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                                   EXHIBIT 99

                                MGI PHARMA, INC.
                               Report on Form 10-Q
                               September 30, 2001

Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information without fear of litigation so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the statement. We desire to take
advantage of these "safe harbor" provisions and are filing this Exhibit 99 in
order to do so. Accordingly, we hereby identify the following important factors
which could cause our actual results to differ materially from any such results
which may be projected, forecast, estimated or budgeted by us in forward-looking
statements made by us from time to time in reports, proxy statements,
registration statements and other written communications, or in oral
forward-looking statements made from time to time by the company's officers and
agents. We do not intend to update any of these forward-looking statements after
the date of this Form 10-Q to conform them to actual results.

If we do not have net income in the future, we may be unable to continue our
operations.

We have a limited history of profitability. We expect to incur significant
research and development expenses over the next several years as we continue to
devote substantial resources to the development and commercialization of
irofulven, MG98 and other product candidates. Therefore, unless we are able to
increase significantly revenues from the launch of additional products, we will
not have net income. Furthermore, because research and development costs are
generally independent of revenues, a delay or decline in revenues from the sale
of our currently available products could cause our operating results to decline
significantly in any given quarter. If we continue to sustain losses, we may be
unable to continue our business operations as planned.

Our operating results may fluctuate significantly, which may adversely affect
our stock price.

If our operating results do not meet the expectations of investors or securities
analysts, our stock price may decline. Our operating results may fluctuate
significantly from period to period due to a variety of factors including:

         o        changing demand for our current products, particularly Salagen
                  Tablets;

         o        third parties introducing competing products;

         o        the pace and breadth of our development programs;

         o        expenditures we incur to acquire, license, develop and promote
                  additional products;

         o        availability of product supply from third-party manufacturers;

         o        changes in sales and marketing expenditures; and

         o        the timing of licensing and royalty revenues.

For the nine months ended September 30, 2001, we had a loss of $24.6 million,
compared to a loss before cumulative effect of change in accounting principle of
$10.1 million for the year ended December 31, 2000. The continuing pattern of
losses is primarily a result of increased research and development spending,
including license fees for palonosetron (a cancer supportive care product in
Phase 3 development) and related support functions.

Variations in the timing of our future revenue and expense could also cause
significant fluctuations in operating results from period to period and may
result in unanticipated earnings shortfalls or losses. Therefore, we do not
believe that period-to-period comparisons of our operating results are
necessarily meaningful. However, securities
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analysts and investors may set expectations about our business based upon past
operating results. Consequently, if our operating results do not follow past
trends, our stock price may decline.

If we fail to obtain additional capital to grow our business, we will be unable
to complete our product acquisition, licensing and development programs.

We need to raise additional funds for various reasons including the following:

         o        to develop fully irofulven and other acylfulvene analogs;

         o        to develop products we have acquired or licensed;

         o        to acquire or license additional products or product
                  candidates;

         o        to support the marketing and sales of additional products;

         o        to obtain necessary working capital; and

         o        to fund operating losses.

We may seek additional funding through public and private financing, including
equity and debt financing. Adequate funds for these purposes may not be
available when needed or on terms acceptable to us. Insufficient funds may cause
us to delay, scale back, or abandon some or all of our product acquisition and
licensing programs and product development programs.

We depend upon the sale of Salagen Tablets for substantially all of our product
revenues. If any factor adversely impacts sales of Salagen Tablets, our product
revenues will decrease and may decrease significantly.

We currently derive substantially all of our product revenues from the sale of
Salagen Tablets. U.S. sales of Salagen Tablets represented 88 percent of our
total product sales and 80 percent of our total revenue for the nine month
period ended September 30, 2001, and represented 96 percent of our total product
sales and 82 percent of our total revenue for the year ended December 31, 2000.
Any factor adversely affecting sales of Salagen Tablets could cause our product
revenues to decrease and our stock price to decline. In March 2001, our orphan
drug status for Salagen Tablets as a treatment for the symptoms of
radiation-induced xerostomia in head and neck cancer patients expired. Our
orphan status for Salagen as a treatment of symptoms associated with Sjogren's
syndrome expires in April 2005. As a result, competing generic products may
enter these markets. In addition, we are aware of two currently marketed
products that compete in the same or similar markets as Salagen Tablets. If
sales of Salagen Tablets decline as a result of this competition, or for any
other reason, our product revenues will decrease and our stock price could
decline.

