865231--3/13/2006--CELL_GENESYS

related topics

{property, intellectual, protect}

{product, candidate, development}

{stock, price, share}

{product, liability, claim}

{acquisition, growth, future}

{control, financial, internal}

{regulation, change, law}

{tax, income, asset}

{product, market, service}

{financial, litigation, operation}

{operation, natural, condition}

{personnel, key, retain}

{customer, product, revenue}

{provision, law, control}

{debt, indebtedness, cash}

{investment, property, distribution}

{regulation, government, change}

{cost, regulation, environmental}

We have not been profitable absent the gains on sales of Abgenix common stock and certain upfront or non-recurring license fees. We expect to continue to incur substantial losses and negative cash flow from operations and may not become profitable in the future. We will need substantial additional funds to continue operations, and our ability to generate funds depends on many factors beyond our control. We plan to raise additional funds through collaborative business relationships, additional equity or debt financings, or otherwise, but we may not be able to do any of the foregoing on favorable terms, or at all. We plan to use potential future operating losses and our federal and state net operating loss carryforwards to offset taxable income from revenue generated from operations or from the sale of Abgenix common stock. However, our ability to use net operating loss carryforwards could be limited as a result of potential future issuances of equity securities. Our ability to manufacture our products is uncertain, which may delay or impair our ability to develop, test and commercialize our products. We depend on clinical trial arrangements with public and private medical institutions to advance our technology, and the loss of these arrangements could impair the development of our products. Failure to comply with foreign regulatory requirements governing human clinical trials and marketing approval for drugs and devices could prevent us from conducting our clinical trials or selling our products in foreign markets, which may adversely affect our operating results and financial condition. If our proposed products are not effectively protected by issued patents or if we are not otherwise able to protect our proprietary information, we will be more vulnerable to competitors, and our business could be adversely affected. Our intellectual property and freedom to operate may be challenged by others, which, if such a challenge were successful, could have a material adverse effect on our business, results of operations, financial condition and cash flow. We may have to engage in litigation, which could result in substantial cost, to enforce our patents or to determine the scope and validity of other parties proprietary rights. Our competitive position may be adversely affected by our limited ability to protect and control unpatented trade secrets, know-how and other technological innovation. Our competitors may develop therapies for the diseases that we are targeting that are more advanced or more effective than ours, which could adversely affect our competitive position, or they may commercialize products more rapidly than we do, which may adversely affect our competitive position. To the extent we depend on strategic partners to sell, market or distribute our products, we will have reduced control over the success of the sales, marketing and distribution of our future products. We may in the future be exposed to product liability claims, which could adversely affect our business, results of operations, financial condition and cash flow. Our business, financial condition and results of operations could suffer as a result of future strategic acquisitions and investments. Our operations are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, terrorist activity and other events beyond our control, which could result in a material adverse effect on our business. We depend on our key technical and management personnel to advance our technology, and the loss of these personnel could impair the development of our products. Various materials that we use are purchased from single qualified suppliers, which could result in our inability to secure sufficient materials to conduct our business. Inventions or processes discovered by our outside scientific collaborators may not become our property, which may affect our competitive position. The prices of our common stock and convertible senior notes are likely to continue to be volatile in the future. Our stockholders may be diluted by the conversion of outstanding convertible senior notes. Our stockholders may be diluted, or our common stock price may be adversely affected, by the exercise of outstanding stock options or other issuances of our common stock. We have adopted anti-takeover defenses that could make it difficult for another company to acquire control of us or could limit the price investors might be willing to pay for our stock. Due to the potential value of our strategic investments, we could be determined to be an investment company, and if such a determination were made, we would become subject to significant regulation that would adversely affect our business. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, maintain investor confidence or prevent fraud. Recent accounting pronouncements will impact our future results of operations. Risks Related to Our Industry In order for our products to be offered to the public, they must undergo extensive clinical testing and receive approval from the FDA and other regulatory agencies, which could delay or prevent the commercialization of our products. Even if our products are approved by regulatory authorities, if we fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market. We are subject to federal, state, local and foreign laws and regulations, and complying with these may cause us to incur significant costs. Reimbursement from third-party payers may become more restricted in the future, which may reduce demand for our products. The continuing efforts of governmental and third-party payers to contain or reduce the costs of healthcare may impair our future revenues and profitability.

Full 10-K form ▸

865231--3/13/2006--CELL_GENESYS_INC