ITEM 1A.RISK FACTORS

have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition,

results of operations and future growth prospects. Our business could be harmed by any of these risks. The risks and uncertainties

described below are not the only ones we face. The trading price of our common stock could decline due to any of these risks,

and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained

in this Annual Report on Form 10-K, including our consolidated financial statements and related notes.

Risk Factors Summary

Our

business operations are subject to numerous risks, factors and uncertainties, including those outside of our control, that could

cause our actual results to be harmed, including risks regarding the following:

Risks Relating to Our Business and Industry

· the timelines of our clinical trials;

· our ability to commercialize TLANDO may be limited;

· the early stage of development of LPCN 1144, LPCN 1107, and TLANDO XR;

· the regulation requirements for our product candidates;

· the market’s acceptance of our products;

· physicians and patients using other products may not switch to our product;

· any possible failure to comply with federal and state healthcare laws;

· the ongoing outbreak of coronavirus around the world;

· difficulties in managing the growth of the Company;

· any product liability claims;

· any failure to comply with the Controlled Substances Act;

· the defense and resolution of any litigation;

· cyber security risks;

Risks Related to Our Dependence on Third Parties

· our ability to establish successful collaborations for our products;

Risks Related to Ownership of Our Common Stock

· the effectiveness of our internal control over financial reporting;

· the volatility of our share price;

· the possibility of delisting of our securities from the Nasdaq Capital Market;

· our decision not to pay dividends on our common stock;

· our management and directors’ ability to exert influence over our affairs;

· volatility in the trading price of our common stock;

Risks Relating to Our Financial Position and Capital Requirements

· our incurrence of significant operating losses;

· any fluctuation in our operating results;

Risks Relating to Our Intellectual Property

· our ability to protect our intellectual property;

Risks Relating to Our Business and Industry

The timelines of our clinical trials may be impacted

by numerous factors and any delays may adversely affect our ability to execute our current business strategy.

Our

expectations regarding the success of our product candidates, including our clinical candidates and lead compounds, and our business

are based on projections which may not be realized for many scientific, business or other reasons. We therefore cannot assure

investors that we will be able to adhere to our current schedule. We set goals that forecast the accomplishment of objectives

material to our success: selecting clinical candidates, product candidates, failures in research, the inability to identify or

advance lead compounds, identifying target patient groups or clinical candidates, the timing and completion of clinical trials,

and anticipated regulatory approval. The actual timing of these events can vary dramatically due to factors such as slow enrollment

of subjects in studies, uncertainties in scale-up, manufacturing and formulation of our compounds, failures in research, the inability

to identify clinical candidates, failures in our clinical trials, requirements for additional clinical trials and uncertainties

inherent in the regulatory approval process and regulatory submissions. Decisions by our partners or collaborators may also affect

our timelines and delays in achieving manufacturing capacity and marketing infrastructure sufficient to commercialize our products.

The length of time necessary to complete clinical trials and to submit an application for marketing approval by applicable regulatory

authorities may also vary significantly based on the type, complexity and novelty of the product candidate involved, as well as

other factors.

We depend primarily on the success of our lead product

candidate, TLANDO, for which we recently received tentative approval from the FDA and which may not receive final regulatory approval

or be successfully commercialized.

TLANDO

is currently our only product candidate that has completed Phase 3 clinical trials, and our business currently depends primarily

on its successful development, regulatory approval and commercialization, if final approval is obtained.

December 8, 2020, the FDA informed us that it granted tentative approval to TLANDO for testosterone replacement therapy in adult

males indicated for conditions associated with a deficiency or absence of endogenous testosterone: primary

hypogonadism (congenital or acquired) and hypogonadotropic hypogonadism (congenital or acquired). In granting tentative approval,

the FDA concluded that TLANDO has met all required quality, safety and efficacy standards necessary for approval, but TLANDO has

not received final approval and is not eligible for final approval and marketing in the U.S. until the expiration of the exclusivity

period previously granted to Clarus with respect to Jatenzo®, which expires on March 27, 2022. We will not be able to market

TLANDO in the U.S. until that time. Such delay could adversely affect our ability to compete with other TRT products and have

a material adverse effect on our business. In addition, we may not have sufficient resources to successfully commercialize TLANDO.

Under

the PREA, if TLANDO receives full approval, we will need to address the PREA requirement to assess the safety and effectiveness

of TLANDO in pediatric patients. The FDA has also required us to conduct certain post-marketing studies including: (i) conduct

an appropriately designed label comprehension and knowledge study that assesses patient understanding of key risk messages in

the Medication Guide for TLANDO and (ii) conduct an appropriately designed one-year trial to evaluate development of adrenal insufficiency

with chronic TLANDO therapy. The timetables for these post-marketing requirements will be established at the time of full approval

of TLANDO. We will incur additional costs to conduct these post-marketing studies, which could have a material adverse effect

on our business and financial condition. If the results of these post-marketing studies are negative, our business could be adversely

affected, including as a result of the withdrawal of FDA approval for TLANDO.

