874443--3/31/2008--GENELABS_TECHNOLOGIES_INC

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{product, liability, claim}

Although we met the standards for continued listing on the Nasdaq Capital Market as of the end of the 2007 fiscal year, our share price has recently traded below $1.00. There is no guarantee that we will be able to regain compliance with these standards and avoid delisting in the future, which may substantially decrease the value of your investment in Genelabs. Many of our drug candidates are still in the early stages of development, and all of our drug candidates remain subject to clinical testing and regulatory approval. If we are unable to identify drug candidates that are successfully developed and tested, we will not be successful. The financial terms of future collaborative or licensing arrangements could result in dilution of our share value. We may be unable to obtain patents or protect our intellectual property rights, or others could assert their patents against us. If third parties on whom we rely do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our product candidates. The results of our clinical trial of Prestara, Genelabs drug candidate for systemic lupus erythematosus, were not positive, substantially decreasing the probability that Prestara will ever be approved for marketing and thus diminishing our business prospects. We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than us. We may be unsuccessful in finding a collaboration partner for Prestara, which could harm our ability to recover our investment in Prestara. Difficulties in financing and integrating future in-licensed or acquired drug programs could have a material adverse impact on our future growth. We may be unable to attract or retain key personnel. Our facilities are located near an earthquake fault, and an earthquake could disrupt our operations and adversely effect our financial results. Our activities involve hazardous materials and improper handling of these materials by our employees or agents could expose us to significant legal and financial penalties. We may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage against potential liabilities in order to protect ourselves against product liability claims. Risks Relating to Owning Our Stock Because our stock is volatile, the value of your investment in Genelabs may substantially decrease.

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874443--3/31/2008--GENELABS_TECHNOLOGIES_INC_/CA