1023024--3/16/2009--BIOSANTE_PHARMACEUTICALS

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The current adverse domestic and worldwide economic conditions have adversely affected our ongoing exploration of strategic alternatives process. Our proposed products are in the development stages and likely will not be commercially introduced for several years, if at all. If we fail to obtain regulatory approval to commercially manufacture or sell any of our future products, or if approval is delayed or withdrawn, we will be unable to generate revenue from the sale of our products. Although we successfully have completed and reached agreement with the FDA under the Special Protocol Assessment process for our Phase III safety and efficacy clinical trials for LibiGel, we still may not obtain FDA approval of LibiGel within a reasonable period of time or ever, which would harm our business and likely decrease our stock price. Uncertainties associated with the impact of published studies regarding the adverse health effects of certain forms of hormone therapy could adversely affect the market for hormone therapy products and the trading price of our common stock. If clinical trials for our proposed products are prolonged or delayed, we may be unable to commercialize our proposed products on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales or licenses. We entered into an exclusive sublicense agreement Azur for the marketing of Elestrin in the United States as a result of which we are dependent upon Azur for the marketing and sale of our Elestrin product. We and our sublicensees depend on third-party manufacturers to produce our proposed products and if these third parties do not successfully manufacture these products our business would be harmed. We have very limited staffing and will continue to be dependent upon key employees. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our stock price. Risks Related to Our Industry Because our industry is very competitive and many of our competitors have substantially greater capital resources and more experience in research and development, manufacturing and marketing than us, we may not succeed in developing our proposed products and bringing them to market. Because the pharmaceutical industry is heavily regulated, we face significant costs and uncertainties associated with our efforts to comply with applicable regulations. Should we fail to comply, we could experience material adverse effects on our business, financial position and results of operations, and the market value of our common stock could decline. Risks Related to Our Intellectual Property We license the technology underlying most of our products and a portion of our CaP technology from third parties and may lose the rights to license them, which could have a material adverse effect on our business, financial position and operating results and could cause the market value of our common stock to decline. We have licensed some of our products to third parties and any breach by these parties of their obligations under these sublicense agreements or a termination of these sublicense agreements by these parties could adversely affect the development and marketing of our licensed products. In addition, these third parties also may compete with us with respect to some of our proposed products. If we are unable to protect our proprietary technology, we may not be able to compete as effectively. Claims by others that our products infringe their patents or other intellectual property rights could adversely affect our financial condition. Risks Related to Our Common Stock Like most other stocks, the price of our common stock has decreased significantly recently and likely will continue to be volatile. As a result, we could become subject to class action litigation, which even if without merit, could be costly to defend and could divert the time and attention of our management, which could harm our business and financial condition. If we fail to meet continued listing standards of the Nasdaq Global Market, our common stock may be delisted which could have a material adverse effect on the liquidity of our common stock. Provisions in our charter documents and Delaware law could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders. Exercise of outstanding options and warrants will dilute stockholders and could decrease the market price of our common stock. We do not intend to pay any cash dividends in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock. We may issue additional equity securities which would dilute your share ownership. Risks Relating to our Committed Equity Financing Facility with Kingsbridge The Committed Equity Financing Facility that we entered into with Kingsbridge may not be available to us if we elect to make a draw down.

Full 10-K form ▸

1023024--3/16/2009--BIOSANTE_PHARMACEUTICALS_INC