356830--3/10/2006--OSCIENT_PHARMACEUTICALS

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{personnel, key, retain}

{stock, price, share}

{acquisition, growth, future}

{debt, indebtedness, cash}

{control, financial, internal}

{cost, regulation, environmental}

RISKS RELATED TO OUR BUSINESS We have a history of significant operating losses and expect these losses to continue in the future. Our business will be very dependent on the commercial success of FACTIVE and TESTIM. We will likely need to raise additional funds in the future. Future fund raising could dilute the ownership interests of our stockholders. We will need to continue to develop marketing and sales capabilities to successfully commercialize FACTIVE tablets, TESTIM and our other product candidates. Our product and product candidates will face significant competition in the marketplace. We cannot expand the indications for which we will market FACTIVE unless we receive FDA approval for each additional indication. Failure to expand these indications will limit the size of the commercial market for FACTIVE Seasonal fluctuations in demand for FACTIVE may cause our operating results to vary significantly from quarter to quarter. We as well as our partners are subject to numerous complex regulatory requirements and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business. Testosterone is classified by the U.S. Drug Enforcement Agency as a controlled substance and our failure or Auxilium s failure to comply with these heightened regulations could harm our business. If testosterone replacement therapies are perceived to create or do create health risks, sales of TESTIM may be adversely affected. Sales of TESTIM will be highly dependent upon physician acceptance of testosterone replacement therapy for the treatment of hypogonadism. We will depend on third parties to manufacture and distribute our products and product candidates, including FACTIVE tablets, TESTIM and Ramoplanin. We will depend on third parties to manage our product supply chain for FACTIVE tablets and TESTIM. Wholesalers, pharmacies and hospitals may not maintain adequate distribution for our products. The development and commercialization of our products may be terminated or delayed, and the costs of development and commercialization may increase, if third parties who we rely on to support the development and commercialization of our products do not fulfill their obligations. Clinical trials are costly, time consuming and unpredictable, and we have limited experience conducting and managing necessary preclinical and clinical trials for our product candidates. Our failure to acquire and develop additional product candidates or approved products will impair our ability to grow. Results related to post-marketing studies could restrict our ability to commercialize FACTIVE tablets. Our intellectual property protection and other protections may be inadequate to protect our products. We rely on Auxilium s license of Bentley Pharmaceuticals intellectual property which provides limited patent protection for TESTIM. We may infringe the intellectual property rights of third parties and may become involved in expensive intellectual property litigation. International patent protection is uncertain. Our proprietary position may depend on our ability to protect our proprietary confidential information and trade secrets. We will bear substantial responsibilities under our license agreement for FACTIVE, our co-promotion agreement for TESTIM and our sublicense agreement to Pfizer, S.A. de C.V., and there can be no assurance that we will successfully fulfill our responsibilities. We will depend on key personnel in a highly competitive market for skilled personnel. Changes in the expensing of stock-based compensation will result in unfavorable accounting charges and may require us to change our compensation practices. Any change in our compensation practices may adversely affect our ability to attract and retain qualified scientific, technical and business personnel. Sales of FACTIVE in European countries in which we do not have rights to market the product could adversely affect sales in the European countries in which we have exclusive rights to market the product. Failure to secure distribution partners or obtain regulatory approval in foreign jurisdictions will prevent us from marketing FACTIVE abroad. Our debt obligations expose us to risks that could adversely affect our business, operating results and financial condition. We will rely upon alliance partners from our previous genomics-based research and alliance business as a means of developing and commercializing related products. RISKS RELATED TO OUR INDUSTRY Health care insurers and other payers may not pay for our products or may impose limits on reimbursement. Wholesalers, pharmacies and hospitals may not provide adequate distribution for our products. If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, we could be forced to pay substantial damage awards. RISKS RELATED TO THE SECURITIES MARKET Our stock price is highly volatile. Multiple factors beyond our control may cause fluctuations in our operating results and may cause our business to suffer.

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356830--3/10/2006--OSCIENT_PHARMACEUTICALS_CORP