EXHIBIT 99



GTC BIOTHERAPEUTICS, INC.



Important Factors Regarding Forward-Looking Statements



March 2005



In this Exhibit 99, we, us, our and GTC refer only to GTC Biotherapeutics, Inc. and its subsidiaries.



From time to time, we may make forward-looking public statements, such as statements concerning our then expected future
revenues or earnings, prospects for clinical trials or regulatory approvals, or our projected plans for research and development programs and collaborations, as well as other estimates relating to future operations. Forward-looking statements may be
in reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), in press releases or informal statements made with the approval of an authorized executive officer. In some cases, words or phrases of expectation
or uncertainty like expect, believe, continue, anticipate, estimate, may, will, could, opportunity, future, project,
intend, plan, or similar expressions are intended to identify forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended, as enacted
by the Private Securities Litigation Reform Act of 1995.



We
caution you not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. In addition, we advise you that the factors listed below, as well as other factors we have not currently identified,
could affect our financial or other performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods or events in any forward-looking statement.



We will not undertake and specifically decline any obligation
to publicly release revisions to these forward-looking statements to reflect either the circumstances after the date of the statements or the occurrence of events which may cause us to re-evaluate our forward-looking statements.



In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act, we are hereby filing the following cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements made by us or on our
behalf:



Risks Related to Our Business



We expect to incur future operating losses and may never become profitable.



We have had operating losses since our inception, and we
expect losses to continue for the next several years. From our inception in 1993 to January 2, 2005, we have incurred cumulative losses of approximately $180 million. These losses have resulted principally from the costs of our research and
development activities and losses from our discontinued operations. Our net losses for fiscal years ended 2002, 2003 and 2004 have been $29.5 million, $29.5 million, and $24.3 million, respectively. We expect to continue incurring significant
operating losses for at least the next several years as we incur increased costs and expenses associated with clinical trials and submissions for regulatory approvals. We may never receive material revenues from product sales or become profitable.



We depend on collaboration agreements for our current revenue.



Our revenues and business strategy depend largely on our
entering into additional development and marketing agreements with third parties, including development programs for our own therapeutic



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compounds. We may not be able to establish these agreements on commercially acceptable terms, if at all, depending on the market position of our technology
and our compounds. The willingness of potential collaborators to enter into agreements with us depends on factors such as the perceived technological or economic advantages of transgenic production and our ability to structure a mutually acceptable
collaboration arrangement. In the case of our own programs for development of proteins proprietary to us, known as internal programs, the attractiveness of the programs commercial potential or other advantages the program offers the partner
will also affect our ability to obtain collaborators. Even if we enter into development agreements, the collaborations may ultimately be unsuccessful, our partners could terminate the agreements or the agreements could expire before meaningful
developmental milestones are reached. The failure of any significant number of these collaborations could have a material adverse effect on our business.



The majority of our collaborations have been external programs that involve proteins proprietary to our partners. Much of the continuing revenue, if any,
that we may receive under these collaborations will depend upon our partners willingness and ability to successfully develop and commercially introduce, market and sell the version of the collaborators product derived from our transgenic
production systems. Our partners may choose competitive production technologies or competitive products outside of their collaborations with us, which could have a material adverse effect on our business.



To date, the scope of our external collaboration programs have generally been
limited to transgenically producing quantities of targeted proteins. These initial development projects may not successfully produce the desired protein quantities or lead to collaboration agreements to commercially produce any proteins. The success
of any collaboration ultimately will be dependent upon our collaborator deciding to seek regulatory approval and to market our transgenically produced version of their product or to invest in a transgenically produced product that we have developed.
Depending upon the terms of any future collaborations, our role in the collaboration will often be limited to the production aspects of the proteins. As a result, we may also be dependent on collaborators for other aspects of the development of any
transgenically produced product, including preclinical and clinical testing and regulatory approval, and marketing and distribution.



We face uncertainty in raising additional funds for our operations.



