1340744--3/11/2009--Altus_Pharmaceuticals

related topics

{product, candidate, development}

{stock, price, share}

{product, liability, claim}

{property, intellectual, protect}

{provision, law, control}

{personnel, key, retain}

{cost, operation, labor}

{control, financial, internal}

{acquisition, growth, future}

{financial, litigation, operation}

{cost, regulation, environmental}

{stock, price, operating}

We are obligated under the terms of our redeemable preferred stock held by Vertex Pharmaceuticals Incorporated to make a significant payment upon the occurrence of a specified event. We may not have sufficient resources to make this payment when it becomes due. We may have contractual liabilities in connection with our discontinuation of the Trizytek program. We have a history of net losses, which we expect to continue for at least several years and, as a result, we are unable to predict the extent of any future losses or when, if ever, we will achieve, or be able to maintain, profitability. Raising additional capital by issuing securities or through collaboration and licensing arrangements may cause dilution to existing stockholders, restrict our operations or require us to relinquish proprietary rights. In order to fund our operations in the future, we may need to comply with NASDAQ Marketplace Rules that require stockholder approval of certain financings, which may limit our ability to raise sufficient capital. Our competitors may develop products that are less expensive, safer or more effective, which may diminish or prevent the commercial success of any product candidate that we bring to market. We may not be successful in establishing and maintaining collaborations on acceptable terms, which could adversely affect our ability to develop and commercialize our products. If we enter into new collaborative agreements, our collaborators and we may not achieve our projected research and development goals in the time frames we announce and expect, which could have an adverse impact on our business and could cause our stock price to decline. Risks Related to Development of Our Product Candidates If we, or if we enter into future collaborative agreements, our collaborators, are unable to commercialize our lead product candidates, or experience significant delays in doing so, our business will be materially harmed. Because our product candidates are in clinical development, there is a significant risk of failure. If we observe serious or other adverse events during the time our product candidates are in development or after our products are approved and on the market, we may be required to perform lengthy additional clinical trials, may be denied regulatory approval of such products, may be forced to change the labeling of such products or may be required to withdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues. We may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates. Risks Related to Regulatory Approval of Our Product Candidates and Other Government Regulations If we or our future collaborators do not obtain required regulatory approvals, we will be unable to commercialize our product candidates, and our ability to generate revenue will be materially impaired. Failure to obtain regulatory approvals or to comply with regulatory requirements in foreign jurisdictions would prevent us or any collaborator from marketing our products internationally. Our product candidates will remain subject to ongoing regulatory requirements even if they receive marketing approval, and if we fail to comply with these requirements, we could lose these approvals, and the sales of any approved commercial products could be suspended. We deal with hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business. Risks Related to Our Dependence on Third Parties We have no manufacturing capacity, and we have relied and expect to continue to rely on third-party manufacturers to produce our product candidates. We currently rely on a limited number of manufacturers for the clinical and commercial supply of each of our product candidates, which could delay or prevent the clinical development and commercialization of our product candidates. Our contract manufacturers may encounter difficulties or unforeseen expenses in connection with the commercial scale-up of manufacturing activities for our product candidates Any performance failure on the part of a contract manufacturer could delay clinical development or regulatory approval of our product candidates or commercialization of any approved products. We rely on third parties to conduct, supervise and monitor our clinical trials, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such trials. Because we may enter into in the future sales or collaboration transactions, we may be dependent upon our collaborators, and we may be unable to prevent them from taking actions that may be harmful to our business or inconsistent with our business strategy. Our collaborations with outside scientists and consultants may be subject to restriction and change. Risks Related to Commercialization of Our Product Candidates If physicians and patients do not accept our future products, we may be unable to generate significant revenue, if any. If the government and third-party payors fail to provide coverage and adequate payment rates for our future products, if any, our revenue and prospects for profitability will be harmed. Foreign governments tend to impose strict price controls on pharmaceutical products, which may adversely affect our revenues, if any. There is a substantial risk of product liability claims in our business. If we are unable to obtain sufficient insurance, a product liability claim against us could adversely affect our business. Risks Related to Our Intellectual Property If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate to provide us with market exclusivity, our ability to successfully commercialize our product candidates will be harmed and we may not be able to operate our business profitably. If third parties successfully assert that we have infringed their patents and proprietary rights or challenge the validity of our patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time consuming, and could delay or prevent the development or commercialization of our product candidates. If we are unable to protect our trade secrets, we may be unable to protect our interests in proprietary technology, processes and know-how that is not patentable or for which we have elected not to seek patent protection. If we fail to comply with our obligations in the agreements under which we licensed development, commercialization or other technology rights to products or technology from third parties, we could lose license rights that are important to our business or incur financial obligations based on our exercise of such license rights. Risks Related to Our Employees and Growth Our future success depends on our ability to attract, retain and motivate key executives and personnel and to attract, retain and motivate qualified personnel. As we evolve from a company primarily involved in drug research and development into one that may become involved in the commercialization of drug products, we may have difficulty managing our growth, which could disrupt our operations. Risks Related to Our Common Stock and Public Company Compliance Requirements Our stock price has been and is likely to continue to be volatile. One of our stockholders has substantial influence over us which could delay or prevent a change in corporate control or result in the entrenchment of management and the board of directors. A significant portion of our total outstanding shares may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well. Provisions of our charter, bylaws, and Delaware law may make an acquisition of us or a change in our management more difficult.

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1340744--3/11/2009--Altus_Pharmaceuticals_Inc.