Ascent Pediatrics Inc · 10-Q · For 3/31/98 · EX-99

Filed On 5/15/98   ·   SEC File 0-22347   ·   Accession Number 950135-98-3373

Quarterly Report   ·   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Ascent Pediatrics, Inc.                               17     82K 
 2: EX-27       Financial Data Schedule                                1      6K 
 3: EX-99       Pages 28 Through 35 of Annual Report                   8     68K 

EX-99   ·   Pages 28 Through 35 of Annual Report
Exhibit Table of Contents

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                                                                  Exhibit 99

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS                                  

  This Annual Report on Form 10-K contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of        
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects,"         
"intends" and similar expressions are intended to identify forward-looking      
statements. There are a number of important factors that could cause the        
Company's actual results to differ materially from those indicated by such      
forward-looking statements. These factors include, without limitation, those set
forth below.                                                                    

CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING                                

     The Company has no committed external sources of capital. Based on its 1998
operating plan, the Company anticipates that it will require approximately      
$8,000,000 of additional funds from external sources no later than the beginning
of the third quarter of 1998 to meet its capital requirements and continue its  
operations for the balance of the third quarter and the remainder of 1998. The  
Company is currently in negotiations with a number of potential sources of      
financing to obtain additional funding. No assurance can be given that such     
financing will be available, or, if available, that it will be available on     
acceptable terms. If additional funds are raised by issuing equity securities,  
further dilution to then existing stockholders will result. Additionally, the   
terms of the financing may adversely affect the holdings or the rights of the   
then existing stockholders.                                                     

If adequate funds are not available, the Company may be required to   
significantly curtail one or more of its product development programs or product
commercialization efforts, obtain funds through arrangements with collaborative 
partners or others that may require the Company to relinquish rights to certain 
of its technologies, product candidates or products which the Company would     
otherwise pursue on its own or significantly scale back or terminate operations.

The Company's future capital requirements will depend on many factors,
including continued progress in its product development programs, the magnitude 
of these programs, the results of preclinical studies and clinical trials, the  
time and cost involved in obtaining regulatory approvals, the costs involved in 
filing, prosecuting, enforcing and defending patent claims, competing           
technological and market developments, the ability of the Company to maintain   
and, in the future, expand its sales and marketing capability and product       
development, manufacturing and marketing relationships, and the costs and       
success of commercialization activities and arrangements, particularly the level
of product sales. The Company's business strategy requires a significant        
commitment of funds to conduct clinical testing of potential products, to pursue
regulatory approval of such products and maintain sales and marketing           
capabilities and manufacturing relationships necessary to bring such products to
market.                                                                         

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EARLY STAGE OF DEVELOPMENT; HISTORY OF OPERATING LOSSES AND CUMULATIVE DEFICIT  

   Ascent has incurred net operating losses since its inception. At December
31, 1997, the Company's cumulative deficit was approximately $32,378,000. Such  
losses have resulted primarily from costs incurred in the Company's product     
development programs, general and administrative costs associated with the      
Company's product development and costs associated with raising equity capital  
and the establishment of the Company's sales force. The Company first began to  
market products in the second half of 1997 and most of its products are still in
development.                                                                    

    The Company expects to incur additional operating losses over at least the
next two years, as it continues its product development programs and incurs the 
costs of maintaining its marketing and sales capabilities, and expects          
cumulative losses to increase. The Company expects that losses will fluctuate   
from quarter to quarter and that such fluctuations may be substantial. The      
Company's ability to achieve profitability is dependent in part upon obtaining  
regulatory approval for new products, commercial acceptance of products that are
introduced to the market after required approvals have been obtained, the       
successful development and commercialization of its products and sales of such  
products and margins on such sales. There can be no assurance that the Company  
will obtain required regulatory approvals, successfully develop, commercialize, 
manufacture and market its products or ever achieve sales or profitability.     