In order to develop and bring our transgenically produced products to market, we and our collaboration partners must commit substantial resources to
costly and time-consuming research, preclinical testing and clinical trials. As of January 2, 2005, we had $1.8 million in cash and cash equivalents and $20.4 million in marketable securities, which were offset in part by our $14.3 million in
current liabilities. We expect our current cash resources and partnering revenue opportunities to be sufficient to fund operations through the end of 2005. Our projected revenue and cash use depends upon attracting additional partnering revenues
from existing and additional collaborations for both external programs and marketing and distribution collaborations. If we do not substantially achieve our revenue projections, we could be forced to delay, scale back or eliminate one or more of our
research and development programs.



Our cash requirements may
vary materially from those now planned, depending upon the results of research and development, competitive and technological advances, the terms of future collaborations, regulatory requirements and other factors. If our business does not become
profitable before we exhaust existing resources, we will need to obtain additional financing, through public or private sources, including debt or equity financing, or through collaborative or other arrangements with corporate partners. Depending on
the state of the capital markets, interest rates, our financial profile and other factors at that time, we may not be able to obtain adequate funds on acceptable terms when needed. If we raise capital through the sale of equity, or securities
convertible into equity, existing shareholders proportionate ownership in us will be reduced. If we cannot obtain financing, we could be forced to delay, scale back or eliminate some of our research and development programs.



Transgenic technology is in a relatively early stage.



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Developing products based on transgenic technology is subject to significant technological risks. Most of
our transgenically produced products are in the early development stage. Each DNA construct is unique and it is possible that it might not be expressed in the transgenic animals milk at a level that is commercially viable. Purifying the
recombinant protein out of the milk to use as a biotherapeutic may be too difficult to be commercially feasible. In addition, production of the recombinant protein may have negative effects on the health of either the mammary gland or more
systematically on the animal as a whole. This would compromise the ability of the animal to produce the recombinant protein. Directing the mammary gland to produce additional proteins in the milk could negatively affect lactation, thereby shutting
down milk production. The mammary gland may also modify a protein in such a manner that it is non-functional or harmful to human subjects. It is also possible that there may be disease agents present in goats or cows that would prevent the use of
products derived from these animals. If an as yet unknown disease was identified that could not be effectively mitigated, government agencies may confiscate or destroy the animals, or prevent the utilization of their milk. Any of these governmental
actions would prevent the use of the recombinant proteins.



To
our knowledge, no other entity has completed human clinical trials necessary to receive marketing authorization in the United States or Europe for any protein produced in the milk of transgenic animals and until European regulatory authorities
approve our application for marketing authorization of ATryn® in Europe, we will not have confirmation that our ATryn® trials are sufficient for approval in Europe. If we are unable to complete all clinical trials that may be required, or if a transgenically produced protein is not proved to be safe or effective, it would have
a material adverse effect on our business and operations. In addition, it is possible that research and discoveries by others could render our transgenic technology obsolete or noncompetitive as a method of production for protein-based therapeutic
products.



If clinical trials of any of our transgenically produced products
are unsuccessful or delayed, we would be unable to meet our anticipated development timeline, which could cause our stock price to decline.



We and our collaborators must demonstrate through preclinical and clinical trials that our transgenically produced products are safe and effective for use
in humans. Clinical trials are expensive and may take several years. Several factors could prevent or delay completion of these trials, including an inability to enroll the required number of patients or demonstrate adequately the safety or efficacy
of the product for humans. If safety concerns develop, regulatory authorities could stop or delay our trials. Furthermore, the results from early clinical trials are often not predictive of results in later clinical trials.



We cannot market and sell our transgenically produced products in the United States or in
other countries if we fail to obtain the necessary regulatory approvals.



Before we can sell any transgenically produced drug or biological products that we or our collaborators develop, we must receive regulatory approvals by federal, state and local governmental authorities, including the
United States Food and Drug Administration, or FDA, and similar agencies in other countries, such as the European Medicines Agency, or EMEA, in Europe. To date, none of our transgenically produced products have been approved for sale in the United
States or any foreign country. Moreover, to our knowledge, no therapeutic protein produced in the milk of a transgenic animal has been submitted to the FDA or, except for our submission of ATryn® to the EMEA in January 2004, to any other regulatory agency for final regulatory
approval. Obtaining required regulatory approvals for our transgenically produced products may take several years to complete and is expensive and uncertain. It is possible that the FDA or any other regulatory authority may not act quickly or
favorably on our requests for approval or will require us to provide additional data that we do not currently anticipate. For example, the FDA may impose restrictions and demands on our clinical trials that require additional resources and result in
longer delays than we anticipate. In addition, the FDA may require us to conduct further clinical trials and post-marketing testing and surveillance to monitor the effects of approved products. The FDA or other regulatory authorities may also place
conditions on approval that could restrict the commercial applications of such products.



