##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
 For the quarterly period ended March 31, 2006
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from  to .
 Commission File Number
000-50438
 Myogen, Inc.
  Delaware
    
    84-1348020(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 7575 West 103rd Avenue, Suite 102
Westminster, CO 80021
(303) 410-6666
 þ o
  o þ o
 o þ




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##### 



MYOGEN, INC.
FORM 10-Q
 INDEX
 PageNumberPART I. Financial Information
    
    
    3ITEM 1. Consolidated Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets As of March 31, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations For the Three Months Ended March 31, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2006 and 2005
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24ITEM 4. Controls and Procedures
    
    
    24PART II. Other Information
    
    
    25ITEM 1. Legal Proceedings
    
    
    25ITEM 1A. Risk Factors
    
    
    25ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    45ITEM 3. Defaults Upon Senior Securities
    
    
    46ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    46ITEM 5. Other Information
    
    
    46ITEM 6. Exhibits
    
    
    46SIGNATURES
    
    
    47EXHIBIT INDEX
    
    
    48Form of Employment AgreementRetirement, Consulting and General Release AgreementEmployment and Retention Agreement - Michael R. BristowLicense Agreement with Glaxo Group LimitedDistribution and Supply Agreement with SmithKline Beecham CorporationCertification of Principal Executive Officer Required by Rule 13a-14(a)Certification of Principal Financial Officer Required by Rule 13a-14(a)Section 1350 Certification
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 MYOGEN, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (In thousands, except share data)
 March 31,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    154,962
    
    
    $
    138,380Short-term investments
    
    
    36,000
    
    
    
    38,575Prepaid expenses, accrued interest
receivable and other current assets
    
    
    4,285
    
    
    
    2,752Assets of discontinued operations
    
    
    
    
    
    
    1,289Total current assets
    
    
    195,247
    
    
    
    180,996Long-term investments
    
    
    2,878
    
    
    
    5,362Property and equipment, net
    
    
    2,810
    
    
    
    2,622Other assets
    
    
    53
    
    
    
    27Total assets
    
    $
    200,988
    
    
    $
    189,007LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    14,150
    
    
    $
    10,345Accrued liabilities
    
    
    867
    
    
    
    2,797Current portion of deferred revenue
    
    
    4,201
    
    
    
    1,187Current portion of other liabilities
    
    
    140
    
    
    
    142Current portion of notes payable, net of discount
    
    
    
    
    
    
    172Liabilities of discontinued operations
    
    
    
    
    
    
    264Total current liabilities
    
    
    19,358
    
    
    
    14,907Deferred revenue, net of current portion
    
    
    19,656
    
    
    
    1,656Other long term liabilities, net of current portion
    
    
    186
    
    
    
    220Commitments and contingencies (See Note 9)Stockholders equity:Preferred Stock, $0.001 par value; 5,000,000
shares authorized at March 31, 2006 and December
31, 2005, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000
shares authorized and 42,378,130 and 41,962,587
shares issued and outstanding as of March 31,
2006 and December 31, 2005, respectively
    
    
    42
    
    
    
    42Additional paid-in-capital
    
    
    416,850
    
    
    
    412,862Deferred stock-based compensation
    
    
    
    
    
    
    (1,406
    )Other comprehensive loss
    
    
    (105
    )
    
    
    (88
    )Accumulated deficit
    
    
    (254,999
    )
    
    
    (239,186
    )Total stockholders equity
    
    
    161,788
    
    
    
    172,224Total liabilities and stockholders equity
    
    $
    200,988
    
    
    $
    189,007
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MYOGEN, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 (In thousands, except share and per share data)
 For the Three Months EndedMarch 31,2006
    
    
    2005Revenues:Sublicense revenues
    
    $
    1,972
    
    
    $
    Research and development contracts
    
    
    1,797
    
    
    
    1,7063,769
    
    
    
    1,706Costs and expenses:Research and
development
(including
stock-based
compensation expense
of $1,230 and $264,
respectively)
    
    
    16,227
    
    
    