If we do not receive regulatory approvals of irofulven or any of our other
product candidates, or if regulatory approval is delayed for any reason, we will
be unable to commercialize and sell our products as we expect.

Prior to marketing, each of our product candidates must undergo an extensive
regulatory approval process conducted by the FDA in the United States and by
comparable agencies in other countries. The approval process can take many years
and require the expenditure of substantial resources. There is a risk that the
FDA or a foreign regulatory authority will not approve in a timely manner, if at
all, any product we develop. Generally, the FDA approves for sale only a very
small percentage of newly discovered pharmaceutical compounds that enter
preclinical development. There is also a risk that regulatory authorities in the
United States and elsewhere may not allow us to conduct planned additional
clinical testing of irofulven or any of our other product candidates, or that,
if permitted, this additional clinical testing will not prove that these product
candidates are safe and effective to the extent necessary to permit us to obtain
marketing approvals from regulatory authorities. Once the FDA approves a product
for sale, we must also submit any labeling, advertising and promotional material
to the FDA for review. There is a risk that the FDA will prohibit use of the
marketing material in the form we desire, which could limit the sale of our
products and could cause our product revenues to decrease and our stock price to
decline.

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We are not in control of the development process for palonosetron, a cancer
supportive care product in Phase 3 development. The licensor, Helsinn Healthcare
SA, is the holder of the investigational new drug application and is sponsoring
the studies and trials that are expected to become the basis of a new drug
application. The studies and trials are being conducted with the assistance of
contract lab and research organizations under the direction of Helsinn.

We currently utilize approximately 86 medical institutions and laboratories to
conduct our preclinical and clinical testing. This research must comply with
good clinical and laboratory practices as required by the FDA. One contract
research organization is responsible for managing 55 of the medical institutions
utilized to conduct our clinical testing.

We may encounter delays or rejection due to: (1) changes in FDA policy during
the period of development, or (2) changes in the requirements for regulatory
review of each submitted new drug application. Even if the FDA approves the
marketing application of a product, this approval may entail commercially
unacceptable limitations on the uses, or "indications," for which a product may
be marketed.

The FDA also subjects an approved product and its manufacturer to continual
regulatory review. The discovery of previously unknown problems with a product
may result in restrictions or sanctions on this product or manufacturer that
could affect the commercial viability of the product or could require withdrawal
of the product from the market.

Clinical trials are complex and unpredictable and may produce unexpected results
that could affect our ability to commercialize our products.

Before obtaining regulatory approvals for the commercial sale of any product
under development, including irofulven, we must demonstrate through preclinical
studies and clinical trials that the product is safe and effective for use in
each target indication. The results from preclinical animal studies and early
human clinical trials may not be predictive of the results that we will obtain
in larger scale testing. Some of the results we are announcing from Phase 2
clinical trials are interim results and may not be predictive of future results,
including final results from such Phase 2 trials, because, among other factors,
patient enrollment and the time period for evaluating patient results are not
complete. If we fail to adequately demonstrate the safety and efficacy of a
product candidate, the FDA would prevent regulatory approval of the product. The
appearance of unacceptable toxicities or side effects during clinical trials or
commercial use could interrupt, limit, delay or abort the development of a
product or, if previously approved and launched, require its withdrawal from the
market. A number of companies in the biotechnology industry have suffered
significant setbacks in advanced clinical trials, even after experiencing
promising results in previous animal and human studies.

The time required to complete clinical trials is dependent upon, among other
factors, the rate of patient enrollment. Patient enrollment is a function of
many factors, including:

         o        the size of the patient population;

         o        the nature of the protocol requirements;

         o        the diversion of patients to other trials or marketed
                  therapies;

         o        our ability to recruit and manage clinical centers and
                  associated trials;

         o        the proximity of patients to clinical sites; and

         o        the patient eligibility criteria for the study.

Other factors, such as lack of efficacy and unacceptable toxicities, may result
in increased costs and delays or termination of clinical trials prior to
completion. In addition, delays in manufacturing of product for our clinical
trials could impact our ability to complete our clinical trials as planned.

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We depend on a single supplier to provide us with the active ingredient for the
production of Salagen Tablets. If such supplier terminates its relationship with
us, or is unable to fill our demand for the ingredient, we may be unable to
produce Salagen Tablets for commercial sale.