Failure to comply with extensive FDA or similar regulations may result in delay, suspension or



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cancellation of a trial or a regulatory authoritys refusal to accept test results. Regulatory authorities may have varying interpretations of our
pre-clinical and clinical trial data, which could delay, limit or prevent regulatory approval or clearance. Because transgenically produced products represent novel therapeutic products, the process for regulatory approval is unproven. There may be
additional delays in regulatory approval due to issues arising from the breeding of transgenic animals and the use of proteins derived from them. Any delays or difficulties in obtaining regulatory approval or clearance for transgenically produced
products may:



| |  |  | adversely affect the marketing of any transgenically produced products we or our collaborators develop;
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| |  |  | impose significant additional costs on us or our collaborators;
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| |  |  | diminish any competitive advantages that we or our collaborators may attain; and
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| |  |  | limit our ability to receive royalties and generate revenue and profits.
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If we do not receive regulatory approvals for our transgenically produced products in a timely manner, we will not be able to commercialize our products,
or their commercialization may be limited or delayed and, therefore, our business and stock price will suffer.



Even if we receive regulatory approval for our transgenically produced products, the FDA or similar agencies in other countries may impose limitations on
the indicated uses for which our products may be marketed. These limitations could reduce the size of the potential market for a product. Failure to comply with applicable FDA and other regulatory requirements can result in, among other things,
warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government to renew our marketing applications and criminal prosecution.



We have been in discussions with the FDA regarding our clinical and
regulatory strategy for approval of ATryn® in the
United States. In response to an investigational new drug application, or IND, filed with the FDA in 2003 for clinical development of ATryn® in the hereditary deficiency indication, the FDA provided us guidance that it wished to see a controlled study as a basis for approval. Such a
controlled study has not been required under the advice we have received from the European regulatory authority for approval of ATryn® in the hereditary deficiency indication in Europe. In connection with our continuing dialogue with the FDA, in December 2004, we submitted an amendment
to the IND to initiate a clinical study which may be used as a basis for the approval of ATryn® in the hereditary deficiency indication in the United States. The FDA has requested some refinements to the protocol submitted in the amended IND. We intend to implement these
refinements and to move forward with this study when the FDA has completed its review of this submission, which is anticipated in the first half of 2005. If our IND is approved and we are able to conduct this study successfully and on schedule, we
currently anticipate filing a Biologics License Application for ATryn® for the HD indication in the United States no earlier than 2006. If we do not reach agreement with the FDA on an appropriate IND for ATryn® in the hereditary deficiency or another indication, we will not be able to proceed with its clinical development in the
United States. Delays in obtaining approval of the IND or in obtaining FDA approval of ATryn® could cause substantial delays in the commercialization of ATryn® in the United States and adversely affect our business and stock price.



Any transgenically produced products for which we obtain regulatory approval will be subject to continuing review and extensive
regulatory requirements, which could affect their manufacture and marketing.



If and when the FDA or other foreign agencies approve any of our transgenically produced products under development, the manufacture and marketing of these products will be subject to continuing regulation and product
approvals may be withdrawn if problems occur after initial approval. Post-approval regulation includes compliance with current Quality Systems Regulations and Good Manufacturing Practices, known as QSR/GMP, adverse event reporting requirements and
prohibitions on promoting a product for unapproved uses. We will also be required to obtain additional approvals for any significant alterations in the products



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labeling or manufacturing process. Enforcement actions resulting from failure to comply with QSR/GMP requirements could result in fines, suspensions of
approvals, recalls of products, operating restrictions and criminal prosecutions, and affect the manufacture and marketing of our transgenically produced products. The FDA or other regulatory agencies could withdraw a previously approved product
from the market upon receipt of newly discovered information, including a failure to comply with regulatory requirements and the occurrence of unanticipated problems with products following approval. Any of these withdrawals could adversely affect
our operating results.