    17,669Selling, general and
administrative
(including
stock-based
compensation expense
of $1,912 and $252,
respectively)
    
    
    7,213
    
    
    
    3,23123,440
    
    
    
    20,900Loss from operations
    
    
    (19,671
    )
    
    
    (19,194
    )Interest income, net
    
    
    1,923
    
    
    
    563Loss from continuing operations before cumulative
effect of a change in accounting principle
    
    
    (17,748
    )
    
    
    (18,631
    )Cumulative effect of a change in accounting
principle
    
    
    172
    
    
    
    Loss from continuing operations
    
    
    (17,576
    )
    
    
    (18,631
    )Gain on the sale of discontinued operations
    
    
    1,763
    
    
    
    Discontinued operations, net of income taxes
    
    
    
    
    
    
    330Net loss
    
    $
    (15,813
    )
    
    $
    (18,301
    )Basic and diluted net loss per common share
attributable to common stockholders:Continuing operations before cumulative effect
of a change in accounting principle
    
    $
    (0.42
    )
    
    $
    (0.52
    )Cumulative effect of a change in accounting
principle
    
    
    0.00
    
    
    
    0.00Discontinued operations, net of income taxes
    
    
    0.04
    
    
    
    0.01$
    (0.38
    )
    
    $
    (0.51
    )Weighted average common shares outstanding
    
    
    42,168,261
    
    
    
    35,757,832
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MYOGEN, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 For the Three Months EndedMarch 31,2006
    
    
    2005Cash Flows From Operating Activities:Net loss
    
    $
    (15,813
    )
    
    $
    (18,301
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    279
    
    
    
    218Cumulative effect of a change in accounting principle
    
    
    (172
    )
    
    
    Gain on the sale of discontinued operations
    
    
    (1,763
    )
    
    
    Stock-based compensation expense
    
    
    3,142
    
    
    
    516Amortization of debt discount
    
    
    
    
    
    
    34Amortization of investment discount
    
    
    (77
    )
    
    
    (9
    )Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (208
    )Research and development contract amounts
    
    
    
    
    
    
    (1,250
    )Inventories
    
    
    
    
    
    
    27Prepaid expenses, accrued interest and other assets
    
    
    (492
    )
    
    
    450Accounts payable
    
    
    3,725
    
    
    
    3,027Deferred revenue
    
    
    22,515
    
    
    
    (456
    )Accrued liabilities
    
    
    (1,945
    )
    
    
    (1,190
    )Net cash provided by (used in) operating activities
    
    
    9,399
    
    
    
    (17,142
    )Cash Flows From Investing Activities:Acquisitions of property and equipment
    
    
    (467
    )
    
    
    (410
    )Purchases of investments
    
    
    (5,663
    )
    
    
    (12,748
    )Proceeds from maturities and sales of investments
    
    
    10,792
    
    
    
    14,470Net cash provided by investing activities
    
    
    4,662
    
    
    
    1,312Cash Flows From Financing Activities:Proceeds from issuance of common stock, net of issuance costs
    
    
    2,424
    
    
    
    132Payments on notes payable
    
    
    (172
    )
    
    
    (472
    )Payments on capital leases
    
    
    (19
    )
    
    
    (17
    )Net cash provided by (used in) financing activities
    
    
    2,233
    
    
    
    (357
    )Effect of exchange rates on cash
    
    
    
    
    
    
    (18
    )Net (decrease) increase in cash and cash equivalents
    
    
    16,294
    
    
    
    (16,205
    )Cash and cash equivalents, beginning of period
    
    
    138,380
    
    
    
    70,669Cash and cash equivalents of discontinued operations, beginning of period
    
    
    288
    
    
    
    589Net (decrease) increase in cash and cash equivalents
    
    
    16,294
    
    
    
    (16,205
    )Less: Cash and cash equivalents of discontinued operations, end of period
    
    
    
    
    
    
    (383
    )Cash and cash equivalents, end of period
    
    $
    154,962
    
    
    $
    54,670Supplemental Disclosure of Non-Cash Financing Activities:Acquisition of property and equipment under capital leases
    