We rely on the Fine Chemicals Division of Merck KgaA as our sole and exclusive
supplier of oral-grade pilocarpine hydrochloride, the active pharmaceutical
ingredient in Salagen Tablets. To our knowledge, there is currently no other
producer of pharmaceutical-grade pilocarpine hydrochloride that is capable of
meeting our commercial needs. If our relationship with Merck KGaA terminates, or
Merck KGaA is unable to meet our needs for any reason, we will need to find an
alternative source of pilocarpine hydrochloride. If we are unable to identify an
alternate source, we may be unable to continue producing Salagen Tablets for
commercial sale. Even if we were able to procure adequate supplies of
pilocarpine hydrochloride from an alternate source, any disruption in our supply
of pilocarpine hydrochloride could have a material adverse effect on our ability
to meet customer demand for Salagen Tablets, which could cause our product
revenues to decrease and our stock price to decline.

If our third-party manufacturer of Salagen Tablets or any of our other products
ceases operations or fails to comply with applicable manufacturing regulations,
we may not be able to meet customer demand in a timely manner, if at all.

We do not have manufacturing facilities and we rely on one third-party
manufacturer, Patheon Inc. (formerly known as Global Pharm, Inc.), for the
production of Salagen Tablets and other third-party manufacturers for our other
products. We intend to continue to rely on others to manufacture any future
products, including any products that we may acquire or license, and we have no
plans to establish manufacturing facilities. The manufacture of our products is,
and will be, subject to current "good manufacturing practices" regulations
prescribed by the FDA or other standards prescribed by the appropriate
regulatory agency in the country of use. There is a risk that our manufacturers,
including the current manufacturer of Salagen Tablets, will not comply with all
applicable regulatory standards, and may not be able to manufacture Salagen
Tablets or any other product for commercial sale. If this occurs, we might not
be able to identify another third-party manufacturer on terms acceptable to us,
or any other terms.

Material changes to an approved product, such as manufacturing changes or
additional labeling claims, require further FDA review and approval. Once we
obtain approval, the FDA may withdraw it if previously unknown problems are
discovered. Further, if we, our corporate partners or our contract manufacturers
fail to comply with applicable FDA and other regulatory requirements at any
stage during the regulatory or manufacturing process, the FDA may impose
sanctions, including:

         o        marketing or manufacturing delays;

         o        warning letters;

         o        fines;

         o        product recalls or seizures;

         o        injunctions;

         o        refusal of the FDA to review pending market approval
                  applications or supplements to approval applications;

         o        total or partial suspension of production;

         o        civil penalties;

         o        withdrawals of previously approved marketing applications; or

         o        criminal prosecutions.

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We may derive additional revenues from product co-promotion arrangements we may
enter into in the future. If these arrangements terminate for any reason, our
revenues could decrease and our stock price could decline.

We may enter into additional co-promotion arrangements in the future. These
co-promotion arrangements might provide us with revenue to partially fund our
operations. We would have no control over how our co-promotion partners run
their own businesses, and existing or future co-promotion partners might pursue
and develop drugs that competed with our co-promoted products. If our
co-promotion partners terminated these arrangements for any reason, or if we
failed to successfully co-promote these products, our revenues could decrease
and our stock price could decline.

Our business strategy depends on our ability to identify, acquire, license and
develop product candidates and identify, acquire or license approved products.

As part of our business strategy we plan to identify, acquire, license and
develop product candidates and identify, acquire and license approved products
for markets that we can reach through our marketing and distribution channels.
If we fail to acquire or license, develop and commercialize additional products
or product candidates, or fail to promote or market commercially successful
products, we may not achieve expectations of our future performance and our
stock price could decline. Because we do not directly engage in basic research
or drug discovery, we must rely upon third parties to sell or license product
opportunities to us. Other companies, including some with substantially greater
financial, marketing and sales resources, are competing with us to acquire or
license such products or product candidates. We may not be able to acquire or
license rights to additional products or product candidates on acceptable terms,
if at all. Furthermore, we may not be able to successfully develop any product
candidates we acquire or license. In addition, we may acquire or license new
products with different marketing strategies, distribution channels and bases of
competition than those of our current products. Therefore, we may not be able to
compete favorably in those product categories.

If we are unable to maintain relationships with third-party collaborators or
enter into new relationships, our research and development costs may increase,
and we may not be able to develop any of our product candidates in a timely
manner, if at all.

