are treated: hospitals, hematology and oncology centers, and nephrology clinics. Competition in these practices is intense and competitors such as Injectafer ® are gaining market share, particularly in hematology practices. IV iron therapeutic products are not currently widely used by certain physicians who treat non-dialysis CKD patients, particularly nephrologists, due to safety concerns and the inconvenience and often impracticability of administering infusion IV iron therapeutic products in their offices. It is often difficult to change physicians' existing treatment paradigms even when supportive clinical data are available. In addition, our ability to effectively market and sell Feraheme in the hospital market depends in part upon our ability to achieve acceptance of Feraheme onto hospital formularies. Since many hospitals and hematology, oncology and nephrology practices are members of GPOs, which leverage the purchasing power of a group of entities to obtain discounts based on the collective bargaining power of the group, our ability to attract customers in these sites of care also depends in part on our ability to effectively promote Feraheme to and enter into pricing agreements with GPOs. The GPOs can also offer opportunities for competitors to Feraheme that provide the ability to quickly gain market share by offering a more attractive price or contracts and incentives that encourage the members of the GPO to use or switch to the competing product. If we are not successful in capturing a significant share of the non-dialysis CKD market or if we are not successful in securing and maintaining formulary coverage for Feraheme , or if we cannot maintain strong relationships and offer competitive contracts to key customers and GPOs, our profitability as well as our long-term business prospects could be adversely affected.

We derive a substantial amount of our Feraheme revenue from a limited number of customers and the loss of one or more of these customers, a change in their fee structure, or a decline in revenue from one or more of these customers could have an adverse impact on our results of operations and financial condition.

We sell Feraheme primarily to wholesalers and specialty distributors and therefore a significant portion of our revenues is generated by a small number of customers and most of these customers are not under long-term contracts with us. The loss of any of our customers, includi ng if a customer views Feraheme as having a higher risk profile as compared to other IV iron products, especially in light of our recent label changes, could have a materially adverse impact on our results of operations. In addition, in 2015 three   customers accounted for greater than 90% of our total Feraheme net revenues and accounts receivable balance. We pay these wholesalers and specialty distri butors a fee for the services that they provide to us. Because our business is concentrated with such a small number of wholesalers and specialty distributors, we could be forced to accept increases in their fees in order to maintain the current distribution networks through which Feraheme is sold. Any increase in fees could have a negative impact on our current and future sales of Feraheme and could have a negative impact on the reimbursement rate an individual physician, hospital or clinic would realize upon using Feraheme .  

In addition, a significant portion of our Feraheme sales are generated through a small number of contracts with GPOs. For example, approximately 26 % of our Feraheme end-user demand during the year ended December 31, 2015 was generated by members of a single GPO with whom we have contracted. As a result of the significant percentage of our end-user demand being generated by a single GPO, we may be at a disadvantage in future contract or price negotiations with such GPO and that GPO may be able to influence the demand for Feraheme from its members in a particular quarter through communications they make to their customers. In addition, competitors of Feraheme may be able to quickly gain market share if they are able to offer GPOs a more attractive price or contracts and incentives that encourage the members of the GPO to use or switch to the competing product, especially if such competing drug can be administered to a broader patient population. The loss of some or all of this demand to a competitor, a material reduction in sales volume, or a significant adverse change in our relationship with any of our key wholesalers, distributors or GPOs could have a material adverse effect on our revenue and results of operations.

Regulatory Risks

There have been, and we expect there will continue to be, a number of federal and state legislative initiatives implemented to reform the U.S. healthcare system in ways that could adversely impact our business and our ability to sell our products and services profitably.

We expect that the Healthcare Reform Act, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase our product sales. These changes might impact existing government healthcare programs and may   result in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. Changes that may affect our business include, but are not limited to, those governing enrollment in federal healthcare programs, reimbursement changes, rules regarding prescription drug benefits under the health insurance exchanges, expansion of the 340B drug pricing program, and fraud and abuse enforcement. For example, beginning April 1, 2013, Medicare payments for all items and services under Part A and B, including drugs and biologicals, and most payments to plans under Medicare Part D were reduced by 2% under the sequestration (i.e., automatic spending reductions) required by the Budget Control Act of 2011 (“BCA”) as amended by the American Taxpayer Relief Act of 2012. The BCA requires sequestration for most federal programs, excluding Medicaid, Social Security, and certain other programs. The BCA caps the cuts to Medicare payments for items and services at 2% and subsequent legislation extended the 2% reduction, on average, to 2025. In addition, various healthcare reform proposals have emerged at the state level in the U.S.

On February 1, 2016, CMS issued a final regulation to implement the changes to the Medicaid Drug Rebate Program under the Health Reform Act. This regulation becomes effective on April 1, 2016. We are evaluating the impact of this regulation on our business and operations.

While we are continuing to evaluate this legislation and its potential impact on our business, we cannot predict the impact that newly enacted laws or any future legislation or regulation will have on us. We expect that there will continue to be a number of U.S. federal and state proposals to implement governmental pricing controls and limit the growth of healthcare costs. These efforts could adversely affect our business by, among other things, limiting the prices that can be charged for our products or services, or the amount of reimbursement rates and terms available from governmental agencies or third-party payers, limiting the profitability of our products and services, increasing our rebate liability or limiting the commercial opportunities for our products and services, including acceptance by healthcare payers.  

If our products and services are marketed or distributed in a manner that violates federal, state or foreign healthcare fraud and abuse laws, marketing disclosure laws or other federal, state or foreign laws and regulations, we may be subject to civil or criminal penalties.

In addition to FDA and related regulatory requirements, our general operations, and the research, development, manufacture, sale and marketing of our products and services, are subject to extensive additional federal, state and foreign healthcare regulation, including the Federal Anti ‑Kickback Statute and the Federal False Claims Act (“FCA”) (and their state analogues ) , as discussed above in Item 1. Business under the heading "Government Regulation - Fraud and Abuse Regulation." If we fail to comply with any federal, state or foreign laws or regulations governing our industry, we could be subject to a range of regulatory actions that could adversely affect our ability to commercialize our products and services, harm or prevent sales of our products and services, or substantially increase the costs and expenses of commercializing and marketing our products and services, all of which could have a material adverse effect on our business, financial condition and results of operations. 

