1013238--3/30/2007--ARADIGM

related topics

{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{control, financial, internal}

{property, intellectual, protect}

{customer, product, revenue}

{provision, law, control}

{acquisition, growth, future}

{personnel, key, retain}

{cost, regulation, environmental}

{regulation, government, change}

{product, market, service}

We have a history of losses, we expect to incur losses for at least the foreseeable future, and we may never attain or maintain profitability. Our dependence on collaborators may delay or prevent the progress of certain of our programs. The results of later stage clinical trials of our product candidates may not be as favorable as earlier trials and that could result in additional costs and delay or prevent commercialization of our products. If our clinical trials are delayed because of patient enrollment or other problems, we would incur additional cost and postpone the potential receipt of revenues. We are subject to extensive regulation, including the requirement of approval before any of our product candidates can be marketed. We may not obtain regulatory approval for our product candidates on a timely basis, or at all. Regulatory authorities may not approve our product candidates even if the product candidates meet safety and efficacy endpoints in clinical trials or the approvals may be too limited for us to earn sufficient revenues. Even if we are granted initial FDA approval for any of our product candidates, we may not be able to maintain such approval, which would reduce our revenues. Since one of our key proprietary programs, the ARD-3100 liposomal ciprofloxacin program, relies on the FDA s granting of orphan drug designation for potential market exclusivity, the product may not be able to obtain market exclusivity and could be barred from the market for up to seven years. We have limited manufacturing capacity and will have to depend on contract manufacturers and collaborators; if they do not perform as expected, our revenues and customer relations will suffer. We rely on a small number of vendors and contract manufacturers to supply us with specialized equipment, tools and components; if they do not perform as we need them to, we will not be able to develop or commercialize products. In order to market our proprietary products, we are likely to establish our own sales, marketing and distribution capabilities. We have no experience in these areas, and if we have problems establishing these capabilities, the commercialization of our products would be impaired. If any products that we or our collaborators may develop do not attain adequate market acceptance by healthcare professionals and patients, our business prospects and results of operations will suffer. We depend upon our proprietary technologies, and we may not be able to protect our potential competitive proprietary advantage. We may infringe on the intellectual property rights of others, and any litigation could force us to stop developing or selling potential products and could be costly, divert management attention and harm our business. We are in a highly competitive market, and our competitors have developed or may develop alternative therapies for our target indications, which would limit the revenue potential of any product we may develop. If we do not continue to attract and retain key employees, our product development efforts will be delayed and impaired. Acquisition of complementary businesses or technologies could result in operating difficulties and harm our results of operations. If we market our products in other countries, we will be subject to different laws and we may not be able to adapt to those laws, which could increase our costs while reducing our revenues. We may be exposed to product liability claims, which would hurt our reputation, market position and operating results. If we cannot arrange for adequate third-party reimbursement for our products, our revenues will suffer. Our use of hazardous materials could subject us to liabilities, fines and sanctions. If we are unable to effectively implement or maintain a system of internal controls over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be adversely affected. Risks Related to Our Common Stock Our stock price is likely to remain volatile. Our common stock was delisted from the Nasdaq Capital Market; this delisting may reduce the liquidity of our common stock and the price may decline. We have implemented certain anti-takeover provisions, which make it less likely that we would be acquired and you would receive a premium price for your shares. We have never paid dividends on our capital stock, and we do not anticipate paying cash dividends for at least the foreseeable future.

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1013238--3/30/2007--ARADIGM_CORP