| You should carefully consider the risks and uncertainties described below in addition to the other information included or incorporated by reference in this annual report |
| If any of the following risks actually occur, our business, financial condition or results of operations would likely suffer |
| In that case, the trading price of our common stock could fall |
| Risks Related to Our Financial Results We have a history of net losses and may not maintain profitability on an annual basis Except for the year ended December 31, 2004, we have incurred net losses on an annual basis since our inception |
| We incurred a net loss for the year ended December 31, 2005 of dlra7dtta8 million |
| As of December 31, 2005, we had an accumulated deficit of approximately dlra304dtta9 million |
| We expect to make substantial expenditures to further develop and commercialize our products, including costs and expenses associated with clinical trials, regulatory approvals and commercialization |
| Although we achieved profitability in 2004, we were not able to maintain profitability in 2005 and will likely need to generate significantly greater revenues in future periods to achieve and maintain profitability in light of our planned expenditures |
| We remain unsure as to when we will achieve profitability again, if at all, or whether we will maintain profitability for any substantial period of time |
| If we fail to achieve profitability or maintain profitability on a quarterly or annual basis within the time frame expected by investors or securities analysts, the market price of our common stock may decline |
| 22 ______________________________________________________________________ Our business is very dependent on the commercial success of Angiomax Angiomax is our only commercial product and, we expect, will account for almost all of our revenues for the foreseeable future |
| The commercial success of Angiomax will depend upon: · its continued acceptance by regulators, physicians, patients and other key decision-makers as a safe, therapeutic and cost-effective alternative to heparin and other products used in current practice or currently being developed; · our ability to expand the indications for which we can market Angiomax; and · the extent to which we and our international distribution partners are successful in marketing Angiomax |
| The rate of Angiomax sales growth was slower than we expected in 2005, and we cannot assure you that our increased sales and marketing efforts or expanded label will result in higher revenues or income |
| If Angiomax is not commercially successful, we will have to find additional sources of funding or curtail or cease operations |
| In addition, our inventory of Angiomax increased from dlra27dtta3 million at December 31, 2004 to dlra48dtta0 million at December 31, 2005 |
| If sales of Angiomax were to decline, we could be required to make an allowance for excess or obsolete inventory or increase our accrual for product returns |
| Our revenues are substantially dependent on a limited number of domestic wholesalers and international distributors to which we sell Angiomax, and such revenues may fluctuate from quarter to quarter based on the buying patterns of these wholesalers and distribution partners and the levels of inventory they maintain We sell Angiomax primarily to a limited number of domestic medical and pharmaceutical wholesalers with distribution centers located throughout the United States and several international distributors |
| During the year ended December 31, 2005, revenues from the sale of Angiomax to our three largest US wholesalers totaled approximately 90prca of our net revenue and sales to one of our international partners totaled nearly 5prca of our net revenue |
| Our reliance on a small number of wholesalers and distributors could cause our revenues to fluctuate from quarter to quarter based on the buying patterns of these wholesalers and distributors, regardless of underlying hospital demand |
| For instance, if inventory levels at wholesalers and distributors are too high, they may seek to reduce their inventory levels by reducing purchases from us |
| In 2005, we agreed with our largest wholesalers to enter into fee-for-service arrangements |
| As a result of these restructured arrangements, we expect our three largest wholesalers to reduce their Angiomax inventory levels to an average of four to six weeks by the end of the first quarter of 2006 |
| In implementing the inventory reduction, we estimate that our three largest wholesalers reduced their aggregate inventories of Angiomax by approximately dlra26dtta0 million over the last two quarters of 2005, which had an adverse effect on our revenue |
| We expect these wholesalers to reduce their aggregate inventories of Angiomax by approximately dlra13dtta0 million in first quarter of 2006 |
| The timing of the inventory reduction, and the reduction in product sales in any quarter, may vary depending on the end-user demand for the product and the actions of our wholesalers |
| Our restructured arrangements with wholesalers may be terminated on short notice, generally 30 days, and we cannot assure you that our planned inventory reduction will be gradual or successful |
| In addition, if any of these wholesalers or distributors fails to pay us on a timely basis or at all, our financial position and results of operations could be materially adversely affected |
| Failure to achieve our revenue targets or raise additional funds in the future may require us to delay, reduce the scope of, or eliminate one or more of our planned activities We will need to generate significantly greater revenues to achieve and maintain profitability on an annual basis |
| The development of Angiomax for additional indications, clevidipine and cangrelor, including clinical trials, manufacturing development and regulatory approvals, and the acquisition and development of additional product candidates by us will require a commitment of substantial funds |
