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EXHIBIT 99
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CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
The following important factors, among others, could cause actual results
to differ materially from those contained in forward-looking statements made in
this Annual Report on Form 10-K and presented elsewhere by management from time
to time.
Early Stage of Development; Technological Uncertainty
Hybridon's potential products are at an early stage of development. All of
the Company's potential products are in research or development. There are a
number of technological challenges that the Company must successfully address to
complete any of its development efforts. To date, most of the Company's
resources have been dedicated to applying oligonucleotide chemistry and cell
biology to the research and development of potential pharmaceutical products
based upon antisense technology. As in most drug discovery programs, the results
of in vitro, tissue culture and preclinical studies by the Company may be
inconclusive and may not be indicative of results that will be obtained in human
clinical trials. In addition, results attained in early human clinical trials by
the Company may not be indicative of results that will be obtained in later
clinical trials. Neither the Company, nor to its knowledge, any other company
has successfully completed human clinical trials of a product based on antisense
technology, and there can be no assurance that any of the Company's products
will be successfully developed.
Uncertainty Associated with Clinical Trials
Before obtaining regulatory approvals for the commercial sale of any of its
products under development, the Company must undertake extensive and costly
preclinical studies and clinical trials to demonstrate that such products are
safe and efficacious. The results from preclinical studies and early clinical
trials are not necessarily predictive of results that will be obtained in later
stages of testing or development, and there can be no assurance that the
Company's clinical trials will demonstrate the safety and efficacy of any
products or will result in products capable of being produced in commercial
quantities at reasonable cost or in a marketable form.
Although the Company is developing several oligonucleotide compounds on
which it plans to file IND applications with the FDA and equivalent filings
outside of the U.S., there can be no assurance that necessary preclinical
studies on these compounds will be completed satisfactorily or that the Company
otherwise will be able to make its intended filings. Further, there can be no
assurance that the Company will be permitted to undertake and complete human
clinical trials of any of the Company's potential products, either in the U.S.
or elsewhere, or, if permitted, that such products will not have undesirable
side effects or other characteristics that may prevent or limit their commercial
use.
Future Capital Needs; Uncertainty of Additional Funding
The Company's future capital requirements will depend on many factors,
including continued scientific progress in its research, drug discovery and
development programs, the magnitude of these programs, progress with preclinical
and clinical trials, the time and costs involved in obtaining regulatory
approvals, the costs involved in filing, prosecuting and enforcing patent
claims, competing technological and market developments, the ability of the
Company to establish and maintain collaborative academic and commercial
research, development and marketing relationships, and the costs of
manufacturing scale-up and commercialization activities and arrangements.
Based upon its current operating plan, the Company anticipates that its
existing capital resources will be adequate to satisfy its capital requirements
for at least 12 months. The Company anticipates that it will be required to
raise substantial additional funds, including through collaborative
relationships and public or private financings. No assurance can be given that
additional financing will be available, or, if available, that it will be
available on acceptable terms. If adequate funds are not available, the Company
may be required to curtail significantly one or more of its research, drug
discovery or development
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programs, or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products which the Company would otherwise
pursue on its own. See "Item 1. Business -- Hybridon Drug Development and
Discovery Programs" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
History of Operating Losses and Accumulated Deficit
Hybridon has incurred net losses since its inception. At December 31, 1995,
the Company's accumulated deficit was approximately $102,341,000. Such losses
have resulted principally from costs incurred in the Company's research and
development programs and from general and administrative costs associated with
the Company's development. No revenues have been generated from product sales,
and no product sales revenues are anticipated for a number of years, if ever.
The Company expects to incur additional operating losses over the next several
years and expects cumulative losses to increase significantly as the Company's
research and development and clinical trial efforts expand. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Patents and Proprietary Rights
The Company's success will depend in part on its ability to develop
patentable products and obtain and enforce patent protection for its products
both in the U.S. and in other countries. The Company has filed and intends to
file applications as appropriate for patents covering both its products and
processes. However, the patent positions of pharmaceutical and biotechnology
firms, including Hybridon, are generally uncertain and involve complex legal and
factual questions. No assurance can be given that patents will issue from any
pending or future patent applications owned by or licensed to Hybridon or that
the claims allowed under any issued patents will be sufficiently broad to
protect the Company's technology.
