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                                                                    EXHIBIT 99.1

              Important Information on Forward-Looking Statements

     Our annual report on Form 10-K, news releases and other public documents,
as well as oral statements that we may make, contain "forward-looking
statements" in addition to historical information. These forward-looking
statements include statements concerning our anticipated product development
program, financial and product performance, and other non-historical events. You
may identify these forward-looking statements by the use of such words as
"believe," "anticipate," "expect," "plan" and "intend." Since these forward-
looking statements are subject to known and unknown risks and uncertainties,
they do not necessarily indicate what our actual future results will be. You
should regard all cautionary statements made in this annual report on Form 10-K
as being applicable to all related forward-looking statements wherever they
appear.

     Below, we identify some important factors that may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements.

(i)  We have a limited operating history and we may not be profitable in the
     future.

     We began the commercial sale of our first drug product, TOBI, in January
1998. Before then, we had no sources of operating revenues from any of our drug
candidates and limited sources of revenue from grants and royalties. We had an
accumulated deficit of $107,135,680 as of December 31, 1999. Our future
profitability will depend on, among other things, the success of TOBI and our
ability to develop and market other products. In addition, because of our
limited sales experience with TOBI, we may be unable to predict or assess the
effect of seasonality, weather, medical reimbursement programs, price changes,
business cycles, national or geographic healthcare matters, wholesaler ordering
patterns, patient use patterns, and similar factors affecting sales patterns and
volatility. There can be no assurance that one or more of the factors discussed
below, or other, unforeseen factors, will not adversely affect our future
operating results and financial condition.

(ii)  We currently depend solely on revenues from TOBI sales to fund our
      development of additional drug products.

     We do not expect our drug candidates other than TOBI to be commercially
available for at least several years. We may not be successful in developing
other drug products commercially. Meanwhile, we must depend on revenues
generated from TOBI sales to fund our product development program. However,
market acceptance of TOBI for cystic fibrosis may remain level or even decline
under certain circumstances, such as competition from alternative therapies or
adverse pricing changes. See "Third party reimbursement and product pricing
affect market acceptance of our products" and "We have many competitors." We
have seven years of marketing exclusivity for TOBI in the U.S. from the time of
TOBI's approval in December 1997. However, tobramycin also has been approved by
the FDA for intravenous and intrathecal (injection into spinal fluid)
administration. These generic formulations of tobramycin can be modified by
pharmacists, physicians or patients for inhalation. Although this practice is
not approved by the FDA, it may continue and may have a material adverse effect
on reimbursement levels, sales and market acceptance of TOBI. Furthermore, we
could incur substantial costs in asserting any rights to prevent such uses under
the Orphan Drug Act. See "Our success depends on our ability to protect patents
and proprietary technology."

(iii)  Third party reimbursement and product pricing affect market acceptance of
       our products.

     One factor that may significantly affect how successfully we can
commercialize our products is the extent to which reimbursement for the cost of
such products will be available from third party payors, such as private health
insurers or Medicaid in the U.S. Adequate reimbursement in the U.S. or other
countries may not be available for any products we have developed or will
develop. If government and third-party payors do not provide adequate coverage
and reimbursement for use of our products, the market acceptance of those
products would be likely to decline.

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(iv)  International markets involve additional risks.

     We or our distributors recently began marketing TOBI in Canada, Argentina,
the U.K. and Israel, and we intend to market TOBI in other international markets
as soon as we have received the appropriate regulatory approvals. In addition to
the same risks in the U.S. market, we face certain risks unique to international
operations. The prices of our products may be restricted by price controls
imposed by local governments and healthcare providers in some countries. Price
controls can cause significant differences in prices between different markets.
The existence of price controls can limit the revenues from sales of our
products outside the U.S. and may adversely affect our business and results of
operations. Currency fluctuations also may cause or aggravate the adverse
effects.

(v)  We have limited sales and marketing capabilities.

     Our sales, marketing and distribution capabilities in the U.S. were
established relatively recently in anticipation of TOBI's launch in 1998. We are
establishing sales, marketing and distribution capabilities in other countries
where we have received, or expect to receive in the near future, regulatory
approval to market TOBI. As a company, we have limited experience in these
areas. These capabilities may not be sufficient or successful for the longer
term.