Our activities relating to the sale and marketing of our products and services may be subject to scrutiny under these laws, and private individuals have been active in bringing lawsuits on behalf of the government under the FCA and similar regulations in other countries. In addition, incentives exist under applicable U.S. law that encourage s employees and physicians to report violations of rules governing promotional activities for pharmaceutical products . These incentives could lead to so-called whistleblower lawsuits as part of which such persons seek to collect a portion of moneys allegedly overbilled to government agencies as a result of, for example, promotion of pharmaceutical products beyond labeled claims. For example, federal enforcement agencies recently have showed interest in pharmaceutical companies’ product and patient assistance programs, including manufacturer reimbursement support services and relationships with specialty pharmacies. Some of these investigations have resulted in government enforcement authorities intervening in related whistleblower lawsuits and obtaining significant civil and criminal settlements. Such lawsuits, whether with or without merit, are typically time-consuming and costly to defend. Such suits may also result in related shareholder lawsuits, which are also costly to defend.

Further, the FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product's approved labeling. For drug products like Makena that are approved by the FDA under the FDA's accelerated approval regulations, unless otherwise informed by the FDA, the sponsor must submit promotional materials at least 30 days prior to the intended time of initial dissemination of the promotional materials, which delays and may negatively impact our commercial team's ability to implement changes to Makena 's marketing materials, thereby negatively impacting revenues. Moreover, under Subpart H, the FDA may also withdraw approval of Makena if, among other things, the promotional materials are false or misleading, or other evidence demonstrates that Makena is not shown to be safe or effective under its conditions of use.

In recent years, several states have enacted legislation requiring pharmaceutical companies to establish marketing and promotional compliance programs or codes of conduct and/or to file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities. Several states have also adopted laws that prohibit certain marketing-related activities, including the provision of gifts, meals or other items to certain healthcare providers. In addition, as part of the Healthcare Reform Act, substantial new provisions affecting compliance have been enacted, which may require us to modify our business practices with healthcare providers and potentially incur additional costs.  One such requirement is for manufacturers of drugs to publicly report gifts and other payments or transfers of value made to physicians and teaching hospitals.

We have developed and implemented a corporate compliance program based on what we believe are current best practices in the pharmaceutical industry; h owever, these laws are broad in scope and there may not be regulations, guidance or court decisions that definitively interpret these laws in the context of particular industry practices. We cannot guarantee that we, our employees, our consultants or our contractors are or will be in compliance with all federal, state and foreign regulations. If we or our representatives fail to comply with any of these laws or regulations, a range of fines, penalties and/or other sanctions could be imposed on us, including, but not limited to, restrictions on how we market and sell our products, significant fines, exclusions from government healthcare programs, including Medicare and Medicaid, litigation, or other sanctions. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could also have an adverse effect on our business, financial condition and results of operations. Such investigations or suits may also result in related shareholder lawsuits, which can also have an adverse effect on our business.

Further, with our recent acquisition of CBR, we will be subject to additional and complex regulations with regard to the CBR Services, as detailed above under the Risk Factors – Risks Related to CBR – “ CBR is subject to data security and privacy obligations. With the addition of the CBR Services to our portfolio, our existing data security and privacy obligations have expanded and the failure to comply with these obligations could adversely affect our financial condition and operating results ” and “ The regulatory landscape for cord blood and cord tissue banking is complex and evolving. This landscape coupled with our inexperience with the CBR Services could subject us to FDA enforcement action or other regulatory implications, which could materially harm our business. ”

If we fail to comply with our reporting and payment obligations under governmental pricing programs, we could be required to reimburse government programs for underpayments and could pay penalties, sanctions and fines which could have a material adverse effect on our business, financial condition and results of operations.

As a condition of reimbursement by various federal and state healthcare programs, we are required to calculate and report certain pricing information to federal and state healthcare agencies. Please see our discussion above under the heading, “ Pharmaceutical Pricing and Reimbursement ” in Item 1. Business for more information regarding our price reporting obligations under the Medicaid Drug Rebate Program, Medicare Part B, and the Department of V eterans A ffairs Federal Supply Schedule (the   “ FSS ”) program.

Price reporting and payment obligations are highly complex and vary among products and programs. The calculations are often subject to interpretation by us, governmental or regulatory agencies and the courts. Any corrections to our rebate calculations could result in an overage or underage in our rebate liability for past quarters, depending on the nature of the correction.

If we have to restate our calculation of government price reports, we may be forced to refund certain monies back to payers to comply with federal pricing agreements. Such a restatement of our government price reports would also adversely impact our reported financial results of operations in the period of such restatement. As a result, our price reporting calculations remain subject to the risk of errors and our methodologies for calculating these prices could be challenged under the FCA or other laws. In addition, the Healthcare Reform Act modified the rules related to certain price reports, among other things. Presently, uncertainty exists as many of the specific determinations necessary to implement this new legislation have yet to be decided and communicated to industry participants. This uncertainty in the interpretation of the legislation increases the chances of an error in price reporting, which could in turn lead to a legal challenge, restatement or investigation. On February 1, 2016, CMS issued a final regulation to implement the changes to the Medicaid Drug Rebate Program under the Health Reform Act. This regulation becomes effective on April 1, 2016. We are evaluating the impact of this regulation on our business and operations.

If we become subject to investigations, restatements, or other inquiries concerning our compliance with price reporting laws and regulations, we could be required to pay or be subject to additional reimbursements, penalties, sanctions or fines, which could have a material adverse effect on our business, financial condition and results of operations.

Our processes for estimating amounts due under these governmental pricing programs involve subjective decisions and estimates. Often, state Medicaid programs may be slow to invoice pharmaceutical companies for these rebates

resulting in a significant lag between the time a sale is recorded and the time the rebate is paid. This results in us having to carry a significant liability on our consolidated balance sheets for the estimate of rebate claims expected for Medicaid patients. For example, almost half of Makena sales are reimbursed through state Medicaid programs and are subject to the statutory Medicaid rebate, and in some cases, supplemental rebates offered by us. If actual claims are higher than current estimates, our financial position and results of operations could be adversely affected.

