1138812--3/14/2006--COTHERIX

related topics

{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{customer, product, revenue}

{control, financial, internal}

{property, intellectual, protect}

{financial, litigation, operation}

{regulation, change, law}

{stock, price, operating}

{provision, law, control}

{cost, operation, labor}

{operation, international, foreign}

{system, service, information}

Risks Related to our Business Ventavis is our only product, and if we do not successfully market and sell Ventavis, we may not generate sufficient sales to expand or continue our business operations. We have a history of net losses and may never achieve or maintain profitability. Our product sales depend on two distributors to whom we sell Ventavis, and a limited number of physicians who prescribe Ventavis. Product sales may fluctuate from quarter to quarter based on the buying patterns of these distributors, the prescribing patterns of these physicians, and the seasonal work and travel schedules of physicians and patients. Any failure to manage and maintain our distribution network could compromise Ventavis sales and harm our business. Our ability to generate sales of Ventavis depends in significant part on achieving and maintaining adequate insurance coverage and reimbursement and government pricing policies. If our competitors have or introduce products that are preferred over Ventavis, our commercial opportunity will be significantly reduced or eliminated. If Ventavis does not gain significant market acceptance in the United States among patients and health care professionals, our business will be harmed. Any interruption in the supply or problems that adversely affect the Prodose or I-neb devices could seriously harm our business or result in our inability to sell Ventavis. We have no manufacturing capabilities and rely on Schering AG for the clinical and commercial production of Ventavis, which puts at risk our ability to obtain Ventavis for distribution and continued development. We must commit to minimum purchase requirements of Ventavis from Schering AG and if we fail to accurately forecast our need for Ventavis our business will be harmed. Our product sales may depend on the health and personal preferences of patients. Identifying and licensing or acquiring other products or product candidates and obtaining FDA approval for their commercialization may put a strain on our operations and will likely require us to seek additional financing, and we ultimately may not be able to expand our business with new product sales. Our sales could be harmed by imports from countries where Ventavis may be available at a lower price. The loss of our rights to market and sell Ventavis would eliminate our only source of product sales and we may not be able to continue our business. We are subject to extensive government regulation that may impair sales of Ventavis. State pharmaceutical marketing compliance and reporting requirements may expose us to regulatory and legal action by state governments or other government authorities. Sales of Ventavis could be harmed due to a large number of clinical trials competing for available PAH patients. We rely on third parties to conduct our clinical trials, including our ongoing Phase II ACTIVE Trial and our Phase III VISION Trial. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain additional regulatory approval for or further commercialize Ventavis. If our clinical trials or clinical disease registry generate data that are less favorable than historical data or are viewed as unsuccessful, or if our clinical trials experience significant delays or adverse events, our business could be harmed significantly. Even if our product or any future product candidate meets safety and efficacy endpoints in clinical trials, regulatory authorities may not approve our request for labeling claims, or we may face post-approval problems that require withdrawal from the market. We are, and potentially may be, subject to new federal and state requirements to submit information on our open and completed clinical trials to public registries and databases. If product liability lawsuits are asserted against us, we may be required to limit or halt commercialization of Ventavis, may incur substantial liabilities, and may suffer damages that exceed our insurance coverage. Third parties may own or control patents or patent applications that we may be required to license to continue commercializing Ventavis or that could result in litigation that would be costly and time-consuming. Our intellectual property rights may not preclude competitors from developing competing products and our business may suffer. We may require additional financing to fund our operations and continue to commercialize Ventavis. If we fail to attract and retain management and other personnel, we may be unable to successfully acquire or license additional products or product candidates, or continue our development and commercialization activities. We have significantly increased the size of our organization and will need to continue to do so, and we may experience difficulties in managing growth. We are exposed to fluctuations in foreign currency exchange rates, particularly the euro, and foreign economic market conditions. Our orphan drug exclusivity for Ventavis may not provide us with a competitive advantage. Competitors could develop and gain FDA approval of inhaled iloprost for a different indication, which could adversely affect our competitive position. Failure to comply with internal control attestation requirements could lead to loss of public confidence in our financial statements and negatively impact our stock price. Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect our reported results of operations. Anti-takeover defenses that we have in place could prevent or frustrate attempts by stockholders to change our board of directors or the direction of the company. If a company that competes with Ventavis attempts to acquire us, Schering AG s right of first negotiation could prevent or delay a change of control. Risks Related to Our Stock Our stock price has been and will likely continue to be extremely volatile, and purchasers of our common stock could incur substantial losses. If there are substantial sales of our common stock, our stock price could decline, even if our business is doing well. Our stock is controlled by a small number of stockholders and the interests of these stockholders could conflict with your interests. Exercise of stock options or any warrants that may be issued by us will cause dilution in net tangible book value. Because our common stock has been and may continue to be subject to high volatility, we may be forced to expend money and resources defending securities class action litigation claims.

Full 10-K form ▸

1138812--3/14/2006--COTHERIX_INC