We enter into relationships with third-party collaborators, including
manufacturers and suppliers, to assist us in the development of our product
candidates. Our collaborators include public research institutions, research
organizations, teaching and research hospitals, community-based clinics, testing
laboratories, contract product formulation organizations, contract packaging and
distribution companies, manufacturers, suppliers and license partners. We
consider our arrangements with Patheon Inc., Helsinn Healthcare SA, MethylGene
Inc., and Dainippon Pharmaceutical Co. Ltd. to be significant. If any of our
collaborators breaches or terminates its agreement with us, or otherwise fails
to conduct its collaborative activities in a timely manner, we may experience
significant delays in the development or commercialization of the product
candidate or the research program covered by the agreement and we may need to
devote additional funds or other resources to these activities. Furthermore, if
we are unable to enter into new or alternative arrangements to continue these
activities, or are unable to continue these activities on our own, we may have
to terminate the development program.

Our continued success will depend in large part upon the efforts of outside
parties. For the research, development, manufacture and commercialization of our
products, we will likely enter into various arrangements with other
corporations, licensors, licensees, outside researchers, consultants and others.
However, we cannot be certain of the actions these parties will take, and there
is a risk that:

         o        we will be unable to negotiate acceptable collaborative
                  arrangements to develop or commercialize our products;

         o        any arrangements with third-parties will not be successful;

         o        third-party collaborators will not fulfill their obligations
                  to us under any arrangements entered into with them; or

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         o        current or potential collaborators will pursue treatments for
                  other diseases or seek alternative means of developing
                  treatments for the diseases targeted by our programs or
                  products.


We rely on multinational and foreign pharmaceutical companies to develop and
commercialize our products and product candidates in markets outside the United
States.

Our strategy for commercialization of our products in foreign markets is to
enter into development and marketing alliances with multinational and foreign
pharmaceutical companies. We have entered into alliances with various companies
related to the marketing of Salagen Tablets in markets outside the United
States. We have entered into an agreement with Dainippon Pharmaceutical Co.,
Ltd. for the development and commercialization of irofulven in Japan, with
Kissei Pharmaceutical Co., Ltd. for the development and commercialization of
Salagen Tablets in Japan and Pharmacia Corporation (formerly Pharmacia & Upjohn
Company) for the development and commercialization of Salagen Tablets in Canada.
Our continued relationships with strategic partners are dependent in part on the
successful achievement of development milestones. If we or our partners do not
achieve these milestones, or we are unable to enter into agreements with our
partners to modify their terms, these agreements could terminate, which could
cause a loss of licensing revenue, a loss of future commercial product potential
and a decline in our stock price.

We depend upon licensing revenue from our marketing partners for a material
portion of our total revenue. Future licensing revenues from these partners will
likely fluctuate from quarter to quarter and year to year depending on:

         o        the achievement of milestones by us or our partners;

         o        the amount of product sales and royalty-generating activities;

         o        the timing of initiating additional licensing relationships;
                  and

         o        the continuing obligation, if any, of the Company related to
                  the license payments.

Historically, under our revenue recognition policy, we recognized revenue from
initial license fees in the period in which the agreement was signed if there
were no significant performance obligations remaining. Revenue from milestone
payments was recognized when the milestones were achieved. In December 1999, the
SEC issued Staff Accounting Bulletin No. 101--Revenue Recognition in Financial
Statements, or SAB 101. SAB 101 requires the deferral of revenue until the
culmination of the earnings process. Accordingly, license fees and milestone
payments must be deferred and recognized over the period during which the
revenue is deemed to be earned. Our required implementation of SAB 101,
beginning in the fourth quarter of 2000 with retroactive effect to January 1,
2000, altered the revenue recognition stream with respect to licensing
arrangements--generally requiring some payments previously recorded in our
revenue line item to be deferred and amortized into revenue over a period of
time. We implemented SAB 101 with respect to licensing arrangements using a
contingency-adjusted performance model. Under this method, revenue related to
up-front, time-based and performance-based payments are recognized over the
entire contract performance period, starting with the contract's commencement,
but not prior to the removal of any contingencies for each individual milestone.