UNCERTAINTY RELATED TO APPROVAL OF PRIMSOL TRIMETHOPRIM SOLUTION                

  In 1996, the Company filed two NDA's covering 25mg and 50mg strengths of
Primsol trimethoprim solution for the treatment of acute otitis media ("AOM"),  
or middle ear infection, for children age six months to 12 years. In June 1997, 
the FDA approved the Company's NDA for its 25mg strength of Primsol solution.   
The Company's NDA for its 50mg strength of Primsol solution is still pending. In
February 1998, the Company received a letter from the FDA citing certain        
deficiencies in the Company's NDA for the 50mg strength. There can be no        
assurance as to when or if the Company will receive approval of such NDA.       

Ascent plans to introduce the 50mg improved formulation as the Primsol
solution product that it brings to market. If the FDA were not to grant         
marketing approval of the 50mg strength of Primsol solution for this indication,
or if there were significant delays in such approval, the business, financial   
condition and operating results of the Company would be adversely affected,     
possibly materially. See "Item 1. Business -- Products and Products Under       
Development -- Primsol Trimethoprim Solution."                                  

PRODUCTS IN DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY                              

Ascent has introduced only one internally-developed product, Pediamist
nasal saline spray, into the market. Although the Company has completed         
development of certain other products and has filed with the FDA applications   
for marketing approval, many of the Company's product candidates are in         
development and require additional formulation, preclinical studies, clinical   
trials and regulatory approval prior to any commercial sales. With respect to   
certain product candidates, the Company must successfully address a number of   
technological challenges to complete its development efforts. In addition, there
can be no assurance that the Company will be permitted to undertake and complete
human clinical trials of certain of the Company's potential products, either in 
the United States or elsewhere, or, if permitted, that such products will be    
demonstrated to be safe and efficacious. The administration of any product the  
Company develops may produce undesirable side effects that could result in the  
interruption, delay or suspension of clinical trials. In addition, there can be 
no assurance that any of the Company's product candidates will obtain the       
approval of the FDA or other regulatory approvals or that any approved product  
will be capable of being produced in commercial quantities at reasonable cost   
and successfully marketed.                                                      

LIMITED SALES AND MARKETING EXPERIENCE                                          

     The Company markets and sells its products in the United States through its
own dedicated marketing staff and sales force. The Company only recruited its   
marketing staff and sales force in the second half of 1997 and has limited      
experience in marketing and sales. The Company believes that its success will   
depend in significant part upon its ability to maintain a dedicated marketing   
staff and sales force capable of promoting its products. However, there can be  
no assurance that the Company will be able to maintain the marketing staff      

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and sales force that it has recruited, that the cost of establishing and        
maintaining this marketing staff and sales force will be justifiable in light   
of product revenues or that the Company's marketing and sales efforts will be   
successful. Should the Company fail in its marketing and sales efforts, its     
business, financial condition and operating results would be materially         
adversely affected. See "Item 1. Business -- Sales and Marketing."              

UNCERTAINTY OF MARKET ACCEPTANCE OF PRODUCTS                                    

 Although many of the Company's product candidates are reformulations of
compounds marketed by other manufacturers, there can be no assurance that these 
products or other current or future products of the Company will achieve market 
acceptance. The commercial success of the Company's products and products under 
development, when and if any required approval for marketing by the FDA or any  
other regulatory agency is obtained, will depend, in significant part, on such  
products' efficacy, side effect profile, taste, dosing frequency, method of     
administration, patent and other proprietary position, brand name recognition   
and price. Another important factor will be the timing of market introduction of
the Company's or competitive products. Earlier entrants in the market often     
obtain and maintain significant market share relative to later entrants.        

The commercial success of the Company's products also will depend in  
significant part upon their acceptance by pediatricians, pediatric nurses and   
third party payors (particularly managed care providers). Acceptance of the     
Company's products by pediatricians, pediatric nurses and third party payors    
will in turn be dependent upon the success of the Company's marketing and sales 
activities. There can be no assurance that pediatricians, pediatric nurses and  
third party payors will accept the Company's products on a timely basis or at   
all. In addition, in order to stimulate demand for its products, the Company may
be required to, among other things, offer substantial price discounts. Failure  
to achieve market acceptance would have a material adverse effect on the        
Company's business, financial condition and operating results.                  