| Our 23 ______________________________________________________________________ future funding requirements, which may be significantly greater than we expect, depend upon many factors, including: · the extent to which Angiomax is commercially successful in the United States; · the extent to which our international distribution partners, including Nycomed, are commercially successful; · the progress, level and timing of our research and development activities related to our clinical trials with respect to Angiomax, clevidipine and cangrelor; · the cost and outcomes of regulatory submissions and reviews; · packaging approval for Angiox from the European authorities, and pricing reimbursement approvals in individual European countries, on a timely basis or at all; · the continuation or termination of third party manufacturing or sales and marketing arrangements; · the cost and effectiveness of our sales and marketing programs; · the status of competitive products; · our ability to defend and enforce our intellectual property rights; and · the establishment of additional strategic or licensing arrangements with other companies, or acquisitions |
| As of the date of this annual report on Form 10-K, we believe, based on our current operating plan, which includes anticipated revenues from Angiomax and interest income, that our current cash, cash equivalents and available for sale securities are sufficient to fund our operations through at least the next twelve months and beyond without requiring us to obtain external financing |
| However, if our existing resources are insufficient to satisfy our liquidity requirements due to slower than anticipated sales of Angiomax or otherwise, or if we acquire additional product candidates or businesses, or if we otherwise believe that raising additional capital would be in our interests and the interests of our stockholders, we may sell equity or debt securities or seek additional financing through other arrangements |
| Any sale of additional equity or debt securities may result in dilution to our stockholders, and debt financing may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures |
| We cannot be certain that public or private financing will be available in amounts or on terms acceptable to us, if at all |
| If we seek to raise funds through collaboration or licensing arrangements with third parties, we may be required to relinquish rights to products, product candidates or technologies that we would not otherwise relinquish or grant licenses on terms that may not be favorable to us |
| If we are unable to obtain additional financing, we may be required to delay, reduce the scope of, or eliminate one or more of our planned research, development and commercialization activities, which could harm our financial condition and operating results |
| Fluctuations in our operating results could affect the price of our common stock Our operating results may vary from period to period based on factors including the amount and timing of sales of Angiomax, underlying hospital demand for Angiomax, our wholesalers’ buying patterns, including in connection with our restructured wholesaler arrangements, the timing, expenses and results of clinical trials, announcements regarding clinical trial results and product introductions by us or our competitors, the availability and timing of third-party reimbursement, including in Europe, sales and marketing expenses and the timing of regulatory approvals |
| If our operating results do not meet the expectations of securities analysts and investors as a result of these or other factors, the trading price of our common stock will likely decrease |
| This volatility may make it difficult for you to sell common stock when you want or at attractive prices Our common stock has been and in the future may be subject to substantial price volatility |
| From January 1, 2004 to December 31, 2005, the closing price of our common stock ranged from a high of dlra35dtta11 24 ______________________________________________________________________ per share to a low of dlra15dtta92 per share |
| The value of your investment could decline due to the effect of any of the following factors upon the market price of our common stock: · changes in securities analysts’ estimates of our financial performance; · changes in valuations of similar companies; · variations in our quarterly operating results; · acquisitions and strategic partnerships; · announcements of technological innovations or new commercial products by us or our competitors; · disclosure of results of clinical testing or regulatory proceedings by us or our competitors; · the timing, amount and receipt of revenue from sales of our products and margins on sales of our products; · governmental regulation and approvals; · developments in patent rights or other proprietary rights; · changes in our management; and · general market conditions |
| In addition, the stock market has experienced significant price and volume fluctuations, and the market prices of biotechnology companies have been highly volatile |
| Moreover, broad market and industry fluctuations that are not within our control may adversely affect the trading price of our common stock |
| You must be willing to bear the risk of fluctuations in the price of our common stock and the risk that the value of your investment in our securities could decline |
| Risks Related to Commercialization Angiomax may compete with all categories of anticoagulant drugs, which may limit the use of Angiomax Because each category of anticoagulant drug acts on different components of the clotting process, we believe that there will be continued clinical work to determine the best combination of drugs for clinical use |
| We recognize that Angiomax may compete with other anticoagulant drugs to the extent Angiomax and any of these anticoagulant drugs are approved for the same indication |
| In addition, other anticoagulant drugs may compete with Angiomax for hospital financial resources |
