914475--2/8/2010--NEUROCRINE_BIOSCIENCES

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{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{property, intellectual, protect}

{stock, price, operating}

{product, market, service}

{condition, economic, financial}

{cost, regulation, environmental}

{regulation, change, law}

{personnel, key, retain}

{cost, operation, labor}

{control, financial, internal}

{regulation, government, change}

Risks Related to Our Company If we cannot raise additional funding, we may be unable to complete development of our product candidates. We depend on continuing our current collaborations and developing additional collaborations to develop and commercialize our product candidates. Our clinical trials may fail to demonstrate the safety and efficacy of our product candidates, which could prevent or significantly delay their regulatory approval. We have a history of losses and expect to incur losses and negative operating cash flows for the near future, and we may never achieve sustained profitability. Because the development of our product candidates is subject to a substantial degree of technological uncertainty, we may not succeed in developing any of our product candidates. The CEFF that we entered into with Kingsbridge may not be available to us if we elect to make a draw down, may require us to make additional blackout or other payments to Kingsbridge, could cause our stock price to decline and may result in dilution to our stockholders. There is uncertainty regarding future development of our product candidate, indiplon, which may never receive regulatory approval or be commercialized. The price of our common stock is volatile. Our restructuring activities could result in management distractions, operational disruptions and other difficulties. Because our operating results may vary significantly in future periods, our stock price may decline. We license some of our core technologies and drug candidates from third parties. If we default on any of our obligations under those licenses, we could lose our rights to those technologies and drug candidates. We have limited marketing experience, sales force or distribution capabilities, and if our products are approved, we may not be able to commercialize them successfully. The independent clinical investigators and contract research organizations that we rely upon to conduct our clinical trials may not be diligent, careful or timely, and may make mistakes, in the conduct of our trials. We have no manufacturing capabilities. If third-party manufacturers of our product candidates fail to devote sufficient time and resources to our concerns, or if their performance is substandard, our clinical trials and product introductions may be delayed and our costs may rise. If we are unable to retain and recruit qualified scientists or if any of our key senior executives discontinues his or her employment with us, it may delay our development efforts. We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers. Governmental and third-party payors may impose sales and pharmaceutical pricing controls on our products that could limit our product revenues and delay profitability. If physicians and patients do not accept our products, we may not recover our investment. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses. Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio. Risks Related to Our Industry We may not receive regulatory approvals for our product candidates or approvals may be delayed. We face intense competition, and if we are unable to compete effectively, the demand for our products, if any, may be reduced. If we are unable to protect our intellectual property, our competitors could develop and market products based on our discoveries, which may reduce demand for our products. Health care reform measures could adversely affect our business. The technologies we use in our research as well as the drug targets we select may infringe the patents or violate the proprietary rights of third parties. We face potential product liability exposure far in excess of our limited insurance coverage. Our activities involve hazardous materials, and we may be liable for any resulting contamination or injuries.

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914475--2/8/2010--NEUROCRINE_BIOSCIENCES_INC