COMPETITION                                                                     

Competition in the pediatric pharmaceutical market is intense. Several
large pharmaceutical companies with significant research, development, marketing
and manufacturing operations market pediatric products in addition to products  
for the adult market. These competitors include Glaxo Wellcome Inc., Eli Lilly  
and Company, the Ortho-McNeil Pharmaceutical Division of Johnson & Johnson Inc.,
Pfizer Inc., the Ross Products Division of Abbott Laboratories Inc.,            
Schering-Plough Corporation and the Wyeth-Lederle Vaccines and Pediatrics       
Division of American Home Products, Inc.                                        

Many of the companies against which Ascent competes have substantially
greater name recognition and greater financial, technical and human resources   
than Ascent. In addition, many of these competitors have significantly greater  
experience than the Company in undertaking preclinical testing and human        
clinical trials of pharmaceutical products and obtaining FDA and other          
regulatory approvals of products for use in health care. Accordingly, the       
Company's competitors may succeed in obtaining FDA or other regulatory approvals
for products more rapidly than the Company. Furthermore, Ascent competes against
these larger companies with respect to manufacturing efficiency and marketing   
capabilities, areas in which Ascent has limited or no experience. These         
competitors may introduce competitive pricing pressures that may adversely      
affect Ascent's sales levels and margins. Moreover, many of these competitors   
offer well established, broad product lines and services not offered by the     
Company. Many of the products and services offered by these competitors have    
well known brand names that have been promoted over many years.                 

     The Company expects to market many of its product candidates as alternative
treatments for pediatric indications for which products with the same active    
ingredient are well entrenched in the market. For example, the Company intends  
to market Primsol, a trimethoprim antibiotic, for the treatment of AOM, an      
indication for which pediatricians often prescribe the well-known combination   
therapies Bactrim and Septra, which also contain trimethoprim. Similarly,       
Feverall controlled-release beads will compete against Tylenol liquid for       
children. The Company's product candidates also will face competition from other
products that do not contain the same active ingredient but are used for the    
same indication and are well entrenched within the pediatric market. For        
example, Primsol solution will compete against other antibiotics, including     
amoxicillin. Moreover, many of the Company's potential products that are        
reformulations of existing drugs of other manufacturers may have limited patent 
or other competitive protection. There can be no assurance that                 

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pediatricians, pediatric nurses and third party payors will prefer the Company's
products to existing products. See "Item 1. Business -- Competition."           

   The Company plans to apply for three year protection for certain products
under the Waxman-Hatch Act from the approval of a potential competitor's ANDA   
which is based on the Company's clinical trial results. There can be no         
assurance that any of the Company's products will qualify for protection under  
the Waxman-Hatch Act or, if any product does so qualify, that the statutory     
protection will enhance the competitive position of such product. See "Item 1.  
Business -- Government Regulation."                                             

UNCERTAINTY OF IDENTIFICATION OR ACQUISITION OF NEW PRODUCT CANDIDATES AND NEW  
TECHNOLOGIES                                                                    

     The success of the Company depends in part upon its ability to identify and
develop or obtain rights to pharmaceuticals suitable for pediatric use. There   
can be no assurance that the Company will be successful in identifying and      
developing pharmaceuticals suitable for pediatric use or in acquiring such      
rights. The Company's success also depends upon its ability to apply its drug   
delivery and reformulation technologies to produce proprietary products. There  
can be no assurance that the Company will be able to develop additional         
technologies or obtain rights from third parties to additional technologies on  
reasonable terms, or at all.                                                    

UNPROVEN SAFETY AND EFFICACY OF PRODUCTS; UNCERTAINTIES RELATED TO CLINICAL     
TRIALS                                                                          

   In order to obtain regulatory approval for the commercial sale of many of
its products, the Company is conducting or plans to conduct clinical trials to  
demonstrate that such products are safe and effective. There can be no assurance
that any of these clinical trials will be successfully completed within any     
specified time period, if at all. The results from early clinical trials may not
be predictive of results that will be obtained in large-scale clinical trials,  
and there can be no assurance that the Company's clinical trials will           
demonstrate the safety and effectiveness of any products or will result in      
marketable products.                                                            

    The rate of completion of the Company's clinical trials is dependent upon,
among other things, the rate of patient enrollment. Patient enrollment is a     
function of many factors, including the size of the patient population, the     
nature of the protocol, the proximity of patients to clinical sites and the     
eligibility criteria for the study. Historically, recruiting children to        
participate in clinical trials has been difficult, as parents are reluctant to  
permit their children to take experimental medications. Delays in planned       
patient enrollment may result in increased costs, program delays, or both, which
could have a material adverse effect on the Company.                            

