- increased amortization expenses;
- difficulty and cost in combining the operations and personnel of any acquired businesses or product lines with Seelos' operations and personnel;
- impairment of relationships with key suppliers or customers of any acquired businesses or product lines due to changes in management and ownership;
- inability to retain key employees of any acquired businesses.
Accordingly, although there can be no assurance that Seelos will undertake or successfully complete any transactions of the nature described above, any transactions
that Seelos does complete may be subject to the foregoing or other risks, and could have a material adverse effect on Seelos' business, financial condition and results of operations.
Risks Relating to Seelos' Intellectual Property
Seelos may not be successful in obtaining or maintaining necessary rights to its product candidates through acquisitions and in-licenses.
Because several of Seelos' programs require the use of proprietary rights held by third parties, the growth of Seelos' business will likely depend in part on
Seelos' ability to maintain and exploit these proprietary rights. In addition, Seelos may need to acquire or in-license additional intellectual property in the future. Seelos may be unable to acquire
or in-license any compositions, methods of use, processes or other intellectual property rights from third parties that Seelos identifies as necessary for its product candidates. Seelos faces
competition with regard to acquiring and in-licensing third-party intellectual property rights, including from a number of more established companies. These established companies may have a
competitive advantage over Seelos due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive Seelos to be a
competitor may be unwilling to assign or license intellectual property rights to Seelos. Seelos also may be unable to acquire or in-license third-party intellectual property rights on terms that
would allow it to make an appropriate return on Seelos' investment.
Seelos may enter into collaboration agreements with U.S. and foreign academic institutions to accelerate development of Seelos' current or future preclinical product
candidates. Typically, these agreements include an option for the company to negotiate a license to the institution's intellectual property rights resulting from the collaboration. Even with such
an option, Seelos may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to Seelos. If Seelos is unable to license rights from a collaborating
institution, the institution may offer the intellectual property rights to other parties, potentially blocking Seelos' ability to pursue its desired program.
If Seelos is unable to successfully obtain required third-party intellectual property rights or maintain Seelos' existing intellectual property rights, Seelos may need to
abandon development of the related program and Seelos' business, financial condition and results of operations could be materially and adversely affected.
If Seelos fails to comply with its obligations in the agreements under which Seelos in-licenses intellectual property and other rights from third parties or
otherwise experience disruptions to Seelos' business relationships with Seelos' licensors, Seelos could lose intellectual property rights that are important to its business.
Seelos' license agreement with Ligand Pharmaceuticals Incorporated, Neurogen Corporation and CyDex Pharmaceuticals, Inc. (the "License
Agreement") is important to Seelos' business and Seelos expects to enter into additional license agreements in the future. The License Agreement imposes, and Seelos expects that
future license agreements will impose, various milestone payment, royalty and other obligations on Seelos. If Seelos fails to comply with Seelos' obligations under these agreements, or if
Seelos files for bankruptcy, Seelos may be required to make certain payments to the licensor, Seelos may lose the exclusivity of its license, or the licensor may have the right to terminate the
license, in which event Seelos would not be able to develop or market products covered by the license. Additionally, the milestone and other payments associated with these licenses could
materially and adversely affect Seelos' business, financial condition and results of operations.
Pursuant to the terms of the License Agreement, the licensors each have the right to terminate the License Agreement with respect to the programs licensed by such
licensor under certain circumstances, including, but not limited to: (i) if Seelos does not pay an amount that is not disputed in good faith, (ii) if Seelos willfully breaches the License Agreement in
a manner for which legal remedies would not be expected to make such licensor whole, or (iii) if Seelos files or has filed against Seelos a petition in bankruptcy or make an assignment for the
benefit of creditors. In the event the License Agreement is terminated by a licensor, all licenses granted to Seelos by such licensor will terminate immediately.
In some cases, patent prosecution of Seelos' licensed technology may be controlled solely by the licensor. If Seelos' licensor fails to obtain and maintain patent or other
protection for the proprietary intellectual property Seelos in-license, then Seelos could lose its rights to the intellectual property or its exclusivity with respect to those rights, and its competitors
could market competing products using the intellectual property. In certain cases, Seelos may control the prosecution of patents resulting from licensed technology. In the event Seelos
breaches any of Seelos' obligations related to such prosecution, Seelos may incur significant liability