872589--2/28/2006--REGENERON_PHARMACEUTICALS

related topics

{product, candidate, development}

{property, intellectual, protect}

{cost, regulation, environmental}

{stock, price, operating}

{product, liability, claim}

{stock, price, share}

{regulation, change, law}

{control, financial, internal}

{debt, indebtedness, cash}

{personnel, key, retain}

{customer, product, revenue}

We have a significant amount of debt and may have insufficient cash to satisfy our debt service and repayment obligations. In addition, the amount of our debt could impede our operations and flexibility. We have adopted, effective January 1, 2005, the fair market value based method of accounting for stock-based employee compensation. This will materially increase operating expenses in our Statement of Operations, primarily due to non-cash compensation costs related to stock options. Risks Related to Development of Our Product Candidates Successful development of any of our product candidates is highly uncertain. Clinical trials required for our product candidates are expensive and time-consuming, and their outcome is highly uncertain. If any of our drug trials are delayed or achieve unfavorable results, we will have to delay or may be unable to obtain regulatory approval for our product candidates. The development of serious or life-threatening side effects with any of our product candidates would lead to delay or discontinuation of development, which could severely harm our business. Our product candidates in development are recombinant proteins that could cause an immune response, resulting in the creation of harmful or neutralizing antibodies against the therapeutic protein. We may be unable to formulate or manufacture our product candidates in a way that is suitable for clinical or commercial use. Risks Related to Intellectual Property If we cannot protect the confidentiality of our trade secrets or our patents are insufficient to protect our proprietary rights, our business and competitive position will be harmed. We may be restricted in our development and/or commercialization activities by, and could be subject to damage awards if we are found to have infringed, third party patents or other proprietary rights. If we do not obtain regulatory approval for our product candidates, we will not be able to market or sell them. If the testing or use of our products harms people, we could be subject to costly and damaging product liability claims. We could also face costly and damaging claims arising from employment law, securities law, environmental law, or other applicable laws governing our operations. Our operations may involve hazardous materials and are subject to environmental, health, and safety laws and regulations. We may incur substantial liability arising from our activities involving the use of hazardous materials. Changes in the securities laws and regulations have increased, and are likely to continue to increase, our costs. In future years, if we or our independent registered public accounting firm are unable to conclude that our internal control over financial reporting is effective, the market value of our common stock could be adversely affected. Risks Related to Our Dependence on Third Parties If our collaboration with sanofi-aventis for the VEGF Trap is terminated, our business operations and our ability to develop, manufacture, and commercialize the VEGF Trap in the time expected, or at all, would be harmed. Our collaborators and service providers may fail to perform adequately in their efforts to support the development, manufacture, and commercialization of our drug candidates. Risks Related to the Manufacture of Our Product Candidates We have limited manufacturing capacity, which could inhibit our ability to successfully develop or commercialize our drugs. If any of our clinical programs are discontinued, we may face costs related to the unused capacity at our manufacturing facilities. Certain of our raw materials are single-sourced from third parties; third-party supply failures could adversely affect our ability to supply our products. Risks Related to Commercialization of Products If we are unable to establish sales, marketing, and distribution capabilities, or enter into agreements with third parties to do so, we will be unable to successfully market and sell future products. Even if our product candidates are approved for marketing, their commercial success is highly uncertain because our competitors may get to the marketplace before we do with better or lower cost drugs or the market for our product candidates may be too small to support commercialization or sufficient profitability. The successful commercialization of our product candidates will depend on obtaining coverage and reimbursement for use of these products from third-party payers. We are dependent on our key personnel and if we cannot recruit and retain leaders in our research, development, manufacturing, and commercial organizations, our business will be harmed. Risks Related to Our Common Stock Our stock price is extremely volatile. Future sales of our common stock by our significant shareholders or us may depress our stock price and impair our ability to raise funds in new share offerings. Our existing shareholders may be able to exert significant influence over matters requiring shareholder approval.

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872589--2/28/2006--REGENERON_PHARMACEUTICALS_INC