1030653--3/13/2008--CURAGEN

related topics

{product, candidate, development}

{debt, indebtedness, cash}

{stock, price, share}

{product, liability, claim}

{property, intellectual, protect}

{personnel, key, retain}

{stock, price, operating}

{control, financial, internal}

{acquisition, growth, future}

{cost, regulation, environmental}

{interest, director, officer}

{loan, real, estate}

{system, service, information}

{product, market, service}

{gas, price, oil}

Risks Related to Our Business We have a history of operating losses and expect to incur operating losses in the future. We do not expect to have a meaningful source of recurring revenue in the near future. We can not ensure that our existing cash and investment balances will be sufficient to meet our requirements for the future. Our drug candidates are still in development and remain subject to clinical testing and regulatory approval. If we are unable to successfully develop and test our drug candidates, we will not be successful. We may not be able to execute our business strategy if we are unable to enter into alliances with other companies that can provide capabilities and funds for the development and commercialization of our drug candidates. If we are unsuccessful in forming or maintaining these alliances on favorable terms, our business may not succeed. We rely significantly on our collaborative partners to gain access to specified technologies and our business could be harmed if we are unable to maintain strategic alliances. We rely on third parties to conduct our clinical trials and provide other services, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such services. We currently depend on third-party manufacturers to produce our clinical drug supplies and intend to rely upon third-party manufacturers to produce commercial supplies of any approved drug candidates. If in the future we manufacture any of our drug candidates, we will be required to incur significant costs and devote significant efforts to establish and maintain these capabilities. Because we have limited experience in developing, commercializing and marketing products, we may be unsuccessful in our efforts to do so. If clinical trials for our drug candidates are prolonged or delayed, we may be unable to commercialize our drug candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any product revenue. If a collaborative partner terminates or fails to perform its obligations under agreements with us, the development and commercialization of our drug candidates could be delayed or terminated. Because neither we nor any of our collaborative partners have received marketing approval for any product resulting from our research and development efforts, and may never be able to obtain any such approval, we may not be able to generate any product revenue. If we are unable to obtain U.S. and/or foreign regulatory approval, we will be unable to commercialize our drug candidates. Even if we obtain regulatory approvals, our drug candidates will be subject to ongoing regulatory review. If we fail to comply with continuing U.S. and applicable foreign regulations, we could lose those approvals, and our business would be seriously harmed. Our business has a substantial risk of product liability claims. If we are unable to obtain appropriate levels of insurance, a product liability claim could adversely affect our business. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug candidates, we may not generate product revenue. If physicians, patients and third-party payors do not accept our future drugs, we may be unable to generate significant revenue, if any. If third-party payors do not adequately reimburse customers for any of our product candidates that are approved for marketing, they might not be purchased or used, and our revenues and profits will not develop or increase. We depend on attracting and retaining key employees. We depend on academic collaborators, consultants, and scientific advisors. Competition in our field is intense and likely to increase. If we do not obtain adequate intellectual property protection, we may not be able to prevent our competitors from commercializing our discoveries. If we infringe on the intellectual property rights of others, we may be required to obtain a license, pay damages, and/or cease the commercialization of our technology. We cannot be certain that our security measures will protect our confidential information and proprietary technologies. We depend upon our ability to license technologies. If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. Risks Related to Our Financial Results We have a large amount of convertible debt and our debt service obligations may prevent us from taking actions that we would otherwise consider to be in our best interests. We will likely need to raise additional funding, which may not be available on favorable terms, if at all. If the proceeds we receive from the sale of our stake in 454 are less than anticipated due to indemnification claims against the escrow account, our liquidity may be impaired, and we may be forced to seek alternative sources of financing sooner than anticipated. Our quarterly operating results have fluctuated greatly and may continue to do so. Our debt investments are impacted by the financial viability of the underlying companies or assets. The market price of our common stock is highly volatile. Our common stock could be delisted from the NASDAQ Global Market if our stock price continues to trade below $1.00 per share. We have significant leverage as a result of the sale of our debt in 2004. There are no restrictive covenants in our indentures relating to our ability to incur future indebtedness. Our debt service obligations may adversely affect our cash flow. Our ability to repurchase notes, if required, with cash upon a change in control or fundamental change may be limited. Securities we issue to fund our operations could cause dilution to our stockholders ownership. We may effect future repurchases of our 4% convertible debentures due in February 2011, which may adversely affect our liquidity.

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1030653--3/13/2008--CURAGEN_CORP