Exhibit 99.1
FACTORS TO CONSIDER IN CONNECTION WITH FORWARD LOOKING STATEMENTS
We have incurred losses since inception and anticipate that we will incur
continued losses for the foreseeable future. We do not have a current source of
product revenue and may never be profitable.
We are a development stage company and since our inception, our source of
income has been public and private sales of our stock. At July 31, 2000, our
accumulated deficit was $56,676,579 and our total stockholders' deficit was
approximately $131,860.
We expect to continue to incur substantial operating losses in the future.
Our profitability will depend on our ability to develop, obtain regulatory
approvals for, and effectively market ONCONASE(R). The FDA has not approved and
may not approve ONCONASE(R). We do not know if, or when, we will:
o complete our product development efforts,
o show that our products are safe and effective in clinical trials
o submit an NDA for any of our product candidates,
o receive regulatory approval of any of our product candidates, or
o sell sufficient approved products to generate enough revenue to enable us
to earn a profit.
We will seek to generate revenue through licensing, marketing and
development arrangements prior to receiving revenue from the sale of our
product, but we may not be able to successfully consummate any licensing,
marketing or development arrangements.
We, therefore, are unable to predict the extent of any future losses or the
time required to achieve profitability, if at all.
We need additional financing to continue operations and this financing may not
be available when we need it, if it is available at all.
We need financing in order to continue operations, including completion of
the Phase III trials and filing an NDA. As a result of our continuing losses and
lack of capital, the report of our independent auditors on our July 31, 2000
financial statements included an explanatory paragraph which states that our
recurring losses, working capital deficit and limited liquid resources raise
substantial doubt about our ability to continue as a going concern. Our
financial statements at July 31, 2000 do not include any adjustments that might
result from the outcome of this uncertainty. If the results of the continuation
of the Phase III trials do not indicate the efficacy and safety of ONCONASE(R)
for malignant mesothelioma, our ability to raise additional capital will be
adversely affected. Even if an NDA is filed, we will need additional financing
to complete the approval process. We may not be successful in obtaining
additional financing as funds are needed to continue operations.
Our clinical trials could take longer to complete and cost more than we expect.
We are currently continuing our Phase III clinical trial of ONCONASE(R)for
the treatment of malignant mesothelioma. The rate of completion of our clinical
trial depends upon many factors, including the rate of enrollment of patients.
If we are unable to accrue sufficient additional patients in our trial during
the appropriate period, such trial may be delayed and will likely incur
significant additional costs.
- 1 -
<PAGE>
The cost of human clinical trials varies dramatically based on a number of
factors, including:
o the order and timing of clinical indications pursued,
o the extent of development and financial support from corporate
collaborators,
o the number of patients required for enrollment,
o the difficulty of obtaining clinical supplies of the product candidate, and
o the difficulty in obtaining sufficient populations.
All statutes and regulations governing the conduct of clinical trials are
subject to change in the future, which could affect the cost of our clinical
trials. Any unanticipated costs or delays in our clinical studies would delay
our ability to generate product revenues and to raise additional capital.
The results of larger scale clinical trials may not show the same promising
results as earlier trials resulting in the abandonment of a failed candidate
after the expenditure of significant additional funds.
During the course of our research and development, we may find that
products that initially appeared promising no longer appear promising in
larger-scale Phase III clinical trials. Like many companies in the
pharmaceutical and biotechnology industries, we have experienced negative
results in clinical trials after experiencing promising results in earlier
trials. For example, in July 1998, we discontinued two Phase III clinical trials
testing ONCONASE(R) with tamoxifen as a treatment for pancreatic cancer due to
the lack of a statistically significant survival benefit. If we experience
negative results in the ongoing Phase III clinical trial, we may have to
curtail, redirect or eliminate this product development programs.
If we fail to obtain the necessary regulatory approvals, we will not be allowed
to commercialize our drugs and will not generate product revenues.
We are conducting Phase III clinical trials of ONCONASE(R) as a treatment
for malignant mesothelioma and intend to file an NDA for this indication if the
data so warrants. Obtaining FDA approval can take a substantial period of time
and requires the expenditure of substantial resources for research and
development and testing. If we fail to achieve regulatory approval of our first
product candidate we will not have a saleable product or product revenues and
may not be able to continue operations.