The commercial success of the Company will also depend in part on its
neither infringing patents issued to competitors or others nor breaching the
technology licenses upon which the Company's products might be based. The
Company's licenses of patents and patent applications impose various
commercialization, sublicensing, insurance and other obligations on the Company.
Failure of the Company to comply with these requirements could result in
termination of the license. The Company is aware of patents and patent
applications belonging to competitors, and it is uncertain whether these patents
and patent applications will require the Company to alter its products or
processes, pay licensing fees or cease certain activities. See "Item 1. Business
- - - -- Patents, Trade Secrets and Licenses."
Need to Establish Collaborative Commercial Relationships; Dependence on Partners
Hybridon's business strategy includes entering into strategic alliances or
licensing arrangements with corporate partners, primarily pharmaceutical and
biotechnology companies, relating to the development and commercialization of
certain of its potential products. Although the Company is a party to corporate
collaborations with Roche, Medtronic, Pharmacia and Searle, there can be no
assurance that these collaborations will be scientifically or commercially
successful, that the Company will be able to negotiate additional
collaborations, that such collaborations will be available to the Company on
acceptable terms or that any such relationships, if established, will be
scientifically or commercially successful. See "Item 1. Business -- Hybridon
Drug Development and Discovery Programs" and "-- Corporate Collaborations."
No Assurance of Regulatory Approval; Government Regulation
The Company's preclinical studies and clinical trials, as well as the
manufacturing and marketing of its potential products, are subject to extensive
regulation by numerous federal, state and local governmental authorities in the
U.S. Similar regulatory requirements exist in other countries where the Company
intends to test and market its drug candidates. Failure to comply with
applicable regulatory requirements can, among other things, result in fines,
suspension of regulatory approvals, product recalls, seizure of products,
operating restrictions and criminal prosecutions. FDA policy may change and
additional government regulations may be established that could prevent or delay
regulatory approval of the Company's potential products. In addition, a marketed
drug and its manufacturer are subject to continual review, and subsequent
discovery of previously unknown problems with a product or manufacturer may
result in restrictions on such product or manufacturer, including withdrawal of
the product
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from the market and withdrawal of the right to manufacture the product. All of
the foregoing regulatory matters also will be applicable to development,
manufacturing and marketing undertaken by any strategic partners or licensees of
the Company. See "Item 1. Business -- Government Regulation."
Competition
There are many companies, both private and publicly traded, that are
conducting research and development activities on technologies and products
similar to or competitive with the Company's antisense technologies and proposed
products. For example, many other companies are actively seeking to develop
products, including antisense oligonucleotides, with disease targets similar to
those being pursued by the Company. Some of these competitive products are in
clinical trials. The Company believes that the industry-wide interest in
investigating the potential of gene expression modulation technologies will
continue and will accelerate as the techniques which permit the design and
development of drugs based on such technologies become more widely understood.
There can be no assurance that the Company's competitors will not succeed in
developing products based on oligonucleotide or other technologies, existing or
new, which are more effective than any that are being developed by the Company,
or which would render Hybridon's antisense technologies obsolete and
noncompetitive. Moreover, there currently are commercially available products
for the treatment of certain of the disease targets being pursued by the
Company.
Competitors of the Company engaged in all areas of biotechnology and drug
discovery in the U.S. and other countries are numerous and include, among
others, pharmaceutical and chemical companies, biotechnology firms, universities
and other research institutions. Many of the Company's competitors have
substantially greater financial, technical and human resources than the Company.
In addition, many of these competitors have significantly greater experience
than the Company in undertaking preclinical studies and human clinical trials of
new pharmaceutical products and obtaining FDA and other regulatory approvals of
products for use in health care. Furthermore, if the Company is permitted to
commence commercial sales of products, it will also be competing with respect to
manufacturing efficiency and marketing capabilities, areas in which it has
limited or no experience. Accordingly, the Company's competitors may succeed in
obtaining FDA or other regulatory approvals for products or in commercializing
such products more rapidly than the Company. See "Item 1. Business
- - - --Competition."
