1061983--3/12/2009--CYTOKINETICS

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{product, candidate, development}

{stock, price, share}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{personnel, key, retain}

{operation, natural, condition}

{tax, income, asset}

{regulation, change, law}

{cost, regulation, environmental}

{investment, property, distribution}

{control, financial, internal}

We have a history of significant losses and may not achieve or sustain profitability and, as a result, you may lose all or part of your investment. We have never generated, and may never generate, revenues from commercial sales of our drugs and we may not have drugs to market for at least several years, if ever. Clinical trials may fail to demonstrate the desired safety and efficacy of our drug candidates, which could prevent or significantly delay completion of clinical development and regulatory approval. Clinical trials are expensive, time-consuming and subject to delay. We have limited capacity to carry out our own clinical trials in connection with the development of our drug candidates and, to the extent we elect to develop a drug candidate without a strategic partner, we will need to expand our development capabilities and will require additional funding. If we fail to enter into and maintain successful strategic alliances for our drug candidates, potential drug candidates or research and development programs, we will have to reduce, delay or discontinue our advancement of those drug candidates, potential drug candidates and programs or increase our expenditures. If Amgen does not exercise its option for CK-1827452, we will have to reduce, delay or discontinue our development of CK-1827452 or increase our expenditures. We depend on GSK for the conduct, completion and funding of the clinical development and commercialization of GSK-923295. The success of our development activities depends in part on the performance of our strategic partners, over which we have little or no control. We depend on contract research organizations to conduct our clinical trials and have limited control over their performance. We have no manufacturing capacity and depend on our strategic partners or contract manufacturers to produce our clinical trial drug supplies for each of our drug candidates and potential drug candidates, and anticipate continued reliance on contract manufacturers for the development and commercialization of our potential drugs. We may not be able to successfully scale-up manufacturing of our drug candidates in sufficient quality and quantity, which would delay or prevent us from developing our drug candidates and commercializing resulting approved drugs, if any. The mechanisms of action of our drug candidates and potential drug candidates are unproven, and we do not know whether we will be able to develop any drug of commercial value. Our success depends substantially upon our ability to obtain and maintain intellectual property protection relating to our drug candidates and research technologies. If we are sued for infringing third party intellectual property rights, it will be costly and time-consuming, and an unfavorable outcome would have a significant adverse effect on our business. We may become involved in disputes with our strategic partners over intellectual property ownership, and publications by our research collaborators and clinical investigators could impair our ability to obtain patent protection or protect our proprietary information, which, in either case, would have a significant impact on our business. We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers. Our competitors may develop drugs that are less expensive, safer or more effective than ours, which may diminish or eliminate the commercial success of any drugs that we may commercialize. We may expand our development and clinical research capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations. We currently have no sales or marketing staff and, if we are unable to enter into or maintain strategic alliances with marketing partners or to develop our own sales and marketing capabilities, we may not be successful in commercializing our potential drugs. Our failure to attract and retain skilled personnel could impair our drug development and commercialization activities. Our workforce reductions in September 2008 and any future workforce and expense reductions may have an adverse impact on our internal programs and our ability to hire and retain skilled personnel. Risks Related To Our Industry The regulatory approval process is expensive, time-consuming and uncertain and may prevent our partners or us from obtaining approvals to commercialize some or all of our drug candidates. If we or our partners receive regulatory approval for our drug candidates, we or they will be subject to ongoing obligations to and continued regulatory review by the FDA and foreign regulatory agencies, such as continued safety reporting requirements, and may also be subject to additional post-marketing obligations, all of which may result in significant expense and limit commercialization of our potential drugs. If physicians and patients do not accept our drugs, we may be unable to generate significant revenue, if any. The coverage and reimbursement status of newly approved drugs is uncertain and failure to obtain adequate coverage and reimbursement could limit our ability to market any drugs we may develop and decrease our ability to generate revenue. We may be subject to costly product liability or other liability claims and may not be able to obtain adequate insurance. To the extent we elect to fund the development of a drug candidate or the commercialization of a drug at our expense, we will need substantial additional funding. Responding to any claims relating to improper handling, storage or disposal of the hazardous chemicals and radioactive and biological materials we use in our business could be time-consuming and costly. Our facilities in California are located near an earthquake fault, and an earthquake or other types of natural disasters, catastrophic events or resource shortages could disrupt our operations and adversely affect our results. Risks Related To an Investment in Our Securities We expect that our stock price will fluctuate significantly, and you may not be able to resell your shares at or at or above your investment price. If the ownership of our common stock continues to be highly concentrated, it may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline. Volatility in the stock prices of other companies may contribute to volatility in our stock price. Our common stock is thinly traded and there may not be an active, liquid trading market for our common stock. Evolving regulation of corporate governance and public disclosure may result in additional expenses, use of resources and continuing uncertainty. We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future. Risks Related To Our Financing Vehicles and Investments 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. We may be required to record impairment charges in future quarters as a result of the decline in value of our investments in auction rate securities.

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1061983--3/12/2009--CYTOKINETICS_INC