Even if we receive regulatory approval, such approval may involve
limitations on the indicated uses for which we may market our products. Further,
later discovery of previously unknown problems could result in additional
restrictions, including withdrawal of products.
In foreign jurisdictions, we must receive marketing authorizations from the
appropriate regulatory authorities before we can commercialize our drugs.
Foreign regulatory approval processes generally include all of the risks
associated with the FDA approval procedures described above.
Our product candidates may not be accepted by the market, which would harm our
business and results of operations.
Even if approved by the FDA and other regulatory authorities, our product
candidates may not achieve market acceptance and we may not receive revenues
from these products as anticipated. The degree of market acceptance will depend
upon a number of factors, including:
o the receipt and timing of regulatory approvals,
o the availability of third-party reimbursement, and
- 2 -
<PAGE>
o the establishment and demonstration in the medical community of the
clinical safety, efficacy and cost-effectiveness of drug candidates, as
well as their advantages over existing technologies and therapeutics.
Our proprietary technology and patents may offer only limited protection against
infringement and the development by our competitors of competitive products.
We currently own six legally effective U.S. patents, three European patents
and one Japanese patent. We also have patent applications that are pending in
the United States, Europe and Japan, and an undivided interest in two patent
applications that are pending in the United States. The scope of protection
afforded by patents for biotechnological inventions is uncertain, and such
uncertainty applies to our patents. Our patents may not give us competitive
advantages and may not afford us adequate protection from competing products.
Furthermore, others may independently develop products that are similar to our
products, and may design around the claims of our patents.
Patent litigation and intellectual property litigation are expensive, and
if we were to become involved in such litigation, we might not have the funds or
other resources necessary to carry on the litigation in an effective manner.
We are, and will be dependent upon third parties for manufacturing, and will be
dependent on third parties for marketing, our products. If these third parties
do not devote sufficient time and resources to our products our revenues and
profits may be adversely affected.
We do not have the facilities or expertise to manufacture or market our
products. We presently rely on third parties to perform certain of the
manufacturing processes for the production of our products for use in clinical
and human trials. We intend to rely on third parties to manufacture and market
our products if they are approved for sale by the appropriate regulatory
agencies and are commercialized. Third party manufactures may not be able to
meet our needs with respect to the timing, quantity or quality of our products
or to supply products on acceptable terms. Moreover, third party manufacturers
and marketing companies often must allocate their resources between various
companies. It is likely that we will have only limited, if any, control over the
amount and timing of the resources devoted by these third parties to our
products. If third party manufacturers or marketing companies cannot, or do not,
devote sufficient resources to our products, our sales of products could be
adversely affected resulting in lower than anticipated revenues or profits.
We depend upon key personnel and may not be able to retain these employees or
recruit qualified replacement or additional personnel which would harm our
business.
Because of the specialized scientific nature of our business, we are highly
dependent upon qualified scientific, technical and management employees. There
is intense competition for qualified personnel in the pharmaceutical field.
Therefore the loss of key scientific, technical or management personnel,
particularly Kuslima Shogen, our Chairman and Chief Executive Officer, would
most likely delay our clinical trials, the commercialization of our products and
the potential revenue from product sales. We carry key person life insurance on
the life of Ms. Shogen with a face value of $1,000,000.
We may not be able to utilize all of our net operating loss carryforwards.
At July 31, 2000, we had federal net operating loss carryforwards of
approximately $39,920,910 that expire from 2001 to 2020. We also had investment
tax credit carryforwards of approximately $26,867 and research and
experimentation tax credit carryforwards of approximately $818,308 that expire
from 2001 to 2020. New Jersey approved the sale of approximately $2.4 million of
our state tax loss carryforwards and state
- 3 -
<PAGE>
research and development credits, or tax benefits, of which approximately $1
million was allocated to be sold between July 1, 1999 and June 30, 2000. In
December 1999, we realized net proceeds of $755,854 from the sale of our
allocated tax benefits. We will attempt to sell the remainder of $1.4 million
between July 1, 2000 and June 30, 2001, but there is no assurance we will be
successful. Additionally, ultimate utilization/availability of the net operating
losses and credits may be significantly curtailed if a significant change in
ownership occurs.
Developments by competitiors may render our products obsolete or
non-competitive.
