facilities in Carlsbad, California pending ultimate use and disposal. We cannot completely eliminate the risk of
contamination, which could cause:
•
interruption of our research, development and manufacturing efforts;
•
injury to our employees and others;
•
environmental damage resulting in costly clean up; and
•
liabilities under federal, state and local laws and regulations governing health and human safety, as well
as the use, storage, handling and disposal of these materials and resultant waste products.
In such an event, we may be held liable for any resulting damages, and any liability could exceed our
resources. Although we carry insurance in amounts and types that we consider commercially reasonable, we do
not have insurance coverage for losses relating to an interruption of our research, development or manufacturing
efforts caused by contamination, and the coverage or coverage limits of our insurance policies may not be
adequate. If our losses exceed our insurance coverage, our financial condition would be adversely affected.
If a natural orman-made disaster strikes our research, development ormanufacturing facilities or
otherwise affects our business, it could delay our progress developing and commercializing our drugs.
We manufacture our research and clinical supplies in a manufacturing facility located in Carlsbad,
California. The facilities and the equipment we use to research, develop and manufacture our drugs would be
costly to replace and could require substantial lead time to repair or replace. Our facilities may be harmed by
natural or man-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 efforts would be delayed.
Although we possess insurance for damage to our property and the disruption of our business from casualties,
this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to
us on acceptable terms, or at all. In addition, our development and commercialization activities could be harmed
or delayed by a shutdown of the U.S. government including the FDA.
Provisions in our certificate of incorporation, other agreements and Delaware lawmay prevent
stockholders from receiving a premium for their shares.
Our certificate of incorporation provides for classified terms for the members of our board of directors. Our
certificate also includes a provision that requires at least 66 2/3 percent of our voting stockholders to approve a
merger or certain other business transactions with, or proposed by, any holder of 15 percent or more of our
voting stock, except in cases where certain directors approve the transaction or certain minimum price criteria
and other procedural requirements are met.
Our certificate of incorporation also requires that any action required or permitted to be taken by our
stockholders must be taken at a duly called annual or special meeting of stockholders and may not be taken by
written consent. In addition, only our board of directors, chairman of the board or chief executive officer can call
special meetings of our stockholders. We have in the past, and may in the future, implement a stockholders’
rights plan, also called a poison pill, which could make it uneconomical for a third party to acquire our company
on a hostile basis. In addition, our board of directors has the authority to fix the rights and preferences of, and
issue shares of preferred stock, which may have the effect of delaying or preventing a change in control of our
company without action by our stockholders.
The provisions of our convertible senior notes could make it more difficult or more expensive for a third
party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the
notes will have the right, at their option, to require us to repurchase all of their notes or a portion of their notes,
which may discourage certain types of transactions in which our stockholders might otherwise receive a premium
for their shares over the then current market prices.
In addition, our collaboration agreement with Genzyme regarding KYNAMRO provides that if we are
acquired, Genzyme may elect to purchase all of our rights to receive payments under the KYNAMRO
collaboration agreement for a purchase price to be mutually agreed to by us and Genzyme, or, if we cannot
agree, a fair market value price determined by an independent investment banking firm. This provision may
make it more difficult or complicated for us to enter into an acquisition agreement with a potential acquirer.
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