Further,

in the event that we seek regulatory approval of TLANDO outside the United States, such markets also have requirements for approval

of drug candidates with which we must comply prior to marketing. Obtaining regulatory approval for marketing of TLANDO in one

country does not ensure we will be able to obtain regulatory approval in other countries but a failure or delay in obtaining regulatory

approval in one country may have a negative effect on the regulatory process in other countries.

Any

regulatory approval of TLANDO, once obtained, including the FDA’s tentative approval, may be withdrawn. Ultimately, the

failure to obtain and maintain regulatory approvals would prevent TLANDO from being marketed and would have a material adverse

effect on our business.

If T-replacement therapies are found, or are perceived,

to create health risks, our ability to sell TLANDO and TLANDO XR could be materially adversely affected and our business could

be harmed. Even if our TLANDO and our TLANDO XR are approved, physicians and patients may be deterred from prescribing and using

T-replacement therapies, which could depress demand for TLANDO and TLANDO XR and compromise our ability to successfully commercialize

TLANDO and TLANDO XR.

Certain

publications have suggested potential health risks associated with T-replacement therapy, such as increased cardiovascular disease

risk, including increased risk of heart attack or stroke, fluid retention, sleep apnea, breast tenderness or enlargement, increased

red blood cells, development of clinical prostate disease, including prostate cancer, and the suppression of sperm production.

These potential health risks are described in various articles, including the following publications:

Prompted

by these events, the FDA announced on January 31, 2014 that it will investigate the risk of stroke, heart attack, and death in

men taking FDA-approved testosterone products and that the FDA would hold a T-class Advisory Committee meeting on September 17,

2014 to discuss this topic further. The FDA has also asked health care professionals and patients to report side effects involving

prescription testosterone products to the agency.

Following

the FDA's announcement, the Endocrine Society, a professional medical organization, released a statement in February 2014 in support

of further studies regarding the risks and benefits of FDA-approved T-replacement products for men with age-related T deficiency.

Specifically, the Endocrine Society noted that large-scale randomized controlled trials are needed to determine the risks and

benefits of T-replacement therapy in older men. In addition, the Endocrine Society recommended that patients should be informed

of the potential cardiovascular risks in middle-aged and older men associated with T-replacement therapies. Also following the

FDA's announcement, Public Citizen, a consumer advocacy organization, petitioned the FDA to add a "black box" warning

about the increased risks of heart attacks and other cardiovascular dangers to the product labels of all T-replacement therapies.

In addition, this petition urged the FDA to delay its decision date on approving Aveed, a long-acting T-injectable developed by

Endo, which was subsequently approved by the FDA in March 2014. In July 2014, the FDA responded to the Public Citizen petition

and denied the petition. Additionally, in June 2014 the FDA announced that it would require the manufacturers of testosterone

drugs to update the warning label to include blood clots including deep vein thrombosis and pulmonary embolism.

the T-class Advisory Committee meeting held on September 17, 2014, the Advisory Committee discussed (i) the identification of

the appropriate patient population for whom T-replacement therapy should be indicated and (ii) the potential risk of major adverse

cardiovascular events, defined as non-fatal stroke, non-fatal myocardial infarction and cardiovascular death associated with T-replacement

therapy. At the meeting, 16 of the 21 members of the Advisory Committee voted that the FDA should require sponsors of testosterone

products to conduct a post marketing study (e.g. observational study or controlled clinical trial) to further assess the potential

cardiovascular risk. Further, 12 of these voted that such post marketing study be required only if the T-replacement therapy is

also approved for age-related hypogonadism.

The

Advisory Committee also held a meeting on September 18, 2014 to evaluate the safety and efficacy of Jatenzo (previously Rextoro),

an oral TU submitted to the FDA by Clarus for the proposed indication of T-replacement therapy. 18 of the 21 members of the Advisory

Committee voted that the overall benefit/risk profile of Jatenzo was not acceptable to support approval for T-replacement therapy.

The Advisory Committee agreed that an oral TU as a T-replacement therapy is promising and that it would be of great value to patients

to have an oral treatment option, but they did not believe the current Jatenzo data supported approval.

March 3, 2015, the FDA issued a safety announcement addressing the Advisory Committee’s recommendations and communicated

its expectations related to label revisions and additional clinical requirements.

The

FDA's safety assessment recommended the following label modifications/restrictions in the indicated population for T-replacement

therapy:

Additionally,

the FDA stated that they will require manufacturers of approved T-replacement products to conduct a well-designed clinical trial

to more clearly address the question of whether an increased risk of heart attack or stroke exists among users of T-replacement

products. The FDA encouraged manufacturers to work together on conducting a clinical trial, although the FDA will allow manufacturers

to work separately if they so choose.

January 9, 2018, a Bone, Reproductive and Urologic Drugs Advisory Committee (“BRUDAC”) meeting was held for Jatenzo.

The BRUDAC voted nine in favor and ten against the acceptability of the overall benefit/risk profile to support approval of Jatenzo

as a TRT. Jatenzo, a competing oral TU TRT product candidate to TLANDO, has shown a clinically meaningful increase in blood pressure.

