1129425--3/1/2010--ZYMOGENETICS

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{acquisition, growth, future}

{cost, regulation, environmental}

{stock, price, share}

{provision, law, control}

{customer, product, revenue}

{personnel, key, retain}

{financial, litigation, operation}

{operation, international, foreign}

{product, market, service}

{loan, real, estate}

{control, financial, internal}

If we fail to increase sales of RECOTHROM recombinant human thrombin or to successfully develop and commercialize product candidates in our pipeline, we will not meet our financial goals. We anticipate incurring additional losses and may not achieve profitability. If we fail to obtain or generate the capital we need to fund our operations, we will be unable to continue operations. We are focused on a limited number of product candidates, and adverse developments with respect to one or more of those candidates could harm our business. One of our limited number of internal product candidates relates to therapeutic antibodies where we have limited experience and where we may be unsuccessful developing or commercializing a product. We are subject to extensive and rigorous governmental regulation including the requirement of approval before our products may be lawfully marketed. Our ability to differentiate RECOTHROM in the marketplace may be limited if FDA challenges our promotional and marketing materials. Our success with RECOTHROM will depend on our ability to effectively compete with large and well established competitors who have greater resources and broader product lines than we do. Several companies, some of which have substantial experience and resources, have products or are developing product candidates in the areas we have targeted for our product candidates. Clinical trials may fail to demonstrate the safety and effectiveness of our product candidates, which could delay, limit or prevent their regulatory approval. If we or others identify previously unknown side effects or safety concerns for RECOTHROM our business could be harmed. We may be required to defend lawsuits and pay damages in connection with alleged or actual harm caused by our products and product candidates. Guidelines, recommendations, codes and other literature published by various organizations, including competitors, may affect our ability to effectively promote and sell RECOTHROM. Pending litigation by our primary competitor for RECOTHROM could have an adverse impact on our business. Our patents and patent applications, including those relating to RECOTHROM, may not result in meaningful protection against competitors, provide us with any competitive advantage, or provide adequate protection or rights for new discoveries, and our competitors may commercialize the discoveries we patent or attempt to patent. Third parties may infringe our patents and challenge the validity or enforceability of our patents. Patent protection for protein-based therapeutic products and other biotechnology inventions is subject to a great deal of uncertainty, and if patent laws or the interpretation of patent laws change, our competitors may be able to develop and commercialize products based on our discoveries. We may be subject to patent infringement claims, which could result in substantial costs and liability and prevent us from commercializing our products and product candidates. We may be unable to protect our unpatented proprietary technology and information. We rely to a significant extent, and expect to continue to rely, on obtaining and maintaining third-party relationships to assist us in developing and commercializing our product candidates. With the termination of the co-promotion arrangement with Bayer HealthCare as of the end of 2009, we are solely responsible for commercialization of RECOTHROM in the United States, and we have limited experience with respect to commercial activities. We rely on contract suppliers to manufacture commercial supplies of RECOTHROM and clinical material for our product candidates and, therefore, we may be unable to effectively control production or obtain adequate supplies, particularly in situations where we rely on a sole source of supply, which could cause delays in product manufacturing, subject us to product shortages or reduce product sales. We may be unable to generate any revenue from product candidates developed by collaborators or licensees. RECOTHROM has not been approved for sale outside of the United States and Canada and we intend to seek new licensing arrangements with one or more third parties, which we will depend on to seek approval for and market and promote RECOTHROM outside the United States. Failure to effectively manage the RECOTHROM supply chain could result in inventory shortages, supply interruptions or inventory obsolescence. Because we will depend on third parties to conduct certain laboratory tests, clinical trials and other critical services, we have limited control and may encounter delays in our efforts to develop product candidates. We may expand our business through the acquisition of companies or businesses or in-licensing products or product candidates that could disrupt our business and harm our financial condition. The failure to attract or retain key management or other personnel could decrease our ability to discover, develop and commercialize potential products. Our restructuring activities in 2009 may place a strain on certain of our remaining personnel, and may have unanticipated effects. Environmental and health and safety laws may result in liabilities, expenses and restrictions on our operations. If we use biological and hazardous materials in a manner that causes contamination or injury or violates laws, we may be liable for damages. We are exposed to financial risks related to foreign currency exchange rates. Our liquidity, capital resources and results of operations may be adversely affected by declines in the value of our investments in marketable securities. If the healthcare system, coverage and reimbursement policies or any other healthcare-related regulations change, the prices of our products and product candidates may fall or our potential sales may decline. Negative public opinion and increased regulatory scrutiny of genetic and clinical research may limit our ability to conduct our business. The marketing and sale of pharmaceutical products and biologics is subject to extensive regulation and aggressive government enforcement, and our corporate compliance program cannot guarantee that we are in compliance with all relevant laws and regulations. We may issue additional equity securities in the future, which may result in dilution to existing investors. Our operating results are subject to fluctuations that may cause our stock price to decline. Our stock price is volatile and subject to many factors beyond our control. Certain of our shareholders have significant control of our management and affairs, which they could exercise against other shareholders best interests. Sales of shares of common stock by our significant shareholders could cause the price of our common stock to decline. Provisions in Washington law, our charter documents and executive employment agreements we have entered into may prevent, discourage or delay a change in control. We may become involved in securities class action litigation that could divert management s attention and harm our business.

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1129425--3/1/2010--ZYMOGENETICS_INC