    $
    
    
    
    $
    1
  5




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MYOGEN, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollars in thousands, except share and per share amounts)
 Note 1: Basis of Presentation
    Accounting and Reporting by Development Stage Enterprises.
 Reclassifications
 Accounting for the
Impairment or Disposal of Long-Lived Assets
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Stock-based Compensation
 Accounting for Stock Issued to Employees
  Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, an
Interpretation of APB Opinions No. 15 and 25 Accounting for Stock-Based CompensationTransition and Disclosurean
amendment of FASB Statement No. 123
 Note 2: Liquidity
   Note 3: Stock Options and Stock-based Compensation
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Impact of the Adoption of FAS 123(R)
  Research and development
    
    $
    1,230General and administrative
    
    
    1,912$
    3,142
    Valuation Assumptions
  2006Risk-free interest rate
    
    
    4.45-4.81
    %Expected life (in years)
    
    
    6Weighted-average volatility
    
    
    75.5%Expected dividend yield
    
    
    0%
 8




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WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual Life
    
    
    AggregateShares
    
    
    Exercise Price
    
    
    (in years)
    
    
    Intrinsic ValueOutstanding at January 1, 2006
    
    
    3,517,745
    
    
    $
    5.49Granted (at market)
    
    
    855,300
    
    
    
    38.42Exercised
    
    
    (371,196
    )
    
    
    5.80Forfeited/expired/cancelled
    
    
    (3,621
    )
    
    
    10.26Outstanding at March 31, 2006
    
    
    3,998,228
    
    
    $
    12.50
    
    
    
    7.53
    
    
    $
    96,794Vested and expected to vest
at March 31, 2006
    
    
    3,807,681
    
    
    $
    12.05
    
    
    
    7.46
    
    
    $
    93,826Vested at March 31, 2006
    
    
    2,052,189
    
    
    $
    3.81
    
    
    
    6.23
    
    
    $
    66,459
     Pro forma Information for Periods Prior to the Adoption of FAS 123(R)
 Accounting For Stock
Issued to Employees Accounting for Stock-Based Compensation Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services
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Net loss attributable to common stockholders, as
reported
    
    $
    (18,301
    )Add: Total stock-based employee compensation expense
included in reported net loss
    
    
    494Deduct: Total stock-based employee compensation expense
determined under fair value based method
    
    
    (1,282
    )Pro forma net loss
    
    $
    (19,089
    )Pro forma basic and diluted net loss per common share
    
    $
    (0.53
    )Basic and diluted net loss per common share, as reported
    
    $
    (0.51
    )
  2005Risk-free interest rate
    
    
    3.69-4.17
    %Expected life (in years)
    
    
    5Expected volatility
    
    
    100%Expected dividend yield
    
    
    0%
  Employee Stock Purchase Plan
 provided
  2006
    
    2005Risk-free interest rate
    
    
    4.52-4.82
    %
    
    
    2.72-3.27
    %Expected life (in years)
    
    
    0.5-2
    
    
    
    0.5-2Expected volatility
    
    
    76%
    
    
    
    100%Expected dividend yield
    
    
    0%
    
    
    
    0%
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Note 4: Discontinued Operations
 Accounting for the Impairment or Disposal
of Long-Lived Assets
  Cash and cash equivalents
    
    $
    288Trade accounts receivable
    
    
    508Finished products
    
    
    167Raw materials
    
    
    34Prepaid expenses and other assets
    
    
    274Property and equipment, net
    
    
    18Assets of discontinued operations
    
    $
    1,289Accounts payable
    
    $
    189Other liabilities
    
    
    75Liabilities of discontinued operations
    
    $
    264
  Product sales
    
    $
    909Pre-tax income from operations
    
    
    336Income taxes
    
    
    (6
    )Discontinued operations, net of income taxes
    
    $
    330
  Netherlands
    
    $
    363Germany
    
    
    262United Kingdom
    
    
    202France
    
    
    71Other
    
    
    11$
    909
    11




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Note 5: Comprehensive Loss
  Three Months EndedMarch 31,2006
    