We are liable for errors associated with our submission of pricing data. In addition to retroactive rebate s and the potential for 340B drug pricing program refunds, if we are found to have knowingly submitted any false price information related to the Medicaid Drug Rebate Program to CMS   to the government, we may be liable for civil monetary penalties in the amount of $ 100,000 per item of false information. If we are found to have made a misrepresentation in the reporting of our average sales price, the Medicare statute provides for civil monetary penalties of up to $10,000 for each misrepresentation for each day in which the misrepresentation was applied. Our failure to submit the required price data to CMS on a timely basis could result in a civil monetary penalty of $10,000 per day for each day the information is late beyond the due date. Such failure could also be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, federal payments may not be available under government programs, including Medicaid or Medicare Part B, for our covered outpatient drugs.

Additionally, if we overcharge the government in connection with the FSS contract or Tricare Retail Pharmacy Program, whether due to a misstated FCP or otherwise, we are required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against us under the FCA and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects

We are subject to ongoing regulatory obligations and oversight of our products and services, and any failure by us to maintain compliance with applicable regulations may result in several adverse consequences including the suspension of the manufacturing, marketing and sale of our respective products and services, the incurrence of significant additional expense and other limitations on our ability to commercialize our respective products and services .  

We are subject to ongoing regulatory requirements and review, including by periodic audits pertaining to the development, manufacture, labeling, packaging, adverse event reporting, distribution, storage, marketing, promotion, record keeping and export of our respec tive products and for their preservation and , storage and other activities associated with the CBR Services. Failure to comply with such regulatory requirements or the later discovery of previously unknown problems with our products or services, or our third-party contract manufacturing facilities or processes by which we manufacture our products or supply our services may result in restrictions on our ability to manufacture, market, distribute or sell our products or services, including potential withdrawal of our products from the market. Any such restrictions could result in a decrease in sales, damage to our reputation or the initiation of lawsuits against us and/or our third-party contract manufacturers. We may also be subject to additional sanction s, including but not limited to the following:

● Warning letters, public warnings and untitled letter s ;

● Court-ordered seizures or injunctions ;

● Civil or criminal penalties, or criminal prosecutions;

● Variation, suspension or withdrawal of regulatory approvals for our products or services ;  

● Changes to the package insert of our products, such as additional warnings regarding potential side effects or potential limitations on the current dosage and administration;

● Requirements to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, or other issues involving our products and services ;

● Implementation of risk mitigation programs and post-marketing obligations;

● Restrictions on our continued manufacturing, marketing, distribution or sale of our products, or the ability to continue to market our services;

● Temporary or permanent closing of the facilities of our third-party contract manufacturers;

● Interruption of clinical trials;

● For HCT/Ps, including umbilical cord blood stem cells and cord tissue, recalls, destruction orders, or cease manufacturing orders ; and

● Refusal by regulators to consider or approve applications for additional indications.

Any of the above sanctions could have a material adverse impact on our revenue s and profitability or the value of our brand, and cause us to incur significant additional expenses.

Additionall y, Lumara Health, as our wholly- owned subsidiary following consummation of the acquisition, is subject to certain continuing obligations under a Consent Decree of Permanent Injunction (“Consent Decree”) between the FDA, Lumara Health’s predecessor company, K-V Pharmaceutical Company (“K-V Pharmaceutical”) , and certain former officers and affiliates of K-V Pharmaceutical. In particular, Lumara Health is bound by a number of provisions and requirements in the Consent Decree including, but not limited to, inspection of Lumara Health's places of business by the FDA without prior notice, and notification of FDA of particular actions and events. If Lumara Health fails to comply with applicable provisions in the Consent Decree, the FDC Act, or the FDC Act’s implementing regulations, the FDA may impose specific sanctions including, but not limited to, the requirement to cease any of Lumara Health's manufacturing operations, the imposition of substantial financial penalties and the requirement to implement additional corrective actions.

Regulators could determine that our clinical trials and/or our manufacturing processes, and/or our storage or those of our third parties, were not properly designed or are not properly operated, which could cause significant costs or setbacks for our commercialization activities.   

We are obligated to conduct, and are in the process of conducting, certain post-approval clinical trials, including in pursuit of the broader IDA indication for Feraheme , and we may be required to conduct additional clinical trials, including if we pursue approval of additional indications, new formulations or methods of administration for our products, seek commercialization in other jurisdictions, or in support of our current indications. The FDA could determine that our clinical trials and/or our manufacturing processes were not properly designed, did not include enough patients or appropriate administration, were not conducted in accordance with applicable laws and regulations, or were otherwise not properly managed. In addition, according to current good clinical practices regulations ("cGCP") we are responsible for conducting, recording and reporting the results of clinical trials to ensure that the data and results are credible and accurate and that the trial participants are adequately protected. The FDA may conduct inspections of clinical investigator sites which are involved in our clinical development programs to ensure their compliance with cGCP regulations. If the FDA determines that we, our CROs or our study sites fail to comply with applicable cGCP regulations, the FDA may deem the clinical data generated in our clinical trials to be unreliable and may disqualify certain data generated from those sites or require us to perform additional clinical trials. Our clinical trials and manufacturing processes are subject to similar risks and uncertainties outside of the U.S. Any such deficiency in the design, implementation or oversight of our clinical development programs or post-approval clinical studies could cause us to incur significant additional costs, experience delays or prevent us from commercializing Makena and Feraheme in their current indications, or obtaining marketing approval for additional indications, including the approval for use of Feraheme for the broad IDA indication.

In addition, the Current Good Tissue Practices rule governs the processing and distribution of cord blood stem cells and cord tissue and covers all stages of HCT/P processing, from procurement to distribution of final allografts. CBR is registered with the FDA as an HCT/P establishment that screens, packages, processes, stores, labels and distributes umbilical cord blood stem cell s and cord tissue by virtue of the services it provides to expectant parents as a private cord blood and cord tissue bank. The FDA periodically inspects such registered establishments to determine compliance with HCT/P requirements. Violations of applicable regulations noted by the FDA during facility inspections could adversely affect the continued operation and marketing of the CBR Services.