| For example, many US hospitals receive a fixed reimbursement amount per procedure for the angioplasties and other treatment therapies they perform |
| Because this amount is not based on the actual expenses the hospital incurs, hospitals may choose to use either Angiomax or other anticoagulant drugs, but not necessarily several of the drugs together |
| Because the market for thrombin inhibitors is competitive, our product may not obtain widespread use We have positioned Angiomax as a replacement for heparin, which is a widely used, inexpensive, generic drug used in patients with arterial thrombosis |
| Because heparin is inexpensive and has been widely used for many years, physicians and medical decision-makers may be hesitant to adopt Angiomax |
| In addition, due to the high incidence and severity of cardiovascular diseases, competition in the market for thrombin inhibitors is intense and growing |
| The rate of Angiomax sales growth was slower than we expected in 2005, and we cannot assure you that our increased sales and marketing efforts or expanded label will result in higher revenues or income |
| There are a number of direct and indirect thrombin inhibitors currently on the market, awaiting regulatory approval and in development, including orally administered agents |
| The thrombin inhibitors on the market include products for use in the treatment of patients with HIT/HITTS, patients with unstable angina and patients with deep vein thrombosis |
| 25 ______________________________________________________________________ We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than we do Our industry is highly competitive |
| Our success will depend on our ability to acquire and develop products and apply technology, and our ability to establish and maintain markets for our products |
| Potential competitors in the United States and other countries include major pharmaceutical and chemical companies, specialized pharmaceutical companies and biotechnology firms, universities and other research institutions |
| Many of our competitors have substantially greater research and development capabilities and experience, and greater manufacturing, marketing and financial resources, than we do |
| Accordingly, our competitors may develop or license products or other novel technologies that are more effective, safer, more convenient or less costly than existing products or technologies or products or technologies that are being developed by us or may obtain regulatory approvals for products more rapidly than we are able |
| Technological development by others may render our products or product candidates noncompetitive |
| We may not be successful in establishing or maintaining technological competitiveness |
| Near-term growth in our sales of Angiomax is dependent on continued physician acceptance of Angiomax clinical data In the fall of 2002, we completed a 6cmam002 patient post-marketing Phase 3b/4 clinical trial of Angiomax in coronary angioplasty called REPLACE-2 |
| In November 2002, the principal investigators of the REPLACE-2 trial announced that, based on 30-day patient follow-up results, Angiomax met all of the primary and secondary objectives of the trial |
| In March 2003, we released the results of the detailed cost analysis study to examine per-patient total hospital resource consumption at US clinical trial sites |
| In September 2003, the principal investigators of the clinical trial announced that, based on six-month patient follow-up results, Angiomax again met all of the primary and secondary objectives of the trial |
| In November 2003, the principal investigators presented one-year follow-up mortality data from the trial, which confirmed the 30-day and six-month mortality results |
| In March 2006, the principal investigators of the ACUITY trial announced the results of this trial based on 30-day patient results |
| We believe that the near-term commercial success of Angiomax will depend upon the extent to which physicians, patients and other key decision-makers accept the results of the Angiomax clinical trials |
| For example, since the original results of REPLACE-2 were announced, additional hospitals have granted Angiomax formulary approval and hospital demand for the product has increased |
| We cannot be certain, however, that these trends will continue |
| Some commentators have challenged various aspects of the trial design of REPLACE-2, the conduct of the study and the analysis and interpretation of the results from the study, including how we define bleeding and the clinical relevance of types of ischemic events |
| The FDA has noted that in its view, statistical non-inferiority was not demonstrated for the 30-day ischemic endpoint in the REPLACE-2 trial |
| Similarly, we cannot be certain of the extent to which physicians, patients and other key decision-makers will accept the results of the ACUITY trial |
| If physicians, patients and other key decision-makers do not accept the REPLACE-2 and ACUITY trial results, adoption of Angiomax may suffer, and our business will be materially adversely affected |
| 26 ______________________________________________________________________ Our ability to generate future revenue from products will be affected by reimbursement and drug pricing Acceptable levels of reimbursement of drug treatments by government authorities, private health insurers and other organizations will have an effect on our ability to successfully commercialize, and attract collaborative partners to invest in the development of, product candidates |
| We cannot be sure that reimbursement in the United States or elsewhere will be available for any products we may develop or, if already available, will not be decreased in the future |
| If reimbursement is not available or is available only to limited levels, we may not be able to commercialize our products, or may not be able to obtain a satisfactory financial return on our products |
| In certain countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals and the level of reimbursement are subject to governmental control |
