1128495--3/1/2010--ANADYS_PHARMACEUTICALS

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{stock, price, share}

{personnel, key, retain}

{acquisition, growth, future}

{provision, law, control}

{loan, real, estate}

{control, financial, internal}

{cost, regulation, environmental}

{system, service, information}

{cost, contract, operation}

{competitive, industry, competition}

{product, market, service}

We may be unable to enter into future strategic transactions, and in particular transactions around ANA598 or ANA773, on terms acceptable to us, or at all. We will need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our development programs. Raising additional funds by issuing securities or through debt or project financing or strategic alliances and licensing arrangements may cause dilution to existing stockholders, restrict our operations or require us to relinquish proprietary rights. We are at an early stage of development, and we may never attain product sales. We expect our net losses to continue for at least several years, and we are unable to predict the extent of future losses and when we will become profitable in our business operations, if ever. The technologies on which we rely are unproven and may not result in the development of commercially viable products. Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results, we can provide no assurances that ANA598 or ANA773 will have favorable results in future clinical trials, or receive regulatory approval. We intend to develop ANA598 as a component of combination treatments, which presents additional challenges to the drug development process. There is no guarantee that in future studies of ANA598, in which ANA598 may be dosed for longer duration in combination with other agents, that we will be able to identify safe and tolerable doses that result in clinical benefit, as measured by clearance of virus and durability of that clearance. The FDA could impose additional requirements on the development of ANA598 which could result in unexpected cost increases and/or delays to our development timelines. Fast track designation does not guarantee approval, or expedited approval, of ANA598 and there is no guarantee that ANA598 will maintain fast track designation. During 2009 we completed a Phase I clinical trial of ANA773 for HCV and intend to explore partnership opportunities as a way to potentially continue the development of ANA773. There is no guarantee that we will be able to obtain a partnership around ANA773 or that the development of the program will be continued. In 2007 we terminated our ANA975 development program due to challenges seen in animal toxicology studies. To the extent that the ANA975 toxicology observations are mechanism related, our ANA773 programs for cancer and hepatitis C and ability to out-license this product candidate could be negatively impacted, causing our stock price to decline. Delays in the commencement of clinical testing of our current and potential product candidates could result in increased costs to us and delay our ability to generate revenues. Delays in the completion of, or the termination of, clinical testing of our current and potential product candidates could result in increased costs to us and delay or prevent us from generating revenues. Even if we successfully complete clinical trials of ANA598 or any future product candidate, there are no assurances that we will be able to submit, or obtain FDA approval of, a new drug application. If we successfully develop products but those products do not achieve and maintain market acceptance, our business will not be profitable. We depend on outside parties to conduct our clinical trials, which may result in costs and delays that prevent us from obtaining regulatory approval or successfully commercializing product candidates. We do not have internal manufacturing capabilities, and if we fail to develop and maintain supply relationships with future collaborators or other outside manufacturers, we may be unable to develop or commercialize any of our products. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any products we may develop, we may not be able to generate product revenue. If we are unable to retain key management and scientific staff, we may be unable to successfully develop or commercialize our product candidates. Earthquake or wildfire damage to our facilities could delay our research and development efforts and adversely affect our business. Our securities available-for-sale held in the form of marketable securities are subject to market, interest and credit risk that may reduce their value. Risks Related to Our Industry Because our product candidates and development and collaboration efforts depend on our intellectual property rights, adverse events affecting our intellectual property rights will harm our ability to commercialize products. If we are sued for infringing intellectual property rights of others, it will be costly and time-consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business. We may be involved in lawsuits or proceedings to protect or enforce our patent rights, trade secrets or know-how, which could be expensive and time-consuming. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information and may not adequately protect our intellectual property. Many competitors have significantly more resources and experience, which may harm our commercial opportunity. If our competitors develop treatments for HCV or cancer that are approved faster, marketed better or demonstrated to be more effective than ANA598, ANA773, or any other products that we may develop, our commercial opportunity will be reduced or eliminated. If we cannot establish pricing of our product candidates acceptable to the government, insurance companies, managed care organizations and other payors, any product sales will be severely hindered. If we cannot arrange for reimbursement policies favorable to our product candidates, their sales will be severely hindered. Product liability claims may damage our reputation and, if insurance proves inadequate, the product liability claims may harm our results of operations. Any claims relating to our improper handling, storage or disposal of biological, hazardous and radioactive materials could be time-consuming and costly. Our business and operations would suffer in the event of system failures. Risks Related to Our Common Stock Future sales of our common stock may cause our stock price to decline. Our stock price may be volatile. Our quarterly results may fluctuate significantly, resulting in fluctuations in our stock price. Our largest stockholders may take actions that are contrary to your interests, including selling their stock. Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change in control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management. We have never paid cash dividends on our capital stock and we do not anticipate paying dividends in the foreseeable future.

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1128495--3/1/2010--ANADYS_PHARMACEUTICALS_INC