Further, our third-party contract manufacturing facilities are subject to cGMP regulations enforced by the FDA and equivalent foreign regulations and regulatory agencies through periodic inspections to confirm such compliance. Contract manufacturers must continually expend time, money and effort in production, record-keeping and quality assurance and control to ensure that these manufacturing facilities meet applicable regulatory requirements. Failure to maintain ongoing compliance with cGMP or similar foreign regulations and other applicable manufacturing requirements of various U.S. or foreign regulatory agencies could result in, among other things, the issuance of warning letters, fines, the withdrawal or recall of our products from the marketplace, total or partial suspension of product production, the loss of inventory, suspension of the review of our current or future sNDAs or equivalent foreign filings, enforcement actions, injunctions or criminal prosecution and suspension of manufacturing authorizations. A government-mandated recall or a voluntary recall could divert managerial and financial resources, could be difficult and costly to correct, could result in the suspension of sales of our products and could have a severe adverse impact on our profitability and the future prospects of our business. If any regulatory agency inspects any of these manufacturing facilities and determines that they are not in compliance with cGMP or similar regulations or our contract manufacturers otherwise determine that they are not in compliance with these regulations, as applicable, such contract manufacturers could experience an inability to manufacture sufficient quantities of product to meet demand or incur unanticipated compliance expenditures.

We have also established certain testing and release specifications with the FDA. This release testing must be performed in order to allow finished product to be used for commercial sale. If a finished product does not meet these release specifications or if the release testing is variable, we may not be able to supply product to meet our projected demand. We monitor annual batches of our finished product for ongoing stability after it has been released for commercial sale. If a particular batch of finished drug product exhibits variations in its stability or begins to generate test results that demonstrate an adverse trend against our specifications, we may need to conduct an investigation into the test results, quarantine the product to prevent further use, destroy existing inventory no longer acceptable for commercial sale, or recall the batch or batches. If we are unable to develop, validate, transfer or gain regulatory approval for the new release test, our ability to supply product will be adversely affected. Such setbacks could have an adverse impact on our revenues, our profitability and the future prospects of our business.    

Our failure to comply with data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business .

We are subject to data protection laws and regulations (i.e., laws and regulations that address privacy and data security). The legislative and regulatory landscape for data protection continues to evolve, and in recent years there has been an increasing focus on privacy and data security issues. In the US, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information. Failure to comply with data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business. In addition, we may obtain health information from third parties (i.e., healthcare providers who prescribe our products) that are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”) . Although we are not directly subject to HIPAA ( other than potentially with respect to provid ing certain employee benefits) we could be subject to criminal penalties if we knowingly obtain or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.

Risks Related to Our Business Generally

With our Lumara Health and CBR acquisitions, we have significantly expanded the size of our organization and we may experience difficulties in managing this or future expansion.

With the Lumara Health and CBR acquisitions, we more than doubled the size of our employee-base. Management , personnel, systems and facilities that we currently have in place may not be adequate to support this recent growth and the addition of a service-based business to our portfolio, and we may not be able to retain or recruit qualified personnel in the future in this competitive environment to adequately support our expanded organization. To manage any future growth effectively, we may be required to continue to manage and expand the sales and marketing efforts for our existing products and services while continuing to identify and acquire attractive additions to our portfolio, enhance our operational, financial and management controls, reporting systems and procedures, benefit plan maintenance, and establish and increase our access to commercial supplies of our products   and call points for our services, which will be challenging and for which we might not be successful, especially given our newly-expanded organization. We will be required to expand and maintain our facilities and equipment and manage our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors, collaborators, distributors and other third parties and we will have to manage multiple geographic locations across the U.S., which we have no experience doing. In addition, management may have to divert a disproportionate amount of its attention away from day-to-day activities and towards managing these growth activities, which could be disruptive to our business. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage our recent and any future growth. If we experience difficulties or are unsuccessful in managing our expansion, our results of operations and business prospects will be negatively impacted.

Our level of indebtedness and the terms of the 2015 Term Loan Facility, 2023 Senior Notes and Convertible Notes could adversely affect our operations and limit our ability to plan for or respond to changes in our business or acquire additional products for our portfolio. If we are unable to comply with restrictions in the 2015 Term Loan Facility , or cannot repay or refinance the 2023 Senior Notes or Convertible Notes, the repayment of our indebtedness could be accelerated.

In order to consummate the CBR acquisition, we incurred a substantial amount of additional debt, which could adversely affect our business. As of December 31, 2015, we had $ 1.0 billion of total debt outstanding. In August 2015, we entered into the 2015 Term Loan Facility , with a floating annual interest rate (currently 4.75%), and issued $500.0 million in aggregate principal Senior Notes due 2023 bearing interest at 7.875% annually (the “2023 Senior Notes”) to help fund our acquisition of CBR and potential expansion and diversification of our portfolio through the in-license or purchase of additional pharmaceutical products or companies, among other things. We also incurred indebtedness in February 2014 in the amount of $200.0 million in aggregate principal convertible notes due February 15, 2019 bearing interest at 2.5% annually (the “Convertible Notes”). Our high level of indebtedness could adversely affect our business in the following ways, among other things:

● make it more difficult for us to satisfy our financial obligations under our current debt obligations, or other indebtedness, as well as our contractual and commercial commitments, and could increase the risk that we may default on our debt obligations;

● prevent us from raising the funds necessary to repurchase 2023 Senior Notes tendered to us if there is a change of control, which would constitute a default under the indenture governing the 2023 Senior Notes , the Convertible Notes and the 2015 Term Loan Facility;

● require us to use a substantial portion of our cash flow from operations to pay interest and principal on our current debt obligations or other indebtedness, which would reduce the funds available for working capital, capital expenditures and other general corporate purposes;

● limit our ability to obtain additional financing for working capital, capital expenditures, acq uisitions and other investments or general corporate purposes, which may limit the ability to execute our business strategy;

● heighten our vulnerability to downturns in our business, our industry or in the general economy , and restrict us from exploiting business opportunities or making acquisitions;

● place us at a competitive disadvantage compared to those of our competitors that may have proportionately less debt;

● limit management’s discretion in operating our business;

● limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy; and

● result in higher interest expense if interest rates increase and we have outstanding floating rate borrowings such as our 2015 Term Loan Facility.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2015 Term Loan Facility, the 2023 Senior Notes and the Convertible Notes (“our current debt obligations”), depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and support our growth strategies. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including under our current debt obligations. In addition, if for any reason we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreements governing our indebtedness, which would allow our creditors at that time to declare all outstanding indebtedness to be due and payable. This would likely in turn trigger cross-acceleration or cross-default rights between our applicable debt agreements. Under these circumstances, our lenders could compel us to apply all of our available cash to repay our indebtedness or they could prevent us from making payments on our current debt obligations .    