    
    2005Net loss
    
    $
    (15,813
    )
    
    $
    (18,301
    )Change in unrealized gain (loss)
on investments available for
sale
    
    
    (7
    )
    
    
    (23
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    (11
    )Total comprehensive loss
    
    $
    (15,820
    )
    
    $
    (18,335
    )
 Note 6: Revenue Recognition
 Revenue Arrangements with
Multiple Deliverables
 Product Sales
  Research and development contracts
   12




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Note 7: Net Loss Per Common Share
   Three Months EndedMarch 31,2006
    
    
    2005Common stock related to options
    
    
    2,625,848
    
    
    
    1,571,828Warrants
    
    
    1,145,889
    
    
    
    4,521Employee stock purchase plan
    
    
    26,773
    
    
    
    Total
    
    
    3,798,510
    
    
    
    1,576,349
 Note 8: Accounts Payable
  March 31,
    
    
    December 31,2006
    
    
    2005Trade accounts payable
    
    $
    14,083
    
    
    $
    10,234Related parties
    
    
    67
    
    
    
    111$
    14,150
    
    
    $
    10,345
  13




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Note 9: Commitments and Contingencies
 Accounting for Contingencies.
 14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    the development of ambrisentan and darusentan, including projected regulatory,
commercialization and clinical trial timelines;
    
    expected trends and projections relating to sales of Flolan and our income and expense
line items; and
    
    expectations regarding our financial condition and liquidity, including the adequacy of
our existing capital resources.
  Overview
    15




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Results of Operations for the Three Months Ended March 31, 2006 and 2005
 Revenues
 Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Revenues:Sublicense revenues
    
    $
    1,972
    
    
    $
    Research and development contracts
    
    
    1,797
    
    
    
    1,706$
    3,769
    
    
    $
    1,706
 Sublicense revenues
   Research and development contracts revenue
   Costs and Expenses
 Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Costs and expenses:Research and development (including
stock-based compensation expense)
    
    $
    16,227
    
    
    $
    17,669Selling, general and administrative
(including stock-based compensation
expense)
    
    
    7,213
    
    
    
    3,231$
    23,440
    
    
    $
    20,900
 16




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Research and Development
  Three Months EndedMarch 31,2006
    
    
    2005(In thousands)DevelopmentEnoximone capsules
    
    $
    (226
    )
    
    $
    10,021Flolan
    
    
    14
    
    
    
    Ambrisentan
    
    
    10,763
    
    
    
    4,538Darusentan
    
    
    2,329
    
    
    
    1,220Total development
    
    
    12,880
    
    
    
    15,779License feesEnoximone
    
    
    
    
    
    
    Ambrisentan
    
    
    
    
    
    
    Darusentan
    
    
    
    
    
    
    Other
    
    
    59
    
    
    
    59Total license fees
    
    
    59
    
    
    
    59Discovery research
    
    
    2,058
    
    
    
    1,567Stock-based compensation expense
    
    
    1,230
    
    
    
    264Total research and development
    
    $
    16,227
    
    
    $
    17,669
   
    
    $4.7 million in expenses for several Phase 1 ambrisentan studies initiated in the
second half of 2005 that carried over into 2006;
    
    $850,000 for increased numbers of patients enrolled the ongoing ARIES extension trial;
    
    $525,000 for manufacturing, analytical testing and regulatory compliance;
    
    $350,000 for AMB-222 LFT rescue trial; and
    
    $888,000 for increased internal expenses associated with an increase in the number
of employees for the management of the ambrisentan trials.
    