 The Company has contracted with clinical research organizations for the
conduct of all of its clinical trials and expects to continue to do so for the  
foreseeable future. There can be no assurance that such entities will conduct   
the clinical trials successfully. The Company relies on scientific, technical   
and clinical data supplied by its academic and industry collaborators and       
licensors in the design, development and evaluation of product candidates. There
can be no assurance that there are no errors or omissions in such data that     
would materially adversely affect the development of these products.            

NO ASSURANCE OF REGULATORY APPROVAL; EXTENSIVE GOVERNMENT REGULATION            

The production and the marketing of the Company's products and the    
Company's ongoing product development activities are and will be subject to     
extensive regulation by numerous federal, state and local governmental          
authorities in the United States and abroad. The Company has had only limited   
experience in filing or pursuing applications necessary to gain regulatory      
approvals. Preclinical testing of the Company's product candidates is subject to
Good Laboratory Practice ("GLP") requirements and the manufacture of products is
subject to Good Manufacturing Practice ("GMP") requirements prescribed by the   
FDA.                                                                            

    Many of the products that the Company is developing are subject to the NDA
regulatory process. This process generally includes preclinical studies,        
clinical trials and ongoing post-approval testing of each compound to establish 
or monitor its safety and effectiveness for the intended indications, typically 
takes many years and requires the expenditure of substantial resources. The     
Company has limited experience in filing or pursuing applications necessary to  
gain regulatory approval. There can be no assurance that, even after the        
performance of clinical studies and the expenditure of resources, regulatory    
approval will be obtained for any products developed by the Company on a timely 
basis, if at all. The Company's analysis of data obtained from                  

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preclinical and clinical activities is subject to confirmation and              
interpretation by regulatory authorities which could delay, limit or prevent    
FDA regulatory approval. The Company or the FDA may suspend clinical trials at  
any time if the participants in such trials are being exposed to unanticipated  
or unacceptable health risks. Moreover, if regulatory approval to market a      
product is granted, such approval may entail limitations on the indicated uses  
for which it may be marketed. See "Item 1. Business -- Government Regulation."  

    Failure to comply with applicable regulatory requirements can, among other
things, result in fines, suspension or withdrawal of regulatory approvals,      
product recalls, seizure of products, operating restrictions and criminal       
prosecutions. FDA policy may change and additional government regulations may   
be established that could prevent or delay regulatory approval of the Company's 
product candidates. In addition, a marketed product, its manufacturer and its   
manufacturing facilities are subject to continual review and periodic           
inspections, and subsequent discovery of previously unknown problems with a     
product, manufacturer or facility may result in restrictions on such product or 
manufacturer, including withdrawal of the product from the market. There can be 
no assurance that additional statutes or regulations applicable to the          
Company's business will not be adopted, impose substantial additional costs     
upon or otherwise adversely affect the Company's operations.                    

The Company is also subject to numerous and varying foreign regulatory
requirements governing the design and conduct of clinical trials and the        
manufacturing and marketing of its products. The approval procedure varies      
among countries and can involve additional testing, and the time required to    
obtain approval may differ from that required to obtain FDA approval. The       
foreign regulatory approval process may include all of the risks associated     
with obtaining FDA approval set forth above. There can be no assurance that     
foreign regulatory approvals will be obtained on a timely basis, if at all.     

DEPENDENCE ON THIRD PARTY MANUFACTURING; RISKS RELATED TO SOLE SOURCE OF SUPPLY 

 The Company has no manufacturing facilities and has to date relied, and
plans in the future to rely, upon third parties to manufacture the Company's    
products in accordance with GMP for preclinical testing, clinical trial and     
commercial purposes. In addition, the Company has not arranged for the          
production of certain of its product candidates in commercial quantities, and   
it is possible that the Company will encounter difficulties in scaling up the   
production of these product candidates. Although there are a number of          
manufacturers that operate under GMP regulations capable of manufacturing       
certain of the Company's products, in the event that the Company is unable to   
obtain contract manufacturing, or obtain such manufacturing on commercially     
reasonable terms, it may not be able to develop and commercialize its products  
as planned. Where third-party arrangements are established, the Company will    
depend upon such third parties to perform their obligations in a timely manner. 
There can be no assurance that third parties depended upon by the Company will  
perform and any failures by third parties may delay clinical trial development  
or the submission of products for regulatory approval, impair the Company's     
ability to commercialize its products as planned and deliver products on a      
timely basis, or otherwise impair the Company's competitive position, which     
could have a material adverse effect on the Company's business, financial       
condition and operating results.                                                

