1004960--3/13/2006--CONNETICS

related topics

{customer, product, revenue}

{property, intellectual, protect}

{product, liability, claim}

{stock, price, share}

{product, candidate, development}

{regulation, government, change}

{cost, regulation, environmental}

Evoclin Foam represents a new product entry for us into the acne market and we may be unable to achieve desired market acceptance and sales of Evoclin Foam. We rely on our employees and consultants to keep our trade secrets confidential. Our reported earnings per share may be more volatile because of the conversion provisions of our convertible senior notes or the exercise of outstanding stock options. Because we rely on third-party manufacturers and suppliers, any manufacturing difficulties they encounter could delay future revenues from our product sales. Orders for our products may increase or decrease depending on the inventory levels held by our major customers. Significant increases and decreases in orders from our major customers could cause our operating results to vary significantly from quarter to quarter. We may spend a significant amount of money to obtain FDA and other regulatory approvals, which may never be granted. Failure to obtain such regulatory approvals could adversely affect our prospects for future revenue growth. Our continued growth depends on our ability to develop new products, and if we are unable to develop new products, our expenses may exceed our revenues without any return on the investment. We rely on the services of a single company to distribute our products to our customers. A delay or interruption in the distribution of our products could negatively impact our business. Our industry is subject to extensive governmental regulation.

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1004960--3/13/2006--CONNETICS_CORP