1093649--3/16/2006--IDENIX_PHARMACEUTICALS

related topics

{product, candidate, development}

{property, intellectual, protect}

{stock, price, operating}

{interest, director, officer}

{loss, insurance, financial}

{personnel, key, retain}

{regulation, government, change}

{stock, price, share}

{provision, law, control}

{control, financial, internal}

{product, liability, claim}

{cost, operation, labor}

{cost, regulation, environmental}

{product, market, service}

We will need additional capital to fund our operations, including product candidate development, manufacturing and commercialization. If we do not have or cannot raise additional capital when needed, we will be unable to develop and commercialize our product candidates successfully. We will not be able to commercialize our drug products successfully if we are unable to hire, train, deploy and retain qualified sales personnel to develop a direct sales force. We will incur significant expense to establish our marketing and sales capabilities. Our market is subject to intense competition. If we are unable to compete effectively, our product candidates may be rendered noncompetitive or obsolete. If we successfully develop and obtain regulatory approval for our products, but those products do not achieve and maintain market acceptance, our business will not be successful. Our research and development efforts may not result in additional product candidates being discovered on timelines anticipated, if at all, which could limit our ability to generate revenues. Our failure to successfully acquire, develop and market additional product candidates or approved drugs would impair our ability to grow. As we evolve from a company primarily involved in discovery and development to one also involved in commercialization, we may encounter difficulties in managing our growth and expanding our operations successfully. If we are not able to attract and retain key management, scientific and commercial personnel and advisors, we may not successfully develop our product candidates, commercialize any products or achieve our other business objectives. Our business has a substantial risk of product liability claims. If we are unable to obtain appropriate levels of insurance, a product liability claim against us could adversely affect our business. Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant, uninsured liabilities. If the estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may vary from those reflected in our projections and accruals. If we fail to design and maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. Factors Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates All of our product candidates are in development and remain subject to clinical testing and regulatory approval. If we are unable to develop our product candidates, we will not be successful. If our clinical trials are not successful, we will not obtain regulatory approval for commercial sale of our product candidates. If our product candidates fail to obtain U.S. and/or foreign regulatory approval, we and our collaborators will be unable to commercialize our product candidates. Even if we obtain regulatory approvals, our products will be subject to ongoing regulatory review. If we fail to comply with applicable U.S. and foreign regulations, we could lose those approvals and our business would be seriously harmed. If we are subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, our business may be harmed. If we receive regulatory clearance or approval but fail to comply with ongoing regulatory requirements, we may be subject to significant FDA sanctions. If we violate healthcare statutes such as fraud and abuse laws, we would be subject to significant penalties and expenses. If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. Factors Related to Our Relationship with Novartis Novartis has substantial control over us and could delay or prevent a change in corporate control. Novartis has the right to exercise control over certain corporate actions that may not otherwise require stockholder approval as long as it holds at least 19.4% of our voting stock. We currently depend on one collaboration partner, Novartis, for substantially all our revenues and for support in commercialization of our HBV product candidates, and we may depend on Novartis for commercialization of other product candidates, including valopicitabine, our HCV product candidate. If our development, license and commercialization agreement with Novartis terminates, our business and, in particular, the development of our product candidates and the commercialization of any products that we successfully develop would be significantly harmed. Novartis has the option to license from us valopicitabine, our lead product candidate for the treatment of hepatitis C, and other product candidates. If Novartis does not exercise its option with respect to a product candidate, our development, manufacture and/or commercialization of such product candidate may be substantially delayed or limited. If we breach any of the numerous representations and warranties we made to Novartis under the development agreement or the stock purchase agreement, Novartis has the right to seek indemnification from us for damages it suffers as result of such breach. These amounts could be substantial. If we materially breach our obligations or covenants arising under the development agreement or our master manufacturing and supply agreement with Novartis, we may lose our right to develop or commercialize our product candidates. If we issue capital stock, in certain situations Novartis will be able to purchase shares at par value to maintain its percentage ownership in Idenix and, if that occurs, this could cause dilution. In addition, Novartis has the right, under specified circumstances, to purchase a pro rata portion of other shares that we may issue. If Novartis terminates or fails to perform its obligations under the development agreement, we may not be able to successfully commercialize our drug products licensed to Novartis and the development and commercialization of our other product candidates could be delayed, curtailed or terminated. Novartis has the right under certain circumstances to market and sell products that compete with the product candidates and products that we license to it, and any competition by Novartis could have a material adverse effect on our business. Factors Related to Our Dependence on Third Parties Because we have limited sales, marketing and distribution capabilities, we may seek to enter into additional arrangements with third parties. We may not be successful in establishing these relationships or, if established, the relationship may not be successful. If we seek to enter into collaboration agreements for any product candidates other than those licensed to Novartis and we are not successful in establishing such collaborations, we may not be able to continue development of those product candidates. If any collaborative partner terminates or fails to perform its obligations under agreements with us, the development and commercialization of our product candidates could be delayed or terminated. Our collaborations with outside scientists may be subject to restriction and change. We depend on third-party manufacturers to manufacture products for us. If in the future we manufacture any of our products, we will be required to incur significant costs and devote significant efforts to establish these capabilities. Factors Related to Patents and Licenses If we are unable to adequately protect our patents and licenses related to our product candidates, or if we infringe the rights of others, we may not be able to successfully commercialize our product candidates. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. If any of our agreements that grant us the exclusive right to make, use and sell our product candidates are terminated, we may be unable to develop or commercialize our product candidates. If our cooperative research agreement with the University of Cagliari is terminated, we may be unable to develop research results arising out of that work prior to the termination. Factors Related to Our Common Stock Sales of additional shares of our common stock could result in dilution to existing stockholders and cause the price of our common stock to decline. Fluctuation of our quarterly results may cause our stock price to decline, resulting in losses to you.

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1093649--3/16/2006--IDENIX_PHARMACEUTICALS_INC