1172480--3/6/2009--SANTARUS

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Risks Related to Our Business and Industry We depend on the commercial success of the Zegerid and Glumetza prescription products, and we cannot be certain that we will be able to continue to increase sales of these products. We may not generate adequate revenues under our promotion agreement for Glumetza products to justify our level of promotional effort and expense under the agreement. Our ability to generate revenues also depends on the success of our strategic alliances with GSK and Schering-Plough, many aspects of which are out of our control. Our budesonide MMX and rifamycin SV MMX product candidates will require significant development activities and ultimately may not be approved by the FDA, and any failure or delays associated with these activities or the FDA s approval of such products would increase our costs and time to market. Our pending NDA for the tablet formulation of our Zegerid prescription products may not be approved by the FDA in a timely manner, or at all, which would adversely impact our ability to commercialize this product. The markets in which we compete are intensely competitive and many of our competitors have significantly more resources and experience, which may limit our commercial opportunity. Our currently marketed products compete with many other drug products, which could put downward pressure on pricing and market share and limit our ability to generate revenues. Our reliance on third-party clinical investigators and clinical research organizations may result in delays in completing, or a failure to complete, clinical trials or we may be unable to use the clinical data gathered if they fail to comply with regulatory requirements or perform under our agreements with them. We depend on a limited number of wholesaler customers for retail distribution of our Zegerid products, and if we lose any of our significant wholesaler customers, our business could be harmed. We do not currently have any manufacturing facilities and instead rely on third-party manufacturers. Our reporting and payment obligations under the Medicaid rebate program and other governmental purchasing and rebate programs are complex and may involve subjective decisions, and any failure to comply with those obligations could subject us to penalties and sanctions, which in turn could have a material adverse effect on our business and financial condition. Regulatory approval for our currently marketed products is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated. We are subject to ongoing regulatory review of our currently marketed products. We are subject to new legislation, regulatory proposals and managed care initiatives that may increase our costs of compliance and adversely affect our ability to market our products, obtain collaborators and raise capital. We face a risk of product liability claims and may not be able to obtain adequate insurance. We rely on third parties to perform many necessary services for our commercial products, including services related to the distribution, storage and transportation of our products. If we are unable to attract and retain key personnel, our business will suffer. Risks Related to Our Intellectual Property The protection of our intellectual property rights is critical to our success and any failure on our part to adequately maintain such rights would materially affect our business. Zegerid Products and Related PPI Technology Budesonide MMX and Rifamycin SV MMX Trade Secrets and Proprietary Know-how The duration and any potential negative outcome in the ongoing patent litigation with Par could adversely affect our financial condition and results of operations as it could result in the introduction of generic products prior to the expiration of the patents for Zegerid Capsules and Zegerid Powder for Oral Suspension, as well as in significant legal expenses and diversion of management time. Third parties may choose to file patent infringement claims against us, which litigation would be costly, time-consuming and distracting to management and could be materially adverse to our business. Our Zegerid products depend on technology licensed from the University of Missouri and any loss of our license rights would harm our business and seriously affect our ability to market our products. Risks Related to Our Financial Results and Need for Financing We have incurred significant operating losses since our inception, and we expect to incur significant additional operating losses and may not attain and sustain profitability. To the extent we need to raise additional funds in connection with the licensing or acquisition of new products or to continue our operations, we may be unable to raise capital when needed. Our quarterly financial results are likely to fluctuate significantly due to uncertainties about future sales levels for our currently marketed products and future costs associated with our development products. Our current and any future indebtedness under our loan agreement with Comerica could adversely affect our financial health. Covenants in our loan agreement with Comerica may limit our ability to operate our business. Our results of operations and liquidity needs could be materially negatively affected by market fluctuations and economic downturn. Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio. In connection with the reporting of our financial condition and results of operations, we are required to make estimates and judgments which involve uncertainties, and any significant differences between our estimates and actual results could have an adverse impact on our financial position, results of operations and cash flows. Risks Related to the Securities Markets and Ownership of Our Common Stock Our stock price has been and may continue to be volatile, and our stockholders may not be able to sell their shares at attractive prices. Our stock price could decline and our stockholders may suffer dilution in connection with future issuances of equity or debt securities. Future sales of our common stock by our stockholders may depress our stock price. We may become involved in securities or other class action litigation that could divert management s attention and harm our business. 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 adversely affect our stock price and prevent attempts by our stockholders to replace or remove our current management.

Full 10-K form ▸

1172480--3/6/2009--SANTARUS_INC