The FDA may consider this blood pressure increase by a product with the same active ingredient as TLANDO to be an oral TU class

effect. Therefore, irrespective of our TLANDO ABPM study findings, we may not be successful in overcoming the FDA’s belief

that the increase in blood pressure is an oral TU class effect rather than a product candidate specific effect. This may result

in a TLANDO non- approval, increased label warnings or agreeing to Risk Evaluation and Mitigation Strategies (“REMS”)

and/or post approval label comprehension study as a condition for approval.

Additionally,

the FDA convened a BRUDAC meeting on January 10, 2018 to evaluate the safety and efficacy of TLANDO as a T-replacement product.

The BRUDAC voted six in favor and thirteen against the acceptability of the overall benefit/risk profile to support approval

of TLANDO as a TRT and ultimately a complete response letter (“CRL”) was received from the FDA citing four deficiencies

on May 8, 2018.

Also,

on September 29, 2018, Antares Pharma, Inc. announced that it had received approval from the FDA regarding its NDA for XYOSTEDTM

(testosterone enanthate) injection. However, based on clinical results XYOSTED’s label is required to contain a black box

warning concerning blood pressure increases. Additionally, the FDA also required the following specific language to be included

in XYOSTED’s label, “In some patients the increase in blood pressure with XYOSTED may be too small to detect, but

can still increase the risk of major adverse cardiovascular events (“MACE”)”.

Additionally

on February 4, 2019, the FDA held a public workshop entitled, “Evaluating the Pressor Effects of Drugs & Ambulatory

Blood Pressure Monitoring Studies”. The purpose of the workshop was to bring together the stakeholder community, including

company sponsors, FDA, and key opinion leaders, to discuss the premarketing assessment of a drug’s effect on blood pressure.

Topics discussed by the FDA included: study design considerations to definitively assess a drug’s effect on blood pressure

and appropriate regulatory action; the need to raise physician and patient awareness via labeling or risk mitigation strategies

based on blood pressure effects and associated increased cardiovascular risks; the assessment of clinical meaningfulness of blood

pressure changes based on findings; appropriately identifying the population at risk; and, a drug’s benefit risk analyses.

December 8, 2020, the FDA tentatively approved TLANDO. As part of their approval, the FDA has required us to include certain warnings

and precautions in our labeling for TLANDO, including a “black box warning,” including warnings relating to blood

pressure increases and an indication that the safety and efficacy of TLANDO in males less than 18 years has not been established.

These warnings may deter physicians and patients from using TLANDO after it has received final approval, which could adversely

affect our business.

The

FDA has also required us to conduct certain post-marketing studies to (i) assess patient understanding of key risks relating to

TLANDO and (ii) evaluate development of adrenal insufficiency with chronic TLANDO therapy. We will incur additional costs to conduct

these post-marketing studies, which could have a material adverse effect on our business and financial condition. In addition,

negative from such studies could adversely affect our business and our ability to successfully commercialize TLANDO.

If we fail to obtain adequate healthcare reimbursement

for our products, our revenue-generating ability will be diminished and there is no assurance that the anticipated market for

our products will be sustained.

believe that there could be many different applications for products successfully derived from our technologies and that the anticipated

market for products under development could continue to expand. However, due to competition from existing or new products, recent

and potential changes to the class TRT label by the FDA and the yet to be established commercial viability of our products, no

assurance can be given that these beliefs will prove to be correct. Physicians, patients, formularies, payors or the medical community

in general may not accept or utilize any products that we or our collaborative partners may develop. Other drugs may be approved

during our clinical testing which could change the accepted treatments for the disease targeted and make our compound obsolete.

Our

ability to commercialize our products with success may depend, in part, on the extent to which coverage and adequate reimbursement

to patients for the cost of such products and related treatment will be available from governmental health administration authorities,

private health coverage insurers and other organizations, as well as the ability of private payors to pay for or afford our drugs.

Adequate third-party coverage may not be available to patients to allow us to maintain price levels sufficient for us to realize

an appropriate return on our investment in product development.

Coverage

and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers can be

critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug

products when more established or lower cost therapeutic alternatives are already available or subsequently become available.

Additionally, current manufacturers of drug products may have agreements with payors that may limit the ability of new products

to get on formulary or require a step edit with an existing product before reimbursement or a new product will occur. Even if

we obtain coverage for our products, the resulting reimbursement payment rates might not be adequate or may require co-payments

that patients find unacceptably high. Patients are less likely to use our products unless coverage is provided and reimbursement

is adequate to cover a significant portion of the cost of our products. Payers may require a more arduous prior authorization

process as a condition to payment for TRT therapy. This could adversely affect the market for TRT products.

the United States and in many other countries, pricing and/or profitability of some or all prescription pharmaceuticals and biopharmaceuticals

are subject to varying degrees of government control. Healthcare reform and controls on healthcare spending may limit the price

we charge for any products and the amounts thereof that we can sell. In particular, in the United States, the federal government

and private insurers have changed and have considered ways to change, the manner in which healthcare services are provided. In

