1. Consequences of Failing to Comply with cGMP – A Perspective from Outside Counsel July 10, 2013 Mark S. Brown King & Spalding LLP mbrown@kslaw.com 202-626-5443

2. Business Losses Disgorgement of Profits Delays in Product Approvals Personnel Changes in Company ― Changes in Executive Management ― Termination of Employees Damage to the Company’s Reputation ― Competitive Harm ― Lengthy Time to Rebuild Reputation Possible Consequences for Failure to Comply with cGMPs 1

3. FDA Loses Confidence in Company’s Ability to Comply Increased Litigation Exposure ― Shareholder litigation ― Contract disputes/litigation based on inability to supply product ― Qui tam complaints/Whistleblowers Civil Actions Can Grow Into Criminal Cases Possible Consequences for Failure to Comply with cGMPs 2

4. Lessons Learned From Enforcement Actions Develop and foster a corporate “culture” of compliance Establish systems and controls to define, measure, monitor, and ensure compliance Establish processes to monitor corrective actions in both the short term and the long term Communicate promptly and collaboratively with FDA ― When FDA brings violations to your attention, immediately notify FDA of your intention, your specific plan, and your timeframe to correct the violations.  Provide objective evidence of the corrections and the preventive steps taken to prevent further violations. 3

5. Lessons Learned From Enforcement Actions Listen to employees who allege problems or misdeeds ― Investigate even if allegation appears unfounded and document the investigation  If law firm conducts investigation, results may be protected from disclosure by attorney-client privilege ― Notification of failures to FDA as soon as confirmed will help in the long run Learn from the mistakes of others 4