     Certain of the Company's supply arrangements require that Ascent buy all of
the Company's requirements of a particular product exclusively from the other   
party to the contract. Moreover, for many of its products, Ascent has qualified 
only one supplier, even though the contractual arrangement with the supplier    
may permit Ascent to qualify an alternative manufacturer. Any interruption in   
supply from any of the Company's manufacturers or the inability of these        
manufacturers to manufacture the Company's products in accordance with GMP      
could have a material adverse effect on the Company's business, financial       
condition and operating results. See "Item 1. Business -- Manufacturing and     
Distribution."                                                                  

   In the future, the Company may establish its own manufacturing facilities
if it becomes economically attractive to do so. In order for the Company to     
establish a manufacturing facility, the Company would require substantial       
additional funds and be required to hire and retain significant additional      
personnel and comply with the extensive GMP regulations of the FDA.             

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UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS                            

    The Company's success depends in part on its ability to develop patentable
products and obtain patent or other proprietary rights protection for its       
products, both in the United States and in other countries. The Company intends 
to file applications as appropriate for patents and other protection covering   
both its products and processes. However, the patent positions of               
pharmaceutical firms, including Ascent, are generally uncertain and involve     
complex legal and factual questions. Moreover, because the Company's product    
candidates are reformulations of existing off-patent drugs, any patent          
protection afforded will be significantly narrower than a patent on the active  
ingredient itself. In particular, the Company does not expect that              
composition-of-matter patent protection will be available for the active        
ingredients in its products. No assurance can be given that patents will issue  
from any patent applications owned by or licensed to the Company or that, if    
patents do issue, the claims allowed will be sufficiently broad to protect the  
Company's products or technology. In addition, no assurance can be given that   
any issued patents owned by or licensed to the Company will not be challenged,  
invalidated or circumvented, or that the rights granted thereunder will provide 
competitive advantages to the Company.                                          

The commercial success of the Company will also depend in part on its 
neither infringing patents or other proprietary rights granted to competitors   
or others nor breaching the technology licenses upon which the Company's        
products are based. The Company's licenses of third party patents and patent    
applications impose various commercialization, sublicensing, royalty and other  
payment, insurance and other obligations on the Company. Failure of the Company 
to comply with these requirements could result in termination of the licenses.  
Competitors of the Company and other third parties hold issued patents and      
pending patent applications which may result in claims of infringement against  
the Company or other patent-related litigation. There can be no assurance that  
the Company will be able to successfully obtain a license to any technology     
that it may require or that, if obtainable, such technology can be licensed at  
a reasonable cost or on an exclusive basis. Failure by the Company to obtain a  
license to any technology that it may require to commercialize its products     
could have a material adverse effect on the Company.                            

    The pharmaceutical industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Litigation, which     
could result in substantial cost to the Company, may be necessary to enforce    
any patents issued or licensed to the Company and/or to determine the scope and 
validity of others' proprietary rights. Competitors of the Company and other    
third parties hold issued patents and pending patent applications relating to   
aspects of the Company's technology, and it is uncertain whether these patents  
and patent applications will require the Company to alter its products or       
processes, pay licensing fees or cease activities. The Company also may have to 
participate in interference proceedings declared by the United States Patent    
and Trademark Office to determine the priority of inventions, which could       
result in substantial cost to the Company. Furthermore, the Company may have to 
participate at substantial cost in International Trade Commission proceedings   
to abate importation of products which would compete unfairly with products of  
the Company.                                                                    

