716054--3/31/2010--CYPRESS_BIOSCIENCE

related topics

{product, candidate, development}

{property, intellectual, protect}

{product, liability, claim}

{control, financial, internal}

{regulation, government, change}

{stock, price, operating}

{tax, income, asset}

{provision, law, control}

{cost, regulation, environmental}

{cost, operation, labor}

{capital, credit, financial}

{regulation, change, law}

{personnel, key, retain}

{loan, real, estate}

If third-party payers, including managed care organizations and Medicare, do not provide reimbursement for Avise PG or Avise MCV, their commercial success could be compromised. We have recently substantially increased the size of our organization and may need to continue to increase the size of our organization, and we may experience difficulties in managing growth. We are dependent on our collaboration with Forest Laboratories to commercialize Savella and to obtain additional regulatory approvals. All of our personalized medicine services are performed at a single laboratory and, in the event this facility was to be affected by man-made or natural disasters, our personalized medicine services operations could be severely impaired. Failure to timely or accurately bill for our personalized medicine services could have a material adverse effect on our personalized medicine services net revenues and bad debt expense. We have a financial risk related to collections for our personalized medicine services. We rely upon an exclusive license from Pierre Fabre in order to develop and sell Savella, and our ability to pursue the further development and commercialization of Savella for the management of FM depends upon the continuation of our license from Pierre Fabre. We rely upon Pierre Fabre as our exclusive supplier of the active ingredient in Savella and if Pierre Fabre fails to supply us sufficient quantities of the active ingredient it may delay or prevent us from further commercializing Savella. Our agreements with Pierre Fabre and Forest Laboratories restrict our ability to develop specified compounds, which limits how we can expand our product candidates. Provisions in our collaboration agreement with Forest Laboratories and our license agreement with Pierre Fabre may prevent or delay a change in control. We are at an early stage of commercialization and we may never generate any significant revenues. Our failure to comply with the HIPAA security and privacy regulations and other state regulations may increase our operational costs. Our business presents the risk of product liability claims. The FDA approval of any future product candidate is uncertain and will involve the commitment of substantial time and resources. In light of our regulatory approval for Savella and if we ever receive regulatory approval for any other future product candidate, and secure and maintain regulatory approvals related to our personalized medicine services, we will be subject to ongoing FDA, CLIA and state regulatory obligations and continuing regulatory review by applicable regulatory authorities. If advances in technology allow others to perform and/or provide personalized medicine services which are similar to or better than ours or to perform such services in a more efficient or cost-effective manner than is currently possible, our personalized medicine services may not meet with demand in the marketplace or the demand for these services may decrease. The FDA may decide to exercise enforcement discretion and require FDA approval or clearance of our personalized medicine services. We rely on third parties to conduct all of our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for any of our other future product candidates. Even if our product candidates are approved, the market may not accept these products or services or our existing products and services. Our competitors may develop and market products and services that are less expensive, more effective or safer, which may diminish or eliminate the commercial success of any products or services we may commercialize. We are subject to uncertainty relating to health care reform measures and reimbursement policies which, if not favorable to our products or services or product candidates, could hinder or prevent the commercial success of our products, services or product candidates. We rely on our employees and consultants for their scientific and technical expertise in connection with our business operations. We have a history of operating losses and we may never be profitable. We will need substantial additional funding and may be unable to raise capital when needed, which could force us to scale back or eliminate our sales efforts and the development of future product candidates and personalized medicine services or to discontinue pursuing any proposed acquisitions, or which could adversely affect our ability to realize the expected benefits of any completed acquisitions. Raising additional funds by issuing securities, or through collaboration and licensing arrangements, may cause dilution to existing stockholders, restrict our operations, or require us to relinquish propriety rights. The investment of our cash balance and short-term investments are subject to risks which may cause losses and affect the liquidity of these investments. We may lose our net operating loss carryforwards, which could prevent us from offsetting future taxable income. Our stock price has been very volatile and will likely continue to be volatile. The concentration of ownership among our existing officers, directors and principal stockholders may result in the entrenchment of management, prevent other stockholders from influencing significant corporate decisions and depress our stock price. 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. We expect to continue incurring significant costs as a result of enacted and proposed changes in laws and regulations relating to corporate governance matters. If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our ability to operate our business and investors view of us. Risks related to our intellectual property We rely primarily on method of use patents to protect our proprietary technology for the sales of Savella, and our ability to compete may decrease or be eliminated if we are not able to protect our proprietary technology. Our ability to compete may decline if we do not adequately protect our proprietary rights. A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and costly and an unfavorable outcome could harm our business. The patent applications of pharmaceutical, biotechnology and personalized medicine companies involve highly complex legal and factual questions, which could negatively impact our patent position.

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716054--3/31/2010--CYPRESS_BIOSCIENCE_INC