(vi)  We have only limited manufacturing capability and we are dependent on
      suppliers.

     We rely on others to supply raw materials and to manufacture TOBI according
to regulatory requirements. Although we believe either one of our two suppliers
of bulk powdered tobramycin will be able to supply sufficient quantities to meet
our current needs, we have not entered into long-term supply contracts with the
suppliers. We have an agreement for the formulation and packaging of TOBI for a
minimum term of 10 years. There can be no assurance that we will be able to
obtain future supplies of bulk tobramycin on favorable terms, that contract
manufacturers will be able to provide us with sufficient quantities of TOBI, or
that the products supplied will meet specifications.

(vii)  Our success depends on our ability to protect patents and proprietary
       technology.

     Our ability to compete effectively depends on our ability to protect our
proprietary technology in the U.S. and internationally, preserve our trade
secrets and know-how, and maintain technological advantages. We intend to file
applications as appropriate for patents covering formulation, composition of
matter, uses of our drug candidates, our proprietary processes and any
significant gene sequences that our scientists discover. We can incur
substantial costs in proceedings before the U.S. Patent and Trademark Office and
other regulatory authorities, and we may not obtain any patents we apply for.
Even if obtained, these patents may be challenged, invalidated or circumvented,
or may not provide any competitive advantage. We also rely on trade secrets,
know-how and other unpatented proprietary information in our business. We have
entered into confidentiality and invention agreements with our employees and
consultants, but there can be no assurance that each of these agreements will be
honored. Moreover, we may not be able to effectively protect our patents or our
rights to unpatented trade secrets, or others may independently develop
substantially equivalent proprietary information.

(viii)  We are subject to substantial government regulations and our products
        are subject to regulatory approval.

     Our research, clinical trials, drug production and marketing are subject to
regulation by numerous governmental agencies in the U.S. and other countries.
The effect of government regulation, or a change in the regulations, may be to
increase product development costs, delay marketing of our proposed products, or
give a competitive advantage to our competitors. Regulatory authorities may not
approve any products we develop on a timely basis or at all. In addition,
noncompliance with regulatory requirements could result in fines, injunctions,
seizures of products, total or partial suspension of product marketing,
withdrawal of marketing approvals, or criminal prosecution, among other
outcomes. Compliance with regulations may be burdensome.

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(ix)  Our drug development efforts and clinical trials may not be successful.

     Before approving a drug for commercial sale as a treatment for a disease,
the FDA and other regulatory authorities generally require that the safety and
efficacy of the drug be supported by results from clinical trials. Certain of
those authorities may require post-marketing testing and surveillance. Results
of initial studies of drug candidates are not necessarily indicative of results
that will be obtained from subsequent or more extensive preclinical and clinical
testing or long-term efficacy studies. Adverse or inconclusive clinical trial
results could significantly delay regulatory filings or result in a filing for a
narrower indication. There can be no assurance that our research and
development, preclinical testing, clinical trials, or long-term safety and
efficacy studies will be successfully completed or, if completed, will have the
desired results. We may not obtain regulatory approvals or may obtain approvals
that are not as broad as sought. Even if we succeed in obtaining the desired
regulatory approval for a drug, we may not be able to produce the drug
candidates in commercial quantities at reasonable costs. Furthermore, products
may not achieve market acceptance.

(x)  Technological change may render our products noncompetitive or obsolete.

     The pharmaceutical business is characterized by extensive research efforts
and rapid technological progress. New developments in molecular biology,
medicinal pharmacology, and other fields are expected to continue at a rapid
pace in academia and industry. Research and discoveries by others may render
some or all of our programs or drug candidates noncompetitive or obsolete.

(xi)  We have many competitors.

     Many companies, including well-known pharmaceutical companies, chemical
companies and specialized genetic engineering companies, are engaged in
developing pharmaceuticals for human therapeutic applications. Many of these
companies have substantially greater financial, research and development,
manufacturing, marketing and human resources than we have and represent
significant competition. Such companies may succeed in developing products that
are more effective or less costly than any that we may develop and also may be
more successful in manufacturing and marketing.

