1144062--3/14/2008--Lev_Pharmaceuticals

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Risks related to our business We are at an early stage of development as a company and currently have no source of revenue and may never become profitable. We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future. We currently are devoting substantially all of our efforts on the development of product candidates based on C1-INH. If we are unable to successfully develop and commercialize these product candidates, or experience significant delays in doing so, our business, financial condition and results of operations will be materially harmed. We are a development stage company, making it difficult for you to evaluate our business and your investment. We expect that we may need to raise substantial additional capital to fund our operations, and our failure to obtain funding when needed would adversely affect our development programs and other operations. If either of our agreements with Sanquin terminate, we may be unable to continue our business. We are dependent on Sanquin as our sole source of supply for C1-1NH. We agreed to provide Sanquin with a loan to finance the scale up of their production facilities, the repayment of which may be waived in the event we fail to perform under our agreement with them. We rely on third parties to supply and manufacture our product candidates, without any direct control over the timing for the supply, production and delivery of our product candidates, thereby possibly adversely affecting any future revenues. Our proposed products are in the development stages and will likely not be commercially introduced until mid-2008, if at all. Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Delays in clinical testing could result in increased cost to us and delay our ability to generate revenue. We may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude approval of our product candidates. If we are unable to satisfy regulatory requirements, we may not be able to commercialize our product candidates. If testing of a particular product candidate does not yield successful results, then we will be unable to commercialize that product. The FDA may determine our clinical trials data regarding safety or efficacy are insufficient for regulatory approval. We may take longer to complete our clinical trials than we project, or we may not be able to complete them at all. The commercial success of our product candidates will depend upon the degree of market acceptance of these products among physicians, patients, health care payors and the medical community. If our product candidates are unable to compete effectively with marketed treatments, our commercial opportunity will be reduced or eliminated If we are not first to market for our HAE product, the Orphan Drug Act may provide a competitor with up to seven years of market exclusivity. We currently have a very limited sales and marketing organization. If we are unable to establish a direct sales force or we are unable to enter into marketing agreements with third parties in the United States to promote our products, the commercial opportunity for our products may be diminished. If the FDA does not approve our contract manufacturers facilities, we may be unable to develop or commercialize our product candidates. We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to seek or obtain regulatory approval for or commercialize our product candidates. If product liability lawsuits are successfully brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates. Even if we receive regulatory approval for our product candidates, we will be subject to ongoing significant regulatory obligations and oversight. If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates. We will need to increase the size of our organization, and we may experience difficulties in managing growth. Reimbursement may not be available for our product candidates, including due to legislative or regulatory reform of the healthcare system, which could diminish our sales or affect our ability to sell our products profitably. Rapid technological change could make our product candidates obsolete. Compliance with the Sarbanes-Oxley Act of 2002 will result in increased expenditures. We have a significant amount of net operating loss and credit carryforwards the use of which may be limited in certain circumstances. Risks related to our intellectual property It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights or use our technology. Risks Relating to our Securities As a result of the shares issued in our recent financing transactions, the number of shares of our common stock outstanding has increased substantially and certain purchasers beneficially own significant blocks of our common stock and these shares are generally available for resale in the public market. If we are unable to make the scheduled principal and interest payments on the term loan facility or maintain compliance with other debt covenants as defined in the loan and security agreement, we may default on our debt. If shares under our universal shelf registration statement are issued, then the price of our securities may be negatively affected. Market volatility may affect our stock and the value of your investment. We are at risk of securities class action litigation. The ownership interests of our officers and directors could conflict with the interests of our other stockholders. We may be subject to penny stock regulations that would limit the trading market for our common stock. A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline. Because we do not intend to pay dividends, you will benefit from an investment in our common stock only if it appreciates in value. Provisions in our charter documents and Delaware law could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders. Exercise of outstanding options and warrants will dilute stockholders and could decrease the market price of our common stock.

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1144062--3/14/2008--Lev_Pharmaceuticals_Inc