March 2010, ACA became law in the United States. ACA substantially changes the way healthcare is financed by both governmental

and private insurers and significantly affects the healthcare industry. The provisions of ACA of importance to our potential product

candidates include the following:

In addition, other legislative

changes have been proposed and adopted since ACA was enacted. On August 2, 2011, the Budget Control Act of 2011, created,

among other things, measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending

a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby

triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare

payments to providers of up to 2% per fiscal year, starting in 2013. On January 2, 2013, President Obama signed into law

the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased

the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare

Access and CHIP Reauthorization Act of 2015 was signed into law on April 16, 2015 and implemented the most significant change

in Medicare reimbursement since the ACA was enacted. This 2015 law authorizes a new Medicare pay –for-performance reimbursement

system for physicians, which will reward physicians for performance on metrics related to quality of care, resource use, meaningful

use of electronic medical records, and clinical practice improvement activities. The Bipartisan Budget Act was enacted on November

2, 2015, and among provisions, restricts the types of facilities that may receive hospital reimbursement under Medicare. These

new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect

on our customers and accordingly, our financial operations.

We anticipate that ACA

will result in additional downward pressure on the reimbursement we may receive for any approved and covered product and could

seriously harm our business. Any reduction in reimbursement from Medicare and other government programs may result in a similar

reduction in payments from private payers. In the future, the U.S. government may institute further controls and different reimbursement

schemes and limits on Medicare and Medicaid spending or reimbursement that may affect the payments we could collect from sales

of any products in the United States.

The Department of Health

and Human Services Office of Inspector General issued final regulations on November 30, 2020 to eliminate safe harbor protection

under the anti-kickback statute for drug price reductions that pharmaceutical manufacturers pay to Medicare and Medicaid plan

sponsors and their pharmacy benefit managers. The proposal reflects a clear intent to substantially alter many of the current

drug discount and services compensation practices among pharmaceutical manufacturers and Medicare and Medicaid managed care organizations

and their pharmacy benefit managers. The proposal also reflects a skepticism that current drug discount and compensation practices

among manufacturers and pharmacy benefit managers are sufficiently transparent to health plans to ensure that all appropriate

cost reductions and value is passed through to health plans and reflected in lower health plans costs and lower premiums for beneficiaries.

The Biden Administration has delayed the effective date of this rule until January 1, 2023, and a lawsuit initiated by the Pharmaceutical

Care Management Administration has challenged this final rule. If the regulation becomes effective, it could result in lower prices

for pharmaceutical products in general.

The Centers for Medicare

and Medicaid Services issued an interim final rule on November 20, 2020 that would tie prices for certain drugs under Medicare

Part B to the lowest price for those drugs available in certain countries that are members of the Organization for Economic Co-operation

and Development. This “most favored nation” drug pricing rule is also the subject of lawsuits, and a federal court

has placed an injunction on the implementation of the rule. This rule, if finalized, could also result in lower prices for pharmaceutical

products in general.

The

Biden Administration will have the opportunity to address these regulations as well as drug pricing, health care access, and other

health care reform issues. Any further legislative or administrative action to reduce reimbursement or health benefits

to beneficiaries under the Medicare or Medicaid program could affect the payment we could collect from sale of any product in

the United States.

We face substantial competition

in the TRT market, which may result in others discovering, developing or commercializing products before or more successfully

than we do.

We expect to face significant

competition for any of our product candidates, if approved. In particular, once final approval is obtained, TLANDO would compete

in the T-replacement therapies market, which is competitive and currently dominated by the sale of T-gels in terms of sales dollars

and T-injectables in terms of prescriptions. Our success will depend, in large part, on our ability to obtain an adequate share

of the market. Potential competitors in North America, Europe and elsewhere include major pharmaceutical companies, specialty

pharmaceutical companies, biotechnology firms, universities and other research institutions and government agencies. Other pharmaceutical

companies may develop oral T-replacement therapies that compete with TLANDO. For example, because TU is not a patented compound

and is commercially available to third parties, it is possible that competitors may design methods of TU administration that would

be outside the scope of the claims of either our issued patents or our patent applications. This would enable their products to

effectively compete with TLANDO, which could have a negative effect on our business.

The following T-replacement

therapies currently on the market in the United States would compete with TLANDO:

· Oral-T, such as Jatenzo;

· branded longer-acting injectables, such as Aveed (marketed by Endo);

· T-nasals, such as Natesto (marketed by Aytu);

· transdermal patches, such as Androderm (marketed by Allergan);

· buccal patches, such as Striant (marketed by Endo);

· generic testosterone enanthate intra-muscular injectables;

· authorized generic and generic T-gels; and

· subcutaneous injectable pellets, such as Testopel (marketed by Endo).

On March 27, 2019, Clarus’

product JATENZO®, an oral TU product, was approved by the FDA and also received three years of data exclusivity. On February

10, 2020, Clarus announced that JATENZO® has been launched and is commercially available. Based on the FDA’s tentative

approval of TLANDO, we will not be able to begin marketing TLANDO until after March 27, 2022, the expiration of the exclusivity

period granted to Clarus with respect to JATENZO®. Our competitors may introduce additional T-replacement therapies before

that time.