    The Company relies on trade secret and proprietary know-how which it seeks
to protect, in part, by confidentiality agreements with its collaborators,      
employees, advisors and consultants. There can be no assurance that these       
agreements will not be breached, that the Company would have adequate remedies  
for any breach or that the Company's trade secrets will not otherwise become    
known or be independently developed by competitors. Failure to obtain or        
maintain patent and trade secret protection, for any reason, could have a       
material adverse effect on the Company's business, financial condition and      
operating results.                                                              

UNCERTAINTY OF PHARMACEUTICAL PRICING AND ADEQUATE REIMBURSEMENT; NEED FOR      
INCLUSION ON FORMULARIES                                                        

     The Company's ability to commercialize its products successfully depends in
part on the extent to which appropriate reimbursement levels for the cost of    
such products are obtained from government authorities, private health insurers 
and other organizations, such as health maintenance organizations ("HMOs").     
Third-party payors are increasingly challenging the prices charged for medical  
products and services. Also, the trend towards managed health care in the United
States and the concurrent growth of organizations such as HMOs, which control or
significantly influence the purchase of health care services and products, as   
well as legislative proposals to reduce government insurance programs, may all  
result in lower prices for the Company's                                        

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products. The cost containment measures that health care providers are          
instituting could affect the Company's ability to sell its products and may     
have a material adverse effect on the Company.                                  

    Thus, there can be no assurance that reimbursement in the United States or
foreign countries will be available for any of the Company's products, or if    
available, will not be decreased in the future, or that reimbursement amounts   
will not reduce the demand for, or the price of, the Company's products. The    
unavailability or inadequacy of third-party reimbursement for the Company's     
products would have a material adverse effect on the Company's business,        
financial condition and operating results.                                      

Managed care providers generally maintain formularies, or lists of    
products, that such providers have approved for use and reimbursement. The      
Company plans to seek to have its products included on such formularies. There  
can be no assurance that the Company's products will be included on the         
formularies of managed care providers on a timely basis, or at all. The         
Company's success in obtaining inclusion of its products on managed care        
formularies will materially affect the Company's business, financial condition  
and operating results.                                                          

POTENTIAL PRODUCT LIABILITY EXPOSURE AND INSURANCE                              

The use of the Company's products in human clinical trials and the    
commercial sale of such products may expose the Company to potential product    
liability risks which are inherent in the testing, manufacturing, marketing and 
sale of human therapeutic pharmaceuticals. Product liability claims might be    
made directly by consumers, health care providers or by licensees, distributors 
or others selling such products. There can be no assurance that product         
liability claims, if made, would not result in a recall of the Company's        
products or a change in the indications for which they may be used. Ascent has  
limited product liability insurance coverage, and such coverage is subject to   
various deductibles. Such coverage is expensive, and no assurance can be given  
that the Company will be able to maintain or obtain such insurance at           
reasonable cost or in sufficient amounts to protect the Company against losses  
due to liability claims that could have a material adverse effect on the        
Company.                                                                        

ATTRACTION AND RETENTION OF KEY EMPLOYEES                                       

    The Company is highly dependent on the principal members of its management
and scientific staff, particularly Dr. Clemente, the Company's Chairman, the    
loss of whose services could have a material adverse effect on the Company.     
Also, recruiting and retaining qualified scientific personnel to perform        
product development work in the future will be critical to the Company's        
success. There can be no assurance that the Company will be able to attract and 
retain such highly skilled personnel on acceptable terms given the competition  
among numerous pharmaceutical and health care companies, universities and       
non-profit research institutions for experienced scientists. The Company does   
not carry key-man insurance with respect to any of its executive officers other 
than Dr. Clemente.                                                              

  The Company's anticipated growth and expansion into areas and activities
requiring additional expertise are expected to require the addition of new      
management personnel and the development of additional expertise by existing    
management personnel. The failure to acquire such services or to develop such   
expertise could have a material adverse effect on the Company's business,       
financial condition and operating results.                                      

RISKS RELATED TO POSSIBLE ACQUISITIONS                                          

The Company may expand its operations or product offerings through the
acquisition of businesses, products or technologies. There can be no assurance  
that the Company will be able to identify, acquire or profitably manage         
additional businesses or successfully integrate any acquired businesses,        
products or technologies into the Company without substantial expense, delays   
or other operational or financial problems. Further, acquisitions may involve a 
number of special risks, including diversion of management's attention, failure 
to retain key acquired personnel, unanticipated events or circumstances and     
legal liabilities, some or all of which could have a material adverse effect on 
the Company's business, financial condition and operating results. In addition, 
there can be no assurance that acquired businesses, products or technologies,   
if any, will achieve anticipated revenues and earnings                          

