1066833--3/15/2006--DOV_PHARMACEUTICAL

related topics

{product, candidate, development}

{property, intellectual, protect}

{stock, price, share}

{product, liability, claim}

{stock, price, operating}

{product, market, service}

{cost, regulation, environmental}

{personnel, key, retain}

{interest, director, officer}

{acquisition, growth, future}

{debt, indebtedness, cash}

{tax, income, asset}

{control, financial, internal}

{provision, law, control}

Risks Related to our Business Our stock price is likely to be volatile and the market price of our common stock may decline. If our outstanding convertible debt is converted into shares of our common stock, existing common stockholders will experience immediate equity dilution and, as a result, our stock price may go down. We have incurred losses since our inception and expect to incur significant losses for the foreseeable future, and we may never reach profitability. We are dependent on the successful outcome of clinical trials for our We may not receive regulatory approvals for our product candidates, approvals may be delayed or the approvals we receive may not be sufficient to fulfill our current goals for our product candidates. Our operating results are subject to fluctuations that may cause our stock price to decline. We rely on the efforts of Neurocrine and Pfizer and ultimately Merck for the development, design and implementation of clinical trials, regulatory approval and commercialization of indiplon and our product candidates DOV 216,303 and DOV 21,947. Our success in developing our product candidates depends upon the performance of our licensees and collaborative partners. The independent clinical investigators and contract research organizations that we rely upon to assist in the conduct of our clinical trials may not be diligent, careful or timely, and may make mistakes, in the conduct of our trials. Our existing collaborative and licensing agreements contain, and any such agreements that we may enter into in the future may contain, covenants that restrict our product development and commercialization activities. If we are unable to create sales, marketing and distribution capabilities, or enter into agreements with third parties to perform these functions, we will not be able to commercialize our product candidates. If we cannot raise additional funding, we may be unable to complete development of our product candidates. Our indebtedness and debt service obligations may adversely affect our cash flow, cash position and stock price. The success of our business depends upon the members of our senior management team, our scientific staff and our ability to continue to attract and retain qualified scientific, technical and business personnel. We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers. Because some of our patents with respect to some of our product candidates have expired or will expire in the near term, we may be required to rely solely on the Hatch-Waxman Act for market exclusivity. Our business activities require compliance with environmental laws, which if violated could result in significant fines and work stoppage. We intend to pursue a rapid growth strategy, which could give rise to difficulties in managing and successfully implementing such growth. Our bylaws require us to indemnify our officers and directors to the fullest extent permitted by law, which may obligate us to make substantial payments and in some instances payments in advance of judicial resolution of entitlement. Provisions of Delaware law, our charter and by-laws and our stockholders rights plan may make a takeover more difficult. Risks Related to our Industry We face intense competition and if we are unable to compete effectively, the demand for our products, if any, may be reduced. If we are unable to protect our intellectual property, our competitors could develop and market products based on our discoveries, which may reduce demand for our product candidates. The intellectual property of our competitors or other third parties may prevent us from developing or commercializing our product candidates. Our ability to receive royalties and profits from product sales depends in part upon the availability of approved reimbursement for the use of our products from third-party payors, for which we may or may not qualify. We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product and may have to limit its commercialization. We may not be able to utilize any of or all our net operating losses to offset future taxable income.

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1066833--3/15/2006--DOV_PHARMACEUTICAL_INC