1100412--8/15/2008--ARRAY_BIOPHARMA

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{stock, price, operating}

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{regulation, government, change}

{acquisition, growth, future}

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{product, market, service}

{cost, regulation, environmental}

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We Have a History of Losses and May Not Achieve or Sustain Profitability. We May Not Receive Royalty or Milestone Revenue Under Our Collaboration Agreements for Several Years, or at All. Our Drug Candidates Are at Early Stages of Development, and We May Not Successfully Develop a Drug Candidate That Becomes a Commercially Viable Drug. We or Our Collaborators May Choose Not to Commercialize a Drug Candidate at Any Time During Development, Which Would Reduce or Eliminate Our Potential Return on Investment for That Drug. We May Not Be Successful In Entering Into Additional Out-License Agreements on Favorable Terms. Our Capital Requirements Could Significantly Increase If We Choose to Develop More of Our Proprietary Programs Internally. We May Not Out-License Our Proprietary Programs at the Most Appropriate Time to Maximize the Total Value or Return of These Programs to Us. If We Fail to Adequately Conduct Clinical Trials, Our Potential Return Could Be Reduced or Eliminated. We Expect That Revenue From Our Funded Research Collaborations Will Decline In the Future As We Focus More Resources on Our Proprietary Research Programs. We Have Limited Clinical Development and Commercialization Experience. Delays In the Commencement or Completion of Clinical Testing Could Result In Increased Costs to Us and Delay or Limit Our Ability to Generate Revenues. Drug Candidates That We Develop With Our Collaborators or on Our Own May Not Receive Regulatory Approval Even If Our Drug Candidates Obtain Regulatory Approval, We and Our Collaborators Will Be Subject to Ongoing Government Regulation. If Our Drug Candidates Do Not Gain Market Acceptance, We May Be Unable to Generate Significant Revenue. If We Need But Are Unable to Obtain Additional Funding to Support Our Operations, We Could Be Unable to Successfully Execute Our Operating Plan or Be Forced to Reduce Our Operations. Our Collaborators Have Substantial Control and Discretion Over the Timing and the Continued Development and Marketing of Drug Candidates We Create for Them. Revenue From Collaborations Depends on the Extent to Which the Pharmaceutical and Biotechnology Industries Collaborate With Other Companies for One or More Aspects of Their Drug Discovery Process. Our Research and Development Capabilities May Not Produce Viable Drug Candidates. If Our Drug Discovery and Development Programs Do Not Progress As Anticipated, Our Revenue and Stock Price Could Be Negatively Impacted. We May Not Realize Anticipated Benefits From Future Acquisitions, Investments and Strategic Partnerships. Because We Rely on a Small Number of Collaborators for a Significant Portion of Our Revenue, If One or More of Our Major Collaborators Terminates or Reduces the Scope of Their Agreement With Us, Our Revenue May Significantly Decrease. We May Not Be Able to Recruit and Retain the Experienced Scientists and Management We Need to Compete In the Drug Research and Development Industry. Our cGMP and Pharmacology Facilities and Practices May Fail to Comply with Government Regulations. Our Development, Testing and Manufacture of Drug Candidates May Expose Us to Product Liability and Other Lawsuits. If Our Use of Chemical and Hazardous Materials Violates Applicable Laws or Regulations or Causes Personal Injury We May Be Liable for Damages. Our Operations Could Be Interrupted By Damage to Our Specialized Laboratory Facilities. Due to Our Reliance on Contract Research Organizations and Other Third Parties to Conduct Our Clinical Trials, We Are Unable to Directly Control the Timing, Conduct and Expense of Our Clinical Trials. Controls We or Our Third Party Service Providers Have in Place to Ensure Compliance With Laws May Not Be Effective to Ensure Compliance With All Applicable Laws and Regulations. The Concentration of the Pharmaceutical and Biotechnology Industry and Any Further Consolidation Could Reduce the Number of Our Potential Collaborators. Capital Market Conditions May Reduce Our Biotechnology Collaborators Ability to Fund Research. Health Care Reform and Cost Control Initiatives By Third-Party Payors Could Reduce the Prices That Can Be Charged for Drugs, Which Could Limit the Commercial Success of Our Drug Candidates. We or Our Collaborators May Not Obtain Favorable Reimbursement Rates for Our Drug Candidates. The Drug Research and Development Industry Has a History of Patent and Other Intellectual Property Litigation, and We May Be Involved In Costly Intellectual Property Lawsuits. The Intellectual Property Rights We Rely on to Protect Our Proprietary Drug Candidates and the Technology Underlying Our Tools and Techniques May Be Inadequate to Prevent Third Parties From Using Our Technology or Developing Competing Capabilities or to Protect Our Interests In Our Proprietary Drug Candidates. Agreements We Have With Our Employees, Consultants and Collaborators May Not Afford Adequate Protection for Our Trade Secrets, Confidential Information and Other Proprietary Information. The Drug Research and Development Industry Is Highly Competitive, and We Compete With Some Companies That Offer a Broader Range of Capabilities and Have Better Access to Resources Than We Do. We Face Potential Liability Related to the Privacy of Health Information We Obtain From Research Institutions. Our Officers and Directors Have Significant Control Over Us and Their Interests May Differ From Those of Our Stockholders. Our Quarterly Operating Results Could Fluctuate Significantly, Which Could Cause Our Stock Price to Decline. Because Our Stock Price May Be Volatile, Our Stock Price Could Experience Substantial Declines. Because We Do Not Intend to Pay Dividends, Stockholders Will Benefit From An Investment In Our Common Stock Only If It Appreciates In Value. The Ability of Our Stockholders to Control Our Policies and Effect a Change of Control of Our Company Is Limited, Which May Not Be In the Best Interests of Our Stockholders.

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1100412--8/15/2008--ARRAY_BIOPHARMA_INC