1087432--3/14/2008--INTERMUNE

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{stock, price, share}

{control, financial, internal}

{customer, product, revenue}

{debt, indebtedness, cash}

{financial, litigation, operation}

{regulation, government, change}

{provision, law, control}

{acquisition, growth, future}

{condition, economic, financial}

{cost, regulation, environmental}

{investment, property, distribution}

{personnel, key, retain}

{product, market, service}

We do not know whether our planned clinical trials will begin on time, or at all, or will be completed on schedule, or at all. Preclinical development is a long, expensive and uncertain process, and we may terminate one or more of our current preclinical development programs. We currently depend upon one collaboration partner, Roche, for support in the development and commercialization of our HCV product candidates. If our Collaboration Agreement with Roche terminates, our business and, in particular, the development and commercialization of our HCV product candidates would be significantly harmed. If Roche fails to perform its obligations under the Collaboration Agreement, we may not be able to successfully commercialize our product candidates licensed to Roche and the development and commercialization of our product candidates could be delayed, curtailed or terminated. If we materially breach the representations and warranties we made to Roche under the Collaboration Agreement or any of our other contractual obligations, Roche has the right to seek indemnification from us for damages it suffers as a result of such breach. These amounts could be substantial. Roche has the right under certain circumstances to market and sell products that compete with our product candidates that we have licensed to Roche, and any competition by Roche could have a material adverse effect on our business. Risks Related to Government Regulation and Approval of our Products and Product Candidates If we fail to comply or have in the past failed to comply with FDA or other government regulations prohibiting the promotion of off-label uses and the promotion of products for which marketing approval has not been obtained, it could result in regulatory enforcement action by the FDA or other governmental authorities, including a substantial fine, either of which could harm our business. If the FDA imposes significant restrictions or requirements related to our products for any disease, or withdraws its approval of any of our products for any disease for which it has been approved, our revenue would decline. If our clinical trials fail to demonstrate to the FDA and foreign regulatory authorities that any of our products or product candidates are safe and effective for the treatment of particular diseases, the FDA and foreign regulatory authorities may require us to conduct additional clinical trials or may not grant us marketing approval for such products or product candidates for those diseases. The pricing and profitability of our products may be subject to control by the government and other third-party payors. Our failure or alleged failure to comply with anti-kickback and false claims laws could result in civil and/or criminal sanctions and/or harm our business. Risks Related to Manufacturing and Our Dependence on Third Parties The manufacturing and manufacturing development of our products and product candidates present technological, logistical and regulatory risks, each of which may adversely affect our potential revenue. Our manufacturing strategy, which relies on third-party manufacturers, exposes us to additional risks as a result of which we may lose potential revenue. We rely on third parties to conduct clinical trials for our products and product candidates, and those third parties may not perform satisfactorily. Risks Related to the Commercialization of Our Products and Product Candidates If the specialty pharmacies and distributors that we rely upon to sell our products fail to perform, our business may be adversely affected. Even if regulatory authorities approve our products or product candidates for the treatment of the diseases we are targeting, our products may not be marketed or commercially successful. If third-party payors do not provide coverage or reimburse patients for our products, our revenue and prospects for profitability will suffer. Our supply agreement with BI may restrict our ability to establish alternative sources of Actimmune in a timely manner or at an acceptable cost, which may cause us to be unable to meet demand for Actimmune and to lose potential revenue. The activities of competitive drug companies, or others, may limit our products revenue potential or render them obsolete. Risks Related to Our Intellectual Property Rights We may not be able to obtain, maintain and protect certain proprietary rights necessary for the development and commercialization of our products or product candidates. Over time, we will lose our ability to rely upon the intellectual property we currently own to prevent competing products, and after 2011 pirfenidone will only be protected by orphan drug designation, which may impair our ability to generate revenue. If we breach our license agreement with Genentech, we may lose our ability to develop and market Actimmune. Since the pirfenidone molecule is in the public domain and the patents we acquired from Marnac and KDL are limited to specific methods of use of pirfenidone, we may be subject to competition from third party products with the same active pharmaceutical ingredients as our product candidate. Litigation or third-party claims of intellectual property infringement could require us to spend substantial time and money and could adversely affect our ability to develop and commercialize products. If the owners of the intellectual property we license fail to maintain the intellectual property, we may lose our rights to develop our products or product candidates. If our employees, consultants and vendors do not comply with their confidentiality agreements or our trade secrets otherwise become known, our ability to generate revenue and profits may be impaired. By working with corporate partners, research collaborators and scientific advisors, we are subject to disputes over intellectual property, and our ability to obtain patent protection or protect proprietary information may be impaired. Risks Related to Our Financial Results and Other Risks Related to Our Business Revenue from the sale of Actimmune has been declining and is expected to decline further. Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio. If we fail to obtain the capital necessary to fund our operations, we will be unable to successfully execute our business plan. If we continue to incur net losses for an extended period of time, we may be unable to continue our business. Failure to accurately forecast our revenue could result in additional charges for excess inventories or non-cancelable purchase obligations. If product liability lawsuits are brought against us, we may incur substantial liabilities. Our use of hazardous materials, chemicals, viruses and radioactive compounds exposes us to potential liabilities. If we fail to fulfill our obligations under the Deferred Prosecution Agreement with the U.S. Department of Justice or the Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services it could have a material adverse effect on our business. Insurance coverage is increasingly difficult to obtain or maintain. Budget or cash constraints may force us to delay our efforts to develop certain products in favor of developing others, which may prevent us from meeting our stated timetables and commercializing those products as quickly as possible. Failure to attract, retain and motivate skilled personnel and cultivate key academic collaborations will delay our product development programs and our business development efforts. Risks Related to our Common Stock We may fail to meet our publicly announced revenue and/or expense projections and/or other financial guidance, which would cause our stock to decline in value. Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our stock price. Our stock price may be volatile, and an investment in our stock could decline in value. If our officers, directors and certain stockholders choose to act together, they may be able to significantly influence our management and operations, acting in their own best interests and not necessarily those of other stockholders. Substantial sales of shares may negatively impact the market price of our common stock. Management may invest or spend the proceeds of our September 2007 public offering in ways with which you may not agree and in ways that may not yield a return to our stockholders. Under the terms of our settlement with the U.S. Department of Justice concerning promotional activities for Actimmune by certain of our former employees, we may be required to apply a portion of the proceeds of our September 2007 public offering towards the making of an accelerated payment to the U.S. Department of Justice. We have implemented anti-takeover provisions, which could discourage, prevent or delay a takeover, even if the acquisition would be beneficial to our stockholders, or frustrate or prevent any attempts by our stockholders to replace or remove our current management or Board of Directors. 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 Outstanding Notes Our indebtedness and debt service obligations may adversely affect our cash flow. We may not have the ability to raise the funds necessary to finance any required redemptions of our outstanding convertible notes, which might constitute a default by us.

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1087432--3/14/2008--INTERMUNE_INC