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If anatural orman-made disaster strikes our research, development ormanufacturing facilities or otherwise affects our
business, it coulddelayourprogress developingand commercializing ourdrugs.
Wemanufacture our research and clinical supplies in amanufacturing facility located inCarlsbad, California. The facilities
and the equipment we use to research, develop andmanufacture our drugswouldbe costly to replace and could require substantial
lead time to repair or replace. Our facilitiesmay be harmedbynatural orman-made disasters, including, without limitation,
earthquakes, floods, fires and acts of terrorism; and if our facilities are affected by a disaster, our development and commercialization
effortswouldbe delayed. Althoughwe possess insurance for damage to our property and the disruptionof our business from
casualties, this insurancemay not be sufficient to cover all of our potential losses andmaynot continue to be available to us on
acceptable terms, or at all. In addition, our development and commercialization activities could be harmed or delayedby a shutdown
of theU.S. government including theFDA.
Provisions inour certificate of incorporation, other agreements andDelaware lawmayprevent stockholders from receivinga
premium for their shares.
Our certificate of incorporationprovides for classified terms for themembers of our boardof directors. Our certificate also
includes a provision that requires at least 66
2
3
percent of our voting stockholders to approve amerger or certainother business
transactionswith, or proposedby, anyholder of 15percent ormore of our voting stock, except in caseswhere certaindirectors
approve the transactionor certainminimumprice criteria and other procedural requirements aremet.
Our certificate of incorporation also requires that any action requiredor permitted tobe takenbyour stockholdersmust be
taken at a duly called annual or specialmeetingof stockholders andmaynot be takenbywritten consent. In addition, onlyour board
of directors, chairman of the boardor chief executive officer can call specialmeetings of our stockholders. We have in the past, and
may in the future, implement a stockholders’ rights plan, also called a poisonpill, which couldmake it uneconomical for a thirdparty
to acquire our companyon a hostile basis. In addition, our boardof directors has the authority to fix the rights andpreferences of, and
issue shares of preferred stock, whichmayhave the effect of delayingor preventing a change in control of our companywithout
actionbyour stockholders.
The provisions of our convertible senior notes couldmake itmore difficult ormore expensive for a thirdparty to acquire us.
Upon the occurrence of certain transactions constituting a fundamental change, holders of the noteswill have the right, at their option,
to require us to repurchase all of their notes or a portionof their notes, whichmaydiscourage certain types of transactions inwhich
our stockholdersmight otherwise receive a premium for their shares over the then currentmarket prices.
In addition, our collaboration agreement withGenzyme regardingKYNAMROprovides that ifwe are acquired, Genzyme
may elect to purchase all of our rights to receive payments under theKYNAMRO collaboration agreement for a purchase price tobe
mutually agreed tobyus andGenzyme, or, ifwe cannot agree, a fairmarket value price determinedby an independent investment
banking firm. This provisionmaymake itmore difficult or complicated for us to enter into an acquisition agreementwith a potential
acquirer.
These provisions, aswell asDelaware law, includingSection 203 of theDelawareGeneral CorporationLaw, andother of our
agreements,may discourage certain types of transactions inwhichour stockholdersmight otherwise receive a premium for their
shares over then currentmarket prices, andmay limit the abilityof our stockholders to approve transactions that they thinkmay be in
their best interests.
Future sales of our common stock in the publicmarket couldadverselyaffect the tradingprice of our securities.
Future sales of substantial amounts of our common stock in thepublicmarket, or the perception that such sales couldoccur,
could adversely affect trading prices of our securities. For example, wemay issue approximately 12.1million shares of our common
stockupon conversionof our convertible senior notes. The additionof anyof these shares into the publicmarketmayhave an adverse
effect on the price of our securities.
Our business is subject to changing regulations for corporate governance andpublic disclosure that has increasedbothour
costs and the risk of noncompliance.
Each yearwe are required to evaluateour internal controls systems in order to allowmanagement to report on andour
Independent RegisteredPublicAccountingFirm to attest to, our internal controls as requiredbySection404of theSarbanes-Oxley
Act. As a result, we continue to incur additional expenses anddivert ourmanagement’s time to complywith these regulations. In
addition, ifwe cannot continue to complywith the requirements of Section404 in a timelymanner, wemight be subject to sanctions
or investigationby regulatory authorities, such as theSEC, the PublicCompanyAccountingOversight Board, or PCAOB, or The
NasdaqGlobalMarket. Any such action could adversely affect our financial results and themarket price of our common stock.
