Risk Factors Update Summary

• The company has been engaged in a legal dispute with Daiichi Sankyo regarding the use of Enhertu® in its cancer drug, resulting in a ruling in favor of Daiichi Sankyo and a petition for reimbursement of $58 million in legal fees and costs.
• In September 2022, the FDA established a PDUFA target action date of June 29, 2023 for the sBLA submission for ADCETRIS. This indicates progress towards potential approval.
• Completed enrollment in trial investigating TUKYSA in combination with trastuzumab, ramucirumab, and paclitaxel.
• In the event our product candidates rely on companion diagnostics, we may need separate coverage and reimbursement. This change might result in additional expenses for obtaining coverage and reimbursement for our product candidates.
• The actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester. This change might result in a significant decrease in Medicare payments for the company.
• The successful commercialization of our products will depend on the acceptance of our products by the medical community, patients, and third-party payors.
• The company is establishing a second source manufacturing supply chain for PADCEV and using its facility in Bothell, Washington to support commercial production. This change might result in increased production capacity and supply chain resilience.
• Performance-based equity awards were granted to eligible employees with vesting based on regulatory milestones. Costs of these awards are not recorded as an expense until vested.
• In November 2022, the FDA approved the sBLA for ADCETRIS, resulting in an additional six months of U.S. market exclusivity. This extends the company's competitive advantage.
• The company's compliance obligations for data privacy and security increased due to new privacy regulations.
• The USPTO denied two post-grant review petitions seeking to cancel claims of the '039 Patent, but a panel decided to institute post-grant review of the claims, potentially impacting the ongoing patent infringement case.
• The company has increased the number of contract manufacturers for its products, including Sterling Pharma Solutions Limited, Esteve, Hovione FarmaCiencia SA, and Corden Plankstadt. This change might result in improved manufacturing capabilities and flexibility.
• The company received accelerated approval for Polivy™ from the FDA, triggering milestone payments and royalties.
• The Infrastructure Investment and Jobs Act included changes to the Medicare Part B program requiring rebates for some discarded drug products. This change could potentially increase future rebates for ADCETRIS, TIVDAK, and possibly PADCEV, starting in Q1 2023.
• FDA granted accelerated approval of TIVDAK in combination with trastuzumab for colorectal cancer.
• Intangible assets decreased from $535 million to $512 million on the consolidated balance sheet.
• The company expects that the ongoing COVID-19 pandemic and future restrictions could negatively impact research and development activities, sales and marketing efforts, and product distribution.
• In December 2022, positive results were presented from a phase 2 trial evaluating ADCETRIS in combination with nivolumab and standard chemotherapy agents for the treatment of classical Hodgkin lymphoma. The high complete response rate and overall response rate demonstrate the potential efficacy of the combination therapy.
• Reports of adverse events or safety concerns involving our product candidates may negatively impact our business and financial position.
• The company's patents for Blenrep decreased from nine to eight in the United States and Europe.
• Our collaboration agreements with Takeda, Astellas, Genmab, and Merck have expanded to include Zai Lab. This change could impact our ability to complete obligations and commercialize products in current territories.
• The company's ability to expand operations internationally may be negatively impacted by geopolitical instability, including sanctions and embargoes, which could affect revenues and growth prospects.
• The company has increased its employee count from 2,675 to 3,256 as of December 31, 2022. This change might indicate business growth and increased workforce capacity.
• Clinical trials and product development are expensive and any delays or failures could adversely affect our operations, financial condition, and growth prospects.
• FDA granted accelerated approval of TIVDAK for recurrent cervical cancer.
• The Inflation Reduction Act of 2022 directs HHS to negotiate the price of certain high-expenditure, single-source drugs covered under Medicare. This change may have a significant impact on the pharmaceutical industry.
• The company's patent portfolio expanded from twelve to thirteen patents in the United States and Europe.
• PADCEV is being investigated in first-line metastatic urothelial cancer and earlier stages of bladder cancer.
• Recent legislation grants the FDA additional authority to enforce post-marketing requirements and commitments for accelerated approval drugs. This change may increase regulatory oversight and compliance obligations.
• The company's patents for PADCEV remained unchanged at five patents in the United States and Europe.
• The Baker Entities collectively beneficially owned approximately 25% of our common stock, a decrease from 26%.
• The company's patents for TUKYSA decreased from eleven to ten in the United States and Europe.
• Fam-trastuzumab deruxtecan-nxki is recommended by NCCN for use as part of a combination therapy in HER2-positive metastatic colorectal cancer. This change may increase competition for TUKYSA in this indication.
• Interim data from innovaTV 205 trial showed promising activity of TIVDAK in combination with pembrolizumab for cervical cancer.
• We face intense competition and rapid technological change, which may result in other companies developing similar therapies before or
• Changes in executive leadership, including the resignation of the President and CEO and appointment of a new CEO, could create uncertainty and impact the successful implementation of the company's strategy.
• Our executive officers, directors, and holders of outstanding common stock beneficially owned approximately 52% of our voting power, a slight increase from 51%.
• The company has implemented diversity, equity, and inclusion initiatives, with 58% of its global workforce and 41% of its leadership being diverse as of the end of 2022. This change reflects the company's commitment to fostering a diverse and inclusive work environment.
• The Biden administration's executive orders and legislation aim to lower drug costs and increase accountability. These changes could impact pricing negotiations and rebates, potentially affecting our commercialization efforts.
• The company has adopted additional initiatives to further build its capacity to meet diversity, equity, and inclusion goals, including employee resource networks and a DEI executive council. This change demonstrates the company's ongoing efforts to promote diversity and inclusion.
• The company's increased reliance on remote work and information technology systems during the pandemic has intensified cybersecurity risks, including the potential for cyberattacks from hackers and nation-state actors.
• Entered into an agreement with LAVA Therapeutics to develop and commercialize SGN-EGFRd2 for solid tumors.
• Changes in tax laws, statutes, rules, regulations, or ordinances could adversely affect our business operations and financial performance.
• The company's patents for TIVDAK decreased from eleven to ten in the United States and Europe.
• Pembrolizumab was approved in Japan as first-line therapy in combination with chemotherapy for recurrent or metastatic cervical cancer. This change expands the potential market for pembrolizumab in this indication.
• Changes in data protection regulations, such as the GDPR and new SCCs, require additional compliance efforts for personal data transfers. This change may impact our data processing practices and collaborations.
• Potential litigation risks related to intellectual property infringement could result in substantial expenses and divert management's attention. This change highlights the ongoing risk of legal disputes.
• The company's competition for qualified personnel has intensified, and the effects of the pandemic and transition to remote work schedules have further highlighted the importance of information technology systems.
• The company has maintained precautionary measures related to COVID-19, such as enhanced facilities cleaning, contact tracing, and making testing available. This change indicates the company's commitment to ensuring the health and safety of its employees.
• The Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures in the year incurred, reducing our operating cash flows.
• Entered into a collaboration with Sanofi to develop multiple novel ADCs targeting CEACAM5 and other
• Construction and expansion of manufacturing facilities in Everett, Washington, may experience cost overruns, delays, or difficulties obtaining regulatory approvals. This change could impact our ability to meet clinical and commercial requirements.
• The company has experienced
• Proposed corporate tax reform measures, including a minimum tax on book income and increased taxation of international business operations, may impact our financial obligations.