    
    $1.1 million in expenses for set-up activities for Phase 3 clinical trials of darusentan;
    
    $535,000 for manufacturing, analytical testing and regulatory compliance; and
    
    $450,000 for increased internal expenses associated with an increase in the number of
employees for the management of the darusentan trials.
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Selling, General and Administrative
  
    
    $935,000 increase in market research costs;
    
    $690,000 related to increased staffing, relocation and related recruiting costs;
    
    $630,000 increase in insurance and professional service costs; and
    
    $1.7 million increase in stock-based compensation expense related to the adoption of
FAS 123(R), see discussion below.
  Stock-Based Compensation
  Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Research and development
    
    $
    1,230
    
    
    $
    264Selling, general and administrative
    
    
    1,912
    
    
    
    252$
    3,142
    
    
    $
    516
 18




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Share-Based Payment Accounting for
Stock Issued to Employees,
     Interest Income, Net
  Cumulative effect of a change in accounting principle
 Share-Based Payment Accounting for
Stock Issued to Employees,
 19




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Discontinued Operations
    Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Product sales
    
    $
    
    
    
    $
    909Operating expenses
    
    
    
    
    
    
    (573
    )Income taxes
    
    
    
    
    
    
    (6
    )$
    
    
    
    $
    330
 Liquidity and Capital Resources
      20




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Critical Accounting Policies
   
    
    revenue recognition;
    
    accounting for research and development expenses;
    
    estimating the value of our equity instruments for use in deferred stock-based
compensation calculations; and
    
    accounting for income taxes.
 Revenue Recognition
 Revenue
Recognition in Financial Statements Revenue Arrangements with
Multiple Deliverables,
 Product Sales.
 21




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Research and development contracts.
     Accounting for research and development expenses.
 22




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Valuation of equity instruments. Accounting for Stock Appreciation
Rights and Other Variable Stock Option or Award Plans, an Interpretation of APB Opinions No. 15 and
25
  Accounting for income taxes.
 23




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      
 ITEM 4. CONTROLS AND PROCEDURES
   24




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 Our business faces significant risks. These risks include those described below and may
include additional risks of which we are not currently aware or which we currently do not believe
are material. If any of the events or circumstances described in the following risks actually
occurs, our business, financial condition or results of operations could be materially adversely
affected and such events or circumstances could cause our actual results to differ materially from
the results contemplated by the forward-looking statements contained in this report. These risks
should be read in conjunction with the other information set forth in this report as well as in our
Annual Report on Form 10-K for the year ended December 31, 2005 and in our other periodic reports
on Form 10-Q and Form 8-K . We consistently update and include our risk factors in our Quarterly
Reports on Form 10-Q . Risk factors which have been substantively changed from those set forth in
our Annual Report on Form 10-K for the year ended December 31, 2005 have been marked with an
asterisk immediately following the heading of such risk factor.
 Risks Related to Our Business
 We are at an early stage of development as a company and we do not have, and may never have, any
products that generate significant revenues. *
  
    
    our product candidates may not prove to be safe and effective in clinical trials;
    
    we may not be able to obtain regulatory approvals for our product candidates, or
approvals may take longer than anticipated, or approvals may be narrower than we seek;
    
    we may not have adequate financial or other resources to complete the development and
commercialization of our product candidates; or
    
    any products that are approved may not be accepted in the marketplace.
  We
have a history of operating losses and we may never become profitable.*
  25




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If we fail to obtain additional financing, we may be unable to complete the development and
commercialization of our product candidates or continue our research and development programs. *
  
    
    seek collaborators for our product candidates at an earlier stage than otherwise would
be desirable and on terms that are less favorable than might otherwise be available; and
    
    relinquish, license or otherwise dispose of rights to technologies, product candidates
or products that we would otherwise seek to develop or commercialize ourselves on terms
that are less favorable than might otherwise be available.
 We may experience delays in our clinical development programs that could adversely affect our
financial position and our commercial prospects. *
    26




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Adverse events in our clinical trials may force us to stop development of our product candidates or
prevent regulatory approval of our product candidates.
  If our product candidates do not meet safety or efficacy endpoints in clinical evaluations, they
will not receive regulatory approval and we will be unable to market them.*
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There can be no assurance that our Phase 3 clinical development program for darusentan will be
acceptable to the FDA, EMEA or other similar agencies for regulatory approval of the compound.
   Our Phase 3 clinical trial designs for darusentan differ from the design of our prior Phase 2b
trial of darusentan.*
    Even if our products meet safety and efficacy endpoints in clinical trials, regulatory authorities
may not approve them or we may face post-approval problems that require withdrawal of our products
from the market.*
  