(xii)  We are exposed to product liability risks which may exceed our existing
       coverage.

     Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of human therapeutic
products. We maintain insurance against product liability and defense costs in
the amount of $25 million per occurrence and $25 million in the aggregate. There
can be no assurance that product liability claims will not occur, that we will
be able to obtain or maintain product liability insurance on acceptable terms,
or that such insurance will provide adequate coverage against any potential
claims.

(xiii)  Our use of hazardous materials subjects us to environmental regulations.

     Our research and development involve the controlled use of hazardous,
infectious and radioactive materials. We are subject to stringent federal, state
and local laws, rules, regulations and policies governing the use, generation,
manufacture, storage, air emission, effluent discharge, handling and disposal of
certain materials and wastes. We may incur significant costs to comply with
environmental laws, rules, regulations and policies. Our business, financial
position or results of operations may be materially and adversely affected by
current or future environmental laws, rules, regulations and policies or by any
releases or discharges of materials which could be hazardous. We do not maintain
a separate insurance policy to cover the risk of accidental injury or
contamination from these materials.

(xiv)  We depend on our key personnel and attracting qualified personnel.

     In view of the intense competition for qualified personnel in the
pharmaceutical field, we may not be able to continue to attract and retain the
qualified personnel necessary for the development of our business. The
unexpected loss of the services of existing personnel, as well as the failure to
recruit additional key scientific, technical and managerial personnel in a
timely manner, would be detrimental to our programs and business.

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(xv)  We depend on some collaborative relationships with third parties and those
      third parties may not continue to work with us.

     Our strategy for the research, development and commercialization of our
drug candidates and proprietary technologies may require us to enter into
various arrangements with corporate and academic collaborators, licensors,
licensees and others. There can be no assurance that any revenues or profits
will be derived from such arrangements, or that we will be able to enter into
collaboration arrangements with others in the future.

(xvi)  Our stock price has been volatile.

     The market price of our common stock has fluctuated significantly, and is
likely to do so in the future, as is typical for publicly traded emerging
pharmaceutical companies. Factors such as results of clinical trials,
announcements of new products by PathoGenesis or our competitors, regulatory
actions, developments or disputes concerning patent or proprietary rights and
period-to-period fluctuations in our financial results could have a significant
impact on the market price of the common stock.

(xvii)  Our continued access to capital is not assured.

     We may need to raise substantial additional capital to fund future
operations. We may seek such additional funding through public or private
financings or collaborative, licensing and other arrangements with corporate
partners. If additional funds are raised by issuing equity securities, dilution
to existing shareholders will result and future investors may be granted rights
superior to those of existing shareholders. There can be no assurance, however,
that additional financing will be available to us on acceptable or affordable
terms when needed.

(xviii)  We are subject to litigation risks.

     We are a party to various lawsuits and claims arising in the ordinary
course of business or otherwise from time to time. Litigation brought against
PathoGenesis could have a material adverse effect on the company by disrupting
operations, distracting management, affecting employee morale, and resulting in
costs or liabilities not covered or not fully covered by applicable insurance.

(xix)  Provisions in our corporate charter and our corporate structure may have
       the effect of delaying, deferring or preventing takeover transactions.

     Certain provisions of our Certificate of Incorporation and by-laws may have
the effect of delaying, deferring or preventing a change in control of the
company, even if such a change would be beneficial to many shareholders. These
provisions include a staggered board and super-majority shareholder vote for a
change in the number of directors below the minimum or the maximum established
in the by-laws. In addition, the board has the authority, without further action
by the shareholders, to issue up to one million shares of preferred stock in one
or more series and to fix their rights, preferences, privileges and
restrictions, and to issue authorized but unissued shares of common stock. The
issuance of preferred stock or additional shares of common stock could have the
effect of delaying, deferring or preventing a change in control of PathoGenesis.
The shareholder rights plan also may have the effect of discouraging a change in
control. Further, the company has not opted out of the provision under Delaware
law that imposes certain restrictions on any business combination between the
company and an "interested stockholder" as defined in the Delaware statute.

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