1145404--3/7/2006--CRITICAL_THERAPEUTICS

related topics

{product, candidate, development}

{property, intellectual, protect}

{regulation, change, law}

{stock, price, operating}

{product, liability, claim}

{acquisition, growth, future}

{system, service, information}

{control, financial, internal}

{personnel, key, retain}

{cost, contract, operation}

{loss, insurance, financial}

{cost, regulation, environmental}

Our business will depend heavily on the commercial success of ZYFLO and, if approved for sale, the controlled-release formulation of zileuton. If we do not successfully recruit, train and retain qualified sales and marketing personnel and build and maintain an adequate marketing and sales infrastructure, our ability to independently launch and market our product candidates, including ZYFLO, will be impaired. A failure to maintain appropriate inventory levels could harm our reputation and subject us to financial losses. If the market is not receptive to our other product candidates, we will be unable to generate revenues from sales of these products. We may not be successful in our efforts to advance and expand our portfolio of product candidates. We face substantial competition. If we are unable to compete effectively, ZYFLO and our product candidates may be rendered noncompetitive or obsolete. If we fail to effectively manage our growth, our business and our operating results could be adversely affected. If we are unable to retain key personnel and hire additional qualified scientific and other management personnel, we may not be able to successfully achieve our goals. We will spend considerable time and money complying with Federal and state laws and regulations, and, if we are unable to fully comply with such laws and regulations, we could face substantial penalties. State pharmaceutical marketing and promotional compliance and reporting requirements may expose us to regulatory and legal action by state governments or other government authorities. Our corporate compliance and corporate governance programs cannot guarantee that we are in compliance with all potentially applicable regulations. Our sales depend on payment and reimbursement from third-party payors, and a reduction in payment rate or reimbursement could result in decreased use or sales of our products. If our Medicaid rebate program practices are investigated or if the Medicaid portion of our ZYFLO sales grows, the costs could be substantial and our operating results could be adversely affected. Our business has a substantial risk of product liability claims. If we are unable to obtain appropriate levels of insurance, a product liability claim against us could interfere with the development and commercialization of our product candidates or subject us to unanticipated damages or settlement amounts. We handle hazardous materials and must comply with laws and regulations, which can be expensive and restrict how we do business. If we are involved in a hazardous waste spill or other accident, we could be liable for damages, penalties or other forms of censure. Risks Relating to Development, Clinical Testing and Regulatory Approval of Our Product Candidates If we do not obtain the regulatory approvals or clearances required to market and sell the controlled-release formation of zileuton or our other product candidates under development, our business may be unsuccessful. If clinical trials for our product candidates are not successful, we may not be able to develop, obtain regulatory approval for and commercialize these product candidates successfully. If clinical trials for our product candidates are delayed, we would be unable to commercialize our product candidates on a timely basis, which would require us to incur additional costs and delay the receipt of any revenues from product sales. Even if we obtain regulatory approvals or clearances, our product candidates will be subject to ongoing regulatory requirements and review. If we fail to comply with continuing U.S. and applicable foreign regulations, we could lose permission to manufacture and distribute our products and the sale of our product candidates could be suspended. If we or our third-party manufacturers or service providers fail to comply with applicable laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to market and sell our product candidates and may harm our reputation. Risks Relating to Our Dependence on Third Parties We depend on MedImmune and Beckman Coulter and expect to depend on additional collaborators in the future for a portion of our revenues and to develop, conduct clinical trials with, obtain regulatory approvals for, and manufacture, market and sell some of our product candidates. These collaborations may not be successful. We rely on third parties to manufacture and supply the zileuton API, ZYFLO and our product candidates. We expect to continue to rely on third parties for these purposes and would incur significant costs to independently develop manufacturing facilities. We rely on a single source supplier for one of the starting materials for zileuton, and the loss of that supplier could prevent us from selling ZYFLO. Any failure to manage and maintain our distribution network could compromise ZYFLO sales and harm our business. If we are unable to enter into additional collaboration agreements, we may not be able to continue development of our product candidates. We plan to rely significantly on third parties to market some product candidates and these third parties may not successfully commercialize these product candidates. Risks Relating to Intellectual Property and Licenses If we are not able to obtain and enforce patent and other intellectual property protection for our discoveries, our ability to prevent third parties from using our inventions and proprietary information will be limited and we may not be able to operate our business profitably. Litigation regarding patents, patent applications and other proprietary rights is expensive and time consuming. If we are unsuccessful in litigation concerning patents or patent applications owned or co-owned by us or licensed to us, we may not be able to protect our products from competition or we may be precluded from selling our products. If we are involved in such litigation, it could cause delays in, or prevent us from, bringing products to market and harm our ability to operate. We in-license a significant portion of our principal proprietary technologies, and if we fail to comply with our obligations under any of the related agreements, we could lose license rights that are necessary to develop and market HMGB1 products and some of our other product candidates. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. Risks Relating to Our Financial Results and Need for Additional Financing We have incurred losses since inception and we anticipate that we will continue to incur losses for the foreseeable future. If we do not generate significant revenues, we will not be able to achieve profitability. We will require substantial additional capital to fund our operations. If additional capital is not available, we may need to delay, limit or eliminate our development and commercialization processes. If the estimates we make, or the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may vary from these reflected in our projections. Changes in or interpretations of accounting rules and regulations, such as expensing of employee stock options, could result in unfavorable accounting charges or require us to change our compensation policies. Risks Relating to Our Common Stock Our stock price is subject to fluctuation, which may cause an investment in our stock to suffer a decline in value. If our quarterly results of operations fluctuate, this fluctuation may subject our stock price to volatility, which may cause an investment in our stock to suffer a decline in value. If significant business or product announcements by us or our competitors cause fluctuations in our stock price, an investment in our stock may suffer a decline in value.

Full 10-K form ▸

1145404--3/7/2006--CRITICAL_THERAPEUTICS_INC