Under this method, we recognize the aggregate of nonrefundable up-front and
time-based fees ratably over the effective term of the underlying license and
related supply arrangements. We recognize performance-based, contingent license
milestone amounts on a pro rata basis in the period the licensee achieves the
performance criteria to the extent of the timing of the achievement of the
milestone in relation to the term of the underlying arrangements--approximating
the extent of contingent performance through the date of the milestone
achievement in relation to the full term of the underlying arrangements. We
recognize the remaining portion of any milestone payments over the remaining
term of the underlying arrangements.

We reported a change in accounting principle in accordance with APB Opinion No.
20, Accounting Changes, for the cumulative effect of the accounting change as of
January 1, 2000 in our fourth quarter 2000 statement of operations. The
cumulative effects of this change through September 30, 2000 were $10.9 million
in the form of a $9.4 million charge to 2000 net earnings as of January 1 and a
$1.5 million restatement of the nine month period ended September 30, 2000.
Results for the first three quarters have been restated for any subsequent
presentation of 2000 financial results. Amounts previously recognized as revenue
but deferred as a result of the implementation of SAB

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101 will be amortized into future license revenue over the expected periods of
benefit from these collaborative arrangements. The $9.4 million increase in
deferred revenue as a result of the cumulative effect of the accounting change
as of January 1, 2000 will be amortized into licensing revenue based upon the
terms of the underlying arrangements at an estimated rate of approximately
$589,000 in each of the years 2000 through 2014 and approximately $569,000 in
2015.

If we fail to compete successfully with our large, multinational competitors,
our product revenues could decrease and our stock price could decline.

Competition in the pharmaceutical industry is intense. Most of our competitors
are large, multinational pharmaceutical companies that have considerably greater
financial, sales, marketing and technical resources than we do. Most of our
present and potential competitors also have dedicated research and development
capabilities that may allow them to develop new or improved products that
compete with our products. Currently, MedImmune, Inc. and Snow Brand
Pharmaceuticals, Inc. have drugs that are approved for sale and compete in the
same markets as Salagen Tablets. Other pharmaceutical companies are developing
products which, if approved by the FDA, will compete directly with Salagen
Tablets. Our competitors could also develop and introduce generic drugs
comparable to Salagen Tablets, or drugs or other therapies that address the
underlying causes of the symptoms that Salagen Tablets treat. If a product
developed by a competitor is more effective than our product, or priced lower
than our product, then our product revenue could decrease and our stock price
could decline.

We are dependent on our key personnel. If we are not able to attract and retain
key employees and consultants, our product development, marketing and
commercialization plans could be harmed.

We are highly dependent on the members of our scientific and management staff.
If we are not able to retain any of these persons, our product development,
marketing and commercialization plans may suffer and our stock price could
decline. In particular, we depend on the services of Charles N. Blitzer, our
President and Chief Executive Officer, and other members of senior management.
We maintain a key person life insurance policy for Mr. Blitzer in the amount of
$5 million. None of our executive officers has an employment agreement with us.
If we are unable to retain our scientific and management staff, we will need to
hire additional qualified personnel for us to pursue our product development,
marketing and commercialization plans. We may not be able to attract and retain
personnel on acceptable terms, given the competition for such personnel among
biotechnology, pharmaceutical and healthcare companies, universities and
non-profit research institutions. If we are not able to attract and retain
qualified personnel, our product development, marketing and commercialization
plans will suffer and our stock price could decline.

If we are unable to keep up with rapid technological changes in the
pharmaceutical or biotechnology industries, we may be unable to continue our
operations.

The pharmaceutical and biotechnology industries have experienced rapid and
significant technological change. We expect that pharmaceutical technology and
biotechnology will continue to develop rapidly. Our future success will depend,
in large part, on our ability to develop and maintain technology that is
competitive. If other companies achieve technological developments in their
products, our products may become obsolete before they are marketed or before we
recover any of our development and commercialization expenses incurred with
respect to such products. In addition, alternative therapies or new medical
treatments could alter existing treatment regimens, and thereby reduce the need
for one or more of our products, which could result in the termination of the
development in one or more of our product candidates, or in the decline in sales
of one of our approved products, which could cause our stock price to decline.

If we are unable to obtain intellectual property protection, or protect our
proprietary technology, we may be unable to compete effectively and our stock
price may decline.

