AKAO 2017 Annual Report

52 In addition, the use of third party distributors, including with respect to cold-chain logistics for plazomicin and the associated IVD assay, involves certain risks, including, but not limited to, risks that distributors or pharmacies will: • not provide us with accurate or timely information regarding their inventories, the number of patients who are using plazomicin or the IVD assay, or complaints regarding them; • not effectively sell or support plazomicin or the associated IVD assay with sufficient cold storage; • reduce their efforts or discontinue to sell or support plazomicin or the IVD assay; • not devote the resources necessary to sell plazomicin or the IVD assay in the volumes and within the time frames that we expect; • be unable to satisfy financial obligations to us or others; or • cease operations. Plazomicin is still undergoing evaluation for, and we expect our IVD assay will have, a room temperature shelf life. Currently cold-chain logistics is required and if we do not effectively maintain our cold-chain supply logistics, then we may experience an unusual number of product returns or out of date product. Any such failure may result in decreased product sales and lower product revenue, which would harm our business. We are increasing our sales and marketing capabilities as we prepare for the potential commercialization of plazomicin and currently have limited sales and marketing and distribution staff. If we are unable to develop an adequate sales and marketing and distribution capability on our own or through third parties, we will not be successful in commercializing our future products. We are increasing our sales and marketing capabilities as we prepare for the potential commercialization of plazomicin and currently have limited sales, marketing and distribution staff and no history in this capacity. To achieve commercial success for any approved product candidate, we must either develop an adequate sales, marketing and distribution organization or outsource these functions to third parties. We currently seek to collaborate with companies that can provide a commercial presence and experience in targeted geographic markets outside of the United States for the commercialization of plazomicin, if approved. If we rely on third parties for selling, marketing and distributing our approved products, any revenue we receive will depend upon the efforts of third parties, which may not be successful and are only partially within our control, and our product revenue may be lower than if we directly sold or marketed our products. If we are unable to enter into arrangements with third parties to sell, market and distribute product candidates for which we have received regulatory approval on acceptable terms or at all, we will need to market these products ourselves. This is likely to be expensive and logistically difficult, as it would require us to build our own sales, marketing and distribution capacity. We have no historical operations in this area, and if such efforts were necessary, we may not be able to successfully commercialize our future products. If we are not successful in commercializing our future products, either on our own or through third parties, any future product revenue will be materially and adversely affected, which would harm our business. We face substantial competition and our competitors may discover, develop or commercialize products faster or more successfully than us. The development and commercialization of new drug products is highly competitive. We face competition from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to plazomicin and other product candidates that we may seek to develop or commercialize in the future. There are a number of pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates for the treatment of MDR infections. Potential competitors also include academic institutions, government agencies and other public and private research organizations. Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective, safer or less costly than plazomicin or any other product candidates that we are currently developing or that we may develop, which could render our product candidates obsolete and noncompetitive.