The 2015 Term Loan Facility requires us to make certain payments of principal and interest over time and contains a number of other restrictive covenants. The 2015 Term Loan Facility also contains covenants and terms limiting our ability to enter into new acquisitions, licenses, mergers, foreign investments, to take on new debt and sell assets, and requiring us to pay penalties in the event we want to prepay the 2015 Term Loan Facility early. The maturity date of the 2015 Term Loan Facility could also be accelerated in certain circumstances, including in the event of an uncured event of default as outlined in the 2015 Term Loan Facility. The 2015 Term Loan Facility has a floating interest rate based on the prevailing London Interbank Offered Rate rate, making interest payments subject to adjustment depending on the interest rate environment. These and other terms in the 2015 Term Loan Facility have to be monitored closely for compliance and could restrict our ability to grow our business or enter into transactions that we believe will be beneficial to our business.

Also, upon the occurrence of specific types of change of control events, we will be required to offer to repurchase all of the outstanding 2023 Senior Notes at a price equal to 101% of the aggregate principal amount of the 2023 Senior Notes repurchased, plus accrued and unpaid interest up to, but not including, the date of repurchase. In addition, in connection with certain asset sales, we may be required to offer to repurchase a portion of the 2023 Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest and additional interest up to, but not including, the date of repurchase. We may not have sufficient funds available to repurchase all of the 2023 Senior Notes tendered pursuant to any such offer and any other debt that would become payable upon a change of control or in connection with such an asset sale offer. The 2015 Term Loan Facility also limits our ability to repurchase the 2023 Senior Notes. Our failure to re purchase the 2023 Senior Notes upon the occurrence of specific types of change of control events would be a default under the indenture governing the 2023 Senior Notes, which would in turn trigger a default under our 2015 Term Loan Facility, the indenture governing the Convertible Notes and may trigger a default under any future credit facility and the terms of our other indebtedness outstanding at such time.

Further, holders of the Convertible Notes have the right to require us to repurchase their notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest. Upon conversion of the Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the notes being converted. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes surrendered therefor or at the time Convertible Notes are being converted. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the Convertible Notes would constitute an event of default. Moreover, if our stock price increases, the parties with whom we entered into warrant transactions in connection with the pricing of the Convertible Notes (the “Warrants”) could exercise such warrants, thereby causing substantial dilution to our stockholders. The Convertible Notes are, the Warrants may be, and any additional equity or equity-linked financings or alternative strategic arrangements would be, dilutive to our stockholders.

Our 2015 Term Loan Facility and the indenture governing the 2023 Senior Notes impose operating and financial restrictions on us and our subsidiaries that may prevent us from pursuing certain business opportunities and restrict our ability to operate our business.

The terms of our current debt instruments or any additional debt financing could greatly restrict our ability to raise additional capital and may provide rights and preferences to the investors in any such financing which are senior to those of, and not available to, current stockholders, impose restrictions on our day-to-day operations or place limitations on our ability to enter into combination transactions with other entities. Our inability to raise additional capital on terms and within a timeframe acceptable to us when needed could force us to dramatically reduce our expenses and delay, scale back or eliminate certain of our activities and operations, including our commercialization and development activities, any of which would have a material adverse effect on our business, financial condition and future business prospects.

Our 2015 Term Loan Facility and the indenture governing the 2023 Senior Notes contain covenants that restrict our and our restricted subsidiaries’ ability to take various actions, such as:

● paying dividends, redeeming subordinated indebtedness or making other restricted payments, including certain investments;

● incurring or guaranteeing additional indebtedness or issuing preferred stock;

● creating or incurring liens;

● consummating a merger;

● consolidation or sale of all or substantially all of our or our subsidiaries’ assets;

● entering into transactions with affiliates;

● transferring or selling assets;

● engaging in businesses other than our current businesses and reasonably related extensions thereof;

● designating subsidiaries as unrestricted subsidiaries; and

● allowing to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

We cannot make any assurances that our future operating results will be sufficient to ensure compliance with the covenants in these arrangements or to remedy any such default. In the event of an acceleration of this indebtedness, we may not have or be able to obtain sufficient funds to make any accelerated payments. Any of the factors discussed above could materially and adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings un der our 2015 Term Loan Facility , and other indebtedness we incur in the future may, bear interest at variable rates exposing us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash available for servicing our indebtedness would decrease.

We may need additional capital to achieve our business objectives and to service our debt obligations, including the 2015 Term Loan Facility, our Convertible Notes, our 2023 Senior Notes and contingent payments that may become due under the Lumara Agreement, which could cause significant dilution to our stockholders.

We may require additional funds or need to establish additional alternative strategic arrangements to execute a business development transaction. We may at any time seek funding through additional arrangements with collaborators through public or private equity or debt financings, subject to the covenants in the documents governing our debt obligations. We may not be able to obtain financing or to secure alternative strategic arrangements on acceptable terms or within an acceptable timeframe, if at all, which would limit our ability to execute on our strategic plan. Moreover, the condition of the credit markets can be unpredictable and we may experience a reduction in value or loss of liquidity with respect to our investments, which would put further strain on our cash resources. For example, as of December 31, 2015, our 2023 Senior Notes are trading at 87.5 (a discount to par) from the time they were issued in August 2015. The yields on debt of comparable credit quality have risen significantly since the time we issued the 2023 Senior Notes implying that our cost of capital could be higher in the future.

O ur current level of cash on hand may limit our ability to take advantage of attractive business development opportunities and execute on our strategic plan. In addition, our cash on hand may not be sufficient to service the principal and interest payments under our current debt obligations or any cash milestone payments to the former Lumara Health security holders upon the achievement of sales milestones. Our ability to make these required payments could be adversely affected if we do not achieve expected revenue and cash flow forecasts or if we are unable to find other sources of cash in the future and we may need to offer the former Lumara Health security holders shares of our common stock or issue shares of our common stock to raise cash resulting in dilution to our stockholders.