We are also aware of

other pharmaceutical companies that have T-replacement therapies or testosterone therapies in development that may be approved

for marketing in the United States or outside of the United States.

Based on publicly available

information, we believe that several other T-replacement therapies that would be competitive with TLANDO are in varying stages

of development, some of which may be approved, marketed and/or commercialized prior to TLANDO. These therapies include T-gels,

oral-T, an aromatase inhibitor, a new class of drugs called Selective Androgen Receptor Modulators and hydroalcoholic gel formulations

of DHT.

In light of the competitive

landscape above, TLANDO will not be the only oral TRT to market, which may significantly affect the market acceptance and commercial

success of TLANDO.

Furthermore, many of

our potential competitors have substantially greater financial, technical and human resources than we do and significantly greater

experience in the discovery and development of drug candidates, obtaining FDA and other marketing approvals of products and the

commercialization of those products. These competitors have the economic power to acquire and maintain market share, limiting

our ability to penetrate the TRT market with our TLANDO product. Accordingly, our competitors may be more successful than we may

be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more effective,

or more effectively marketed and sold, than our products and may render our products obsolete or non-competitive before we can

recover the expenses of developing and commercializing them. We anticipate that we will face intense and increasing competition

as new drugs enter the market and advanced technologies become available. Failure to successfully compete in this market would

materially and negatively impact our business and operations.

The entrance of generic T-gels into

the market have created downward pricing pressure on all T-replacement therapies and therefore have a negative effect on our business

and financial results.

Several companies have

received approval of Abbreviated New Drug Applications, or ANDAs, for generic versions of existing T-gels. For example in 2014,

two authorized generic T-gels were launched at a lower price than the branded version of the same T-gel. With generic versions

of T-gel becoming available in the market, governmental and other pressures to reduce pharmaceutical costs have resulted in physicians

writing prescriptions for generic T-gels as opposed to branded T-gels. The entrance of these generic T-gels into the market has

caused downward pressure on the pricing of all T-replacement therapies and has materially and adversely affected the level of

sales and price at which we could sell TLANDO, and ultimately will materially and adversely impact our revenues and financial

results.

The introduction of generic

T-gel, may also affect the reimbursement policies of government authorities and third-party payors, such as private health insurers

and health maintenance organizations. These organizations determine which medications they will pay for and establish reimbursement

levels. Cost containment is a primary concern in the U.S. healthcare industry and elsewhere. Government authorities and these

third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for branded medications

when there is a generic available. With generic T-gels available in the market, that creates an additional obstacle to the availability

of reimbursement for TLANDO. Even if reimbursement is available, the level of such reimbursement could be reduced or limited.

Reimbursement may impact the demand for, or the price of, TLANDO. If reimbursement is not available or is available only at limited

levels, we may not be able to successfully commercialize TLANDO, and/or our financial results from the sale of related products

could be negatively and materially impacted. Rebates and other pricing strategies of generics may erode our revenue and harm our

financial performance.

Additionally, TLANDO

will not be the only oral TRT product in the market. If the generic version of a competing oral TRT product enters the market

before TLANDO, then the commercial prospects of TLANDO could be materially and negatively impacted.

Even

if we obtain FDA approval for TLANDO, our ability to commercialize TLANDO may be limited.

Our ability to commercialize

TLANDO, should it receive final approval, is uncertain. Our ability to commercially launch TLANDO is contingent upon numerous

factors including FDA approval, the availability of commercial launch supplies, the impact of COVID-19, our financial resources,

and our ability to license TLANDO to a third party or build out a commercial sales and marketing team/organization. If we are

unable to launch TLANDO commercially at scale, our business and operations will be adversely affected. As an alternative to launching

TLANDO on our own, we are exploring the possibility of licensing TLANDO to a third party, although no licensing agreement has

been entered into by us yet. We are unable to estimate whether or when we will be able to out-license TLANDO, should it be approved.

We will not be able to successfully

commercialize our product candidates without establishing sales, marketing and market access capabilities internally or through

collaborators.

currently do not have a sales, marketing and market access staff. If and when any of our product candidates are commercialized,

we may not be able to find suitable sales and marketing staff and collaborators for our product candidates. The outside collaborators

we work with may not be adequate or successful and any collaborators could terminate or materially reduce the effort they direct

to our products. The development of collaborations or an internal sales force and marketing, market access and sales capability

will require significant capital, management resources and time. The cost of establishing such a sales force may exceed any potential

product revenues and our marketing, market access and sales efforts may be unsuccessful. If we are unable to develop an internal

marketing, market access and sales capability or if we are unable to enter into a marketing and sales arrangement with a third

party on acceptable terms, we may be unable to successfully commercialize our product candidates.

LPCN 1144 is in a very early stage

of development and may not be further developed for a variety of reasons.

LPCN 1144 is in a very

early stage of development and consequently the risk that we fail to commercialize LPCN 1144 and related products is high. In

particular, we have only recently announced topline primary endpoint results from our ongoing Phase 2 LiFT clinical study.