The FDA awarded us orphan drug status for Salagen Tablets in 1994 as a treatment
for the symptoms of xerostomia induced by radiation therapy in head and neck
cancer patients and in 1998 for the symptoms of dry mouth associated with
Sjogren's syndrome. Our orphan drug protection for Salagen Tablets expired in
March 2001 for the treatment of symptoms of radiation-induced xerostomia in head
and neck cancer patients and will expire in 2005 for the Sjogren's syndrome
indication. Upon expiration of our orphan drug protection for Salagen Tablets,
we may face competition from manufacturers of generic versions of Salagen
Tablets.

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We hold an exclusive, worldwide license on patents and patent applications
covering acylfulvene proprietary rights. The license applicable to these
technologies is subject to certain statutory rights held by the U.S. government.
Even though we have licensed these patents, we may not have exclusive rights to
all possible acylfulvene analogs, all possible methods of using acylfulvene
analogs to treat tumors or all possible synthetic methods for preparing
acylfulvenes. In addition, we licensed rights to patents and patent applications
covering MG98, other inhibitors of DNA methyltransferase and palonosetron.
Protection of these rights and creation of additional rights involve joint
responsibilities between us and the respective license party.

Our pending patent applications, those we may file in the future, or those we
license from third parties, may not result in patents being issued. Patents, if
issued, may be challenged, invalidated or circumvented. In addition, other
entities may develop similar technologies that fall outside the scope of our
patents. Thus, any patent rights that we own or license from third parties may
not provide sufficient protection against potential competitors.

In the event that our technologies or activities taken in the course of
developing or selling our products infringe the patents or violate other
proprietary rights of third parties, we and our corporate partners may be
prevented from pursuing product development or commercialization.

In addition to patents, we rely on trade secrets and proprietary know-how. We
protect our proprietary technology and processes in part by confidentiality
agreements with our collaborative partners, employees and consultants. There is
a risk that:

         o        these confidentiality agreements will be breached;

         o        we will not have adequate remedies for any breach of these
                  agreements;

         o        our trade secrets will otherwise become known; or

         o        our trade secrets will be independently discovered and used by
                  competitors.

The biotechnology and pharmaceutical industries have been characterized by
litigation regarding patents and other intellectual property rights. If we
become involved in any litigation, interference or other administrative
proceedings, we will incur substantial expense and the efforts of our technical
and management personnel will be diverted. An adverse determination may subject
us to significant liabilities or require us to cease using the technology or to
seek licenses that may not be available from third parties on commercially
favorable terms, if at all, or to cease manufacturing and selling our products.
This could cause us to terminate the development of one or more of our product
candidates, to discontinue marketing an existing product, or to pay royalties to
a third party. Any of these events could result in a decline in our stock price.

If the use of one of our products harms people, we may be subject to costly and
damaging product liability claims.

We face exposure to product liability claims in the event that the use of our
product is alleged to have harmed someone. Although we have taken, and continue
to take, what we believe are appropriate precautions, there is a risk that we
will not be able to avoid significant product liability exposure. We currently
have product liability insurance in the amount of $15 million per occurrence and
in the aggregate for the year. There is a risk that our insurance will not be
sufficient to cover any potential claims. There is also a risk that adequate
insurance coverage will not be available in the future on commercially
reasonable terms, if at all. The successful assertion of an uninsured product
liability or other claim against us could cause us to incur a significant
expense to pay such a claim, could adversely affect our product development and
could cause a decline in our product revenue and stock price.

In addition to product liability risks associated with sales of our products, we
may be liable to the claims of individuals who participate in clinical trials of
our products. A number of patients who participate in trials are already
critically ill when they enter a trial. The waivers we obtain may not be
enforceable and may not protect us from liability or the costs of product
liability litigation. Our product liability insurance may not provide adequate
protection against potential liabilities. Moreover, we may not be able to
maintain our insurance on acceptable terms. As a result of these factors, a
product liability claim, even if successfully defended, could cause us to incur
a

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significant expense to defend such a claim, could adversely affect our product
development and could cause a decline in our product revenue and stock price.

If we issue a product recall, we may not sell as much of our products in the
future and we may incur significant expenses.

The FDA or other government agencies having regulatory authority for product
sales may request product recalls or we may issue product recalls. These product
recalls may occur due to manufacturing issues, safety concerns or other reasons.
Although none of our products have been recalled, product recalls may occur in
the future on these or other grounds. We do not carry any insurance to cover the
risk of a product recall. Any product recall could have a material adverse
effect on our product revenue and could cause our stock price to decline.