Our long-term capital requirements will depend on many other factors, including, but not limited to the commercial success of our products and efforts we make in connection with commercialization and development, our ability to realize synergies and opportunities in connection with our acquisitions and portfolio expansion, the outcome of and costs associated with any material litigation or patent challenges to which we are or may become a party, the timing and magnitude of costs associated with qualifying additional manufacturing capacities and alternative suppliers, and our ability to raise additional capital on terms and within a timeframe acceptable to us, if necessary.

Our ability to use net operating loss carryforwards and tax credit carryforwards is dependent on generating future taxable income and may be limited, including as a result of future transactions involving our common stock.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating losses and certain other tax assets to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders increases by more than 50 percentage points over such stockholders' lowest percentage ownership during the testing period, which is generally three years. An ownership change could limit our ability to utilize our net operating loss and tax credit carryforwards for taxable years including or following such "ownership change" by allowing us to utilize only a portion of the net operating losses and tax credits that would otherwise be available but for such ownership change. Limitations imposed on the ability to use net operating losses and tax credits to offset future taxable income or the failure to generate sufficient taxable income could require us to pay more U.S. federal income taxes than we have estimated and could cause such net operating losses and tax credits to expire unused, in each case reducing or eliminating the benefit of such net operating losses and tax credits and potentially adversely affecting our financial position, including our after-tax net income. Similar rules and limitations may apply for state income tax purposes.

In September 2014, we adopted an amendment to our shareholder rights plan to help preserve our tax assets by deterring certain stockholders from increasing their percentage ownership in our stock; however, such amendment is merely a deterrent that does not actually prevent Section 382 ownership limitations and there can be no assurance that we will not undergo an ownership change. Even minor accumulations by certain of our stockholders could result in triggering an ownership change under Section 382. If such an ownership change were to occur, we expect that our net operating losses could become limited; however, the amount of the limitation would depend on a number of factors including our market value at the time of the ownership change. For a discussion of the amendment to our shareholder rights plan, see the discussion in Note  N , "Stockholders' Equity," to our consolidated financial statements included in this Annual Report on Form 10-K.

In addition, we have recorded deferred tax assets based on our assessment that we will be able to realize the benefits of our net operating losses and other favorable tax attributes. Realization of deferred tax assets involve significant judgments and estimates which are subject to change and ultimately depends on generating sufficient taxable income of the appropriate character during the appropriate periods. Changes in circumstances may affect the likelihood of such realization, which in turn may trigger a write-down of our deferred tax assets, the amount of which would depend on a number of factors. A write-down would reduce our reported net income, which may adversely impact our financial condition or results of operations or cash flows. In addition, we are potentially subject to ongoing and periodic tax examinations and audits in various jurisdictions, including with respect to the amount of our net operating losses and any limitation thereon. An adjustment to such net operating loss carryforwards, including an adjustment from a taxing authority, could result in higher tax costs, penalties and interest, thereby adversely impacting our financial condition, results of operations or cash flows.

An adverse determination in any current or future lawsuits in which we are a defendant could have a material adverse effect on us.

The administration of our products to, or the use of our products by, humans may expose us to liability claims, whether or not our products are actually at fault for causing an y harm or injury. As Feraheme is used over longer periods of time by a wider group of patients taking numerous other medicines or by patients with additional underlying health problems, the likelihood of adverse drug reactions or unintended side effects, including death, may increase. While these adverse events are rare, all IV irons, including Feraheme , can cause patients to experience serious hypersensitivity reactions, including anaphylactic-type reactions, some of which have been life-threatening and/or fatal. Makena is a prescription hormone medicine (progestin) used to lower the risk of preterm birth in women who are pregnant and who have previously delivered preterm in the past. It is not known if Makena is safe and effective in women who have other risk factors for preterm birth. In one clinical study, certain complications or events associated with pregnancy occurred more often in women who received Makena . These included miscarriage (pregnancy loss before 20 weeks of pregnancy), hospital admission for preterm labor, preeclampsia, gestational hypertension and gestational diabetes. In addition, other hormones administered during pregnancy have in the past been shown to cross the placenta and have negative effects on the offspring. Although we maintain product liability insurance coverage for claims arising from the use of our products in clinical trials and commercial use, coverage is expensive, and we may not be able to maintain sufficient insurance at a reasonable cost, if at all. Product liability claims, whether or not they have merit, could also decrease demand for our products, subject us to product recalls or harm our reputation, cause us to incur substantial costs, and divert management's time and attention.

We may also be the target of claims asserting violations of securities and fraud and abuse laws and derivative actions or other litigation. Any such litigation could result in substantial costs and divert our management's attention and resources, which could cause serious harm to our business, operating results and financial condition. Further, we may not be successful in defending ourselves in the litigation and, as a result, our business could be materially harmed. These lawsuits may result in large judgments or settlements against us, any of which could have a negative effect on our financial condition and business if in excess of our insurance coverage. Though we maintain liability insurance, if any costs or expenses associated with litigation exceed our insurance coverage, we may be forced to bear some or all of these costs and expenses directly, which could be substantial.

Our success depends on our ability to attract and retain key employees, and any failure to do so may be disruptive to our operations.

We are a pharmaceutical company focused on marketing commercial products and services and we plan to expand our portfolio, including through the addition of commercial-stage products or services through acquisitions and in-licensing; thus, the range of skills of our executive officers needs to be broad and deep. If we are not able to hire and retain talent to drive commercialization and expansion of our portfolio, we will be unlikely to maintain profitability. Because of the specialized nature of our business, including the recent introductions of a service-based business model, our success depends to a significant extent on our ability to continue to attract, retain and motivate qualified sales, technical operations, managerial, scientific, regulatory compliance and medical personnel of all levels. The loss of key personnel or our inability to hire and retain personnel who have such sales, technical operations, managerial, scientific, regulatory compliance and medical backgrounds could materially adversely affect our business (including research and development efforts).

Our operating results will likely fluctuate, including as a result of wholesaler, distributor and customer buying patterns, so you should not rely on the results of any single quarter to predict how we will perform over time.