Treatments with LPCN 1144 post 12 weeks of treatment resulted in robust liver fat reduction, assessed by MRI-PDFF, and showed

improvement of liver injury markers with no observed tolerability issues. Inclusion of d-alpha tocopherol formulated with the

testosterone prodrug resulted in additional liver benefits, notably improved key liver markers without compromising tolerability.

Although our primary endpoint results from the LiFT clinical study results were positive,

these results may not be indicative of ultimate success in a larger Phase 2/3 clinical study with required FDA end-points and

populations needed for regulatory approval of LPCN 1144 for the treatment of NASH.

In addition, a number

of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late stage clinical trials,

even after achieving positive results in early stage development. Accordingly, our results from our LiFT study may not

be predictive of the results we may obtain from further studies and trials.

Several

factors could significantly affect the prospects for LPCN 1144, including factors relating to the regulatory approval, competitive

landscape and clinical development challenges for LPCN 1144. The anticipated Phase 2 and Phase 3 programs for an NDA filing for

LPCN 1144 will be very long and resource intensive.

LPCN 1107 is in a very early stage

of development and may not be further developed for a variety of reasons.

LPCN 1107 is in a very

early stage of development and consequently the risk that we fail to commercialize LPCN 1107 and related products is high. In

particular, we have only conducted three Phase 1 clinical studies with this product candidate. Two of the studies were in healthy

pregnant women and one was in healthy women. Although these studies demonstrated oral absorption of LPCN 1107 is possible, we

may not be able to match or exceed Cavg blood levels shown with the intramuscular injection comparator product over a longer duration.

Furthermore, our completed Phase 1 clinical studies may not be predictive of safety concerns that may arise in pregnant women

or demonstrate that LPCN 1107 has an adequate safety profile to warrant further development. The FDA may also require further

preclinical studies. All of these factors can impact the timing of and our ability to continue development of LPCN 1107.

In addition, a number

of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials,

even after achieving positive results in early stage development. Accordingly, our results from our Phase 1a, our Phase 1b and

our multi-dose PK dose selection studies may not be predictive of the results we may obtain from further studies and trials.

traditional PK/PD based Phase 2 clinical study in the intended patient population may not be required prior to entering into Phase

3. Therefore, based on the results of our multi-dose PK study results, we had an End-of-Phase 2 meeting with the FDA in the second

quarter of 2016, as well as subsequent guidance meetings to agree on a pivotal Phase 2b/3 development plan for LPCN 1107. However,

these discussions will need to be updated based on recent developments with Covis’ Makena®. We plan to resume our interactions

with the FDA to discuss our pivotal Phase 2b/3 clinical trial design and better understand next steps to advance LPCN 1107. Additionally,

a pivotal Phase 2b/3 study design review will not occur until the results from a planned food-effect study with LPCN 1107 are

reviewed by the FDA, though manufacturing scale-up work for LPCN 1107 has been completed. Once the pivotal Phase 2b/3 clinical

trial is started, the anticipated Phase 2b/3 program for an NDA filing for LPCN 1107 will be very long and expensive.

TLANDO XR is in a very early stage

of development and may not be further developed for a variety of reasons.

TLANDO

XR is in a very early stage of development. We have completed a Phase 2a and Phase 2b study in hypogonadal men. Results from the

Phase 2a clinical study demonstrated the feasibility of a once daily dosing with TLANDO XR hypogonadal men and a good dose response.

Results of the Phase 2b study suggest that the primary objectives were met, including identifying the dose expected to

be tested in a Phase 3 study. Future studies may not have similar clinical results. Additionally, we have preliminary data demonstrating

absorption of TLANDO XR in dogs and in postmenopausal females.

In addition, the active

ingredient in TLANDO XR has only been manufactured on a small scale. Scaling up into larger batches could be challenging and our

ability to procure adequate material in a timely manner to further develop TLANDO XR is uncertain. We also may not be able to

engage a manufacturer who can supply adequate quantities of the drug substance in compliance with cGMP.

Several

factors could significantly affect the prospects for TLANDO XR, including factors relating to the regulatory approval and clinical

development challenges for TLANDO XR discussed above. The anticipated Phase 3 program for an NDA filing for TLANDO XR, however,

could be very long and expensive.

Our research and development programs

and processes are at an early stage of development, which makes it difficult to evaluate our business and prospects, or predict

if or when we will successfully commercialize our product candidates.

Our

operations to date have primarily been limited to conducting research and development activities under license and collaboration

agreements. Our current portfolio consists of our most advanced product candidate TLANDO as well as four additional earlier stage

clinical candidates, LPCN 1144, TLANDO XR, LPCN 1148 and LPCN 1107. We have never marketed or commercialized a drug product.

Consequently, any predictions about our future performance may not be as accurate as they could be if we were further along our

commercialization path. In addition, as a pre-commercial stage business, we may encounter unforeseen expenses, difficulties, complications,

delays and other unknown factors.