We have limited manufacturing capability and may
rely on third party contract manufacturers to purify and formulate our transgenically produced products.



We have the capability to purify pre-clinical and clinical trial quantities of our transgenically produced products. Our current capacity allows us to
purify products for clinical trials, up to and including Phase II. We also rely upon third party manufacturers to purify and formulate significant pre-clinical, clinical and commercial quantities of our transgenically produced products. We will
depend on these third party manufacturers to perform their obligations in a timely manner and in accordance with applicable government regulations in order to conduct our clinical trials or commercialize any of our products. In addition, there are
very few third party manufacturers that have sufficient production capacity to manufacture all of our products either for our clinical trials or on a commercial scale. Our third party manufacturers may encounter difficulties, including problems
involving:



| |  |  | inconsistent production yields;
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| |  |  | poor quality control and assurance or inadequate process controls;
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| |  |  | lack of compliance with FDA, EMEA and other regulations; and
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| |  |  | high production costs.
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These contract manufacturers may not be able to manufacture our products at a cost or in quantities necessary to make them commercially viable. If we are
unable to enter into agreements with additional manufacturers on commercially reasonable terms, or if there is poor performance on the part of our third party manufacturers, we may not be able to complete development of, or market, our
transgenically produced products.



We have entered into
contracts with Cambrex Bio Science MA, Inc. for large scale purification and with Medimmune (Holland) for fill/finish services of our lead product, ATryn®. Both contracts have a five-year, renewable term, which will expire in 2007 if not renewed. Although we have identified possible alternative
suppliers with respect to these services for this product, interruptions in these services and the process of changing to an alternative manufacturer could have a material adverse effect on our timely ability to manufacture bulk delivery of
ATryn® for delivery to our collaborators or to
market distribution after regulatory approval.



Transgenically produced
products may never become commercially successful.



Even
if our transgenically produced products are successfully developed and approved by the FDA and foreign regulatory agencies, they may not enjoy commercial acceptance or success, which would adversely affect our business and results of operations.
Several factors could limit our success, including:



| |  |  | limited market acceptance among patients, physicians, medical centers and third party payors;
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| |  |  | our inability to access a sales force capable of marketing the product, either through a third party contract sales force or by establishing our own internal sales force;
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| |  |  | our inability to supply a sufficient amount of product to meet market demand;
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| |  |  | the number and relative efficacy of competitive products that may subsequently enter the market; and
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| |  |  | for a transgenically produced product designed to replace or supplement currently marketed non-transgenically produced products, the relative risk-benefit profile and
cost-effectiveness of the transgenically produced product.
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In addition, it is possible that we or our collaborative partners will be unsuccessful in developing, marketing or implementing a commercialization strategy for any transgenically produced products.



Our business may fail due to intense competition in our industry.



The industries in which we operate are highly competitive and may become
even more so. Some of our competitors have greater financial and human resources and more experience in research and development than we have. We will need to continue to devote substantial efforts and expense in research and development to maintain
a competitive position for our transgenic production technology and potential product offerings. It is also possible that others will develop alternative technologies or products that will render our proposed products or technologies obsolete. We
may encounter significant competition for our protein development and production contracts from other companies. In addition, our potential transgenic production capabilities may face significant competition from biological products manufactured in
cell culture or by other traditional protein production methods. Our business will also compete against other companies whose business is dedicated to offering transgenic production and with prospective customers or collaborators who decide to
pursue such transgenic production internally. Competitors that complete clinical trials, obtain regulatory approvals and begin commercial sales of their products before us will enjoy a significant competitive advantage. We anticipate that we will
face increased competition in the future as new companies enter the market and alternative technologies become available.