| In some countries, it can take an extended period of time to establish and obtain reimbursement, and reimbursement approval may be required at the individual patient level, which can lead to further delays |
| Third-party payers increasingly are challenging prices charged for medical products and services |
| Also, the trend toward managed health care in the United States and the changes in health insurance programs, as well as legislative proposals, may result in lower prices for pharmaceutical products, including any products that may be offered by us |
| Cost-cutting measures that health care providers are instituting, and the effect of any health care reform, could materially adversely affect our ability to sell any products that are successfully developed by us and approved by regulators |
| Moreover, we are unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such legislation or regulation would have on our business |
| We could be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwise protect ourselves against potential product liability claims Our business exposes us to potential product liability risks which are inherent in the testing, manufacturing, marketing and sale of human healthcare products |
| Product liability claims might be made by patients in clinical trials, consumers, health care providers or pharmaceutical companies or others that sell our products |
| These claims may be made even with respect to those products that are manufactured in licensed and regulated facilities or otherwise possess regulatory approval for commercial sale |
| These claims could expose us to significant liabilities that could prevent or interfere with the development or commercialization of our products |
| Product liability claims could require us to spend significant time and money in litigation or pay significant damages |
| As of the date of this annual report on Form 10-K, we are covered, with respect to our commercial sales and our clinical trials, by products liability insurance in the amount of dlra20dtta0 million per occurrence and dlra20dtta0 million annually in the aggregate on a claims-made basis |
| This coverage may not be adequate to cover any product liability claims |
| As we commercialize our products, we may wish to increase our product liability insurance |
| Product liability coverage is expensive |
| In the future, we may not be able to maintain or obtain such product liability insurance on reasonable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to product liability claims |
| Risks Related to Regulatory Approval of Our Product Candidates If we do not obtain regulatory approvals for our product candidates we will not be able to market our product candidates and our ability to generate additional revenues could be materially impaired Except for Angiomax, which has been approved for sale in the United States for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing percutaneous coronary interventions, and which has been approved for sale in the European Union and in other countries for indications similar to those approved by the FDA, we do not have a product approved for 27 ______________________________________________________________________ sale in the United States or any foreign market |
| We must obtain approval from the FDA in order to sell our product candidates in the United States and from foreign regulatory authorities in order to sell our product candidates in other countries |
| Securing regulatory approval requires the submission of extensive pre-clinical and clinical data, information about product manufacturing processes and inspection of facilities and supporting information to the regulatory authorities for each therapeutic indication to establish the product’s safety and efficacy |
| We must successfully complete our clinical trials and demonstrate manufacturing capability before we can file for approval to sell our products |
| Delays in obtaining or failure to obtain regulatory approvals may: · delay or prevent the successful commercialization of any of our product candidates; · diminish our competitive advantage; and · defer or decrease our receipt of revenues |
| The regulatory review and approval process to obtain marketing approval for a new drug takes many years and requires the expenditure of substantial resources |
| This process can vary substantially based on the type, complexity, novelty and indication of the product candidate involved |
| Changes in the regulatory approval policy during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application |
| The regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that data is insufficient for approval and require additional pre-clinical, clinical or other studies |
| In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of a product candidate |
| We cannot expand the indications for which we are marketing Angiomax unless we receive FDA approval for each additional indication |
| Failure to expand these indications will limit the size of the commercial market for Angiomax The FDA has approved Angiomax for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing percutaneous coronary interventions |
| One of our key objectives is to expand the indications for which Angiomax is approved for marketing by the FDA In order to market Angiomax for these expanded indications, we will need to conduct appropriate clinical trials, obtain positive results from those trials and obtain FDA approval for such proposed indications |
| If we are unsuccessful in expanding the approved indications for the use of Angiomax, the size of the commercial market for Angiomax will be limited |
| Clinical trials of product candidates are expensive and time-consuming, and the results of these trials are uncertain Before we can obtain regulatory approvals to market any product for a particular indication, we will be required to complete pre-clinical studies and extensive clinical trials in humans to demonstrate the safety and efficacy of such product for such indication |
| Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome |
| Success in pre-clinical testing or early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results |
| An unexpected result in one or more of our clinical trials can occur at any stage of testing |
| We may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent us from receiving regulatory approval or commercializing our products, including: · our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials; 28 ______________________________________________________________________ · data obtained from pre-clinical testing and clinical trials may be subject to varying interpretations, which could result in the FDA or other regulatory authorities deciding not to approve a product in a timely fashion, or at all; · the cost of clinical trials may be greater than we currently anticipate; · any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product commercially non-viable; · regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; · we, or the FDA, might suspend or terminate a clinical trial at any time on various grounds, including a finding that participating patients are being exposed to unacceptable health risks; and · the effects of our product candidates may not be the desired effects or may include undesirable side effects or the product candidates may have other unexpected characteristics |
| The rate of completion of clinical trials depends in part upon the rate of enrollment of patients |
| Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments |
| In particular, the patient population targeted by some of our clinical trials may be small |
| Delays in patient enrollment in any of our current or future clinical trials may result in increased costs and program delays |
| If we fail to comply with the extensive regulatory requirements to which we, our contract manufacturers and our products could be subject to restrictions or withdrawal from the market and we could be subject to penalties The testing, manufacturing, labeling, advertising, promotion, export, and marketing, among other things, of our products, both before and after approval, are subject to extensive regulation by governmental authorities in the United States, Europe and elsewhere throughout the world |
| Our failure or the failure of our contract manufacturers to comply with the laws administered by the FDA, the European Medicines Agency, or other governmental authorities could result in any of the following: · delay in approving or refusal to approve a product; · product recall or seizure; · interruption of production; · operating restrictions; · warning letters; · injunctions; · criminal prosecutions; and · unanticipated expenditures |
| Both before and after approval of a product, quality control and manufacturing procedures must conform to cGMP Regulatory authorities, including the FDA, periodically inspect manufacturing facilities to assess compliance with GMP Accordingly, we and our contract manufacturers will need to continue to expend time, monies, and effort in the area of production and quality control to maintain GMP compliance |
| 29 ______________________________________________________________________ Risks Related to our Dependence on Third Parties for Manufacturing, Research and Development and Distribution Activities We depend on single suppliers for the production of Angiomax, clevidipine and cangrelor bulk drug substance and different single suppliers to carry out all fill-finish activities We do not manufacture any of our products and do not plan to develop any capacity to manufacture them |
| As of the date of this annual report on Form 10-K, we obtain all of our Angiomax bulk drug substance from one manufacturer, UCB Bioproducts, and rely on another manufacturer, Ben Venue Laboratories, to carry out all fill-finish activities for Angiomax, which includes final formulation and transfer of the drug into vials where it is then freeze-dried and sealed |
| The terms of our agreement with UCB Bioproducts require us to purchase from UCB Bioproducts a substantial portion of our Angiomax bulk drug product manufactured using the Chemilog process |
| As of the date of this annual report on Form 10-K, we obtain all of our clevidipine bulk drug substance from one manufacturer, Johnson Matthey Pharma Services |
| We rely on a different single supplier, Hospira, Inc, and its proprietary formulation technology, for the manufacture of all finished clevidipine product, as well as for release testing and clinical packaging |
| We have transferred the manufacturing process for all of our cangrelor bulk drug substance from AstraZeneca to Johnson Matthey Pharma Services for scale up and manufacture for Phase III clinical trials and commercial supplies |
| We will also rely on a different single supplier, Baxter Pharmaceutical Solutions LLC, for the manufacture of all finished cangrelor drug product for all Phase III clinical trials and to carry out release testing |
| There are a limited number of manufacturers capable of manufacturing Angiomax, clevidipine and cangrelor |
| As of the date of this annual report on Form 10-K, we do not have alternative sources for production of bulk drug substance or to carry out fill-finish activities |
| Consolidation within the pharmaceutical manufacturing industry could further reduce the number of manufacturers capable of producing our products, or otherwise affect our existing contractual relationships |
| announced that it acquired the bioproducts manufacturing division of UCB, our sole source of Angiomax bulk drug product as of the date of this annual report |
| In July 2004, we had entered into a development and supply agreement with Lonza for the development of an alternative method of manufacture and commercial supply of Angiomax |
| Following the acquisition, we will rely on Lonza for both a continuing commercial supply of Angiomax and development of the alternative method of manufacture |
