1385830--3/19/2010--NeurogesX

related topics

{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{property, intellectual, protect}

{acquisition, growth, future}

{stock, price, operating}

{control, financial, internal}

{regulation, change, law}

{provision, law, control}

{operation, international, foreign}

{personnel, key, retain}

{loan, real, estate}

Risks Related to our Business Our success depends on our ability to effectively commercialize our lead product Qutenza (capsaicin) 8% patch. Our strategy for launching Qutenza in the United States may result in lower than expected near term revenue and could result in a lower overall revenue potential for Qutenza. We will require substantial additional funding and may be unable to raise capital when needed. Our success will depend, in part, on the successful efforts of our collaboration partner in the European Union, certain countries in Eastern Europe, the Middle East and Africa. We have no manufacturing capabilities and depend on other parties for our manufacturing operations. If these manufacturers fail to meet our requirements and strict regulatory requirements, Qutenza commercialization efforts and further product development efforts may be negatively affected. If we are unable to establish a sales, marketing and distribution infrastructure or enter into collaborations with partners to perform these functions, we will not be successful in commercializing Qutenza or our product candidates. Qutenza and our other product candidates may never achieve market acceptance. If physicians are not adequately reimbursed for their time and services in administering Qutenza, it is likely that they will not prescribe Qutenza. Qutenza will be subject to ongoing regulatory requirements and may face regulatory or enforcement action. We are subject to various regulations pertaining to the marketing of our products. The efforts of government entities and third party payers to contain or reduce the costs of health care may adversely affect our sales and limit the commercial success of our products. We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for Qutenza or our product candidates and may have to limit its commercialization. Our products are expected to face substantial competition which may result in others discovering, developing or commercializing products before or more successfully than us or our collaborators. We may not be able to maintain orphan drug exclusivity for Qutenza in PHN and HIV-DSP or obtain orphan designation in additional indications or product candidates. We intend to rely, in part on Hatch-Waxman Act data exclusivity or equivalent regulatory data exclusivity protection in other jurisdictions for Qutenza. Our fast track designation for development of Qutenza for management of pain associated with HIV-associated neuropathy may not actually lead to a faster development or regulatory review or approval process. Our clinical trials may fail to demonstrate adequately the safety and efficacy of our product candidates, which could prevent or delay regulatory approval and commercialization. Delays in the commencement or completion of clinical testing could result in increased costs to us and delay our ability to generate revenues. We rely on third parties to conduct our non-clinical studies and clinical trials. If these third parties do not perform as contractually required or otherwise expected, we may not be able to obtain regulatory approval for our product candidates. Even though certain of our clinical trials for Qutenza have met their primary endpoints, certain other studies have not met their primary endpoints and, our clinical trials for other indications, if we or our collaborator decide to conduct them, may not succeed, which would adversely impact our long term success. We depend on our key personnel. If we are not able to retain them, our business will suffer. Risks Related to Our Finances and Capital Requirements We have incurred operating losses in each year since inception and expect to continue to incur substantial and increasing losses for the foreseeable future. If we do not raise additional capital, we may be forced to delay; reduce or eliminate our commercialization efforts or development programs. Raising additional funds by issuing securities or through licensing arrangements may cause dilution to existing stockholders, restrict our operations or require us to relinquish proprietary rights. Risks Related to our Intellectual Property The commercial success, if any, of Qutenza depends, in part, on the rights we have under certain patents. If we are unable to maintain and enforce our proprietary rights, we may not be able to compete effectively or operate profitably. If we are sued for infringing intellectual property rights of other parties, such litigation will be costly and time consuming, and an unfavorable outcome would have a significant adverse effect on our business. We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights. If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are important to our business. We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers. Risks Related to an Investment in our Common Stock We expect that our stock price will fluctuate significantly, and you may not be able to resell your shares at or above your investment price. If we fail to meet the requirements for continued listing on the NASDAQ Global Market and do not meet initial listing requirements to transfer to the NASDAQ Capital Market, our common stock could be delisted from trading, which would adversely affect the liquidity of our common stock and our ability to raise additional capital. We will continue to incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could affect our operating results. If the ownership of our common stock continues to be highly concentrated, it may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline. Future sales of shares by existing stockholders could cause our stock price to decline. Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management. Events in the credit markets have, and will continue to, impact our investment returns. We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.

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1385830--3/19/2010--NeurogesX_Inc