Limited Manufacturing Capability
While the Company believes that its existing production capacity and
inventories of GEM 91 will be sufficient to enable it to satisfy its current
research needs and its needs for clinical trials for this product candidate
through 1996, and that its existing production capacity is sufficient to support
the Company's other preclinical and clinical requirements for oligonucleotide
compounds during such period, the Company will need to expand its manufacturing
capacity in order to satisfy its future requirements for commercial production
of GEM 91 and the Company's other product candidates. In addition, in order to
successfully commercialize its product candidates, the Company may be required
to reduce further the cost of production of its oligonucleotide compounds, and
there can be no assurance that the Company will be able to do so.
The manufacture of the Company's products will be subject to GMP
requirements prescribed by the FDA or other standards prescribed by the
appropriate regulatory agency in the country of use. To the Company's knowledge,
therapeutic products based on chemically-modified oligonucleotides have never
been manufactured on a commercial scale. There can be no assurance that the
Company will be able to manufacture or obtain products in a timely fashion and
at acceptable quality and price levels, that it or its suppliers can manufacture
in compliance with GMP or other regulatory requirements or that it or its
suppliers will be able to manufacture an adequate supply of product. See "Item
1. Business --Manufacturing."
Absence of Sales and Marketing Experience
The Company expects to market and sell certain of its products directly and
through co-marketing or other licensing arrangements with third parties. There
can be no assurance that the Company will be able to build such a marketing
staff or sales force, that the cost of establishing such a marketing staff or
sales force will be justifiable in light of any product revenues or that the
Company's direct sales and marketing efforts will be successful. To the extent
the Company enters into co-marketing or other licensing arrangements, any
revenues received by the Company will be dependent in part on the efforts of
third parties and there can be no assurance that such efforts will be
successful. See "Item 1. Business -- Marketing Strategy."
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Product Liability Exposure and Insurance
The use of any of the Company's potential products in clinical trials and
the commercial sale of any products may expose the Company to liability claims.
These claims might be made directly by consumers, health care providers or by
pharmaceutical and biotechnology companies or others selling such products.
Hybridon has limited product liability insurance coverage, and such coverage is
subject to various deductibles. Such coverage is becoming increasingly
expensive, and no assurance can be given that the Company will be able to
maintain or obtain such insurance at reasonable cost or in sufficient amounts to
protect the Company against losses due to liability claims that could have a
material adverse effect on the Company.
Uncertainty of Health Care Reform Measures
Federal, state and local officials and legislators (and certain foreign
government officials and legislators) have proposed or are reportedly
considering proposing a variety of reforms to the health care systems in the
U.S. and abroad. The Company cannot predict what health care reform legislation,
if any, will be enacted in the U.S. or elsewhere. Significant changes in the
health care system in the U.S. or elsewhere are likely to have a substantial
impact over time on the manner in which the Company conducts its business. Such
changes could have a material adverse effect on the Company. The existence of
pending health care reform proposals could have a material adverse effect on the
Company's ability to raise capital.
Attraction and Retention of Key Employees and Scientific Collaborators
The Company's success is dependent on the retention of principal members of
its management and scientific staff and on the recruitment of additional
qualified scientific personnel who can provide additional expertise to the
Company. The Company's success also depends in part on its continued ability to
develop and maintain collaborative relationships with independent researchers
and leading academic and research institutions. However, given the intense
competition for experienced scientific personnel and for such collaborator
relationships, there can be no assurance that the Company will be able to
attract and retain scientific personnel or to develop and maintain collaborative
agreements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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All financial statements required to be filed hereunder are filed as
APPENDIX A hereto, are listed under Item 14(a), and are incorporated herein by
this reference.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HYBRIDON, INC.
May 13, 1996 /s/ E. Andrews Grinstead, III
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Date E. Andrews Grinstead, III
Chairman, President and Chief
Executive Officer
May 13, 1996 /s/ Anthony J. Payne
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Date Anthony J. Payne
Senior Vice President of Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)