875622--3/15/2010--BIOSPECIFICS_TECHNOLOGIES

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Risks Related to Our Limited Sources of Revenue Our future revenue is primarily dependent upon option, milestone and contingent royalty payments from Auxilium and technical assistance payments and contingent earn out payments from DFB. Our dependence upon revenue from Auxilium and DFB make us subject to the commercialization and other risk factors affecting those two companies over which we have limited or no control. Unstable market conditions may have serious adverse consequences on our business. Risks Related to Clinical Trials We have a limited supply of clinical material, which may limit our ability to conduct other clinical trials and to obtain the associated option, milestone and contingent royalty payments under the Auxilium Agreement. If clinical trials for our potential new indications are delayed, we may not be able to obtain option, milestone or royalty payments under the Auxilium Agreement for new indications. Risks Related to Our Agreements with Auxilium and DFB Our ability to conduct clinical trials and develop products for dermal formulations for topical or injectable administration of collagenase is limited by the agreements we have signed with Auxilium and DFB. Risks Related to Our Limited Financial Resources If we are unable to obtain option, milestone, earn out and royalty payments from Auxilium or DFB or meet our needs for additional funding from other sources, we may be required to limit, scale back or cease our operations. In order to finance and to secure the rights to conduct clinical trials for products we have licensed to Auxilium, we have granted to third parties significant rights to share in royalty payments received by us. Risks Related to Regulatory Requirements We are subject to numerous complex regulatory requirements and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business. Our corporate compliance program cannot guarantee that we are in compliance with all potentially applicable laws and regulations and we have incurred and will continue to incur costs relating to compliance with applicable laws and regulations. We may fail to maintain effective internal controls over external financial reporting or such controls may fail or be circumvented. Risks Related to Growth and Employees Our failure to successfully in-license or acquire additional technologies, product candidates or approved products could impair our ability to grow or continue to operate. Even if we are able to develop any product candidates for additional indications of injectable collagenase, we may not be able to obtain option, milestone or royalty payments under the Auxilium Agreement, which could impair our ability to grow and could cause a decline in the price of our common stock. Adverse events or lack of efficacy in clinical trials may force us and/or our partners upon whom we are wholly dependent to stop development of our product candidates or prevent regulatory approval of our product candidates or significant safety issues could arise after regulatory approval of our products, any of which could materially harm our business. We face competition in our product development efforts from pharmaceutical and biotechnology companies, universities and other not-for-profit institutions. Because of the specialized nature of our business, the termination of relationships with key management, consulting and scientific personnel or the inability to recruit and retain additional personnel could prevent us from developing our technologies, conducting clinical trials and obtaining financing. If product liability lawsuits are brought against us, we may incur substantial liabilities. Risks Related to Intellectual Property Rights If we breach any of the agreements under which we license rights to products or technology from others, we could lose license rights that are critical to our business and our business could be harmed. Our ability and the ability of our licensors, licensees and collaborators to develop and license products based on our patents may be impaired by the intellectual property of third parties. Risks Related to our Common Stock Although we currently meet the listing requirements for the Nasdaq Global Market ( Nasdaq ), our common stock could be delisted from Nasdaq. If securities analysts do not publish research reports about our business or if they downgrade us or our sector, the price of our common stock could decline. Future sales of our common stock could negatively affect our stock price. Our stock price has, in the past, been volatile, and the market price of our common stock may drop below the current price. We have no current plan to pay dividends on our common stock and investors may lose the entire amount of their investment. outstanding options to purchase shares of common stock could have a possible dilutive effect. Provisions in our certificate of incorporation, bylaws and stockholder rights agreement may prevent or frustrate a change in control. If our principal stockholders, executive officers and directors choose to act together, they may be able to control our operations, acting in their own best interests and not necessarily those of other stockholders.

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875622--3/15/2010--BIOSPECIFICS_TECHNOLOGIES_CORP