Pharming Group N.V., Nexia Biothechnologies and BioProtein Technologies are other companies known to us that are extensively engaged in the application of
transgenic technology in mammals for the production of proteins for therapeutic use in humans. Pharming, based in the Netherlands, is primarily engaged in the development of recombinant proteins in the milk of transgenic cows and rabbits. Pharming
reports that it has one product in clinical development that is commencing Phase III studies in the United States. Nexia is developing Protexia, a recombinant butyrylcholinesterase, under a technology license from us. BioProtein Technologies is a
contract manufacturing organization specializing in the production of human therapeutic proteins and vaccines in the milk of transgenic rabbits also under a technology license agreement. There are also other companies seeking to develop transgenic
technology in animals and in plants, which may be competitive with our technology with respect to our patents and proprietary rights as discussed further below.



For ATryn®, a number of companies internationally produce and market antithrombin from the fractionation of human plasma. CSL has approximately a 40% share of this market worldwide, but is not
approved in the U.S. Bayer is the only company that has commercially available fractionated antithrombin material that is approved for sale in the U.S., which sales represent only about 1% of the worldwide market.



There are a number of companies worldwide that produce and market human serum
albumin from the fractionation of human plasma, including Bayer, CSL and Baxter. We are aware of two companies internationally that are developing recombinant forms of human serum albumin derived from yeast cultures. One company, Aventis, is
developing its recombinant albumin product for the excipient market. The other lead company is Yoshitomi (formerly Green Cross Corporation) which has been active in developing human albumin through genetic manipulation of Pichia pastorisis (better
known as yeast) on a commercial scale for use in Japan and other parts of Asia.



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We may face public concerns about genetic engineering in animals.



Our activities involve genetic engineering in animals. The success of our
potential commercial products will depend in part on public acceptance of the use of genetic engineering. Public attitudes may be influenced by claims that these types of activities are unsafe and our products may not gain the acceptance of the
public or the medical community. Negative public reaction to genetic engineering activities in general could result in greater restrictive legislation and regulations involving nuclear transfer and other methodologies which could impede our ability
to conduct our business efficiently, delay preclinical studies or future clinical trials, or prevent us or our partners from obtaining regulatory approvals or commercializing transgenically produced products.



We depend on patents and proprietary rights that may fail to protect our business.



Our success will partly depend on our ability to obtain
and maintain patent or other proprietary protection for our technologies, products and processes such as:



| |  |  | compositions of matter or processes;
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| |  |  | processes developed by our employees; or
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| |  |  | uses of compositions of matter discovered through our technology.
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We may not be able to obtain the necessary protection. Our success will also depend on our ability to operate without infringing the proprietary rights of
other parties. Legal standards relating to the validity of patents covering pharmaceutical and biotechnological inventions and the scope of claims made under these patents are still developing. There is no consistent policy regarding the breadth of
claims allowed in biotechnology patents. The patent position of a biotechnology company is highly uncertain and involves complex legal and factual questions.



We hold 18 issued or allowed U.S. patents and 111 corresponding foreign patents. Our patents generally expire between 2013 and 2019, with the most
significant patent expiring in 2015. Of our patents expiring in 2015, two relate ATryn®, our lead program. One in-licensed European patent, pertaining to transgenic animals secreting proteins in milk, expires in 2006. In accordance with ongoing research and development efforts, we have 51 pending
U.S. patent applications and 159 corresponding foreign applications covering relevant and newly developed portions of its transgenic technology. Several of these pending applications are included in various cross-licensing or out-licensing
arrangements with other companies that in turn provide access to their proprietary technologies. Specifically we have cross-licensed our proprietary technology for the production of proteins in milk to Pharming B.V. Recently issued U.S. patents
provide claim coverage for protein purification from the milk of transgenic animals, the production of monoclonal and assembled antibodies at commercial levels in the milk of transgenic mammals, the production of recombinant antithrombin in the milk
of transgenic goats and the production of Prolactin in the milk of transgenic animals. We cannot be certain that we will receive issued patents based on pending or future applications. Our issued patents may not contain claims sufficiently broad to
protect us against competitors with similar technology. Additionally, our patents, our partners patents and patents for which we have license rights may be challenged, narrowed, invalidated or circumvented. Furthermore, rights granted under
patents may not provide us with any competitive advantage.