Our future operating results will likely vary from quarter to quarter depending on a number of factors, including the factors described in these Risk Factors, many of which we cannot control, as well as the timing and magnitude of:

● Product revenues;

● The loss of a key customer or GPO;

● Costs and liabilities incurred in connection with business development activities or business development transactions into which we may enter;

● Costs associated with the commercialization of our products and services;

● Makena milestone payments we may be required to pay to the former shareholders of Lumara Health pursuant to the Lumara Agreement;

● Tax payments and of principal and interest payments in connection with our debt obligations, including the 2015 Term Loan Facility, the 2023 Notes and our Convertible Notes;

● Costs associated with the manufacture of our products and collection, processing and storage services, including costs of raw and other materials and costs associated with maintaining commercial inventory and qualifying additional manufacturing capacities and alternative suppliers;

● The recognition of deferred tax assets during periods in which we generate taxable income and our ability to preserve our net operating loss carryforwards and other tax assets;

● Costs associated with our ongoing and planned clinical studies of Feraheme, including costs associated with pursuing a broader indication of Feraheme ;

● Costs associated with the ongoing and planned clinical studies of Makena in connection with current or future post- approval commitments, and our pursuit of our multi-pronged next generation development programs for  Makena ;  

● Any changes to the mix of our business;

● Costs associated with manufacturing batch failures or inventory write-offs due to out-of-specification release testing or ongoing stability testing that results in a batch no longer meeting specifications;

● Changes in accounting estimates related to reserves on revenue, returns, contingent consideration, impairment of long-lived or intangible assets or other accruals or changes in the timing and availability of government or customer discounts, rebates and incentives; and

● The implementation of new or revised accounting or tax rules or policies .  

Our results of operations, including, in particular, product revenues , may also vary from period to period due to the buying patterns of our wholesalers, distributors, pharmacies, clinics or hospitals and specialty pharmacies. Further, our contracts with GPOs often require certain performance from the members of the GPOs on an individual account level or group level such as growth over prior periods or certain market share attainment goals in order to qualify for discounts off the list price of our products, and a GPO may be able to influence the demand for our products from its members in a particular quarter through communications they make to their members. In the event wholesalers, distributors, pharmacies, clinics or hospitals with whom we do business determine to limit their purchases of our products, our product revenues could be adversely affected. Also, in the event wholesalers, distributors, pharmacies, clinics or hospitals purchase increased quantities of our products to take advantage of volume discounts or similar benefits, our quarterly results will fluctuate as re-orders become less frequent, and our overall net pricing may decrease as a result of such discounts and similar benefits. In addition, these contracts are often cancellable at any time by our customers, often without notice, and are non-exclusive agreements within the Feraheme or Makena markets. While these contracts are intended to support the use of our products, our competitors could offer better pricing, incentives, higher rebates or exclusive relationships. Because Feraheme is not indicated for the broad IDA population, the incentives in our contracts for a particular site of care are capped based on our estimate of their patients covered by our current CKD label. Because some of our competitors' products have the broad IDA label, they may provide additional incentives for all of a customer's IV iron usage, essentially becoming an exclusive provider to that particular customer.  

Our contracting strategy can also have an impact on the timing of certain purchases causing product revenues to vary from quarter to quarter. For example, in advance of an anticipated or rumored price increase, including following the publication of our quarterly ASP, which affects the rate at which Feraheme is reimbursed, or a reduction in expected rebates or discounts for one of our products, customers may order our produ c ts in la rger than normal quantities , which could cause sales to be lower in subsequent quarters than they would have been otherwise. Further, any changes in purchasing patterns or inventory levels, changes to our contracting strategy, increases in product returns, delays in purchasing products or delays in payment for products by one of our distributors or GPOs could also have a negative impact on our revenue and results of operations.

As a result of these and other factors, our quarterly operating results could fluctuate, and this fluctuation could cause the market price of our common stock to decline. Results from one quarter should not be used as an indication of future performance.

If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements and/or our projected guidance prove inaccurate, our actual results may vary from those reflected in our projections and accruals.

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, our management evaluates our critical and other significant estimates and assumptions , including among others those associated with revenue recognition related to product and services sales ; product sales allowances and accruals ;   investments;   inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development and other intangible assets ; contingent consideration ; debt obligations ;   certain accrued liabilities , including clinical trial accruals and restructuring liabilities; income tax es and equity-based compensation expense. We base our estimates on market data, our observance of trends in our industry, and various other assumptions that we believe to be reasonable under the circumstances. If actual results differ from these estimates, there could be a material adverse effect on our financial results and the performance of our stock.

Further, in January 2016, we issued financial guidance, including expected 2016 total revenues and Makena , CBR and Feraheme net sales, which is likewise based on estimates and the judgment of management. If, for any reason, we are unable to realize our projected 2016 revenue, we may not realize our publicly announced financial guidance. If we fail to realize , or if we change or update any element of , our publicly disclosed financial guidance or other expectations about our business, our stock price could decline in value.

As part of our revenue recognition policy, our estimates of product returns, rebates and chargebacks, fees and other discounts require subjective and complex judgments due to the need to make estimates about matters that are inherently uncertain. Any significant differences between our actual results and our estimates could materially affect our financial position and results of operations.

In addition, to determine the required quantities of Feraheme ,   Makena ,   and the materials that support the CBR Services   and their related manufacturing schedules, we also n eed to make significant judgments and estimates based on inventory levels, current market trends, anticipated sales, forecasts and other factors. Because of the inherent nature of estimates, there could be significant differences between our estimates and the actual amount of product need. For example, the level of our access to wholesaler and distributor inventory levels and sales data, which varies based on the wholesaler, distributor, clinic or hospital, affects our ability to accurately estimate certain reserves included in our financial statements. Any difference between our estimates and the actual amount of product or services demand could result in unmet demand or excess inventory, each of which would adversely impact our financial resu lts and results of operations.

Our stock price has been and may continue to be volatile, and your investment in our stock could decline in value or fluctuate significantly, including as a result of analysts' activities.