Several companies, universities, research teams and scientists are
developing products to treat the same medical conditions our products are
intended to treat. Most of our competitors are more experienced and have greater
clinical, marketing and regulatory capabilities and managerial and financial
resources than we do. Our competitors may develop products to treat the same
medical conditions our products are intended to treat before we are able to
complete the development of our competing product.
Our business is very competitive and involves rapid changes in the
technologies involved in developing new drugs. If others experience rapid
technological development, our products may become obsolete before we are able
to recover expenses incurred with respect to our products. We will probably face
new competitors as new technologies develop. Our success depends on our ability
to remain competitive in the development of new drugs. We cannot assure you that
we will be able to compete successfully.
We may be sued for product liability.
The use of our products by humans during testing of those products or after
regulatory approval entails a risk of adverse effects which could expose us to
product liability claims. We maintain product liability insurance in the amount
of $6,000,000 for claims arising from the use of our products in clinical trials
prior to FDA approval. We cannot assure you that we will be able maintain our
existing insurance coverage or obtain coverage for the use of our products in
the future. While we believe that we maintain adequate insurance coverage, we
cannot assure you that our current insurance coverage and our financial
resources would be sufficient to pay any liability arising from a product
liability claim. A product liability claim may have a material adverse effect on
our business, financial condition or results of operations.
Our stock is thinly traded therefore you may not be able to sell our stock when
you may want to do so.
Our common stock has been quoted on the OTC Bulletin Board since April 28,
1999, and is currently thinly traded. You may be unable to sell our common stock
when you want to do so if the trading market continues to be limited.
The price of our common stock has been, and may continue to be, volatile.
The market price of our common stock, like that of the securities of many
other development stage biotechnology companies, has fluctuated over a wide
range and it is likely that the price of our common stock will fluctuate in the
future. The market price of our common stock could be impacted by a variety of
factors, including:
o announcements of technological innovations or new commercial products by us
or our competitors,
o disclosure of the results of pre-clinical testing and clinical trials by us
or our competitors,
o disclosure of the results of regulatory proceedings,
o changes in government regulation,
o developments in the patents or other proprietary rights owned or licensed
by us or our competitors,
o public concern as to the safety and efficacy of products developed by us or
others,
- 4 -
<PAGE>
o litigation, and
o general market conditions in our industry.
In addition, the stock market continues to experience extreme price and
volume fluctuations. These fluctuations have especially affected the market
price of many biotechnology companies. Such fluctuations have often been
unrelated to the operating performance of these companies. Nonetheless, these
broad market fluctuations may negatively affect the market price of our common
stock.
Our charter documents and Delaware law may discourage a takeover of our company.
We are currently authorized to issue 1,000,000 shares of preferred stock,
par value $.001 per share. Our Board of Directors is authorized, without any
approval of the stockholders, to issue the preferred stock and determine the
terms of the preferred stock. There are no shares of preferred stock
outstanding. The authorized shares of preferred stock will remain available for
general corporate purposes, may be privately placed and can be used to make a
change in control of our company more difficult. Under certain circumstances,
our Board of Directors could create impediments to or frustrate persons seeking
to effect a takeover or transfer in control of our company by causing shares of
preferred stock to be issued to a stockholder who might side with the Board of
Directors in opposing a takeover bid that the Board of Directors determines is
not in the best interests of our company and its stockholders, but in which
unaffiliated stockholders may wish to participate. Furthermore, the existence of
authorized shares of preferred stock might have the effect of discouraging any
attempt by a person, through the acquisition of a substantial number of shares
of common stock to acquire control of our company. Accordingly, the
accomplishment of a tender offer may be more difficult. This may be beneficial
to management in a hostile tender offer, but have an adverse impact on
stockholders who may want to participate in the tender offer. Under the General
Corporation Law of Delaware, the Board of Directors is permitted to use a
depositary receipt mechanism that enables the Board to issue an unlimited number
of fractional interests in each of the authorized and unissued shares of
preferred stock without stockholder approval. Consequently, the Board of
Directors, without further stockholder approval, could issue authorized shares
of preferred stock or fractional interests in preferred stock with rights that
could adversely affect the rights of the holders of our common stock to a
stockholder which, when voted together with other securities held by members of
the Board of Directors and the executive officers and their families, could
prevent the majority stockholder vote required by our certificate of
incorporation or Delaware General Corporation Law to effect certain matters.
