716646--6/14/2010--CLINICAL_DATA

related topics

{product, candidate, development}

{property, intellectual, protect}

{product, liability, claim}

{stock, price, share}

{competitive, industry, competition}

{financial, litigation, operation}

{stock, price, operating}

{provision, law, control}

{cost, regulation, environmental}

{control, financial, internal}

{acquisition, growth, future}

{personnel, key, retain}

{debt, indebtedness, cash}

{tax, income, asset}

{product, market, service}

Given our current product development efforts, which have resulted in significant net losses, we expect to incur further net losses for the foreseeable future. If we are unable to obtain marketing approval of vilazodone, our results of operations will suffer. We may not successfully develop or derive revenues from any products. We have never marketed a drug before, and if we are unable to establish an effective sales force and marketing infrastructure either directly or in collaboration with a third party, we may not be able to commercialize our product candidates successfully. If physicians and patients do not accept and use our drugs, we will not achieve sufficient product revenues and our business will suffer. If our products are not granted adequate reimbursement from third-party payors, we may be unable to successfully commercialize them and we may never achieve widespread market acceptance of our products. If we are unable to develop and/or in-license or otherwise acquire new products and technologies, we may not be able to grow our company successfully. Because a significant portion of our total assets are represented by goodwill and indefinite-lived intangible assets that are subject to mandatory annual and potentially interim impairment evaluations and definite-lived intangible assets that are reviewed for impairment if certain conditions exist, we could be required to write-off some or all of this goodwill and intangible assets, which may adversely affect our financial condition and results of operations. We might enter into new acquisitions that are difficult to integrate, disrupt our business, dilute stockholder value or divert management attention. We are dependent upon certain key personnel. In order to conduct clinical trials and to market our drugs, we will have to develop approved methods to produce these drugs using appropriate quality controls and at commercially viable rates. If we cannot successfully form and maintain suitable arrangements with third parties for the manufacturing of the products we may develop, our ability to develop or deliver products may be impaired. New drug development is a lengthy and complex process, and we may be unable to commercialize any of the products we develop. Our operations may be affected by unexpected problems frequently encountered in connection with the development and transition to other technologies and by the competitive environment in which we operate. Covenants in our convertible notes restrict our financial and operational flexibility. Risk Factors Relating to Our Intellectual Property If we are unable to protect effectively our intellectual property, we may not be able to operate our business and third parties may use our technology, both of which would impair our ability to compete in our markets. If third parties make or file claims of intellectual property infringement against us, or otherwise seek to establish their intellectual property rights, we may have to spend time and money in response and cease some of our operations. Any patent protection we obtain for our products may not prevent marketing of similar competing products. Any patents we obtain may be challenged by producers of generic drugs. Patents pending may not issue. We may be unable to achieve milestones contained in our licensing agreements and have our license revoked by our licensors. Risk Factors Relating to Regulatory Matters Preclinical and clinical trials are time consuming, expensive, and uncertain processes. Regulatory approval of vilazodone or other products may be delayed, may require additional studies to be conducted or may not be obtained. Even if our drug candidates obtain regulatory approval, we will be subject to on-going government regulation. Risks Related to Our Dependence on Third Parties We rely on third-party manufacturers and we or such third parties may encounter failures or difficulties that could delay the clinical development or regulatory approval of our drug candidates, or their ultimate commercial production if approved. We rely on third parties to conduct our clinical trials and many of our preclinical studies. If those parties do not successfully carry out their contractual duties or meet expected deadlines, our drug candidates may not advance in a timely manner or at all. Our operations involve hazardous materials and medical waste and are subject to environmental, health and safety controls and regulations. Any claim relating to our improper handling, storage or disposal of biological and hazardous materials could be time-consuming and costly, and may exceed our resources. Our business involves animal testing and changes in laws, regulations or accepted clinical procedures or social pressures could restrict our use of animals in testing and adversely affect our research and development efforts. Risk Factors Relating to Our Industry If we were sued for product liability, we could face substantial liabilities that may exceed our resources. We may not be able to compete successfully with other companies and government-sponsored entities in the development and marketing of products and services. In the U.S. there have been, and we expect there will continue to be, a number of federal and state proposals to reform the health care system in ways that could adversely impact the available reimbursement for, and therefore our ability to sell our products profitably. We operate in a very competitive environment. Risk Factors Relating to Our Common Stock Conversion of outstanding convertible notes and exercise of outstanding warrants could significantly dilute the ownership interests of existing stockholders. If the investors in our private placements sell their shares, which have been registered under the Securities Act, the market price of our common stock may decline significantly. Our directors, executive officers and their affiliated entities have substantial control over us and could limit the ability of other stockholders to influence the outcome of key transactions, including changes of control. The price of our common stock is volatile and could cause investors to lose a substantial part of their investment. We could be subject to class action litigation due to stock price volatility, which, if it occurs, will distract our management and could result in substantial costs or large judgments against us. Our corporate documents and Delaware Law make a takeover of our company more difficult, which could prevent certain changes in control and limit the market price of the common stock.

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716646--6/14/2010--CLINICAL_DATA_INC