| In the event that UCB Bioproducts, Lonza, Johnson Matthey, Hospira, Ben Venue or Baxter is unable to carry out their respective manufacturing obligations, we may be unable to obtain alternative manufacturing, or obtain such manufacturing on commercially reasonable terms or on a timely basis |
| If we were required to transfer manufacturing processes to other third party manufacturers, we would be required to satisfy various regulatory requirements, which could cause us to experience significant delays in receiving an adequate supply of Angiomax, clevidipine or cangrelor |
| Any delays in the manufacturing process may adversely impact our ability to meet commercial demands for Angiomax on a timely basis and supply product for clinical trials of Angiomax, clevidipine or cangrelor |
| 30 ______________________________________________________________________ The development and commercialization of our products may be terminated or delayed, and the costs of development and commercialization may increase, if third parties on whom we rely to manufacture and support the development and commercialization of our products do not fulfill their obligations Our development and commercialization strategy entails entering into arrangements with corporate and academic collaborators, contract research organizations, distributors, third-party manufacturers, licensors, licensees and others to conduct development work, manage or conduct our clinical trials, manufacture our products and market and sell our products outside of the United States |
| We do not have the expertise or the resources to conduct such activities on our own and, as a result, are particularly dependent on third parties in most areas |
| We may not be able to maintain our existing arrangements with respect to the commercialization or manufacture of Angiomax or establish and maintain arrangements to develop and commercialize clevidipine, cangrelor or any additional product candidates or products we may acquire on terms that are acceptable to us |
| Any current or future arrangements for development and commercialization may not be successful |
| If we are not able to establish or maintain agreements relating to Angiomax, clevidipine, cangrelor or any additional products we may acquire on terms that we deem favorable, our results of operations would be materially adversely affected |
| Third parties may not perform their obligations as expected |
| The amount and timing of resources that third parties devote to developing, manufacturing and commercializing our products are not within our control |
| Our collaborators may develop, manufacture or commercialize, either alone or with others, products and services that are similar to or competitive with the products that are the subject of the collaboration with us |
| Furthermore, our interests may differ from those of third parties that manufacture or commercialize our products |
| Our collaborators may re-evaluate their priorities from time to time, including following mergers and consolidations, and change the focus of their development, manufacturing or commercialization efforts |
| Disagreements that may arise with these third parties could delay or lead to the termination of the development or commercialization of our product candidates, or result in litigation or arbitration, which would be time consuming and expensive |
| If any third party that manufactures or supports the development or commercialization of our products breaches or terminates its agreement with us, or fails to commit sufficient resources to our collaboration or conduct its activities in a timely manner, or fails to comply with regulatory requirements, such breach, termination or failure could: · delay or otherwise adversely impact the manufacturing, development or commercialization of Angiomax, clevidipine, cangrelor or any additional products that we may acquire or develop; · require us to seek a new collaborator or undertake unforeseen additional responsibilities or devote unforeseen additional resources to the manufacturing, development or commercialization of our products; or · result in the termination of the development or commercialization of our products |
| Use of third party manufacturers may increase the risk that we will not have appropriate supplies of our product candidates |
| Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including: · reliance on the third party for regulatory compliance and quality assurance; · the possible breach of the manufacturing agreement by the third party; and · the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us |
| 31 ______________________________________________________________________ If we are not able to obtain adequate supplies of Angiomax, clevidipine and cangrelor, it will be more difficult for us to compete effectively and develop our product candidates |
| Angiomax and our product candidates may compete with product candidates and products of third parties for access to manufacturing facilities |
| Our contract manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state and foreign agencies or their designees to ensure strict compliance with the FDA’s GMP, regulations and other governmental regulations and corresponding foreign standards |
| We cannot be certain that our present or future manufacturers will be able to comply with GMP regulations and other FDA regulatory requirements or similar regulatory requirements outside the United States |
| We do not control compliance by our contract manufacturers with these regulations and standards |
| Failure of our third party manufacturers or us to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of Angiomax and our product candidates |
| Risks Related to our Intellectual Property A breach of any of the agreements under which we license commercialization rights to products or technology from others could cause us to lose license rights that are important to our business or subject us to claims by our licensors We license rights to products and technology that are important to our business, and we expect to enter into additional licenses in the future |
