912183--3/1/2006--CUBIST_PHARMACEUTICALS

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Risks Related to Our Business We depend heavily on the success of our lead product CUBICIN, which may not be widely accepted by physicians, patients, third-party payors, or the medical community in general. Our ability to grow revenues from the commercialization and sale of CUBICIN will be limited if we do not obtain approval to market CUBICIN for additional therapeutic uses and in countries outside of the United States or fulfill certain post-approval requirements of the FDA relating to CUBICIN. If we are unable to generate revenues from any drug products other than CUBICIN, our ability to create long-term shareholder value may be limited. We will need to obtain regulatory approvals for our other drug candidates, and our ability to generate revenues from the commercialization and sale of products resulting from our development efforts will be limited by any failure to obtain these approvals. If clinical trials for our drug candidates are unsuccessful or delayed, we will be unable to meet our anticipated development and commercialization timelines, which could harm our business. We face significant competition from other biotechnology and pharmaceutical companies, particularly with respect to CUBICIN, and our operating results will suffer if we fail to compete effectively. We are completely dependent on third parties to manufacture CUBICIN, and our commercialization of CUBICIN could be stopped, delayed, or made less profitable if those third parties fail to provide us with sufficient quantities of CUBICIN or fail to do so at acceptable prices. We have collaborative relationships that may expose us to a number of risks. We depend on third parties in the conduct of our clinical trials for CUBICIN and HepeX-B and expect to do so with respect to other drug candidates, and any failure of those parties to fulfill their obligations could adversely affect our development and commercialization plans. If we are unable to continue to develop satisfactory sales and marketing capabilities, we may not succeed in commercializing CUBICIN. We have incurred substantial losses in the past and expect to incur additional losses. We may require additional funds. We may not be able to obtain, maintain or protect certain proprietary rights necessary for the development and commercialization of CUBICIN, our other drug candidates and our research technologies. Third-party patent and intellectual property rights may interfere with our ability to commercialize drug products and research technologies. If we are unable to discover or acquire drug candidates, we will not be able to implement our current business strategy. A variety of risks associated with our international business relationships could materially adversely affect our business. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. We may undertake additional strategic acquisitions in the future, and we may not realize the benefits of such acquisitions. Our business may suffer if we fail to manage our growth effectively. Risks Related to Our Industry Our products will be subject to ongoing regulatory review. We could incur substantial costs resulting from product liability claims relating to our pharmaceutical products. We may become involved in patent litigation or other intellectual property proceedings relating to our products or processes that could result in liability for damage or stop our development and commercialization efforts. Revenues generated by products we currently market or that we successfully develop and for which we obtain regulatory approval depend on reimbursement from third-party payers such that if reimbursement for our products is reduced or is insufficient, there could be a negative impact on the utilization of our products. Our corporate compliance program cannot ensure that we are in compliance with all applicable laws and regulations, and a failure to comply with such regulations or prevail in litigation related to noncompliance could harm our business. Competitors may develop drug products that make our drug products obsolete. Our use of hazardous materials, chemicals, viruses and radioactive compounds exposes us to potential liabilities. Risks Related to Ownership of Our Common Stock Our stock price may be volatile, and the value of our stock could decline. As previously reported in the Company s filings with the SEC, an adverse outcome of the Securities and Exchange Commission s investigation into trading in our common stock around the time we disclosed information about the results of our Community Acquired Pneumonia trial could cause our stock price to decline. We are exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002. If our officers, directors and certain stockholders choose to act together, they may be able to significantly influence our management and operations, acting in their best interests and not necessarily those of other stockholders. We have implemented anti-takeover provisions that could discourage, prevent or delay a takeover, even if the acquisition would be beneficial to our stockholders. WHERE YOU CAN FIND MORE INFORMATION

Full 10-K form ▸

912183--3/1/2006--CUBIST_PHARMACEUTICALS_INC