    
    a product candidate may not be safe or effective;
    
    the risk profile of a product candidate (e.g., teratogenicity) may outweigh the
potential or perceived benefits of the product candidate;
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
    
    the manufacturing processes or facilities we have selected may not meet the applicable
requirements; and
    
    changes in their approval policies or adoption of new regulations may require
additional work.
     Abnormal liver function test results have been reported as complications in trials of ERAs.*
  Journal of the American College of Cardiology
 ERAs, including ambrisentan and darusentan, have demonstrated toxicity, including teratogenicity,
in animals.
  29




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ERAs have been shown to increase peripheral edema and cardiovascular adverse events.
   If approved, our products may be subject to significant restrictions or we may be subject to
stringent post-marketing commitments that could affect our ability to market our products.
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Market size and market acceptance of our product candidates is uncertain.
    Our applications for regulatory approval could be delayed or denied due to problems with studies
conducted before we in-licensed our product candidates.
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If we become subject to product liability claims, the damages may exceed our insurance.*
      
    
    decreased demand for our products and product candidates;
    
    negative publicity and injury to our reputation;
    
    withdrawal of clinical trial participants;
    
    costs of related litigation;
    
    substantial monetary awards to patients and others;
    
    loss of revenues; and
    
    the inability to commercialize our products and product candidates.
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If we are unable to develop adequate sales, marketing or distribution capabilities or enter into
agreements with third parties to perform some of these functions, we will not be able to
commercialize our products effectively.*
  Since we will rely on third-party manufacturers, we may be unable to control the availability or
cost of producing our products.
  Our third-party manufacturers and their manufacturing facilities and processes are subject to
regulatory review, which may delay or disrupt our development and commercialization efforts.
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Due to our reliance on contract research organizations and other third parties to conduct clinical
trials, we are unable to directly control the timing, conduct and expense of our clinical trials.
  If we do not find development and commercialization collaborators for our product candidates, we
may have to reduce or delay product development and commercialization and increase our
expenditures.*
    
    
    collaborators may not pursue further development and commercialization of compounds
resulting from collaborations or may elect to terminate or not to renew research and
development or distribution programs;
 34




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
    
    collaborators may delay, underfund or stop product development, including clinical
trials or abandon a product candidate, repeat or conduct new clinical trials or require the
development of a new formulation of a product candidate for clinical testing;
    
    a collaborator with marketing and distribution rights to one or more of our products
may not commit enough resources to the marketing and distribution of our products, limiting
our potential revenues from the commercialization of these products; and
    
    disputes may arise delaying or terminating the research, development or
commercialization of our product candidates, or resulting in significant legal proceedings.
 Even if we receive regulatory approval for our product candidates, we will be subject to ongoing
regulatory obligations and review.*
  Our success depends on retention of our President and Chief Executive Officer and other key
personnel.
   If our discovery research program is not successful, we may be unable to develop additional product
candidates.
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Our operations may be impaired unless we can successfully manage our growth.*
  If we engage in any acquisition, we will incur a variety of costs, and we may never realize the
anticipated benefits of the acquisition.*
  Our corporate compliance program cannot guarantee that we are in compliance with all potentially
applicable regulations.*
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Our operations involve hazardous materials, and compliance with environmental laws and regulations
is expensive.
  Changes in the economic, political, legal and business environments in foreign countries in which
we do business could limit or disrupt our international sales and
operations.*
  
    
    economic problems that disrupt foreign healthcare payment systems;
    
    the imposition of governmental controls, including price controls, and changes in
regulatory requirements;
    
    less favorable intellectual property or other applicable laws;
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
    
    the inability to obtain any necessary foreign regulatory approvals of products in a
timely manner, if at all;
    
    import and export license requirements;
    
    economic weakness, including inflation, or political instability in particular foreign
economies and markets;
    
    business interruptions resulting from geo-political actions, including war and
terrorism;
    
    difficulties complying with foreign tax, employment, immigration and labor laws and
pharmaceutical regulations;
    
    unexpected changes in tariffs, trade barriers and regulatory requirements;
    
    difficulties in staffing and managing international operations; and
    
    slower collection experience outside the United States.
 Currency fluctuations may negatively affect our financial condition.
  Risks Related to Our Industry
 Our competitors may develop and market drugs that are less expensive, more effective or safer than
our products and product candidates.*
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Our products may face significant price pressures due to competition from similar products.
   The status of reimbursement from third-party payors for newly approved health care drugs is
uncertain and failure to obtain adequate reimbursement could limit our ability to generate revenue.
  