| For instance, we have exclusively licensed patents and patent applications relating to Angiomax from Biogen Idec and Health Research Inc |
| and relating to clevidipine and cangrelor from AstraZeneca |
| Under these agreements, we are subject to commercialization and development, sublicensing, royalty, patent prosecution and maintenance, insurance and other obligations |
| Any failure by us to comply with any of these obligations or any other breach by us of these license agreements could give the licensor the right to terminate the license in whole, terminate the exclusive nature of the license or bring a claim against us for damages |
| Any such termination or claim, particularly relating to our agreements with Biogen Idec and Health Research Inc, could have a material adverse effect on our business |
| Even if we contest any such termination or claim and are ultimately successful, our stock price could suffer |
| In addition, upon any termination of a license agreement, we may be required to license to the licensor any related intellectual property that we developed |
| If we are unable to obtain or maintain patent protection for the intellectual property relating to our products, the value of our products will be adversely affected The patent positions of pharmaceutical companies like us are generally uncertain and involve complex legal, scientific and factual issues |
| Our success depends significantly on our ability to: · obtain and maintain US and foreign patents, including defending those patents against adverse claims; · protect trade secrets; · operate without infringing the proprietary rights of others; and · prevent others from infringing our proprietary rights |
| We may not have any additional patents issued from any patent applications that we own or license |
| If additional patents are granted, the claims allowed may not be sufficiently broad to protect our technology |
| In addition, issued patents that we own or license may be challenged, narrowed, invalidated or 32 ______________________________________________________________________ circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of term of patent protection we may have for our products |
| Changes in patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection |
| Our patents also may not afford us protection against competitors with similar technology |
| Because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, or in some cases not at all, and because publications of discoveries in the scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that others have not filed or maintained patent applications for technology used by us or covered by our pending patent applications without our being aware of these applications |
| We exclusively license US patents and patent applications and corresponding foreign patents and patent applications relating to Angiomax, clevidipine and cangrelor |
| As of the date of this annual report on Form 10-K, we exclusively license six issued US patents relating to Angiomax, three issued US patents relating to clevidipine and four issued US patents relating to cangrelor |
| We have not yet filed any independent patent applications |
| The principal US patent that covers Angiomax expires in 2010 |
| The US Patent and Trademark Office has rejected our application for an extension of the term of the patent beyond 2010 because the application was not filed on time by our counsel |
| We are exploring alternatives to extend the term of the patent, but we can provide no assurance that we will be successful |
| We have entered into agreements with the counsel involved in the filing that suspend the statute of limitations on our claims against them for failing to make a timely filing |
| We have entered into a similar agreement with Biogen Idec relating to any claims for damages and/or license termination they may bring in the event that a dispute arises between us and Biogen Idec relating to the late filing |
| We may be unable to utilize the Chemilog process if UCB Bioproducts breaches our agreement Our agreement with UCB Bioproducts for the supply of Angiomax bulk drug substance requires that UCB Bioproducts transfer the technology that was used to develop the Chemilog process to a secondary supplier of Angiomax bulk drug substance or to us or an alternate supplier at the expiration of the agreement |
| If UCB Bioproducts fails or is unable to transfer successfully this technology, we would be unable to employ the Chemilog process to manufacture our Angiomax bulk drug substance, which could cause us to experience delays in the manufacturing process and increase our manufacturing costs in the future |
| If we are not able to keep our trade secrets confidential, our technology and information may be used by others to compete against us We rely significantly upon unpatented proprietary technology, information, processes and know-how |
| We seek to protect this information by confidentiality agreements with our employees, consultants and other third-party contractors, as well as through other security measures |
| We may not have adequate remedies for any breach by a party to these confidentiality agreements |
| In addition, our competitors may learn or independently develop our trade secrets |
| If our confidential information or trade secrets become publicly known, they may lose their value to us |
| If we infringe or are alleged to infringe intellectual property rights of third parties, it will adversely affect our business Our research, development and commercialization activities, as well as any product candidates or products resulting from these activities, may infringe or be claimed to infringe patents or patent applications under which we do not hold licenses or other rights |
| Third parties may own or control these patents and patent applications in the United States and abroad |
| These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages |
| Further, if a patent infringement suit were brought against 33 ______________________________________________________________________ us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit |
| As a result of patent infringement claims, or in order to avoid potential claims, we or our collaborators may choose or be required to seek a license from the third party and be required to pay license fees or royalties or both |
| These licenses may not be available on acceptable terms, or at all |
| Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property |
| Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms |
| This could harm our business significantly |
| There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries |
| In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the US Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products and technology |
| The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial |
| Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources |
| Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace |
| Patent litigation and other proceedings may also absorb significant management time |
| Risks Related to Growth and Employees If we fail to acquire and develop additional product candidates or approved products it will impair our ability to grow We have a single product approved for marketing |
| In order to generate additional revenues, we intend to acquire and develop additional product candidates or approved products |
| The success of this growth strategy depends upon our ability to identify, select and acquire pharmaceutical products that meet the criteria we have established |
| Because we neither have, nor intend to establish, internal scientific research capabilities, we are dependent upon pharmaceutical and biotechnology companies and other researchers to sell or license product candidates to us |
| We will be required to integrate any acquired products into our existing operations |
| Managing the development of a new product entails numerous financial and operational risks, including difficulties in attracting qualified employees to develop the product |
| Any product candidate we acquire will require additional research and development efforts prior to commercial sale, including extensive pre-clinical and/or clinical testing and approval by the FDA and corresponding foreign regulatory authorities |
| All product candidates are prone to the risks of failure inherent in pharmaceutical product development, including the possibility that the product candidate will not be safe and effective or approved by regulatory authorities |
| In addition, we cannot assure you that any approved products that we develop or acquire will be: · manufactured or produced economically; · successfully commercialized; or · widely accepted in the marketplace |
| We have previously acquired rights to products and, after having conducted development activities, determined not to devote further resources to those products |
| We cannot assure you that any additional products that we acquire will be successfully developed |
| 34 ______________________________________________________________________ In addition, proposing, negotiating and implementing an economically viable acquisition is a lengthy and complex process |
| Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for the acquisition of product candidates and approved products |
| We may not be able to acquire the rights to additional product candidates and approved products on terms that we find acceptable, or at all |
| We may undertake strategic acquisitions in the future and any difficulties from integrating such acquisitions could damage our ability to attain or maintain profitability We may acquire additional businesses and products that complement or augment our existing business |
| Integrating any newly acquired business or product could be expensive and time-consuming |
| We may not be able to integrate any acquired business or product successfully or operate any acquired business profitably |
| Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses or products, which may result in dilution for stockholders or the incurrence of indebtedness |
| We may not be able to manage our business effectively if we are unable to attract and retain key personnel and consultants Our industry has experienced a high rate of turnover of management personnel in recent years |
| We are highly dependent on our ability to attract and retain qualified personnel for the acquisition, development and commercialization activities we conduct or sponsor |
| If we lose one or more of the members of our senior management, including our Chairman and Chief Executive Officer, Clive A Meanwell, or our President and Chief Operating Officer, John P Kelley, or other key employees or consultants, our ability to implement successfully our business strategy could be seriously harmed |
| Our ability to replace these key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to acquire, develop and commercialize products successfully |
| Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate such additional personnel |
| Our corporate governance structure, including provisions in our certificate of incorporation and by-laws and Delaware law, may prevent a change in control or management that security holders may consider desirable Section 203 of the General Corporation Law of the State of Delaware and our certificate of incorporation and by-laws contain provisions that might enable our management to resist a takeover of our company or discourage a third party from attempting to take over our company |
| These provisions include the inability of stockholders to act by written consent or to call special meetings, a classified board of directors and the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval |
| These provisions could have the effect of delaying, deferring, or preventing a change in control of us or a change in our management that stockholders may consider favorable or beneficial |
| These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions |
| These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock or our other securities |