If we or patients using our products are unable to obtain adequate reimbursement
from government health administration authorities, private health insurers and
other organizations, our product sales and stock price could decline.

Our profitability will depend in part on: (1) the price we are able to charge
for our products, and (2) the availability of adequate reimbursement for our
products from third-party payors, such as government entities, private health
insurers and managed care organizations. Salagen Tablets generally have been
eligible for reimbursement from third-party payors, however, third-party payors
are increasingly challenging the pricing of medical products and services. There
is much uncertainty as to the pricing flexibility pharmaceutical companies will
have with respect to newly approved healthcare products. In the United States,
we expect that there will continue to be a number of federal and state proposals
to implement government control of pricing and profitability of prescription
pharmaceuticals. Cost controls, if mandated by a government agency, could
decrease the price that we receive for our current or future products. Cost
controls could also prevent the recovery of potentially substantial development
costs and an appropriate profit margin. This could cause our product revenues or
revenue expectations to decrease and our stock price to decline.

There is also much uncertainty about the reimbursement status of healthcare
products. Federal and state regulations govern or influence the reimbursement
status of healthcare products in many situations. Although third-party
reimbursement is not currently an issue for us, there is a risk that
reimbursement will not be available in the future for our products, or that such
third-party reimbursement will not be adequate. If government entities and other
third-party payors do not provide adequate reimbursement levels for our
products, our product development and product revenues would be materially and
adversely affected and our stock price could decline. In recent years, various
parties have proposed a number of legislative and regulatory proposals aimed at
changing the nation's healthcare system. These proposals, if enacted, could have
a material adverse effect on our product development and product revenues and
could cause our stock price to decline. In certain countries, regulatory
authorities must also approve the sales price of a product after they grant
marketing approval. There is a risk that we will not be able to obtain
satisfactory prices in foreign markets even if we obtain marketing approval from
foreign regulatory authorities.

Our operations, and the operations of our third-party contractors, involve
hazardous materials that could expose us to liability if environmental damage
occurs.

Our business activities involve the controlled use of hazardous materials. We
cannot eliminate the risk of accidental contamination or injury from these
materials. In the event of an accident or environmental discharge, third parties
may hold us liable for any resulting damages, which may exceed our financial
resources and may have a material adverse effect on our product development and
product revenues.

Our stock price is volatile, which may result in significant losses to
shareholders.

There has been significant volatility in the market prices of pharmaceutical and
biotechnology companies' securities. Various factors and events may have a
significant impact on the market price of our common stock. These factors
include:

         o        fluctuations in our operating results;

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         o        announcements of technological innovations or acquisitions or
                  licensing of therapeutic products or product candidates by us
                  or our competitors;

         o        published reports by securities analysts;

         o        positive or negative progress with our clinical trials;

         o        governmental regulation, including healthcare reimbursement
                  policies;

         o        developments in patent or other proprietary rights;

         o        developments in our relationship with collaborative partners;

         o        public concern as to the safety and efficacy of our products;
                  and

         o        general market conditions.

The trading price of our common stock has been, and could continue to be,
subject to wide fluctuations in response to these factors, including the sale or
attempted sale of a large amount of our common stock into the market. Our stock
price ranged from $7.50 to $54.75 per share during the twenty-one month period
ended September 30, 2001. Broad market fluctuations may also adversely affect
the market price of our common stock.

Our charter documents, our shareholder rights plan and Minnesota law contain
provisions that could delay or prevent an acquisition of our company.

Our charter documents contain provisions that may discourage third parties from
seeking to acquire our company. These provisions include:

         o        advance notice requirements for shareholder proposals and
                  nominations; and

         o        the authority of the board of directors to issue, without
                  shareholder approval, preferred stock with such terms as the
                  board of directors may determine.

In addition, our board of directors has adopted a shareholder rights plan, or
"poison pill," which enables our board of directors to issue preferred stock
purchase rights that would be triggered by an acquisition of 15 percent or more
of the outstanding shares of our common stock. These provisions and specific
provisions of Minnesota law relating to business combinations with interested
shareholders may have the effect of delaying, deterring or preventing a merger
or change in control. Some of these provisions may discourage a future
acquisition of our company even if shareholders would receive an attractive
value for their shares or if a significant number of our shareholders believed
such a proposed transaction to be in their best interests. As a result,
shareholders who desire to participate in such a transaction may not have the
opportunity to do so.

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