1062216--4/2/2007--MEMORY_PHARMACEUTICALS

related topics

{product, candidate, development}

{property, intellectual, protect}

{product, liability, claim}

{stock, price, share}

{stock, price, operating}

{provision, law, control}

{control, financial, internal}

{debt, indebtedness, cash}

{cost, contract, operation}

{personnel, key, retain}

{cost, regulation, environmental}

{acquisition, growth, future}

Risks Relating to our Business We expect to continue to incur substantial losses, and we may never achieve profitability. We will need additional financing, which may be difficult to obtain. Our failure to obtain necessary financing would adversely affect our development programs and other operations. Our drug candidates and programs are novel and in the early stages of development. As a result, it is difficult to predict accurately if and when we will achieve the development goals we establish for these drug candidates and programs. Our failure to achieve our development goals could adversely affect our business and our stock price. The diseases we are targeting are poorly understood, which increases our chances of failure. Our preclinical and clinical testing results may not be predictive of future trial results and may not be sufficient to support regulatory approval of future clinical trials. If subsequent study or trial results are unfavorable or insufficient, we may be forced to stop developing drug candidates that we currently believe are important to our future. If we are unable to secure the requisite approvals for our drug candidates, we may not be able to proceed with our planned clinical trials, or if we experience significant delays in our clinical trials, we may incur additional costs in connection with conducting such trials. We may not be able to succeed in our business model of seeking to enter into collaborations at early stages of development. We currently do not have a collaboration partner for MEM 1003, our most clinically advanced drug candidate. We are dependent upon our collaboration partners to conduct clinical trials and to manufacture, market and sell our products. Our collaborations are subject to many risks, which could prevent us from developing and commercializing our drug candidates. In addition to our collaborations, we are dependent on certain license relationships. Our secured loan agreement contains various covenants that may restrict our business and financing activities. We face intense competition in the development and commercialization of our drug candidates. We depend on our key scientific and other key personnel and have experienced turnover in our key senior management. If we are not able to retain our key scientific and other key personnel or recruit additional scientific and technical personnel, our business will suffer. If our preclinical and clinical investigators, third-party contract research organizations and consultants do not perform in an acceptable and timely manner, our preclinical testing or clinical trials could be delayed or unsuccessful. If we or our collaborators fail to obtain regulatory clearance for our current or future drug candidates, we will be unable to market and sell any products and therefore may never be able to generate product revenue or be profitable. Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products abroad. Our potential products may not be commercially viable if we or our collaborators fail to obtain an adequate level of reimbursement for these products by Medicare and other third-party payors or if the pricing for these products is set at unsatisfactory levels by foreign countries. If physicians and patients do not accept our product candidates, we may be unable to generate significant revenue. We have no manufacturing capacity and depend on third parties to supply us with the compounds under development, to develop effective formulations and to manufacture our products. Manufacturing of our products must meet applicable regulatory standards. We face the risk of product liability claims and may not be able to obtain insurance. Our or our collaborators products could be subject to restrictions or withdrawal from the market. We or they may be subject to penalties if we or they fail to comply with post-approval regulatory requirements or experience unanticipated problems with any approved products. Our business activities require compliance with environmental laws. If we violate these laws, we could be subject to significant fines, liabilities or other adverse consequences. Risks Relating to Intellectual Property If we are unable to obtain intellectual property protection for our chemical compounds and research tools, the value of our technology and products will be adversely affected. We rely on trade secrets and other confidential information to maintain our proprietary position. We may be involved in lawsuits to protect or enforce our patents or the patents of our collaborators or licensors, which could be expensive and time consuming. Third parties may own or control patents or proprietary rights that are infringed by our technologies or drug candidates. Risks Relating to our Common Stock Our executive officers, directors and their affiliates have the ability to significantly influence all matters submitted to stockholders for approval. If we do not maintain effectiveness of the registration statement covering the resale of the shares issued in the 2006 private placement, we will be required to pay certain liquidated damages, which could be material in amount. Our stock price is subject to fluctuation, which may cause an investment in our stock to suffer a decline in value. Antitakeover provisions that we have in place could entrench our management team and delay or prevent an acquisition. These provisions could adversely affect the price of our common stock because purchasers cannot acquire a controlling interest. If there are substantial sales of our common stock, our stock price could decline. Because we do not intend to pay dividends, you will benefit from an investment in our common stock only if it appreciates in value.

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1062216--4/2/2007--MEMORY_PHARMACEUTICALS_CORP