1005201--3/9/2010--DEPOMED

related topics

{product, candidate, development}

{property, intellectual, protect}

{acquisition, growth, future}

{product, liability, claim}

{interest, director, officer}

{control, financial, internal}

{regulation, change, law}

{personnel, key, retain}

{debt, indebtedness, cash}

{stock, price, share}

{stock, price, operating}

{condition, economic, financial}

{provision, law, control}

{system, service, information}

{product, market, service}

We depend on Solvay Pharmaceuticals for certain aspects of the development and commercialization of DM-1796, which subjects us to risks related to Solvay and its business that are outside our control. Our prior clinical trials evaluating Serada TM for menopausal hot flashes failed to meet all of their primary endpoints and there can be no assurance this product will be approved for marketing. We depend heavily on Santarus, Inc. for the successful commercialization of GLUMETZA in the United States. The timing and any potential negative outcome in the ongoing patent litigation with Lupin could adversely affect our financial condition and results of operations as it could result in the introduction of generic products prior to the expiration of the patents for GLUMETZA, as well as in significant legal expenses and diversion of management time. The development of drug candidates is inherently uncertain and we cannot be certain that any of our product candidates will be approved for marketing or, if approved, will achieve market acceptance. We are expecting operating losses in the future. Our operating results may fluctuate and affect our stock price. Our collaborative arrangements may give rise to disputes over commercial terms, contract interpretation and ownership of our intellectual property and may adversely affect the commercial success of our products. We have limited in-house sales and marketing resources, which we will require in order to successfully promote products through our own sales force. We depend on our marketing partners for the successful commercialization of GLUMETZA in Canada and Korea, and of Proquin XR in Europe. Our credit facility contains operating covenants that may restrict our business and financing activities. Our existing resources may not be sufficient to fund our operations until such time as we may be able to consistently generate sufficient revenues to support our operations. The global economic downturn may adversely affect our business. We may be unable to protect our intellectual property and may be liable for infringing the intellectual property of others. Our licensed patent covering the use of gabapentin to treat hot flashes associated with menopause is a method-of-use patent, which increases the risk that prescriptions for gabapentin to treat hot flashes in menopausal women could be written for, or filled with, generic gabapentin. It is difficult to develop a successful product. If we do not continue to develop successful products, our financial position and liquidity will be adversely affected. If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and our business will be harmed and our stock price may decline. We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays outside of our control. If we are unable to obtain or maintain regulatory approval, we will be limited in our ability to commercialize our products, and our business will be harmed. Pharmaceutical marketing is subject to substantial regulation in the United States. The approval process outside the United States is uncertain and may limit our ability to develop, manufacture and sell our products internationally. If we or our marketing partners are unable to obtain acceptable prices or adequate reimbursement for our products from third-party payers, we will be unable to generate significant revenues. We may be unable to compete successfully in the pharmaceutical product and drug delivery system industries. We depend on third parties who are single source suppliers to manufacture GLUMETZA, Proquin XR and our other product candidates. If these suppliers are unable to manufacture GLUMETZA, Proquin XR or our product candidates, our business will be harmed. We depend on third parties to manufacture our products, which could adversely affect our ability to deliver our products to market on a timely or competitive basis. A successful product liability claim against us could materially harm our business. Our success is dependent in large part upon the continued services of our CEO and senior management with whom we do not have employment agreements. If we choose to acquire new and complementary businesses, products or technologies, we may be unable to complete these acquisitions or to successfully integrate them in a cost effective and non-disruptive manner. We have implemented certain anti-takeover provisions. Increased costs associated with corporate governance compliance may significantly impact our results of operations. If we sell shares of our common stock under our equity line of credit arrangement or in other future financings, existing common shareholders will experience immediate dilution and, as a result, our stock price may go down. If we are unable to satisfy regulatory requirements relating to internal controls, our stock price could suffer. Business interruptions could limit our ability to operate our business.

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1005201--3/9/2010--DEPOMED_INC