1183765--3/8/2010--THRESHOLD_PHARMACEUTICALS

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RISKS RELATED TO OUR BUSINESS Risks Related to Drug Discovery, Development and Commercialization We are substantially dependent upon the success of TH-302. Clinical trials may not demonstrate efficacy or lead to regulatory approval and preliminary results may not be confirmed. Our product candidates must undergo rigorous clinical testing, the results of which are uncertain and could substantially delay or prevent us from bringing them to market. Pre-clinical studies of our product candidates may not predict the results of their human clinical trials. We are subject to significant regulatory approval requirements, which could delay, prevent or limit our ability to market our product candidates. Our product candidates are based on targeting the microenvironment of solid tumors, which currently are unproven approaches to therapeutic intervention. Our product candidates may have undesirable side effects that prevent or delay their regulatory approval or limit their use if approved. Delays in clinical testing could result in increased costs to us and delay our ability to obtain regulatory approval and commercialize our product candidates. Orphan drug exclusivity affords us limited protection, and if another party obtains orphan drug exclusivity for the drugs and indications we are targeting, we may be precluded from commercializing our product candidates in those indications. Even if we obtain regulatory approval, our marketed drugs will be subject to ongoing regulatory review. If we fail to comply with continuing United States and foreign regulations, we could lose our approvals to market drugs and our business would be seriously harmed. The FDA and foreign regulatory authorities may impose significant restrictions on the indicated uses and marketing of pharmaceutical products. We are, and in the future may be, subject to new federal and state requirements to submit information on our open and completed clinical trials to public registries and databases. Risks Related to Our Financial Performance and Operations We have incurred losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future, and our future profitability is uncertain. We are likely to require substantial additional funding and may be unable to raise capital when needed, which could force us to delay, reduce or eliminate our drug discovery, product development and commercialization activities. Our success depends in part on retaining and motivating key personnel and, if we fail to do so, it may be more difficult for us to execute our business strategy. As a small organization we are dependent on key employees and may need to hire additional personnel to execute our business strategy successfully. Our facilities in California are located near an earthquake fault, and an earthquake or other natural disaster or resource shortage could disrupt our operations. Risks Related to Our Dependence on Third Parties We rely on third parties to manufacture TH-302 and 2DG. If these parties do not manufacture the active pharmaceutical ingredients or finished drug products of satisfactory quality, in a timely manner, in sufficient quantities or at an acceptable cost, clinical development and commercialization of our product candidates could be delayed. We have no control over our manufacturers and suppliers compliance with manufacturing regulations, and their failure to comply could result in an interruption in the supply of our product candidates. We rely on third parties to conduct some of our clinical trials, and their failure to perform their obligations in a timely or competent manner may delay development and commercialization of our product candidates. We may rely on strategic collaborators to market and sell our products. We are dependent on Eleison to develop and commercialize glufosfamide Risks Related to Our Intellectual Property Hypoxia activated prodrug technology is not a platform technology broadly protected by patents, and others may be able to develop competitive drugs using this approach. 2DG is a known compound that is not protected by patents on the composition of the molecule. Targeting the increased uptake of glucose and the increased reliance on glycolysis as an energy source in cancer cells is not protected by patents, and others may be able to develop competitive drugs using this approach. We are dependent on patents and proprietary technology, both our own and those licensed from others. If we or our licensors fail to adequately protect this intellectual property or if we otherwise do not have exclusivity for the marketing of our products, our ability to commercialize products could suffer. We rely on trade secrets and other forms of non-patent intellectual property protection. If we are unable to protect our trade secrets, other companies may be able to compete more effectively against us. If we are sued for infringing intellectual property rights of third parties or if we are forced to engage in an interference proceeding, it will be costly and time consuming, and an unfavorable outcome in that litigation or interference would have a material adverse effect on our business. Risks Related To Our Industry If our competitors are able to develop and market products that are more effective, safer or more affordable than ours, or obtain marketing approval before we do, our commercial opportunities may be limited. There is a substantial risk of product liability claims in our business. If we do not obtain sufficient liability insurance, a product liability claim could result in substantial liabilities. Even if we receive regulatory approval to market our product candidates, the market may not be receptive to our product candidates upon their commercial introduction, which would negatively affect our ability to achieve profitability. If third-party payors do not adequately reimburse patients for any of our product candidates, if approved for marketing, we may not be successful in selling them. Foreign governments tend to impose strict price controls, which may adversely affect our future profitability. We may incur significant costs complying with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities. We may not be able to conduct, or contract with others to conduct, animal testing in the future, which could harm our research and development activities. Risks Related To Our Common Stock We may not maintain the listing of our common stock on the NASDAQ Capital Market. A significant number of shares of our common stock are subject to issuance upon exercise of outstanding warrants, which upon such exercise would result in dilution to our security holders. The price of our common stock has been and may continue to be volatile. If our officers, directors and largest stockholders choose to act together, they may be able to control our management and operations, acting in their best interests and not necessarily those of other stockholders. Our certificate of incorporation, our bylaws and Delaware law contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

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1183765--3/8/2010--THRESHOLD_PHARMACEUTICALS_INC