The market price of our common stock has been, and may continue to be, volatile, and your investment in our stock could decline in value or fluctuate significantly. Our stock price has ranged between $20.48 and $77.73 in the fifty-two week period through February  12, 2016. The stock market has from time to time experienced extreme price and volume fluctuations, particularly in the biotechnology and pharmaceuticals sectors, which have often been unrelated to the operating performance of particular companies. Various factors and events, including the factors and events described in these Risk Factors, many of which are beyond our control, may have a significant impact on the market price of our common stock. Our stock price could also be subject to fluctuations as a result of general market conditions, shareholder activism and attempts to disrupt our strategy by activist investors ,   sales of large blocks of our common stock , the impact of our stock repurchase program or the dilutive eff ect of our Convertible Notes, other equity or equity-linked financings , or alternative strategic arrangements.

In addition, the trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us and our business. We do not control these or any other analysts. Furthermore, there are many large, well-established, publicly traded companies active in our industry and market, which may mean that it is less likely that we will receive widespread analyst coverage. In addition, our future operating results are subject to substantial uncertainty, and our stock price could decline significantly if we fail to meet or exceed analysts' forecasts and expectations. If any of the analysts who cover us downgrade our stock, lower their price target or issue commentary or observations about us or our stock that are perceived by the market as negative, our stock price would likely decline rapidly. In addition, if these analysts cease coverage of our company, we could lose visibility in the market, which in turn could also cause our stock price to decline.

If we identify a material weakness in our internal controls over financial reporting, our ability to meet our reporting obligations and the trading price of our stock could be negatively affected.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. If we, or our independent registered public accounting firm, determine that our internal controls over our financial reporting are not effective, or we discover areas that need improvement in the future, or we experience high turnover of our personnel in our financial reporting functions, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could be negatively affected.

If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price. Failure to comply with reporting requirements could subject us to sanctions and/or investigations by the U.S. Securities and Exchange Commission , NASDAQ or other regulatory authorities.

Our shareholder rights plan, certain provisions in our charter and by-laws, certain provisions of our Convertible Notes, certain contractual relationships and certain Delaware law provisions could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove the current members of our Board.

We have a shareholder rights plan, the provisions of which are intended to protect our net operating loss and tax credit carryforwards .   Although the plan was put in place to protect these assets, its provisions could function to deter a hostile takeover by making any proposed hostile acquisition of us more expensive and less desirable to a potential acquirer by enabling our stockholders (other than the potential hostile acquiror) to purchase significant amounts of additional shares of our common stock at dilutive prices. The rights issued pursuant to our shareholder rights plan, as amended in September 2014, become exercisable generally upon the earlier of 10 days after a person or group acquires 4.99% or more of our outstanding common stock or 10 business days after the announcement by a person or group of an intention to acquire 4.99% of our outstanding common stock via tender offer or similar transaction. The shareholder rights plan could delay or discourage transactions involving an actual or potential change in control of us or our management, including transactions in which stockholders might otherwise receive a premium for their shares over then-current prices.

In addition, certain provisions in our certificate of incorporation and our by-laws may discourage, delay or prevent a change of control or takeover attempt of our company by a third-party as well as substantially impede the ability of our stockholders to benefit from a change of control or effect a change in management and our Board. These provisions include:

● the ability of our Board to increase or decrease the size of the Board without stockholder approval;

● advance notice requirements for the nomination of candidates for election to our Board and for proposals to be brought before our annual meeting of stockholders;

● the authority of our Board to designate the terms of and issue new series of preferred stock without stockholder approval;

● non-cumulative voting for directors; and

● limitations on the ability of our stockholders to call special meetings of stockholders.

As a Delaware corporation, we are subject to the provisions of Section 203 of the Delaware General Corporation Law ("Section 203"), which prevents us from engaging in any business combination with any "interested stockholder," which is defined generally as a person that acquires 15% or more of a corporation's outstanding voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business

combination is approved in the manner prescribed in Section 203. These provisions could have the effect of delaying or preventing a change of control, whether or not it is desired by, or beneficial to, our stockholders.

In addition to the above factors, an acquisition of our company could be made more difficult by employment agreements we have in place with our executive officers, as well as a company-wide change of control policy, which provide for severance benefits as well as the full acceleration of vesting of any outstanding options or restricted stock units in the event of a change of control and subsequent termination of employment. Further, our Third Amended and Restated 2007 Equity Incentive Plan generally permits our Board to provide for the acceleration of vesting of options granted under that plan in the event of certain transactions that result in a change of control.

Furthermore, holders of the Convertible Notes have the right to require us to repurchase their notes at a price equal to 100% of the principal amount thereof and the conversion rate for the Convertible Notes may be increased as described in the indenture, in each case, upon the occurrence of certain change of control transactions. Additionally, upon certain change of control transactions, the offsetting convertible bond hedge and warrant transactions that we entered into at the time we issued the Convertible Notes may be exercised and/or terminated early. Upon any such exercise and/or early termination, the proceeds we receive upon the exercise of the convertible bond hedge transactions may prove to be significantly lower than the amounts we would be required to pay upon termination of the warrant transactions. These features of the Convertible Notes and the convertible bond hedge and warrants, including the financial implications of any renegotiation of the above-mentioned provisions, could have the effect of preventing a change of control, whether or not it is desired by, or beneficial to, our stockholders, or may result in the acquisition of us being on terms less favorable to our stockholders than it would otherwise be.

Significant disruptions of information technology systems or security breaches could adversely affect our business.

We are increasingly dependent upon information technology systems, infrastructure, and data to operate our business. In the ordinary course of business, we collect, store, and transmit large amounts of confidential information (including but not limited to intellectual property, proprietary business information, and personal information). It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result we manage a number of third-party vendors who may or could have access to our confidential information. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, and the large amounts of confidential information stored on those systems, make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors, and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks are increasing in their frequency, sophistication, and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information. Significant disruptions of our information technology systems or security breaches could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including but not limited to trade secrets or other intellectual property, proprietary business information, and personal information), and could result in financial, legal, business, and reputational harm to us. For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our patients or employees, could harm our reputation, require us to comply with federal and/or state breach notification laws and foreign law equivalents, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information. Security breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. While we have implemented security measures to protect our information technology systems and infrastructure, there can be no assurance that such measures will prevent service interruptions or security breaches that could adversely affect our business.