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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.
Since these forward-looking statements are subject to known and unknown risks
and uncertainties, our actual results may be materially different from those
expressed or implied by the forward-looking statements. 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)    Uncertainty of Future Profitability. 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. Although we reported a small profit
       in 1998, we had an accumulated deficit of $98,940,262 as of December 31,
       1998. Our future profitability will depend on, among other things, the
       success of TOBI and our ability to develop and market other products.
       Because TOBI has been on the market only since January 1998, we do not
       know with certainty how sales may be affected by a number of factors and
       whether such factors are sporatic, cyclical or have determinable trends.
       These factors include: the seasonality arising from business cycles,
       weather, geographic factors, or cold and flu outbreaks, the impact of
       hospitalizations or exacerbations experienced by CF patients, compliance
       with chronic therapy (28 days on drug, 28 days off drug), physician and
       patient concerns about potential bacterial resistance to TOBI, insurance
       reimbursement factors variability in ordering patterns by drug
       wholesalers, and the effect of price increases and changes in credit
       terms and the approval, availability, efficacy and popularity of
       alternative treatments. The interplay of these factors may cause
       fluctuations in quarter to quarter sales. In addition, the effect these
       factors may have on sales is likely to change as TOBI sales increase and
       our drug is introduced in other countries. There can be no assurance that
       one or more of these factors, the factors discussed below or other,
       unforeseen factors, will not adversely affect our future operating
       results and financial condition.

(ii)   Dependence on TOBI. We do not expect our drug candidates other than TOBI
       to be commercially available for at least several years, if at all. We
       must depend on revenues generated from TOBI sales to fund the development
       of additional drug products. However, a high level of market acceptance
       of TOBI for cystic fibrosis and a high level or prescriptions for chronic
       use of TOBI may not be achieved, or levels of market acceptance or
       prescriptions for chronic use may stagnate or even decline under certain
       circumstances, such as competition from alternative therapies or adverse
       pricing changes. See "Competition" and "Uncertainty over Third Party
       Reimbursement and Product Pricing" below. In addition, we may not be
       successful in developing other drug products commercially. 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) use. These generic formulations of tobramycin can be
       modified by pharmacists, physicians or patients for inhalation use.
       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 also the discussion under "Uncertain Ability to Protect Patents and
       Proprietary Technology" below.

(iii)  Uncertainty of Third Party Reimbursement and Product Pricing. 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.

       We intend to market TOBI in international markets as soon as we have
       received the appropriate regulatory approval. The prices of our products
       may be restricted by price controls imposed by local

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       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 adverse
       effects.

(iv)   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, so as a company, we
       have limited experience in these areas. These capabilities may not be
       sufficient or successful for the longer term. 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. Our efforts in those countries may not be adequate or
       successful, in which case our revenue and profits could be adversely
       affected.

(v)    Limited Manufacturing Capability; Dependence on Suppliers. We rely on
       others to supply raw materials and to manufacture TOBI according to the
       FDA's requirements. Although we have a long-term contract with a bulk
       supplier of tobramycin and a long-term agreement with a contract
       manufacturer, 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 our and the FDA's
       specifications.

(vi)   Uncertain 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 abroad, 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.

(vii)  Government Regulation and Uncertainty of 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.

(viii) Uncertainty of Drug Development and Clinical Trials. 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

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       drug candidates in commercial quantities at reasonable costs.
       Furthermore, products may not achieve market acceptance.

(ix)   Technological Change. The pharmaceutical business is characterized by
       extensive research efforts and rapid technological progress. New
       developments in molecular biology, medicinal pharmacology, recombinant
       DNA technology and other fields of biology and pharmaceutical chemistry
       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.

(x)    Competition. 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 may also be more successful
       in manufacturing and marketing.

(xi)   Product Liability. 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.

(xii)  Use of Hazardous Materials. 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.

(xiii) Dependence on 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.

(xiv)  Dependence on Others. 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.

(xv)   Stock Price Volatility. 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, the 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.

(xvi)  Access to Capital. 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

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       existing stockholders will result and future investors may be granted
       rights superior to those of existing stockholders. There can be no
       assurance, however, that additional financing will be available to us on
       acceptable or affordable terms when needed.


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