1305409--2/22/2007--Valera_Pharmaceuticals

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{product, candidate, development}

{property, intellectual, protect}

{stock, price, share}

{product, liability, claim}

{stock, price, operating}

{acquisition, growth, future}

{provision, law, control}

{control, financial, internal}

{personnel, key, retain}

{product, market, service}

{investment, property, distribution}

{cost, operation, labor}

Risks Related to Our Business We are largely dependent on the success of Vantas, our first product to be approved for commercial sale by the FDA, and we cannot be certain that we will be able to successfully expand the commercialization of Vantas. We have a history of operating losses and may not achieve or sustain profitability. We are dependent on single suppliers for certain services and raw materials, including histrelin, that are necessary for the manufacture of our products. If any of these suppliers fail or are unable to perform in a timely and satisfactory manner, we may be unable to manufacture Vantas or some of our product candidates, which could delay sales of Vantas and hinder research and development of our product candidates. The successful commercialization of Vantas and any other products we develop will depend on obtaining reimbursement at adequate levels from private health insurers and Medicare/Medicaid for patient use of these products. We expect the reimbursement levels for Vantas to continue to decline, which will have an adverse effect on our net product sales. As a manufacturer of our products, we are subject to regulatory requirements. If we do not comply with such requirements, the development and sales of our products and our financial performance may be materially harmed. We may not be able to manufacture the Valstar (valrubicin) product or realize a return on our investment in this product candidate. We have limited sales, marketing and distribution experience and may be unable to successfully commercialize our products. We may not be able to obtain additional capital that may be necessary for growth and market penetration or to continue our operations. If products utilizing our technology fail to gain market acceptance, we may be unable to generate significant revenue. Our failure to recruit, retain, and motivate qualified management and scientific personnel could adversely affect us. We face substantial competition and our competitors may discover, develop or commercialize products similar to ours before or more successfully than we do. Our sales of Vantas and any other products we may develop could suffer from competition by generic products. We face a risk of product liability claims and may not be able to obtain adequate insurance. The approved drugs used in Vantas and our product candidates, as well as the implant itself, may cause side effects and we may not be able to achieve an acceptable level of side effect risks, compared to the potential therapeutic benefits, for our product candidates. Risks Related to Clinical Trials and Other Regulatory Matters If our clinical trials are unsuccessful or significantly delayed, or if we do not complete our clinical trials, we may not be able to commercialize our product candidates. The development and approval process may take many years, require substantial resources and may never lead to the approval of a product. With the exception of Vantas, we do not have, and may never obtain, the regulatory approvals we need to market our product candidates. Our failure to obtain, or delays in obtaining, regulatory approvals would have a material adverse effect on our business, financial condition and results of operations. Even if we receive regulatory approval for our product candidates, our approval may be limited and, we will be subject to significant ongoing regulatory obligations and oversight. The regulatory approval process outside the United States varies depending on foreign regulatory requirements, and failure to obtain regulatory approval in foreign jurisdictions would prevent the marketing of our products in those jurisdictions. We rely on third parties to conduct certain of the clinical trials for our product candidates, and if they do not perform their obligations to us, we may not be able to obtain regulatory approvals for our product candidates. Risks Related to Intellectual Property Our success depends on the protection of our intellectual property rights, and our failure to secure these rights would materially harm our business. If we are unable to protect the confidentiality of our proprietary information and know-how, our competitive position would be impaired and our business could be adversely affected. Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Protecting our intellectual property is expensive and time consuming and could harm our business. Risks Related to Our Common Stock The trading price of the shares of our common stock could be highly volatile. The ownership interests of our officers, directors and largest stockholders could conflict with the interests of our other stockholders. Our use of our initial public offering proceeds may not yield a favorable return on your investment. Our common stock has been publicly traded for a short time and an active trading market may not be sustained. Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay and discourage takeover attempts that stockholders may consider favorable. Future sales of our common stock may depress our stock price. Our quarterly financial results are likely to fluctuate significantly because our sales prospects are uncertain and, as a result, our stock price may decline. Risks Related to Our Potential Merger with Indevus Pharmaceuticals The merger is subject to conditions to closing that could result in the merger being delayed or not consummated, which could negatively impact our stock price and future business and operations. Failure to complete the merger could negatively impact the market price of our common stock and the future business and financial results of our Company. We will incur substantial expenses whether or not the merger is completed.

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1305409--2/22/2007--Valera_Pharmaceuticals_Inc