Our

clinical product candidates are at an early stage of development and will require significant further investment and regulatory

approvals prior to marketing and commercialization. As such, our product development processes for TLANDO, LPCN 1144, TLANDO

XR, LPCN 1148 and LPCN 1107 are very risky and uncertain, and our product candidates may fail to advance beyond the current study.

Even if we obtain required financing, we cannot ensure successful product development or that we will obtain regulatory approval

or successfully commercialize any of our product candidates and generate product revenues.

All of our clinical candidates will

be subject to extensive regulation which can be costly and time consuming, cause delays or prevent approval of the products for

commercialization.

Our clinical development

of TLANDO, LPCN 1144, TLANDO XR, LPCN 1148 and LPCN 1107 and any future product candidates, is subject to extensive regulations

by the FDA. Product development is a very lengthy and expensive process and can vary significantly based upon the product candidate’s

novelty and complexity. Regulations are subject to change and regulatory agencies have significant discretion in the approval

process.

Numerous statutes and

regulations govern human testing and the manufacture and sale of human therapeutic products in the United States. Such legislation

and regulation bears upon, among other things, the approval of protocols and human testing, the approval of manufacturing facilities,

safety of the product candidates, testing procedures and controlled research, review and approval of manufacturing, preclinical

and clinical data prior to marketing approval including adherence to cGMP during production and storage as well as regulation

of marketing activities including advertising and labeling.

In order to obtain regulatory

clearance for the commercial sale of any of our product candidates, we must demonstrate through preclinical studies and clinical

trials that the potential product is safe and efficacious for use in humans for each target indication. Obtaining approval of

any of our product candidates is an extensive, lengthy, expensive and uncertain process, and the FDA may delay, limit or deny

approval for many reasons, including:

· the FDA may not accept data generated at our clinical trial sites;

· the FDA may require development of a REMS as a condition of approval;

Preclinical and clinical

data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates

performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain FDA approval for their products.

No assurance can be

given that current regulations relating to regulatory approval will not change or become more stringent. The FDA may also require

that we amend clinical trial protocols and/or run additional trials in order to provide additional information regarding the safety,

efficacy or equivalency of any compound for which we seek regulatory approval. Moreover, any regulatory approval of a drug which

is eventually obtained may entail limitations on the indicated uses for which that drug may be marketed. Furthermore, product

approvals may be withdrawn or limited in some way if problems occur following initial marketing or if compliance with regulatory

standards is not maintained. FDA could become more risk averse to any side effects or set higher standards of safety and efficacy

prior to reviewing or approving a product. This could result in a product not being approved.

Even if we receive marketing approval

in the United States, we may never receive regulatory approval to market our products outside the United States, which could reduce

the size of our potential markets and have a material adverse impact on our business.

In order to market any

products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other

countries regarding safety and efficacy.

Approval procedures vary

among countries and can involve additional product candidate testing and additional administrative review periods. The time required

to obtain approvals in other countries might differ from that required to obtain FDA approval. The marketing approval process

in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks.

In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before

the product can be commercialized. This can result in substantial delays in such countries. Marketing approval in one country

does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have

a negative effect on the regulatory process in others. Failure to obtain marketing approval in other countries or any delay or

setback in obtaining such approval would impair our ability to market our products in such foreign markets. Any such impairment

would reduce the size of our potential markets, which could have a material adverse impact on our business, results of operations

and prospects.

We are subject to stringent government

regulations concerning the clinical testing of our products and will continue to be subject to government regulation of any product

that receives regulatory approval.

Numerous statutes and

regulations govern human testing and the manufacture and sale of human therapeutic products in the United States and other countries

where we intend to market our products. Such legislation and regulation bears upon, among other things, the approval of clinical

study protocols and human testing of our products, the approval of manufacturing facilities, testing procedures and controlled

research, the review and approval of manufacturing, preclinical and clinical data prior to marketing approval, including adherence

to cGMP during production and storage, and marketing activities including advertising and labeling.

Clinical trials may be

delayed or suspended at any time by us or by the FDA or by other similar regulatory authorities if it is determined at any time

that patients may be or are being exposed to unacceptable health risks, including the risk of death, or if compounds are not manufactured

under acceptable cGMP conditions or with acceptable quality. Current regulations relating to regulatory approval may change or

become more stringent. The agencies may also require additional clinical trials to be run in order to provide additional information

regarding the safety, efficacy or equivalency of any compound for which we seek regulatory approval. Moreover, any regulatory

approval of a drug which is eventually obtained may entail limitations on the indicated uses for which that drug may be marketed.

Furthermore, product approvals may be withdrawn or limited in some way if problems occur following initial marketing or if compliance

with regulatory standards is not maintained. Regulatory agencies could become more risk adverse to any side effects or set higher

standards of safety and efficacy prior to reviewing or approving a product. This could result in a product not being approved.