    
    government and health administration authorities;
    
    private health insurers;
    
    managed care programs; and
    
    other third-party payors.
  Health care reform measures could adversely affect our business.
  39




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Failure to obtain regulatory approval in international jurisdictions would prevent us from
marketing our products abroad.
  Ambrisentans orphan drug designation may be challenged by competitors or withdrawn by the FDA or
the EMEA.
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Changes in or interpretations of accounting rules and regulations, including recently enacted
changes relating to the expensing of stock options, could result in unfavorable accounting charges
or require us to change our compensation policies.
    Risks Related to Our Intellectual Property
 We rely on compounds and technology licensed from third parties and termination of any of those
licenses would result in the loss of significant rights.*
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If we are unable to protect our proprietary technology, we may not be able to compete effectively.*
   
    
    we or the party from whom we licensed such patents might not have been the first to
make the inventions covered by each of our pending patent applications and issued patents;
    
    we or the party from whom we licensed such patents might not have been the first to
file patent applications for these inventions;
    
    others may independently develop similar or alternative technologies or duplicate any
of our technologies;
    
    it is possible that none of our pending patent applications will result in issued
patents;
    
    the claims of our issued patents may be unenforceable or narrower than as filed and not
sufficiently broad to prevent third parties from circumventing them;
    
    we may not develop additional proprietary technologies or drug candidates that are
patentable;
    
    our patent applications or patents may be subject to interference, opposition or
similar administrative proceedings;
    
    any patents issued to us or our potential strategic partners may not provide a basis
for commercially viable products or may be challenged by third parties in the course of
litigation or administrative proceedings such as reexaminations or interferences; and
    
    the patents of others may have an adverse effect on our ability to do business.
  42




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We may be accused of infringing on the proprietary rights of third parties, which could impair our
ability to successfully commercialize our product candidates.
  
    
    defending a lawsuit, which is very expensive and time consuming;
    
    defending against an interference proceeding in the United States Patent and Trademark
Office, which also can be very expensive and time consuming;
    
    an adverse decision in a lawsuit or in an interference proceeding resulting in the loss
of some or all of our rights to our intellectual property;
    
    paying a large sum for damages if we are found to be infringing;
    
    being prohibited from making, using, selling or offering for sale our product
candidates or our products, if any, until we obtain a license from the patent holder. Such
a license may not be granted to us on satisfactory terms, if at all, and even if we are
granted a license, we may have to pay substantial royalties or grant cross-licenses to our
patents; and
    
    redesigning the manufacturing methods or the use claims of our product candidates so
that they do not infringe on the other partys patent in the event that we are unable to
obtain a license, which, even if possible, could require substantial additional capital,
could necessitate additional regulatory approval, and could delay commercialization.
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Risks Related to Our Stock
 The market price of our common stock has been and may continue to be highly volatile.*
  
    
    actual or anticipated results of our clinical trials or those of our potential competitors;
    
    actual or anticipated regulatory approvals of our products or of competing products;
    
    changes in laws or regulations applicable to our products;
    
    changes in the expected or actual timing of our development programs or those of our
potential competitors;
    
    actual or anticipated variations in quarterly operating results;
    
    actual or anticipated sales of Flolan;
    
    announcements of technological innovations by us, our collaborators or our competitors;
    
    new products or services introduced or announced by us or our competitors;
    
    changes in financial estimates or recommendations by securities analysts;
    
    conditions or trends in the biotechnology and pharmaceutical industries;
    
    changes in the market valuations of similar companies;
    