We
may have to initiate arbitration or litigation to enforce our patent and license rights. If our competitors file patent applications that claim technology also claimed by us, we may have to participate in interference or opposition proceedings to
determine the priority of invention. An adverse outcome could subject us to significant liabilities to third parties and require us to cease using the technology or to license the disputed rights from third parties. We may not be able to obtain any
required licenses on commercially acceptable terms or at all.



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The cost to us of any litigation or proceeding relating to patent rights, even if resolved in our favor,
could be substantial. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation
of any pending patent or related litigation could have a material adverse effect on our ability to compete in the marketplace. Advanced Cell Technologies, Inc., or ACT, has announced that the Board of Patent Appeals and Interferences of the U.S.
Patent Office has entered a judgment in an interference proceeding in favor of Geron Corporation against ACT on all counts as to the priority of ACTs U.S. Patent No. 5,945,577, which we license from ACT. ACT has also announced that it intends
to appeal that decision in a proceeding in U.S. District Court, during which proceeding we believe that we may continue to rely on the validity of the disputed patent. While we have also licensed nuclear transfer technology from Pharming, we do not
know at this time what impact, if any, this proceeding involving ACT may ultimately have on our ability to practice nuclear transfer for the production of animals expressing therapeutic proteins in their milk. Our principle product, ATryn®, does not utilize this technology.



We rely on certain proprietary trade secrets and know-how that are not
patentable. We have taken measures to protect our unpatented trade secrets and know-how, including having our employees, consultants and some contractors execute confidentiality agreements. These agreements could be breached. If so, it is possible
that our remedies for a given breach might be inadequate. It is also possible that competitors emerge who could independently develop or discover our trade secrets or that the trade secrets could otherwise become known.



Recovery from any catastrophic event may not be adequate.



While we have measures in place to minimize and recover from catastrophic
events that may substantially destroy our animal herd(s), these measures may not be adequate to recover our production processes quickly enough to support critical timelines, collaborator needs or market demands. These catastrophic events may
include animal diseases that breach our biosecurity measures or weather events such as tornadoes, earthquakes or fires. In addition, these catastrophic events may render some or all of the products at the affected facilities unusable.



Successful commercialization of our products will depend on obtaining coverage and
reimbursement for use of the products from third-party payors.



Sales of pharmaceutical products depend largely on the reimbursement of patients medical expenses by government health care programs and private health insurers. It is possible that third party payors will not reimburse sales of our
transgenically produced products. Reimbursement by third party payors depends on a number of factors, including the payors determination that use of the product is safe and effective, not experimental or investigational, medically necessary,
appropriate for the specific patient and cost-effective. Reimbursement in the United States or foreign countries may not be available or maintained for any of our products. If we do not obtain approvals for adequate third party reimbursements, we
may not be able to establish or maintain price levels sufficient to realize an appropriate return on our or our partners investment in product development. Any limits on reimbursement available from third party payors may reduce the demand
for, or negatively affect the price of, our or our partners products. Without the financial support of the government or third party insurers, the market for transgenically produced products will be limited.



The U.S. federal government and private insurers are continually working on
ways to contain health care costs, particularly by limiting both coverage and the level of reimbursement for new therapeutic products. The government or private insurers may institute future price controls and other cost-containment measures on
Medicare, Medicaid and other health care insurance spending. These controls and limits could affect the payments we collect from sales of our products. Internationally, medical reimbursement systems vary significantly, with some medical centers
having fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of, government or third party reimbursement. Even if we or our partners succeed in bringing transgenically produced products
to market, uncertainties regarding future health care policy, legislation and regulation, as well as private market practices, could affect our ability



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to sell our products in commercially acceptable quantities at profitable prices.



Our ability to negotiate with potential marketing partners may be limited.



If we choose to commercialize ATryn® with a marketing partner outside of Asia, Genzyme has an exclusive first right of
negotiation for exclusive commercialization rights. This right is triggered on an indication-by-indication basis at such time as we apply for marketing approval with a regulatory authority. This right does not apply if we have already entered into a
collaboration or other agreement with a prospective research, development and marketing partner prior to such regulatory submission. The right also does not apply to the hereditary deficiency indication which has been filed with the EMEA.



The manufacture and sale of our products may expose us to product liability
claims for which we could have substantial liability.