If we, or any future

marketing collaborators or CMOs, fail to comply with applicable regulatory requirements, we may be subject to sanctions including

fines, product recalls or seizures and related publicity requirements, injunctions, total or partial suspension of production,

civil penalties, suspension or withdrawals of previously granted regulatory approvals, warning or untitled letters, refusal to

approve pending applications for marketing approval of new products or of supplements to approved applications, import or export

bans or restrictions, and criminal prosecution and penalties. Any of these penalties could delay or prevent the promotion, marketing

or sale of our products.

The successful commercialization of

our product candidates and ability to generate significant revenue will depend on achieving market acceptance.

Even if our product candidates

are successfully developed and receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare

payers such as private insurers or governments and other funding parties and the medical community. The degree of market acceptance

for our products, if approved, will depend on a number of factors, including:

· the prevalence and severity of any adverse side effects;

· limitations or warnings contained in the labeling approved by the FDA;

· pricing and cost effectiveness;

· our ability to increase awareness of our products through marketing efforts;

· our ability to obtain sufficient third-party coverage or reimbursement; and

our product candidates are approved but do not achieve an adequate level of acceptance by physicians, healthcare payors and patients,

we may not generate sufficient revenue from our products and we may never become or remain profitable. In addition, our

efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources

and may never be successful.

Even if we obtain marketing approval

for our products, physicians and patients using existing products may choose not to switch to our products.

Physicians often show

a reluctance to switch their patients from existing drug products even when new and potentially more effective and convenient

treatments enter the market. Also, physicians may be reluctant to switch patients if adequate reimbursement for new products is

not available. In addition, patients often acclimate to the brand or type of drug product that they are currently taking and do

not want to switch unless their physicians recommend switching products or they are required to switch drug treatments due to

lack of reimbursement for existing drug treatments and only if the new product has adequate reimbursement. The existence of either

or both of physician or patient reluctance in switching to our products would have a material adverse effect on our operating

results and financial condition.

The FDA and other regulatory agencies

actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found to have improperly promoted

off-label uses, we may become subject to significant liability.

The FDA and other regulatory

agencies strictly regulate the promotional claims that may be made about prescription products, such as our product candidates.

In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected

in the product’s approved labeling. The FDA may impose further requirements or restrictions on the distribution or use of

our product candidates as part of a REMS plan, such as limiting prescribing to certain physicians or medical centers that have

undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients

to enroll in a registry. If we receive marketing approval for our product candidates, physicians may nevertheless prescribe our

products to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label

uses, we may become subject to significant liability, including potential liability under federal civil and criminal false claims

acts. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has

enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent

decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

If we fail to comply with federal and

state healthcare laws, including fraud and abuse and health information privacy and security laws, we could face substantial penalties

and our business, results of operations, financial condition and prospects could be adversely affected.

As a pharmaceutical company,

even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party

payers, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are

and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both

the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

Because of the breadth

of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of our business activities

could be subject to challenge under one or more of such laws. To the extent that any of our product candidates is ultimately sold

in countries other than the United States, we may be subject to similar laws and regulations in those countries. If we or our

operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to

us, we may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, exclusion

from participating in government healthcare programs, contractual damages, reputational harm and the curtailment or restructuring

of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could materially adversely affect

our ability to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation

and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of

these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s

attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state

privacy, security and fraud laws may prove costly.

The Department of Health

and Human Services Office of Inspector General proposed new regulations on February 6, 2019 to eliminate safe harbor protection

under the anti-kickback statute for drug price reductions that pharmaceutical manufacturers pay to Medicare and Medicaid plan

sponsors and their pharmacy benefit managers. The proposal reflects a clear intent to substantially alter many of the current

drug discount and services compensation practices among pharmaceutical manufacturers and Medicare and Medicaid managed care organizations

and their pharmacy benefit managers. The proposal also reflects a skepticism that current drug discount and compensation practices

among manufacturers and pharmacy benefit managers are sufficiently transparent to health plans to ensure that all appropriate

cost reductions and value is passed through to health plans and reflected in lower health plans costs and lower premiums for beneficiaries.

If the proposal is finalized, it could result in lower prices for pharmaceutical products in general. The Biden Administration

has delayed the effective date of this rule until January 1, 2023, and a lawsuit initiated by the Pharmaceutical Care Management

Administration has challenged this final rule. If the regulation becomes effective, it could result in lower prices for pharmaceutical

products in general.

The Centers for Medicare

and Medicaid Services issued an interim final rule on November 20, 2020 that would tie prices for certain drugs under Medicare

Part B to the lowest price for those drugs available in certain countries that are members of the Organization for Economic Co-operation

and Development. This “most favored nation” drug pricing rule is also the subject of lawsuits, and a federal court

has placed an injunction on the implementation of the rule. This rule, if finalized, could also result in lower prices for pharmaceutical

products in general.

The

Biden Administration will have the opportunity to address these regulations as well as drug pricing, health care access, and other

health care reform issues. Any further legislative or administrative action to reduce reimbursement or health benefits

LPCN US Equity

LPCN · 10-K · period ended 2020-12-31

ITEM 1A.RISK FACTORS

LPCN US Equity☆

LPCN · 10-K · period ended 2020-12-31

ITEM 1A.RISK FACTORS

LPCN US Equity