    announcements by us of significant acquisitions, strategic partnerships, joint ventures
or capital commitments;
    
    additions or departures of key personnel;
    
    disputes or other developments relating to proprietary rights, including patents,
litigation matters and our ability to obtain patent protection for our technologies;
    
    the loss of a collaborator, including GlaxoSmithKline or Novartis;
    
    developments concerning our collaborations;
    
    trading volume of our common stock;
    
    sales of our common stock by us; and
    
    sales or distributions of our common stock by our stockholders, including our officers
and directors.
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Issuance of shares in connection with financing transactions or under stock plans and outstanding
warrants will dilute current stockholders.*
   Some provisions of our charter documents and Delaware law may have anti-takeover effects that could
discourage, delay or prevent a change of control or management, even if such changes would be
beneficial to our stockholders.
  
    
    authorizing the issuance of blank check preferred stock;
    
    limiting the removal of directors by the stockholders to removal for cause;
    
    prohibiting stockholder action by written consent, thereby requiring all stockholder
actions to be taken at a meeting of our stockholders;
    
    eliminating the ability of stockholders to call a special meeting of stockholders; and
    
    establishing advance notice requirements for nominations for election to the Board of
Directors or for proposing matters that can be acted upon at stockholder meetings.
  
 ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  45




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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 10.34(1)
    
    Form of Employment Agreement entered into between Myogen and certain of
its executives, including reference schedule.10.35(1)
    
    Retirement, Consulting and General Release Agreement between Myogen and
John R. Julian, dated March 30, 2006.10.36(1)
    
    Employment and Retention Agreement between Myogen and Michael R.
Bristow, dated February 21, 2006.10.37+
    
    License Agreement between Myogen and Glaxo Group Limited, dated March
3, 2006.10.38+
    
    Distribution and Supply Agreement between Myogen and SmithKline Beecham
Corporation, dated March 3, 2006.31.1
    
    Certification of principal executive officer required by Rule 13a-14(a).31.2
    
    Certification of principal financial officer required by Rule 13a-14(a).32.1#
    
    Section 1350 Certification.
 
 (1)
    
    Indicates Management Contract or Compensatory Plan or Arrangement.+
    
    We have applied for confidential treatment with respect to portions of this agreement. Omitted
portions have been filed separately with the Securities and Exchange Commission.#
    
    The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are
not deemed filed with the Securities and Exchange Commission and are not to be incorporated by
reference into any filing of Myogen, Inc. under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form
10-Q, irrespective of any general incorporation language contained in such filing. 46




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SIGNATURES
  Date:  May 9, 2006
    MYOGEN, INC./s/ Joseph L. TurnerJoseph L. TurnerSenior Vice President, Finance and Chief
Financial Officer 47




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Exhibit Index
 EXHIBITS NO.
    
    DESCRIPTION10.34(1)
    
    Form of Employment Agreement entered into between Myogen and certain of
its executives, including reference schedule.10.35(1)
    
    Retirement, Consulting and General Release Agreement between Myogen and
John R. Julian, dated March 30, 2006.10.36(1)
    
    Employment and Retention Agreement between Myogen and Michael R.
Bristow, dated February 21, 2006.10.37+
    
    License Agreement between Myogen and Glaxo Group Limited, dated March
3, 2006.10.38+
    
    Distribution and Supply Agreement between Myogen and SmithKline Beecham
Corporation, dated March 3, 2006.31.1
    
    Certification of principal executive officer required by Rule 13a-14(a).31.2
    
    Certification of principal financial officer required by Rule 13a-14(a).32.1#
    
    Section 1350 Certification.
 
 (1)
    
    Indicates Management Contract or Compensatory Plan or Arrangement.+
    
    We have applied for confidential treatment with respect to portions of this agreement. Omitted
portions have been filed separately with the Securities and Exchange Commission.#
    
    The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are
not deemed filed with the Securities and Exchange Commission and are not to be incorporated by
reference into any filing of Myogen, Inc. under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form
10-Q, irrespective of any general incorporation language contained in such filing. 48