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DEPENDENCE ON COLLABORATORS; COPROMOTION ARRANGEMENTS                           

  In addition to the manufacturing of product candidates and products, the
Company is dependent upon third parties with respect to significant other       
aspects of its operations, including product design and formulation work,       
conduct of clinical trials, marketing to managed care organizations and product 
distribution. There can be no assurance that the Company will be able to enter  
into future collaborative arrangements with respect to these matters or as to   
whether any of the Company's existing or future relationships will be           
successful. The success of any such arrangement is dependent on, among other    
things, the skills, experience and efforts of the third party, the third        
party's commitment to the arrangement and the financial condition of the third  
party, all of which are beyond the control of the Company.                      

The Company plans to enter into arrangements to copromote certain     
pharmaceutical products of third parties to pediatricians in the United States. 
To date, the Company has entered into a four-year copromotion agreement with    
Bristol-Myers Squibb to market Bristol-Myers Squibb's Duricef oral suspension   
product. See "Item 1. Business -- Products and Products Under Development --    
Duricef Oral Suspension." There can be no assurance that the Company will be    
able to enter into future arrangements or as to whether any of the Company's    
existing or any future copromotion arrangements will be successful. The success 
of any such arrangement is dependent on, among other things, the third party's  
commitment to the arrangement, the financial condition of the third party and   
market acceptance of the third party's products.                                

RELIANCE ON THIRD PARTIES FOR CERTAIN SALES AND MARKETING AND DISTRIBUTION      
ACTIVITIES                                                                      

   The Company plans to sell its pediatric products in international markets
through distribution, licensing and similar arrangements and to sell its        
products for adult indications in the United States and in international        
markets through similar arrangements. To date, the Company has not entered into 
any material arrangements of this nature. To the extent the Company enters into 
such arrangements with third parties, any revenues the Company receives will    
depend upon the efforts of such parties. There can be no assurance that any     
third party will market the Company's products successfully or that any         
arrangements with third parties will be on terms favorable to the Company. If a 
third party does not market the Company's products successfully, the Company's  
business, financial condition and operating results would be adversely          
affected, possibly materially. If Ascent's plan to rely on third parties for    
certain aspects of marketing and selling the Company's products is unsuccessful 
for any reason, Ascent may need to forgo international and adult market         
opportunities or recruit and train a larger marketing staff and sales force and 
establish a larger distribution capability than it currently anticipates doing, 
which would entail the incurrence of significant additional costs.              

Ascent distributes its products through a third party distribution    
warehouse. The Company has no experience with the distribution of products and  
relies on the third party distributor to perform various functions on behalf of 
the Company, including order entry, customer service and collection of accounts 
receivable. The success of this arrangement is dependent on, among other        
things, the skills, experience and efforts of the third party distributor, all  
of which are beyond the control of the Company.                                 

UNCERTAINTY OF HEALTH CARE REFORM MEASURES                                      

 Federal, state and local officials and legislators (and certain foreign
government officials and legislators) periodically propose or consider          
proposing a variety of reforms to the health care systems in the United States  
and abroad. The Company cannot predict what health care reform legislation, if  
any, will be enacted in the United States or elsewhere or when such legislation 
will be enacted. Significant changes in the health care system in the United    
States or elsewhere are likely to have a substantial impact over time on the    
manner in which the Company conducts its business and could have a material     
adverse effect on the Company. The existence of pending health care reform      
proposals could have a material adverse effect on the Company's ability to      
raise capital. Further, to the extent that proposals have a material adverse    
effect on other pharmaceutical companies that are prospective collaborators     
with the Company, the Company's ability to establish collaborative commercial   
relationships may be adversely affected.                                        

35  

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-Q Filing		Date		First		Last			Other Filings
		12/31/97		2					10-K
For The Period Ended		3/31/98							10-K
Filed On / Filed As Of		5/15/98
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