We
face an inherent risk of product liability exposure related to testing of our transgenically produced products in human clinical trials and will face even greater risks when we commercialize our products. An individual may bring a product liability
claim against us if one of our products causes, or is claimed to have caused, an injury or is found to be unsuitable for consumer use, even if the product involved is granted regulatory authorization for commercial sale. Although we have obtained
product liability insurance for our ATryn®
program under an insurance policy arrangement with Genzyme Corporation, it is possible that our insurance coverage will not be sufficient to cover any claim. Any product liability claim brought against us, with or without merit, could result in:



| |  |  | liabilities that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available;
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| |  |  | an increase of our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms or at all;
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| |  |  | damage to our reputation and the reputation of our products, resulting in lower sales;
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| |  |  | regulatory investigations that could require costly recalls or product modifications; and
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| |  |  | the diversion of managements attention from managing our business.
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Qualified managerial and scientific personnel are scarce in our industry.



We are highly dependent on the principal members of our scientific and management staff. Our success will depend in part on our ability to identify,
attract and retain qualified managerial and scientific personnel. There is intense competition for qualified personnel in our industry. We may not be able to continue to attract and retain personnel with the advanced technical qualifications or
managerial expertise necessary for the development of our business. If we fail to attract and retain key personnel, it could have a material adverse effect on our business, financial condition and results of operations. We have employment agreements
with our executive officers, but these agreements do not guarantee that they will remain employed with us in the future. If we lose an executive officer, or a significant number of any of our staff, or are unable to hire and retain qualified
personnel, then our ability to develop and commercialize our products and processes may be delayed or impaired. We do not carry key man insurance.



If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, investors
may lose confidence in our financial reporting.



The
Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal controls over financial reporting. Among other things, we must perform systems and process evaluation and testing. We must also conduct an assessment of
our internal controls to allow management



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to report on, and our independent registered public accounting firm to audit, our assessment of our internal controls over financial reporting, as required
by Section 404 of the Sarbanes-Oxley Act. These requirements were effective for the first time for our fiscal year ended January 2, 2005. In connection with our Section 404 compliance efforts, we have incurred or expended, and expect to continue to
incur or expend, substantial accounting and other expenses and significant management time and resources. Any subsequent assessment by us or our independent registered public accounting firm may reveal significant deficiencies or material weaknesses
in our internal controls, which may need to be disclosed in subsequent periodic reports filed with the SEC. Disclosures of this type could cause investors to lose confidence in our financial reporting and may negatively affect the price of our
common stock. Moreover, effective internal controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our internal controls over financial reporting, these deficiencies may negatively impact our
business and operations.



Risks Related to Our Common
Stock



Genzymes significant ownership interest in us could give it
significant influence over matters requiring shareholder approval.



Genzyme is our largest single shareholder, beneficially owning 5,443,243 shares or 12% of our outstanding common stock at March 1, 2005, assuming the exercise of all of its 518,324 currently exercisable common stock purchase warrants with
exercise prices ranging from $6.30 to $2.84. As an 12% shareholder, Genzymes ownership interest could give it significant influence if it were to oppose matters requiring our shareholders approval, including electing directors, adopting
or amending provisions of our charter or by-laws and approving or preventing some mergers or similar transactions, such as a sale of substantially all of our assets, or transactions that could give our shareholders the opportunity to realize a
premium over the market price of their shares.



We have obligations to issue
shares of common stock in the future that will dilute your ownership interest and may adversely affect our stock price.



Sales of substantial amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect our common
stocks market price. As of March 1, 2005, there were 46,658,728 shares of our common stock outstanding. As of March 1, 2005, options to purchase an aggregate of 4,218,796 shares of common stock at varying exercise prices were outstanding; of
this total, options to purchase 2,910,388 shares were immediately exercisable and these shares could be immediately resold into the public market. As of March 1, 2005, Genzyme held 5,443,243 shares of our common stock which could be sold into the
public markets under Rule 144 of the Securities Act. Genzyme is also entitled to registration rights with respect to some of these shares. An additional 518,324 shares of our common stock, issuable to Genzyme upon exercise of outstanding warrants,
are also entitled to registration rights, which could expedite the resale of such shares into the public market.



