1053221--3/13/2007--METABASIS_THERAPEUTICS

related topics

{product, candidate, development}

{stock, price, share}

{cost, regulation, environmental}

{property, intellectual, protect}

{product, liability, claim}

{stock, price, operating}

{acquisition, growth, future}

{control, financial, internal}

{regulation, change, law}

{interest, director, officer}

{cost, operation, labor}

{provision, law, control}

{personnel, key, retain}

{financial, litigation, operation}

Risks Related to our Business We are dependent on the success of one or more of our current product candidates and we cannot be certain that any of them will receive regulatory approval or be commercialized. If clinical trials of our product candidates do not produce successful results, we and our commercialization collaborators, as applicable, will be unable to commercialize these products. Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on our business. We are currently dependent on our collaborations with Daiichi Sankyo and Schering-Plough for development of CS-917 and pradefovir, respectively, and events involving these collaborations, our collaborations with Merck and Idenix, or any future collaborations could prevent us from developing and commercializing our product candidates and achieving or sustaining profitability. Because our collaborations with Merck may involve Merck s proprietary compounds, if Merck terminates development of product candidates we may not have the right to pursue development of these product candidates on our own. Conflicts may arise between us and any of our collaborators that could delay or prevent the development or commercialization of our product candidates. Our efforts to discover product candidates beyond our current product candidates may not succeed, and any product candidates we recommend for clinical development may not actually begin clinical trials. Delays in the commencement or completion of clinical trials could result in increased costs to us and delay our ability to generate significant revenues. We rely on third parties to conduct our clinical trials. If these third parties do not successfully meet their obligations under our agreements, we may not be able to obtain regulatory approval for or commercialize our product candidates. Because our product candidates, research programs and collaborative efforts depend on our proprietary technologies, adverse events affecting our proprietary technologies may delay or prevent the commercialization of our product candidates. Our product candidates are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates. Even if any of our product candidates receive regulatory approval, our product candidates may still face future development and regulatory difficulties. If our competitors have products that are approved faster, marketed more effectively or demonstrated to be more effective than ours, our commercial opportunity will be reduced or eliminated. We do not have internal manufacturing capabilities, and if we fail to develop and maintain supply relationships with collaborators or other third-party manufacturers, we may be unable to develop or commercialize our products. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may be unable to generate significant revenues. The commercial success of our product candidates depends upon their market acceptance among physicians, patients, healthcare payors and the medical community. We are subject to uncertainty relating to health care reform measures and reimbursement policies which, if not favorable to our product candidates, could hinder or prevent our product candidates commercial success. We will need to increase the size of our organization, and we may experience difficulties in managing growth. If we fail to attract and keep key management and scientific personnel, we may be unable to successfully develop or commercialize our product candidates. We have limited experience in identifying, completing and integrating acquisition targets, and if we do not successfully integrate any future acquisitions, we may incur unexpected costs and disruptions to our business. Risks Related to our Finances and Capital Requirements We have a history of net losses, which we expect to continue for the foreseeable future, and we are unable to predict the extent of future losses or when we will become profitable, if ever. We currently lack a significant continuing revenue source and may not become or remain profitable. We will need substantial additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our research and development programs or commercialization efforts and affect our ability to continue as a going concern. Raising additional funds by issuing securities or through collaboration and licensing arrangements will cause dilution to existing stockholders, restrict our operations or require us to relinquish proprietary rights. Our quarterly operating results and stock price may fluctuate significantly. Our committed equity financing facility with Kingsbridge may not be available to us if we elect to make a draw down, may require us to make additional blackout or other payments to Kingsbridge and may result in dilution to our stockholders. Risks Related to our Intellectual Property Our success depends upon our ability to protect our intellectual property, including the proprietary technologies and compounds used in our business. If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business. Existing patents and patent applications covering adefovir or prodrugs of adefovir in the U.S. and foreign countries may prevent the commercialization of pradefovir in the future. Risks Related to Other Legal Matters We may incur significant costs complying with environmental laws and regulations. We may incur substantial liabilities from any product liability claims if our insurance coverage for those claims is inadequate. If we use biological and hazardous materials in a manner that causes injury, we may be liable for damages. Risks Related to the Securities Markets and Investment in our Common Stock Market volatility may affect our stock price and the value of your investment. Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management. We may incur increased costs as a result of changes in laws and regulations relating to corporate governance matters. Investor confidence and share value may be adversely impacted if our independent auditors are unable to provide us with the attestation of the adequacy of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. If our executive officers, directors and largest stockholders choose to act together, they may be able to control our operations and act in a manner that advances their best interests and not necessarily those of other stockholders. Future sales of our common stock may cause our stock price to decline.

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1053221--3/13/2007--METABASIS_THERAPEUTICS_INC