In August 2003, we completed a private placement transaction in which we sold 3,626,465 shares of our common stock and warrants to purchase an aggregate
961,009 shares of our common stock at an exercise price of $3.30 per share. We have registered for resale the shares of common stock and the shares issuable under the warrants that were issued in the private placement transaction. To date, none of
these warrants have been exercised.



Our capital raising efforts may dilute
shareholder interests.



If we raise additional capital by
issuing equity securities, the issuance will result in a reduction of the percentage of ownership for our existing shareholders, a result commonly referred to as dilution. The extent of such dilution will vary based upon the amount of capital
raised.



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Our common stock may have a volatile public trading price and low trading volume.



Historically, the market price of our common stock has been highly volatile
and the market for our common stock has experienced significant price and volume fluctuations, some of which are unrelated to our companys operating performance. Since January 1, 2001, the trading price of our stock has fluctuated from a high
of $15.50 to a low of $0.61. It is likely that the market price of our common stock will continue to fluctuate in the future. Factors which may have a significant adverse effect on our common stocks market price, include:



| |  |  | announcements by us or our competitors of technological innovations or new commercial products;
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| |  |  | developments concerning our proprietary rights, including patent and litigation matters;
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| |  |  | publicity regarding actual or potential results relating to our or our partners products or compounds under development;
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| |  |  | an unexpected termination of one of our partnerships;
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| |  |  | regulatory developments in the United States and other countries;
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| |  |  | general market conditions; and
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| |  |  | quarterly fluctuations in our revenues and other financial results.
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The average daily trading volume of our common stock for the three-month period ending March 1, 2005 was 213,648 shares.



Anti-takeover provisions in our charter and by-laws and Massachusetts law may result in
management entrenchment and adversely affect our stock price.



Anti-takeover provisions in our charter, our by-laws and Massachusetts statutes could delay or make more difficult a merger, tender offer or proxy contest involving us. These provisions may delay or prevent a change of control without
action by the shareholders, and may resist important changes shareholders seek to make if they are dissatisfied with the conduct of our management. Therefore, these provisions could result in the entrenchment of our management and adversely affect
the price of our common stock.



Our charter grants authority to
the board of directors to issue series of preferred stock with certain rights and privileges, including voting rights, as it deems appropriate. This authority may enable our board of directors to deter or delay a change in control despite a shift in
stock ownership, as a result of an increase in the number of shares needed to gain voting control. This may have the effect of discouraging tender offers and proxy contests, and give management the power to reject certain transactions which might be
desired by shareholders. This provision could also be deemed to benefit incumbent management to the extent it deters offers by persons who would wish to make changes in management or exercise control over management.



In addition, our by-laws may have the effect of preventing changes in our
management because shareholders are required to give us written notice of any proposal or director nomination within a specified period of time before the annual meeting of shareholders, certain qualifications for a person to be elected to the board
of directors must be established, and shareholders are prohibited from calling a special meeting of shareholders, unless the shareholder owns 90% of our outstanding voting stock.



Our shareholder rights plan is another anti-takeover device. It involves a distribution to our shareholders of certain
rights to acquire shares of our capital stock in the event of an acquisition of a predetermined number of shares by an investor. The shareholder rights plan is designed to deter coercive takeover tactics and to encourage a party interested in
acquiring the corporation to negotiate with the board of directors.



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Certain Massachusetts corporate statutes provide anti-takeover protections. Our charter gives effect to a
provision of Massachusetts law that places directors of publicly-held Massachusetts corporations into three classes of nearly equal sizes with staggered terms, thereby permitting only one-third of the board of directors to be elected at once. In
addition, with certain exceptions, Massachusetts law prohibits a publicly-held Massachusetts corporation from engaging in a business combination transaction with an interested stockholder for a period of three years. An interested
stockholder is a person who owns 5% or more of the outstanding voting stock of the corporation. Finally, our by-laws include a provision excluding us from the applicability of a Massachusetts statute that denies voting rights to any person
acquiring 20% or more of the outstanding voting stock of a corporation, unless such voting rights are approved by a majority of the corporations disinterested shareholders. Our by-laws may be amended at any time to subject us to this statute
prospectively.